Govt silence on Sales Tax guidelines will injure economy, warns CTPD

The Centre for Trade Policy and Development (CTPD) has demanded for guidelines on the imminent Sales Tax’s implementation because there is still uncertainty among tax payers on how it will work.

In a statement released, Tuesday, CTPD executive director Isaac Mwaipopo urged the Ministry of Finance to issue guidelines on the Goods and Services Tax (GST) to allay uncertainties and anxieties among economic players in the country.

Government is set to replace the current VAT system with Sales Tax from next Monday, but have yet to indicate its exact rate or how it will be implemented to the satisfaction of Zambian tax payers.

“The CTPD urges government through the Ministry of Finance to publish guidelines on Sales Tax implementation. With only four days from the day this has to come into effect, no one knows how this tax will be implemented nor the rates at which it will be implemented. This is not good on the part of business entities, especially that the new tax brings into play a number adjustments on the part of tax payers,” Mwaipopo stated.

“The silence on the part of government to communicate such important economic policy changes to the business community in due time in order to allow for prudent business planning may impact negatively on business and the economy at large. We note that since September last year, government is yet to address the major concerns regarding the transition towards Sales Tax: There is no indication of the rate to be used and how government seeks to deal with the cascading effect of the tax, among others.”

He also feared that the heightened uncertainty on the Sales Tax’s implementation would curb Foreign Direct Investment (FDI) inflows into the country.

“It must also be noted that tax changes of this magnitude affect Foreign Direct Investment since foreign investors need to also make proper forecasts of their returns before making such investments. We remain concerned with the delayed release of the guidelines on Sales Tax implementation and we would like to urge government to consider postponing the implementation of Sales Tax so as to allow for more consultation. According to the recent economic brief issued by the Ministry of Finance, VAT was cited to have been one of the best performing taxes in 2018; we remain wondering why we are getting rid of a good performing tax?” asked Mwaipopo.

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