By BUUMBA CHIMBULU
THE Digital Tax Stamp (DTS) solution, once introduced in Zambia, should not treat all companies producing excisable products the same, as they differ in tax compliance.
This is according to the Zambia Association of Manufacturers (ZAM), vice president -South, Chipego Zulu.
Ms Zulu said the DTS solution was most effective where smuggling, counterfeit products, tax leakages and under declaration of production or sales volume was rife by registered industry players.
She said it was for this reason that it was not ideal to treat all companies producing excisable products the same in view of variability in tax compliance and the nature of illicit trade in their respective sectors.
The Zambia Revenue Authority (ZRA) will start implementing a DTS to enhance tax compliance on all excisable products.
But Ms Zulu said viewing the DTS solely as a tax revenue growth initiative was wrong, as a poorly designed solution would likely result in increased costs of doing business for legitimate manufacturers in excisable sectors.
“Higher costs will in the medium to long-term translate into reduced revenue collection for ZRA as a result of products in these sectors becoming uncompetitive on the market,” she said.
Ms Zulu urged ZRA to adapt international best practices and more cost-effective alternatives before proceeding with the DTS proposal.
She said ZRA should undertake a comprehensive consultative process with the affected private sector companies to determine the manner in which the DTS solution would be implemented.
Ms Zulu observed the need for the Regulatory Impact Assessment process to be transparent and fully assess the overall cost and benefit of this solution to the ZRA and to Industry.
This process, she said, was cardinal as it allowed for meaningful consideration of Industry concerns at a sector specific level.
“It is imperative that the ZRA undertake an independent due diligence assessment of the DTS solution in those countries in which it has been implemented,” Ms Zulu said.
She encouraged ZRA to continue promoting voluntary compliance for those organisations that were fully tax compliant. Ms Zulu explained that this would remove the uncertainty in the market and avoid unnecessary operational cost escalation at industry level.
“ZAM remains open to further engagements with the ZRA on this matter towards the development of a workable solution that meets the shared growth aspirations of the Authority and Industry in developing Zambia,” he said.