LUSAKA, Zambia: July 19 (Xinhua) — Most commercial banks in Zambia have proposed to government to reduce value added tax (VAT) to 15 percent in next year’s budget as a way of reducing the cost of doing business, the Zambia Daily Mail reported on Thursday.
The commercial banks have argued that the current 17.5 percent VAT is still too high and contributing to the high cost of doing business in the country. Tax team leader Nambula Wamulungwe said the financial sector faces the highest tax burden with marginal effective tax rate of around 25 to 30 percent.
He said most commercial banks want VAT to be reduced and banks are not able to claim most of their input VAT which ultimately increases operating costs.
The official, who was speaking at a stakeholders’ meeting, called to review the tax regime in the financial sector, the newly introduced VAT on banking services would significantly raise the cost of financial services in addition to its administrative burden.
“A case in point is VAT on commissions, this they argued is not consistent with government goal of enhancing financial inclusion and reducing the cost of doing business,” he was quoted as saying by the paper.
The official further said the financial sector has the highest effective tax burden compared to mining and agricultural sectors as high as 40 percent. (Xinhua)
