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There is no illegality in investing money offshore – KanyamaBy Mirriam Chabala on 16 Nov 2017
Economist Chibamba Kanyama says there is no illegality in the investment of money in offshore accounts, except that many individuals who have had chance to enjoy such incentives have been abusing them to a point where they completely evade the payment of tax obligations for their investments.
And Kanyama who is former IMF communications advisor, says tax evasion has a lot of implications on companies and individuals.
Speaking during a Zambia Revenue Authority Tax Reporting Workshop in Siavinga yesterday, Kanyama noted that some countries take advantage of offshore investment incentives to evade tax.
He said tax evasion was a destructive habit that had potential to destroy people’s reputations.
“Do you see how tax evasion can be a reputation challenge on an individual or a company? No company wants to be mentioned for tax evasion, no one, its destructive and it’s a human interest story, it’s a name and shame kind of situation. No one wants to be named or prosecuted for not paying tax. Even in the political dynamics everyone now wants to talk about HH because tax has implications not only on an individual but its a campaign tool as well. Many governments actually campaign over the same issues of tax,” Kanyama said.
“However, there are treaties that are signed for instance these bilateral agreements where countries agree on how they are going to treat investors. So Zambia will sign with other countries that are trading within but the problem is that some businesses take advantage of those incentives. For instance a country which trades in another country would deliberately want a shelve to own a company where they have a bilateral agreement so that they can exploit those low tax rates which we call treaty shoppings. So this is a good arrangement which is in existence but a person who ordinarily does not qualify begins to structure himself in such a way that they take advantage of that.”
Kanyama addeded that: “In Zambia we have these incentives which we call the Multi-Economic Facility Zones (MFEZ) and you can go and invest in a rural area. So you can imagine if I am based in Lusaka [obviously] I would want to take advantage of that investment in the rural area so I go and open a small business in the rural area. But I am operating on tax just to take advantage of all that incentive. So when you abuse incentives in that sense it all becomes bad because the whole essence of having incentives in place is to help people succeed in their business operations.”
And Kanyama said People must not consider paying tax a punishment because it created a better environment for businesses to thrive.
“Today we are being starved of information because you (the media) have assumed that no one is interested in the type of news that has to do with tax and this is affecting compliance because informations is power. The more people understand the value of things, the better and they will pay more. I can assure you, the more people are compliant to paying tax, the less demanding government will be to intervene in the banking sector to borrow money. The more people are complaint to paying taxes, the more ZRA will reach its targets and the higher the revenue for government. Then the whole climate for business will be better and the economy will thrive. Countries where there are high levels of tax compliance have very low interest rates, there is a relationship between tax compliance and low interest rates in countries where citizens are tax compliant,” said Kanyama.
Meanwhile, ZRA director for research and policy Ezekiel Phiri said the authority had embraced technology to encourage compliance levels among tax payers.
“We are living in a world that is technologically advancing and there is no reason for us as ZRA; much as we may be thinking that we don’t have competition, there is no reason why we shouldn’t be adopting the technologies that is there like e-payment, mobile transactions and everything. The need for modernisation is convenient because what we want is for our tax payers to have no friction when it comes to tax compliance. We want to make things as easier as we possibly can for our clients so that people do not have complications when dealing with our services; either self-service whether in the use of internet or by whatever means. We called for this workshop because we believe that you the media partners have a pivotal role to play in this. We have embarked on a number of reforms that are underway and all this is in our effort to improve service delivery and compliance levels among tax payers,” said Phiri.
About Mirriam Chabala
Mirriam Chabala covers current affairs and writes in-depth feature articles on social issues.
Email: mirriam [at] diggers [dot] news
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