Chikwanda Is Stubborn -Sondashi

DR Ludwig Sondashi has accused finance minister Alexander Chikwanda of being stubborn by going ahead to pave way for the amendment of VAT rule number 18.

And the Zambia Council for Social Development has questioned the real motive behind the amendment of VAT rule number 18.

The Zambia Revenue Authority on Monday effectively waived the controversial rule requiring mining companies and other exporters to produce import certificates from destination countries in order to claim tax refunds.

This comes after the amendment of rule 18 of the Value Added Tax General Rules gazette notice No 86 of 1997, as amended by the value added tax general (Amendment Rules, Gazette Notice Number 27 of 2013).

Last year, ZRA started enforcing a rule requiring exporters to produce certificates for copper shipments in order in order to curb tax avoidance.

However, the foreign mining companies complained that they were unable to do so because they sold via middlemen, although maintaining that those deals were at arm’s length.
ZRA had withheld US$600 million in VAT refunds for key exporters, mainly mining firms because of failing to produce import certificates.

Dr Sondashi, who is Forum for Democratic Alternatives president, wondered why Chikwanda had U-turned on the VAT rule 18 implemented last year to curb tax avoidance by companies that were claiming VAT refund after valid reasons for doing so were advanced.

“I am sure the minister consulted Cabinet before coming up with that law. The law was made in our view for government to benefit,” he said. “Now you can see that this money is owed in billions and this law has been amended. Where is government going to find money to pay back mining firms? That is unacceptable and you can’t govern like that.”

Dr Sondashi said the decision to simplify tax refund claims showed incompetence on the part of government to run its affairs prudently.

“In other countries, a person who authorises such an amendment to be done can be cited for robbing the country. I know there are some people who are hiding in that and that is really showing incompetence on the government which I have been talking about,” he said. “For goodness’ sake, government should come up with a systematic way of discharging the payment of that money to ensure that they pay what duly belongs to these instead of promoting mining firms at the expense of the interest of Zambians. To frame a legislation like that is stealing from the people of Zambia. We don’t accept that type of behaviour. That is why our party has been advocating windfall tax so that Zambians get what belongs to them. So we do not favour these amendments.”

Dr Sondashi said there was urgent need to audit the country’s tax system, especially that of the mining sector.

“Now mines also have taken advantage because it is something the minister made law. For me, government is undermining itself. They are not running the affairs of the country prudently and I think that amendment should be corrected,” said Dr Sondashi. “I think there is nothing you can advise Chikwanda [on]. Chikwanda is not advisable because if you remember, he called all of us who called for windfall tax [lunatics], but I think the one who advocates for such policies is the one who should be called a lunatic.”

In an interview, ZCSD executive secretary Lewis Mwape challenged the Ministry of Finance to explain to the public in whose interest the decision to waive a rule requiring mining companies and other exporters to produce import certificates from destination countries in order to claim tax refunds was made.

“The way we are running the government affairs…you cannot say there is transparency when people are not involved,” he said. “As far as we are concerned, we have followed the debate and the arguments that have been pushed forward and in our view, we feel that there is need for the government, especially the Ministry of Finance, to come out and explain to the Zambian people on how this decision will benefit the Zambian people. Can the Ministry of Finance, and the Minister of Finance specifically, explain to the Zambian people the benefits that will accrue from this decision?”

Mwape explained that the council had in the past carried out studies on the extractive industry that showed how Zambians were robbed of their resources.

“Therefore, let the Zambian people judge if this is the way to go or not on the VAT rule 18. Let them judge if this decision was made in personal interest or in public interest. Our interest, however, is to see that the decisions that the government is making are in the public interest and not in the interest of individuals.”

Posted by Kunda on September 10, 2014. Filed under POLITICS. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry