ZRA exeeds revenue targets with low compliance levels 

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Despite Zambia Revenue Authority (ZRA) surpassing it’s revenue collection for the 2023 first quarter, less than one percent of active tax payers accounted for the K27.3 billion recorded.

The authority recorded an increase of 12.4 percent in comparison to the same period last year which stood at K26.5 billion.

However, ZRA Commissioner General Dingani Banda disclosed that out 364,627 active taxt payers only 1063 tax payers representing a 0.3 percent accounted for 80 percent of the revenue collected.

Speaking during the First Quarter Tax Revenue and Administrative Performance presentation in Lusaka yesterday, Banda said one of the challenges the authorities faced was low tax compliance and limited tax base.

Banda said only top five sectors generating about 72 percent of the revenue collected which are mining, manufacturing, wholesale and retail, public administration and financial and insurance services.

The top five sectors contributed 72 percent of the gross collections in the period under review compared to 74.1 percent during the same period in 2022.

Banda said the authority will embark on making reforms that will help it collect maximum revenue and enhance compliance levels via the enhancement of data analytics internally within the institution and with businesses.

“Our key strategic reform is to ensure that when a transaction that involves taxes in Zambia is conducted, ZRA knows first before you even file a return,”

Banda further said ZRA is set up a unit for artificial intelligence and machine learning to help detect fraud among other services and curb Value Added Tax (VAT) fraud and revenue leakages.

Meanwhile VAT on imports came out as the top revenue collecting venture of the tax payment types followed by Pay As You Earn (PAYE) where 4.7 percent was recorded which is a drop negative 1.1 percent as compared to last year.

Banda said VAT recorded a growth of 8.5 percent which means that it contributed an overall revenue of 22.1 percent.

He added that the other sector which are 22 in total contributed 7.7 billion increase K6.8 billion representing an 11.7 percents increase.

Banda further said three tax types recorded a negative revenue collection, two related to mining and Pay As You Earn.

“When we introduced the mandatory requirement to Include the Tax Payer Identification Number (TPIN) in the return for pay as you earn, some of the tax payers have dropped from the taxage,”

He appealed to stakeholders to be compliant in payments of PAYE tax.

The other two tax type that recorded a negative in terms of revenue collection included Mineral Royalty Tax, recording negative 5.7 percent and Mining Company Tax which had the largest drop from last year’s K3.5 billion to slightly under a billion.

In the next three months to follow, ZRA targets to collect K28.3 billion, of which K25.6 billion will come from tax revenue while K2.7 billion from non tax revenues in the next three months.

By Moses Makwaya

Kalemba May 12, 2023

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