Maravi

First Alliance, Intermarket lose appeals against ZRA

First Alliance, Intermarket lose appeals against ZRA
By Kabanda Chulu
Tuesday October 21, 2008 [04:00]

FIRST Alliance Bank and Intermarket Banking Corporation have lost appeals in the Revenue Appeals Tribunal against ZRA that it wrongly imposed taxes on income earned on government bonds. According to the notice of appeal, Intermarket stated that discount interest income on government bonds was a capital gain and therefore not a taxable receipt.

First Alliance Bank also argued that the taxation of discount on government bonds was not provided for under section 82(a) of the income tax Act.

The banks stated that this was premised on the fact that discount income was a capital gain and the Act in its present form did not recognise capital gains for tax purposes.
However, the tribunal dismissed the grounds raised by the two banks, stating that it would not have been the intention of the legislature to cast its tax net short of income on government bonds and treasury bills.

“The words in section 82(a) do not create a type of short-term financial instruments and our view is that the interpretation which the appellants are perusing will produce a wholly irrational situation and it would not have been the intention of the legislature to cast its tax net short of income on government bonds and treasury bills," stated the tribunal.

"As correctly submitted by the Zambia Revenue Authority (ZRA), the appellants are in the business of lending money and it is either they are within the Act or not and if you are not within it, you are right, if you are within it, the course is clear and it cannot be said that you are not within it because the very word of the Act may have not been violated and for these reasons, the appeals are dismissed with costs.”

Labels: FIRST ALLIANCE BANK, INTERMARKET BANK, ZRA

posted by MrK @ 4:22 AM