Tax avoidance still rampant in Zambia-Action Aid

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Action Aid Zambia has observed that tax avoidance by multinational companies that are operating in the country was rampant and widespread.

Country Director Pamela Chisanga disclosed that following her organisation’s revelation of alleged tax avoidance scandal by Zambia Sugar, many informants have come out to testify of tax avoidance bordering on tax evasion by many companies in the country.

Ms. Chisanga told ZANIS in an interview in Lusaka today that Action Aid would name other companies that were involved in tax evasion but will have to verify this information before doing so.

She has since urged government to tighten up its regulatory roles in order to seal all the loopholes being used by companies to avoid paying tax.

She said the country has the potential to generate a lot of resources to finance most of its developmental programmes but this potential was being stifled by companies that do not want to meet their obligations.

Ms. Chisanga said government only needs to put in place systematic measures to curb tax avoidance.

She has since urged government to also review tax codes in order to do away with those (codes) that do not favour the country and which the multinationals were using to avoid paying tax.

Ms. Chisanga said while it was good to have foreign direct investment and a conducive investment climate, the country must not take on board legislation that encourages foreign nationals to exploit the country’s resources.

Meanwhile, Ms. Chisanga has praised government for introducing a new law that allows the Bank of Zambia to regulate and monitor foreign exchange flows in a bid to curb tax avoidance by multinationals that are operating in the country.

Finance Minister Alexander Chikwanda recently signed statutory instrument number 32 of 2013 that will take effect on 16th May this year.

The objective of the statutory instrument is to monitor the balance of payments in a transparent and accountable manner.

Ms. Chisanga said her organisation welcomes any measure that aims at curbing tax avoidance by companies that have invested in the country.

She said the introduction of statutory instrument number 32 was a good move that will bring some control on how money moves in and out of the country.

Ms. Chisanga however stated that the new law was not very effective as it only targets small enterprises that are operating in the country rather than the big multinationals.

She said the new law also has the potential to encourage illicit trade in foreign exchange.