The Zambia Revenue Authority (ZRA) has been implementing a tax amnesty program since 1st October 2022. According to the Ministry of Finance and National Planning, this is to provide relief to individuals, businesses, and other entities following the adverse effects of COVID-19. The program covers all tax types and provides amnesty on penalties and interest accumulated up to 30th September 2022.
On 31st March 2023, the Minister of Finance and National Planning (MOFNP) announced that ZRA had collected 2.6 billion Kwacha from the tax amnesty exercise with over 11,700 applications received. According to the minister, the response was overwhelming since the exercise kicked off in October 2022. The amnesty program, which was scheduled to close on the 31st of March 2023, has now been extended for an additional 3 months until the 30th of June 2023.
This extension of the Tax Amnesty program provides taxpayers who missed the earlier deadline an opportunity to enjoy tax amnesty on their tax liabilities. Taxpayers must make efforts to determine their eligibility and assess their tax liabilities. Taxpayers must also register for the program and make accurate declarations. By taking these steps, taxpayers can benefit from the Tax Amnesty program by paying their tax arrears without penalties and interest, regularizing their tax affairs, and avoiding enforcement actions by the revenue authority.
However, there still remains a high likelihood that even with the extension in place, the program may still not reach maximum participation, as some taxpayers may not be aware of the program while others may not just want to take advantage of it. Undesirably, the Tax Amnesty program could also create a moral hazard for taxpayers who may feel encouraged to engage in non-compliance, feeling that the penalties and interest can be waived through an amnesty program.
To enhance the Tax Amnesty program, the revenue authority should increase awareness of the program possibly by launching targeted marketing campaigns to educate taxpayers on the benefits of the program. The application process must be evaluated to ascertain potential areas of improvement. For example, the application process for tax amnesty for customs liability can be improved by providing more clarity and transparency on the requirements, criteria and for processing tax amnesty applications, as well as ensuring that the process is accessible and equitable for all taxpayers. The application process in general must also outline any appeals or dispute resolution mechanisms for taxpayers who may disagree with the ZRA’s decision on their tax amnesty application. The process can also be simplified for small taxpayers.
Additionally, to encourage participation, the revenue authority could also consider increasing penalties for non-compliant taxpayers after the deadline for the Tax Amnesty program has passed. This can provide an incentive for taxpayers to take advantage of the initiative and avoid higher penalties. Beyond the Tax Amnesty program, the revenue authority must boost its support provision to taxpayers who are struggling to meet their tax obligations, such as providing advice on how to comply with tax regulations or providing payment plans for taxpayers who are struggling to pay their taxes.
In conclusion, the tax amnesty program introduced by MOFNP has proven to be successful with a substantial amount of revenue collected and a high number of applications received. The extension of the program provides additional opportunities for taxpayers to regularize their tax affairs without penalties and interest, thereby avoiding enforcement actions. However, there is still room for improvement, particularly in terms of increasing awareness of the program and improving the application process. The revenue authority must also consider enhancing its support provision to taxpayers struggling to meet their tax obligations beyond the tax amnesty program. Overall, the tax amnesty program can be a useful tool in providing relief to individuals and businesses.
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