Sales Tax not easy to implement, can take 10 years – Zanaco

Successful implementation of Sales Tax in any jurisdiction can take an average five to 10 years, says Zanaco Managing Director and CEO, Henk Mulder.

And Mulder says the Bank of Zambia’s (BoZ) unwarranted charges that were introduced last September have proven harmful for commercial banks because the move had resulted in lost income.

Meanwhile, Zanaco declared a huge dividend of 20 per cent of its net profit earned during its financial year ending December 31, 2018, amounting to over K36 million.

Addressing questions from journalists following Zanaco’s Annual General Meeting in Lusaka, Friday, Mulder explained that successful implementation of Sales Tax can take an average of five to 10 years in most jurisdictions that have implemented it successfully.

He was reacting to government’s latest announcement where Finance Minister Margaret Mwanakatwe told Parliament, Friday morning, that implementation of the Goods and Services Tax (GST) had now been pushed back from the initial proposed date of April 1 to July 1, 2019.

“Sales Tax is an issue that is keeping a lot of people busy in the market. Besides Zanaco, I am also president of the European-Zambian Business Club, and a lot of members there are very anxious to understand what’s happening. 1st July looks more realistic. However, it looks easier than it is because I have seen in other countries, to implement a thing like Sales Tax, it can take five to 10 years to be successful; it’s not a simple thing because it requires a lot of preparation and behaviour as well in the market,” Mulder told journalists at Intercontinental Hotel.

And he explained that Zanaco was not happy with the BoZ’s unwarranted charges, which had cost the bank K60 million.

Last September, the BoZ promulgated into law a decision to prohibit unwarranted fees that commercial banks charged depositors.

“If these fees have been cut, then it’s very harmful for a bank like Zanaco, also other banks, but especially Zanaco. I can tell you in numbers; the charges were cut on 1st of September, 2018. During the last four months of 2018, it cost us K60 million. So, if we could have still charged, we would have earned K60 million more, that’s the impact,” he said.

He, however, ruled out any staff downsizing at Zanaco as a consequence of the BoZ’s directive.

“We have not cut back in staff at all; it can be that we change the jobs within the bank – from back office jobs to front office jobs, that’s a normal trend you see worldwide,” said Mulder.

Meanwhile, Zanaco declared a huge dividend of 20 per cent of its net profit earned during its financial year ending December 31, 2018, amounting to over K36 million.

The dividend declaration for the 2018 financial year is up from five per cent declared during the financial year ending December 31, 2017.

Zanaco’s profits soared to K183.7 million after tax, up from K114.1 million recorded during the corresponding period in 2017.

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