Mwanakatwe defers Sales Tax to July 1

Government has decided to push back its proposed implementation of the Goods and Services Tax (GST) from April 1 to July 1, 2019, says Finance Minister Margaret Mwanakatwe.

Rendering a Ministerial statement in Parliament, Friday, Mwanakatwe revealed that the move was to allow for further consultation on the disputed Sales Tax, which had received widespread criticism from stakeholders in the economy due to the uncertainties it presents for local businesses.

Mwanakatwe’s latest announcement in Parliament now means government has yielded to widespread pressure to delay the Sales Tax’s implementation amidst a lack of guidelines on how it would be administered.

As recently as last month, following a trip to South Africa during the 25th Mining Indaba in Cape Town, the Minister had insisted that Zambia was on course to implement the Sales Tax from next Monday.

“[GST] on 1st April, 2019, is not only a path of best practice but it will also eliminate the unsustainable and laborious process of VAT refunds. We are constantly in a refund position; it is unsustainable, hence us going to GST, just like America, just like Australia, just like India, just like Malaysia,” Mwanakatwe insisted in a statement availed by Ministry of Finance spokesperson Chileshe Kandeta.

But Mwanakatwe told the House that the draft Bill had been concluded and would be presented to the House for first reading by April 2, 2019.

Mwanakatwe further said the Bill is intended to be finalized during the June parliamentary session.

Government proposed to abolish Value Added Tax (VAT) and replace it with the newly proposed non-refundable Sales Tax.

“Mr Speaker, I wish to thank you for giving me this opportunity to update the House and the nation on progress made towards the implementation of Sales Tax. Mr Speaker, in my 2019 budget address, I announced the intention of government to abolish the Value Added Tax (VAT) and replace it with a simpler, non-refundable Sales Tax. Sir, this reform is intended to address the challenges of government being in a perpetual net refund position to tax payers, a situation that has resulted in the accumulation of VAT refund arrears and decreasing revenues for spending on social and economic development. Mr Speaker, moving from VAT to Sales Tax is a major reform. As part of the process, the government has since October, 2018, been engaging key stakeholders from both the public and private sectors to provide input into the conceptual framework and design of the new tax,” Mwanakatwe said.

“Sir, it was envisaged that this process would be completed within the first quarter of 2019. However, as part of the process and due to the delicate nature of the assignment, it has been imperative to ensure that all suggestions and concerns that have been raised by stakeholders are taken into consideration. This has taken more time than we had originally planned. Mr Speaker, I am pleased to report that significant progress has been made. The draft Bill has been concluded and it will be presented to this August House for the first reading by 2nd April, 2019. It is intended that the second reading and finalisation of the Bill by the House will be done during the June, 2019, session. During the intervening period, the Bill will undergo further stakeholder consultations through the Parliamentary Committee and interaction by the Ministry of Finance with different economic players. Sir, this being a new law, we do not want to leave any stone unturned. The proposed date of commencement for the Sales Tax is the 1st of July, 2019.”

She explained that by informing the House about the newly-proposed Bill was part of the consultation process.

“Mr Speaker, may I take this opportunity to thank the business community for their input during this process. It is in recognition of our partnership that government has taken time to engage stakeholders and I will ensure that sufficient lead time is granted for a smooth transition from VAT to Sales Tax. Mr Speaker, government is committed to doing the very best for this country and this economy. I, therefore, wish to reaffirm our commitment to implementing a simplified non-refundable Sales Tax regime that will provide a win–win solution for government and business. At the appropriate time, I will bring to this house the Bill for Sales Tax,” submitted Mwanakatwe.




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