Mixed feelings on new tax measures

Sosten Gwengwe

Tax experts have expressed mixed views on tax measures the government intends to implement in the 2023-24 financial year.

Minister of Finance and Economic Affairs Sosten Gwengwe presented the financial blueprint to Parliament last Thursday, highlighting a number of tax changes.

Among other things, Gwengwe indicated that the government is removing taxes on importation of electric motor vehicles and electric motor vehicle charging systems, reducing excise tax on airtime and data from 10 percent to 7.5 percent and introducing a five percent excise tax on roofing tiles coated with acrylic paint.


On income tax measures, Gwengwe announced a 10- year and duty-free importation of various items including machinery and building materials for mega-farm investments, removal of the 40 percent income bracket in Pay As You Earn (Paye) and reintroduction of the three percent withholding tax on farm produce sold by farmers’ clubs with a one percent final tax as is done for tobacco sold by farmer clubs.

Senior Tax Consultant at EK Tax Consultants Emmanuel Kaluluma said the country is going through difficult times and drafting the budget must have been a difficult task for the Treasury.

However, Kaluluma wondered the reasons behind removal of the 40 percent Paye bracket, saying it contradicts the purpose of tax, which is to take from the rich to share with the poor.


“Realistically, for big investments, it takes five to 10 years before they start paying income tax because of capital allowances. So, it means they are in zero taxable income; so, the only tax we can get is when they employ people,” Kaluluma said.

MM Tax Advisory Services Managing Partner Misheck Msiska commended the government for the 10-year tax holiday, saying it gives local investors a competitive edge.

He further commended the government for removing the 40 percent bracket, saying it was discriminating against the employed when others running sole proprietorship businesses were taxed at 30 percent.

“The increase in the tax rate for contractors from 4 to 10 percent, I think, is not a good move, especially because they cannot get an exemption certificate; so, 10 percent is high. Real contractors do not make huge margins; so, we might just end up having more of them having tax refunds at the end of the year and their cash flow will be seriously affected,” Msiska said.

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