Tax Collection Agency Partnership in Zambia: Objectives, Achievements, and Challenges

TAX COLLECTION AGENCY PARTNERSHIP BETWEEN ZAMBIA REVENUE AUTHORITY AND LOCAL AUTHORITIES Presented by: Ronald Chalwe Director Informal Sector & Medium Taxpayer Office My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

PRESENTATION OUTLINE INTRODUCTION OBJECTIVES WHY THIS PARTNERSHIP? SERVICES DELEGATED TO THE LOCAL AUTHORITIES COUNCILS ENGAGED BY PROVINCE ZRA SUPPORT TO LOCAL AUTHORITIES ACHIEVEMENTS CHALLENGES CONCLUSION My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Introduction The government of the republic of Zambia has always been desirous to tap into the unexploited taxpayer base, which is mainly the informal sector. It has been realised that Zambia Revenue Authority (ZRA) needs to forge strategic partnerships with strategic institutions in order to achieve this goal. Therefore, in 2018, the Minister of Finance signed a statutory instrument number 48, of 2018, The Income Tax (Tax Agent) (Terms and Conditions), Regulations 2018 that empowers the Commissioner General to appoint tax collection agents at fee to collect taxes from the informal sector. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Introduction Following this decision, a memorandum of understanding was signed on 29th September 2020 between ZRA and the Ministries of Finance & National Planning and Local Government & Rural Development which culminated into the signing of tax collection agency contracts with 33 local authorities on 1st February 2021, which was phase 1 of the engagement. Four (4) of the Councils have had their Contracts renewed on 29th August 2023 for another two years. The remaining 29 Council s contracts to be renewed within the month of September. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Objectives The key objectives of the partnership are: To establish a long-term collaborative and formal working relationship. To bring everyone who is supposed to pay tax into the tax net thus broaden the tax base. To improve tax compliance in the formal sector at minimal cost to all the stakeholders To increase revenue base for the councils. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Why this Partnership? The Tax Agency model aligns well with ZRA s aspirations as set out in the 2022-2024 Corporate Strategic Plan. ZRA has only physical presence in 13 out of 116 Districts in Zambia, while local authorities are present in every district. Partnership supports Government s Decentralization Policy. Government in 2022 increased the constituency development fund (CDF) from K1.6m in 2021 to K25.7m in 2022 and K28.3m in 2023 thus most districts in Zambia have experienced economic activities linked to expenditure of CDF. This spur in economic activities represents growth in the tax base and in the tax potential of each district. Tax Agency Partnership with the Local Authorities is very timely and strategic for ZRA. Councils interact with a wide variety of taxpayers, both informal and formal and of all sizes, operating un their Jurisdictions. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Services delegated to the Local Authorities The Local Authorities have been engaged as agents for the collection of the following taxes: Base tax from marketeers Rental Income Tax Turnover tax Presumptive Tax on Passenger Transport Base tax, rental income tax and presumptive tax will be collected from the territorial boundary of the agent while turnover tax will be collected only in the markets and bus stations located within the territorial boundary of the agent. Local Authorities to be paid commission at 10%. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Councils Engaged by Province Thirty three (33) Local Authorities were engaged across the country in Phase one and these will continue in Phase two. Number of councils per province is shown in Table 1 Below: TABLE 1 Province Central Copperbelt Eastern Luapula Lusaka Muchinga Northern NorthernWestern Southern Western Total Number 3 8 2 3 4 3 2 2 4 2 33 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Councils engaged by Province.contd The names of Councils involved are shown below in Table 2 TABLE 2 No. Central Province 1 Kabwe Municipal Council 2 Chibombo Town Council 3 Kapiri Town Council No. Copperbelt Province 1 Ndola City Council 2 Kitwe City Council 3 Chingola Municipal Council 4 Mufulira Municipal Council 5 Chililabombwe Municipal Council 6 Luanshya Municipal Council 7 Kalulushi Municipal Council 8 Masaiti Town Council No. Eastern Province 1 Chipata City Council 2 Lundazi Town Council No. Luapula Province 1 Mansa Municipal Council 2 Nchelenge Town Council 3 Kawambwa Town Council No. Lusaka Province 1 Lusaka City Council 2 Chongwe Municipal Council 3 Chilanga Town Council 4 Kafue Town Council No. Muchinga Province 1 Chinsali Municipal Council 2 Mpika Town Council 3 Nakonde Town Council No. Northern Province 1 Kasama Municipal Council 2 Mbala Municipal Council No. Southern Province 1 Livingstone City Council 2 Choma Municipal Council 3 Mazabuka Municipal Council 4 Siavonga Town Council No. NorthWestern Province 1 Solwezi Municipal Council 2 Kalumbila Town Council No. Western Province 1 Mongu Municipal Council 2 Kaoma Town Council My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

ZRAs Support to Local Authorities ZRA is supporting the Councils in the following ways: Carrying out media coverage and sensitization of the partnership and what is expected of the public and the tax paying communities. Provision of reflectors bearing names of both ZRA and the Local Authority. ZRA staff working with the councils in the initial stages to ensure that job on training is conducted in the field and to ensure the correct things are being done Provision of leaflets and other information in the taxation of tax types under the scope Provision of data collection forms and data capturing excel template Provision of transport when doing joint enforcements. Training on e-registration, e-payment and e-filing platforms My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Achievements The key achievements are: LAs visited 12,733 taxpayers. Increased Rental tax registrations of 9,775. Improved tax revenue with tax Collections of K7.5million as at 31st January 2023. Non remitting rental tax taxpayers brought on board Improved compliance among small and medium taxpayers. Additional stream of income through commissions for the Council. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Challenges Tax Agency Module not yet implemented on the ZRA TaxOnline System. Nondisclosure or delay in provision of relevant information by either tenants or landlords Difficulties in enforcing Rental Tax on rental income on properties under Customary land Local Authorities have thinly invested in ICT Equipment such as computers. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

Conclusion This partnership is very important in achieving our objective of taxing the informal sector as well as bringing fairness and equity to our tax system. It is also aimed at increasing the revenue base and capacity building for the councils. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny

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