ZRA urged to expedite VAT refunds for energy sector to alleviate crisis

ZRA urged to expedite VAT refunds for energy sector to alleviate crisis

By Mast Reporter

The chairperson of the Planning and Budgeting Parliamentary Committee has called on the Zambia Revenue Authority (ZRA) to prioritize the refund of Value Added Tax to companies in the energy sector to help mitigate the energy crisis in the country.

Speaking during a Study Tour on Domestic Resource Mobilization (Value Added Tax) of the Copperbelt Energy Corporation (CEC) Plc, Saturday, in Kitwe, Fred Chaatila said prioritizing VAT payments to such companies would help them re-invest the money in other energy solutions.

Chaatila observed that there should further be a mechanism where companies that had a history of being tax compliant, like CEC, are exempted from audit rigidities.

“We are struggling with the energy crisis, and these producers have other solutions that don’t necessarily rely on hydro. For me, that’s where an institution like ZRA needs to classify these taxpayers and prioritize them. If, for example, CEC comes with a claim, which if paid, will be used to reinvest in other power solutions, prioritize them,” he said.

“Out of the K17.8 billion that ZRA has audited, about K2.8 billion is non-mine, which means the rest is related to the mines, and that’s where CEC also falls.”

He said that the CEC tour was insightful in appreciating the gaps in tax collection.

And CEC Chief Financial Officer, Mutale Mukuka said that in 2024 alone, the company contributed $94 million to the treasury.

However, he said the company is currently owed K13 million in VAT refunds by ZRA.

Mukuka stated that in the last couple of years, the refunds had been taking a long time to be paid out a position that was negatively impacting the working capital and had the effect of increasing costs.

He noted that the implementation of the new system, including the automation of tax administration at ZRA, had taken too long.

Mukuka said a result, it had led to unintended negative consequences for the industry, such as reconciliation challenges on tax balance accounts within the ZRA system.

He emphasized that tax compliance and clean, reconciled records at ZRA were critical for lender due diligence an essential aspect of the finance-raising process which was currently being adversely affected.

“We are certainly not asking for concessions or rebates. We remain committed to paying our fair share of taxes to the Treasury and recognize the importance of partnering in the provision of public services. What we are asking is for the government to expedite the VAT refund process,” he said.

“Policy consistency enables smooth planning and reduces economic uncertainties. Therefore, we would like to propose through you that the government consider establishing a clear framework for VAT refunds, including service level commitments to affected taxpayers.”

He stated that the company had $200 million worth of approved projects for 2025 and a project pipeline valued at $400 million for the medium term.

All of these could be affected by delays in VAT refunds if the issue is not resolved, potentially impacting the projects negatively.

Among the MPs that toured the CEC facility were Brenda Nyirenda, Machila Jamba, Koonwa Simuunji, Anthony Mumba, Kalalwe Mukosa, Jeffrey Murebwa, David Mabumba, Oliver Amutike, and Mayungo Simushi.