The Zambia Institute of Chartered Accountants has proposed the further deferment of the implementation date of the General Sales Tax (GST).
ZICA President Jason Kazilimani said the effective implementation date of 1st July 2019 or any other date within 2019 does not appear feasible.
Mr. Kazilimani said the roll out of a new tax regime requires time as there are many interdependences to consider.
He pointed out the issue of re-configuring firm and institutional system for them to be Sales Tax compliant.
Mr Kazilimani said ZICA has proposed 1st January 2020 as the roll out date which would coincide and align the effective date to that of the new budgeting year making it easier for budgeting and forecasting with known Sales Tax rates.
He said timely implementation is another key issue that would impact the successful implementation of GST.
“The success of the soon to be implemented General Sales Tax (GST) is largely dependent on implementing agencies ensuring that they minimize the cascading effects that could result along the value chains of goods and services as well as ensuring the sufficient time is allotted to the implementation process,” he said.
Mr Kazilimani said ZICA acknowledged the efforts made thus far in terms of stakeholder engagement and applauded Finance Minister Margaret Mwanakatwe’s combined efforts the tax authority on the sensitization of the general public on the new tax bill that would see the epilogue of VAT in Zambia and the introduction of Sales Tax as the new tax regime.
“The Institute is cognisant of the fact that a well-designed Sales Tax could potentially spur local production and also lead to higher revenue for the fiscus”, Mr Kazilimani said.
On the cascading effect, ZICA hoped for a minimal effect as the current form of the 2019 Sales Tax Amendment Bill could result in the escalation of the price of goods and services through the cascading effect of sales tax along the value chains of goods and services.
Me Kazilimani said the motivation for the GST was due to the lack of refunds on tax credit mechanisms imbedded in the Sales Tax mechanism.
He said this would therefore have the unwanted effect of increasing the prices of goods and services by whatever rate that is finally legislated.
Mr Kazilimani said one remedy will be the effective collection of data on sales tax exemption schedules which requires rigorous engagement of key stakeholders.
He said ZICA further proposes that in the event that a single rate is hard to come by, a minimal impact rate not exceeding 5% should be set for locally sourced goods and service to reign in the ripple effect that may ensue.
Just implement it NOW. We have had enough of this deferement nosense.
Is that Bona, next to Kazilimani?
I also feel that deferring it to next year could be better