Tuesday, May 07, 2013

(STICKY) Govt introduces law to curb tax avoidance
By Gift Chanda
Mon 06 May 2013, 14:00 CAT

GOVERNMENT has introduced a new law allowing the Central Bank to regulate and monitor foreign exchange flows in order to curb tax avoidance.

The Statutory Instrument (SI) number 32 of 2013, which was signed by finance minister Alexander Chikwanda last week, will take effect on May 16 this year, according to Ministry of Finance public relations officer Chileshe Kandeta.

"The main objective of the Statutory Instrument is to monitor Balance of Payments in a transparent and accountable manner," Kandeta stated in an emailed statement yesterday.

A report by a US anti-graft watchdog recently revealed that almost US$9 billion was illicitly siphoned out of Zambia over the last decade.

The new regulation, apart from improving transparency standards in managing the Zambian financial system, would also protect the kwacha from manipulative practices by some market players.

The new law will apply to financial service providers, importers and exporters of goods or services exceeding US$10,000 or the equivalent in other foreign currency", Kandeta explained.

"In relation to outflows, BoZ shall monitor the value of any imported goods, the value of any imported services, including management services, and any amounts remitted out of Zambia whether unrequited (gratuitous) or otherwise," he stated.

"It shall also monitor the amounts, if any, deposited abroad but generated by a person resident in Zambia from the supply of goods produced or services rendered in Zambia, loans granted to non-residents as well as trade credits from non-residents. Others are investments made in the form of equity outside Zambia by persons resident in Zambia and investments made in the form of debt securities outside Zambia by persons resident in Zambia.

BoZ will also monitor the value of any goods or services exported out of Zambia, profits or dividends received in respect of investments abroad and borrowings from non-residents, among others," added Kandeta.

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