[{"bbox": [96, 123, 1135, 283], "category": "Text", "text": "process will require broad stakeholder consultations, including the private sector, civil society and academia. As an intermediate step, and with the aim to reach a key IMF benchmark of achieving a tax-to-GDP ratio of 22.5% by 2025, the government is currently developing a Revenue Mobilization Action Plan for the period 2023-2025 with the assistance of the current BMZ/EU programme. This plan will entail a number of tax policy and tax administration measures aimed at boosting public revenues that stood at 20.4% and 20.6% to GDP in 2020 and 2021 respectively."}, {"bbox": [96, 294, 1135, 636], "category": "Text", "text": "The MoFNP is responsible for formulating policies on tax and non-tax revenue generation. Currently, the MoFNP is facing challenges to fully fullfil this mandate, due to significant shortcomings in its structure and capacities. Though sufficiently staffed, the unit in charge of tax policy formulation is distracted by tasks that are not within their mandate and lacks dedicated processes and skills for a more strategic design of tax policies. This includes a lack of instruments to forecast the impacts of individual tax policy changes on public revenues, but also on factors such as economic growth and employment, wealth and income distribution, gender equality or environmental and climate impacts. In addition, the tax policy formulation process and the revenue targets derived from these policies are not well-integrated and aligned into the Medium-Term Expenditure Framework (MTEF) process. The MoFNP also manages tax expenditures, such as tax exemptions, tax holidays or preferential tax rates, which are the cause for significant amounts in unrealised revenues each year. Currently, the MoFNP does not report on the revenue implications of these tax expenditures or to which extend they achieve their intended objectives of stimulating economic activities. With the support of USAID, MoFNP is conducting a cost-benefit analysis of existing tax incentives."}, {"bbox": [96, 651, 1135, 758], "category": "Text", "text": "To perform the task of revenue collection, statutory bodies have been established on behalf of the MoFNP. These include the following institutions: Zambia Revenue Authority (ZRA), Ministry of Lands and Natural Resources (MoLNR), Ministry of Home Affairs (MoHA), Ministry of Commerce, Trade and Industry (MoCTI), the Road Development Fund, etc."}, {"bbox": [96, 770, 1135, 981], "category": "Text", "text": "The overall performance of revenue collection for the period 2018 to 2020 was respectively at between 104%, 106% and 90%. Except for 2020, both tax and non-tax revenue have performed above target. Average revenue distribution is roughly 80% tax, versus 20% non-tax, while grants represent less than 2% of total revenue. The ZRA collects the bulk of government revenues. While aggregate revenue has been performing well, there is a high level of variance in revenue composition, which points at low performance in forecasting tax and non-tax revenue. The high volatility of the local currency against other major currencies also has an impact on revenue performance, particularly for trade taxes and consumption taxes such as excise duty. There are no expenditure adjustment mechanisms to match the revenue flows."}, {"bbox": [96, 994, 1135, 1472], "category": "Text", "text": "Overall, ZRA has a robust tax-administration structure and has made good progress with the modernization and automation of revenue collection processes. The 2022 TADAT (Tax Administration Diagnostic Assessment Tool) results show however that on all but one of the performance indicators, the organization's progress has either stagnated or even slightly reversed since the last TADAT assessment. This result is partly due to the fact that many reform efforts have yet to be fully implemented throughout the entire organization and across the division between direct and direct taxation. Digitalization has been at the forefront of ZRA's reform initiatives, but serious challenges remain. The organization's backbone system, TaxOnline II, is commendable for being a home-grown IT-solution, but suffers from shortcomings, especially in the area of taxpayer data management. The introduction of the Bulk Intelligence Data Analysis (BIDA) system will significantly increase ZRA's ability to effectively analyse taxpayer data and identify cases of non-compliance. To fully exploit the system's potential, ZRA needs to be connected to other government agencies and their taxpayer data sources through the government service bus. The Authority is relatively transparent and has developed a stronger focus on encouraging voluntary compliance by providing an increasing range of taxpayer services as well as taxpayer information and support through various channels. Yet, many of the \"offline\" services still remains only available in urban centers where ZRA has offices. To address this challenge, the organisation has initiated a more systematic cooperation with the local Councils. Another persistent challenge for ZRA is the timely management of VAT refunds that have accumulated to unsustainable levels. In addition, the authority is struggling to effectively manage its high levels of tax arrears. Information on redress processes and procedures is widely available, including appeals to the tax appeals tribunal."}, {"bbox": [96, 1484, 1135, 1619], "category": "Text", "text": "During budget execution, inter-agency and MoFNP inter-departmental communication and coordination is limited, and the revenue collecting agencies provide little or no information on revenue flows and revenue forecasts are not prepared. The recording of actual non-tax revenue is currently done manually at MPSA level as the IFMIS revenue module is not loaded in the system. With a manual revenue collection reporting system, and limited capacity in revenue estimates, in-year revenue forecasts are not prepared. The Auditor General reports weak"}, {"bbox": [1038, 1681, 1143, 1705], "category": "Page-footer", "text": "Page 9 of 31"}]