ZRA POLICIES ARE HURTING BUSINESSES: A CALL FOR CHANGE

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By Nkonkomalimba Kapumpe.

ZRA POLICIES ARE HURTING BUSINESSES: A CALL FOR CHANGE.

Tax Clearance Certificate

The Zambia Revenue Authority (ZRA) is one of the few institutions in the country that demands money from you while preventing you from earning it. By withholding Tax Clearance Certificates, ZRA effectively stops businesses from operating or participating in tenders for serious contracts.



Beside imposing compliance before Tax clearance is issued goes contrary to what ZRA pledged to Parliament in early 2000s,  when the Tax clearance Certificate  law was being reintroduced.

In a parliamentary committee sitting, ZRA committed to not ever use obtaining a TCC (Tax clearance Certificate) as a compliance measure. The idea of TCC was to ensure that the authority would have a way of knowing who to focus on as an active taxpayer.



It is also a lazy way of collecting taxes thereby challenging the existence of a bloated workforce failing to collect taxes by engaging taxpayers in actual business settings and see challenges first hand.

But new Managing Director  Dingani Banda is choosing a comfortable and  easier method where he  holding a whip in his right hand. In short, can the Minister of finance Situmbeko Musokotwane   kanshi withdraw the huge enforcement budget allocated to ZRA and redirect that to paying debt to local suppliers since ZRA has found a magic cheap method of collecting taxes.


In this struggling economy, it is counterproductive to block over 5,000 companies this January from conducting business. Such policies are not only illogical but also detrimental to economic growth.



Unreasonable Penalties

The penalties imposed by ZRA are another glaring issue. For example, a small Zambian business struggling to stay afloat may generate an annual revenue of K150,000. Yet, ZRA might impose penalties of K300,000 on top of the actual tax owed. Is this a rational system? Penalties should never exceed the principal tax owed. They should be a reasonable percentage of the principal amount, not an amount that crushes small businesses. Ladies and Gentlemen we are not in a development country that we just copy and paste tax police’s.



Imagine you  owing K50,000 in taxes but facing penalties up to K300,000. This creates a hostile business environment and discourages entrepreneurship—especially in Africa, where we need to nuture local businesses, not suffocate them.



Gnashing

The situation is worse when you are doing business with parastatals, Government agencies and  departments. Profit margins in Zambia typically range from 10% to 35%, especially with the introduction of  Market Pricing Index . Yet ZRA’s gnashes or takes up an unrealistic 40% to pay for penalties,  leaving businesses struggling to survive.


For instance, if you borrow K120,000 to buy a car for K100,000 and sell it for K140,000 to government , you make a modest K20,000 profit. But when ZRA takes or gnashes  K50,000 from penalties , you’re left with no profit and no means to repay your debtors. This is unsustainable for businesses, it like kalaba now.


It’s time to rethink the way taxes are collected in Zambia. We need a system that aligns with our culture and economic realities. Perhaps collecting taxes directly through banks could be a more efficient and business-friendly approach. It’s counterproductive to make businesses lose their ability to operate when they’re the very source of the revenue you need.



The same way ZRA called almost each and every company to train and  register on Smart invoices; you can also do the same to resolve Tax clearance Certificate for small simple businesses. Those Ladies and Gentlemen who helped us with smart invoicing were sharp, so that people start doing business.


ZRA must understand that supporting businesses and creating a conducive environment for growth will ultimately result in higher tax revenues. Crushing businesses with illogical penalties and policies only hurts the economy in the long run.

Ba Dingani Banda help us please, you are killing us.

4 COMMENTS

  1. We said, ZRA is operates like a military organisation. There’s no way you can withdraw the TCC and then you still expect your customer to pay you. There’s no logic here. It seems ZRA is not there to offer a service but to punish. With such approach how do you expect to collect targeted revenues? These issues of garnishing are detrimental to businesses, one wonders which school of business these leaders attended. The so called penalties are outrageous and make no business sense. Surely there are better ways to collect revenues but not in this way. Let there be leadership at our institution and learn from successful countries how revenues are successfully collected.

  2. This is very true that Zambian owned Small and medium Companies are growing at a snails pace or never with this ZRA RACIST whip TCC. Please my FORWARD Government our children must grow and NOT just remain at nursery level, because of this racist whip TCC that takes all the working capitals of Zambian owned Small and medium Companies, whereby killing growth of our Zambian owned Small and medium Companies which should be revised downwards because we charge a person NOT to kill him, but to educate him or her.
    Zambia Forward! Forward batata ni Forward,

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