THE Zambia Revenue Authority (ZRA), Ministry of Finance and the Ministry of Local Government have signed a Memorandum of Understanding (MoU) that will see local authorities collecting base and withholding taxes on rental income on a commission basis.
Speaking during the signing ceremony, Tuesday, ZRA Commissioner General Kingsley Chanda explained that the partnership would help the Authority reach the much-sought-after informal sector and widen the country’s tax base.
“We are very confident that with this collaboration, we will be able to tax all Zambians. The ZRA has embarked on a modernisation drive, which involves using platforms that simplify payment of tax by the informal sector. Some of our recent innovations include, but not limited to: introduction of payment of tax on phone; we are soon launching another application very soon, a platform on which taxes can be paid, but also payment of taxes using WhatsApp. These simplified ways of collecting tax are designed to ensure that the small-scale businesses and individuals find it easy to pay tax,” Chanda said.
“For this particular Memorandum of Understanding, we have targeted two taxes: the base tax and withholding tax on rental income. We believe that through your undoubted geographical spread around the country and with the Commission that we shall pay, which has now been enhanced in the budget, the councils will be able to help us collect base tax and withholding tax on rental income and we are also aware that you have a very robust database of marketeers and residents in your districts. So, through this partnership, we are very confident that we will expand our tax base. We are also confident that the Commission that the councils will receive from the Zambia Revenue Authority will enable them to deliver social services to their residents.”
He said due to geographical challenges and limited human resources, the Authority had not been able to successfully tax the informal sector.
“As you may be aware, one of our major challenges, as the Zambia Revenue Authority, is collection of tax from the informal sector. This has actually been a major criticism of the Authority since it was established. Everyone, year in, year out, talks about expanding the tax base and we are also urged to ensure that every citizen contributes to the tax basket. But because of our limited geographical spread as the Zambia Revenue Authority and limited resources in terms of human resource and offices around the country, we have not been able to successfully tax the informal sector,” said Chanda, who added that local authorities will be getting 10 per cent of the gross collection made.
And Ministry of Local Government Permanent Secretary Ed Chomba hailed the agreement signing as the “new dawn in the revitalisation of decentralisation in the country.”
“The signing of this MoU signifies a new dawn in the quest to revamp decentralisation. Decentralisation seems to be on its knees at the moment, but I think this is just one injection we needed to revamp and to revive decentralisation. We believe at the Ministry and at the central government that if service delivery has got to be enhanced, it has got to be enhanced on a municipal level and this is what this is all about. Where a person, who is in Shang’ombo and somebody who is in Lundazi, they begin to start to understand two things: that government institutions are no longer working in silos, but rather they are coming together to enhance service delivery to them. Then, number two, the importance of tax itself, which we view in our understanding that our people are to be conscientise even more on the importance of tax,” Bishop Chomba said.
He, however, cautioned that he would not take kindly to any abuse of the collected resources.
“I will emphasise to my friends and to my colleagues that I will not take kindly any abuse, any misapplication, any mishandling and whatsoever inappropriate handling of these funds that has been allowed for us to collect on behalf of ZRA, through the local authorities to be misused. Once that takes place, then I think I will be the first whistleblower to begin with based on the Financial Regulations Act of 2018, I will call the ACC! I am the controlling officer, I am appointed and I will do that. There will be nothing like covering anything. No money has got to go missing. The pudding in this MoU will be in its implementation,” said Chomba.
Also present at the ceremony was acting Accountant General Amy Chenguluka, who signed on behalf of the Ministry of Finance.