The Zambia Institute for Policy Analysis and Research (ZIPAR) discloses that against a target of K10.6 billion, income tax collections amounted to K10.1 billion.

The institute says this was due to lower than projected collections for both mining and non-mining company income tax, pay as you earn, and withholding tax.

ZIPAR Research Fellow Florence Muleya says lower-than-projected performance of income taxes in the period is reminiscent of poor performance in 2017 and points to the sluggish economic growth experienced since 2015, and a multiplicity of tax rates and incentives.

Ms Muleya says sluggish economic growth continues to prevail at present.

“GDP growth was recorded at 2.6% in first quarter of 2018, the lowest growth since fourth quarter of 2015, and a far-cry from the strong growth experienced before 2015,” she said.

She adds that the low growth has resulted in declining taxable income and that by not paying attention to, and sufficiently promoting private sector performance, the Government is now missing out on taxable income.

Ms Muleya states that against a target of K5.5 billion, VAT revenue amounted to K7.9 billion in the first 6 months of 2018.

She further states that the measures introduced in 2017 and 2018, including withholding the tax at source by appointed agents, seem to be paying off.

She however notes that this outstanding performance may not be all due to the measures outlined.

Ms Muleya explains that the Zambia Revenue Authority now makes pre-VAT audits for firms perceived to be risky before refunds can be effected.

She recalls that previously, all firms could claim VAT before an audit was done but that now, some firms (especially exporting firms) can only claim VAT after being audited.