BAZ Proposes Tax Reforms to Boost Business Efficiency
The Bankers Association of Zambia (BAZ) has proposed several key tax reforms for the 2024 national budget, aimed at reducing compliance costs and administrative burdens on businesses.
In a detailed presentation, BAZ Chief Executive Officer Leonard Mwanza highlighted the need for exemption from Withholding Tax (WHT) for consultancy services provided under business-to-business (B2B) arrangements.
Mr. Mwanza argued that such an exemption would streamline operations and lower costs for businesses involved in these transactions.
“Exempting WHT for B2B consultancy services will not lead to revenue leakage, as both parties are registered for income tax and contribute through the existing provisional tax system,” Mr. Mwanza explained.
He emphasized that the WHT mechanism should still be applied in business-to-customer (B2C) arrangements, where customers are individuals or entities not registered for income tax. “Legislation should be adjusted to ensure WHT is only applicable to local B2C management or consultancy services,” he added.
Additionally, BAZ proposed the exemption of WHT on interchange fees or similar fees incurred to facilitate or settle electronic transactions.
Mr. Mwanza stated that this exemption would clarify existing legal ambiguities and help maintain lower transactional costs, promoting a more digital or cashless economy.
“In line with our goal of advancing a digital economy, exempting WHT on electronic transaction fees will significantly reduce costs and encourage more electronic transactions,” said Mr. Mwanza.
BAZ also recommended that the interest component of finance leases be zero-rated. This measure, according to Mr. Mwanza, would correct distortions in the VAT mechanism related to leases, making finance leases more affordable and thereby boosting their uptake and sales.
“Zero-rating the interest component on finance leases will make asset acquisition more accessible, supporting business growth and ultimately benefiting the broader economy,” Mr. Mwanza stated.
He stressed the importance of facilitating cheaper financing options to help businesses acquire essential assets.
