FOR IMMEDIATE RELEASE
JANUARY 12, 2022
TAX EXPERT CALLS FOR CAUTION ON ZRA’S PROPOSED DIGITAL TAX STAMPS
LUSAKA, ZAMBIA – Zambia’s leading tax expert, Professor Oliver S. Saasa, has urged the Zambia Revenue Authority (ZRA) to undertake extensive due diligence before implementing the proposed Digital Tax Stamps (DTS).
Digital Tax Stamps are paper stamps attached to goods or their packaging to facilitate tracking. The solution is part of Government’s strategy to combat illicit trade, plug revenue leakages and close existing gaps in the tax collection system.
Prof Saasa has warned that when not implemented correctly, the tax measure had the potential to raise operational costs for legitimate manufacturers in the excisable sector, thus putting inflationary pressure on certain products.
He further said that while DTS was effective in sectors rife with smuggling, counterfeiting, tax leakages, and production under-declaration, a blanket implementation would be detrimental to compliant manufacturers.
“Technology offers progressive and practical solutions to persistent problems affecting various sectors of the economy. However, part of what makes the DTS so contentious is that we may be offering the right solution to the wrong problem or indeed to a problem that does not exist,” he stated.
“A poorly designed solution would likely result in increased operational costs for compliant manufacturers in excisable sectors like the clear beer industry. These additional costs will eventually be passed onto consumers who may react by buying less of the affected goods.”
“Zambia’s clear beer sector is dominated by only a handful of players thus making tax compliance tracking easy. If anything, improving enforcement control is a cheaper alternative to DTS.”
Prof Saasa has since urged the ZRA to focus on the problem and not the technology and called for further engagement with affected private sector players.
The tax expert insisted that the stamp’s intended benefits notwithstanding, ZRA needed to urgently address some of the more pressing concerns raised by stakeholders before rollout commences.
“Before this project sees the light of day, ZRA needs to clarify who will bear the cost of installing, operating, and distribution of the digital tax stamps? And who will facilitate the technical interventions, upgrades, and maintenance required?”
Professor Saasa commended ZRA for digitising its tax collection systems saying that the technology would augment the authority’s capacity to combat crime. He however, insisted further consultation was needed to ensure systems like the DTS worked as intended.
“The fact that there still exists several points of contention regarding the project suggests inadequate consultation on the authority’s part. The system must be introduced as a win-win solution between the tax authority and manufacturers in terms of accountability vis-à-vis business viability in a stinging economy ravaged by COVID-19. And to achieve this, all stakeholders must be given a voice.”