Lusaka - Zambia will pay off all outstanding legitimate VAT refunds, but plans to press ahead with a new non-refundable sales tax despite criticism from some businesses as it strives to cut debt, its finance minister said on Friday.
In a speech in Lusaka, Finance Minister Margaret Mwanakatwe told business leaders, who are involved in extended consultations over the tax change, that the move was necessary to stop "debt escalation". The new sales tax was meant to have been introduced on April 1, but has been postponed until July to allow more consultation.The International Monetary Fund has repeatedly warned Zambia is struggling with high debts and shrinking foreign currency reserves."Why should the government go through this pain of refunds every month? Do I need to go through that pain? No. Let's bring up a simpler, more efficient system," she said.
In January, for example, Canada's First Quantum Minerals, scrapped plans to layoff 2,500 workers in Zambia, saying it would continue dialogue with the government over the tax changes.