Shielding against Covid-19 fallout

BUUMBA CHIMBULU writes THE Zambian Government has continued to quickly take emergency actions to protect the economy from shrinking further as key sectors have been drained by the current COVID-19 which has taken a toll on the global economy. The Government is fully aware of the potential damage COVID-19 can cause if no emergency actions […]

Shielding against Covid-19 fallout
BUUMBA CHIMBULU writes THE Zambian Government has continued to quickly take emergency actions to protect the economy from shrinking further as key sectors have been drained by the current COVID-19 which has taken a toll on the global economy. The Government is fully aware of the potential damage COVID-19 can cause if no emergency actions are swiftly taken and implemented.  Different emergency tax relief measures are being undertaken to protect the economy from shrinking further. Already, Finance Minister, Bwalya Ng’andu, has projected that the Zambian economic growth for this year will be lower at around 2 percent despite the anticipated significant recovery in the agricultural sector. He also estimated that the budgeted revenue will fall short of target by at least K14.8 billion or 19.7 percent of the approved 2020 budget. To protect the economy from shrinking further, Dr Ng’andu on Monday last week announced a second tax relief measures to help businesses sustain and have cash flow. This was after the first set of tax relief measures were announced about a month ago. Some of the tax relief measures announced on Monday include waiving of penalties and interest on all outstanding tax liabilities to assist businesses manage their cash flow during the COVID-19 pandemic period. Another measure was the suspension of customs duties and VAT on additional medical supplies used in the fight against Covid-19. “To assist companies and businesses manage their cash flows during this period when they are faced with reduced revenues, Government has decided to waive tax penalties and interest on outstanding tax liabilities resulting from the impact of Covid-19,” Dr Ng’andu said at a press briefing. However, the major economic players, the mines, are concerned at the pace at which the announced tax relief measures are being implemented. Last week on Wednesday, the mining industry said it is currently under distress as the first set of tax relief measures announced by Government over three weeks ago which, once implemented can help sustain copper production, have not yet been enforced. The Zambia Chamber of Mines (ZCM) is confident that once the announced and proposed measures are implemented, the industry will be able to sustain production as cash flow will be unlocked. ZCM Chief Executive Officer, Sokwani Chilembo, complained that the Industry had been put in a more desperate situation as tax relief measures such as the suspension of import duties on concentrates had not yet been implemented. “The delayed implementation of the announced tax relief measures need to be taken immediately to address the issues facing the mining sector and the business community in the midst of COVID-19,” Mr Chilembo said. Mr Chilembo said in the time that had elapsed since the 27th March announcements, the industry’s circumstances had become more desperate. About a month ago, ZCM proposed the introduction of a six-month tax amnesty on all active open tax assessments and audits currently active at the Zambia Revenue Authority (ZRA). ZCM wrote to Government to implement a six-month amnesty as most taxpayers would be unable to meet their obligations due to limited cash flow caused by COVID-19. The Chamber said the six-month tax amnesty should be put in place with waiver of interest and penalties to incentivise closures of cases and payment of taxes where due. ZCM said this in the submission made to a consultative meeting at the Vice president Inonge Wina’s office on the social impact of COVID-19 titled “the Zambian mining industry’s responses and proposed actions to contend with the COVID-19 pandemic.” “While we laud the efforts of the ZRA to recover unpaid taxes, we propose that new and existing tax assessments be put on hold for the duration of the crisis to allow for the continuity of business operations. “This is because assessed taxpayers may have challenges complying with the statutory time limits for the objection and appeal process. This should include rescheduling any appointments between ZRA and taxpayers,” the Chamber said. ZCM also recommended an extension of the statute of limitations to 31 December 2020 for any period due to expire in 2020. This, the Chamber explained, was to prevent any new assessments being raised during crisis months and to protect ZRAs ability to assess these issues from being time barred. “It is therefore recommended that first provisional payment and filing for corporation taxes due 31 March/10 April is deferred until July,” the Chamber said. ZCM emphasised that businesses would be incurring additional expenses to mitigate the impact of COVID-19 in the workplaces and surrounding areas, putting pressure on cash-flows. Economist Oliver Saasa believes that the relief measures that were given for the private sector are very small, and sector-specific. It is regrettable that Government is currently unable to provide appropriate and sufficient incentives suitable for each sector, not because it does not want to, but because it has no capacity. It is therefore important for the business community to constantly engage with Government on various challenges they are facing. Government has shown its commitment to ensure that as many businesses as possible are saved from collapsing during the COVID-19 period by offering appropriate and suitable tax relief measures. The Sun