THE Zambia Revenue Authority (ZRA) must expedite the revision of Rule 18 on Value Added Tax (VAT) to attract further investment into Zambia and boost economic growth, ZALCO managing director Hussein Safieddine has said.
Mr Safieddine said mining companies and other exporters had run out of liquidity because huge amounts of their money were being withheld by the ZRA and this had started having a ripple effect on other industries.
ZRA is withholding $600 million in VAT refunds owed to copper mining companies and will repay the cash only when they produce import certificates from destination countries, the tax authority said at a media workshop last week.
Mr Safieddine said some mines had planned to invest in what was termed a Copper Park in Kabwe which is being spearheaded by the Ministry of Commerce, Trade and Industry but this had been put on hold because of the adverse effects of Rule 18 which had resulted in reduced liquidity affecting these mining houses.
“Two mining houses had intended to invest heavily in Kabwe using the Copper Park Concept in support of value addition but now they have held back because they are low on liquidity and this can be very damaging to the mining houses whereas Kabwe is in desperate need for investment,” Mr Safieddine said.
Mr Safieddine said mines were the backbone of the Zambian economy and the problems of liquidity they were facing because of Rule 18 could result in adverse effects on the economy and the good policies the PF Government was implementing that were pro-poor.
“The projected capital inflows that will result in infrastructure development and greater job creation will not take place if the liquidity conditions are not improved by revision of Rule 18,” he said in a statement.
He welcomed the ZRA’s decision to dialogue with the mines and other exporters before revising Rule 18 but stressed that delays in making the amendments would be damaging to the economy.
Finance Minister Alexander Chikwanda said last month Zambia that plans to waive the rule requiring mining companies and other exporters to produce import certificates from destination countries because it is impracticable.