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Low tax compliance irks ZRA

By Derrick Silimina

The Zambia Revenue Authority (ZRA) says the tax collector has recorded over 890 tax payers accounting to 80 percent of total revenue collected in 2023.

ZRA Commissioner General Dingani Banda said during the first quarter of 2024, the authority has just managed to net in over 570 taxpayers accounting for 0.1 percent of the tax population in the country.

“When other countries are above 28 percent, our VAT total contribution has been mainly averaging way below the 28 percent. According to our Tax Gap Studies, our tax gap as percentage of GDP of company income tax has recorded six percent, followed by excise duty at 0.9 percent and VAT at 0.2 percent. In short, we are not collecting this type tax to the expected optimal levels,” Banda said during a media briefing on progress of SmartInvouce system held at Lusaka’s Sarovar hotel on Monday.

Banda has since urged all VAT registered taxpayers that have successfully implemented Smart invoice to continue using the system consistently while those yet to register and integrate are encouraged to continue issuing invoices using their existing invoicing systems.

Banda further disclosed that over 12,000 taxpayers have since been onboarded on the Smart Invoice as at July 4, 2024.

Speaking at the same event, ZRA Director Data Analytics Yvonne Mwanza said with the introduction of the software based solution – Smart Invoice system will improve tax compliance and curb revenue leakages in the country.

Early this year, the Minister of Finance and National Planning Situmbeko Musokotwane officially rolled out Smart Invoice as the country’s electronic invoicing system.

Smart Invoice is a key initiative towards sealing revenue leakages and improving service delivery in tax administration. The system enables the ZRA to have real time access to business transactions. It also prevents the use of fake invoices in VAT refund claims and ensures that only qualifying entities claim deductions. Smart Invoice also reduces tax evasion.

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