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Revenue authority laments K100 billion debt in unpaid taxes, VAT fraud through fake import certificates


Zambia Revenue Authority (ZRA) is owed close to K100 billion of unpaid taxes from suppliers of goods and services to government.

This is according to Commissioner General, Dingani Banda, during a stakeholder engagement meeting on tax administration performance during the first quarter of 2023 in Lusaka on Thursday.

Banda said the authority has started withholding tax liabilities for suppliers of goods and services to government before they are paid.

He said this would help deal with the current debt situation where suppliers of goods and services are owning ZRA.

Banda pointed out that taxes worth K99.9 billion were being owed to the Authority as at December 2022.

Read more: Zambia capable of generating K17bn from VAT, K9.7bn from CIT if tax net is widened, gaps closed —ZRA

Banda explained that this was one of the reasons the authority was supporting the tax amnesty initiative to encourage taxpayers commit to their dues.

“We have a challenge of escalating debt. Our debt which are taxes owed to ZRA now stands at K99.9 billion as at end of 2022 and that is one of the many reasons that we have been supporting implementation of the tax amnesty.We have also started withholding of tax liabilities for suppliers to government. This is a very important reform.

“What we are saying is that if you want to do business with government, you must also be a tax payer and if you are not compliant, what we will do is that before government pays you for the goods and services, we will advise government to hold a portion of that. We started this in February this year and this is actively in place now…so take note,” he said.

Banda also pointed out that ZRA had continued to record VAT fraud, with taxpayers using fake import certificates.

He described the current fraudulent VAT as a scam which ZRA had taken aggressively to close it.

Zambia, he said, had a huge problem of fraudulent VAT claims.

“We also have intensified our investigations on suspected VAT fraud. VAT is a fundamental problem in Zambia. We have a challenge as a country for fraudulent VAT claims.

“We have heard about supplying air so they claim VAT from air where no goods and services are provided but someone wants to claim VAT. It is a major scam and we have taken it aggressively as ZRA to make sure that we close it. This is an area we are looking at to seal VAT leakages,” Banda said.

Also read: Zambia Revenue Authority chases after tax defaulters, issues 14 days ultimatum

Meanwhile, Banda said ZRA collected gross revenue of K27.3 billion during the first quarter of 2023.

He also announced that K4.1 billion was refunded during the same period with ZRA paying out K1.35 billion pet month.

This is compared to K26.5 billion collected during the same period in 2022.

Banda pointed out low payment compliance by withholding VAT agents with over K13.8 billion cumulatively withheld but not paid as one of the factors leading to low revenue collection this year.

“Other factors are lower than projected profitability of major mining companies in 2022. This led to downward adjustment of the forth quarter of 2022 provisional tax payment as well as lower metal production and ore grade than forecasted, which affected mineral royalty tax as well,”
he said.

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