By 
The Insurers Association of Zambia (IAZ) has proposed the abolishment of withholding tax on interest earned on government treasury bills and bonds to enhance and develop financial markets.
Executive Director, Nkaka Mwashika, in his submission for the 2024 national budget framework in Lusaka recently proposed that government must consider abolishing withholding tax on interest earned on its securities.
Mwashika explained that current tax on interest on government securities negatively affected the growth of pension funds and member’s benefits especially for Defined Contribution Schemes.
“There will be a loss in government revenue in the short run, but the medium to long term benefits of an enhanced and development financial market which is a life blood of any economy will mitigate the short-term losses,” he submitted.
Mwashika also submitted that government must consider domestication of Marine Insurance as it would bring considerable revenue to the treasury once this matter was enforced.
He said the figures would depend on the mode taken whether it was a phased or wholesale approach.
“The insurance industry and the Zambian economy, is losing millions of Kwacha every year through the payment of insurance premiums on imports, as these come into the Country on a Cost Freight and Insurance basis (CIF), instead of importing on an Free on Board (FOB) basis, while exports go out of the country on FOB basis.
“Zambia lost over K1.5 billion between 2009 and 2015 because of this practice. Some countries in the region are upon realising the leakage of forex, are now moving towards stemming this practice,” Mwashika said.
He pointed out that a quick check on the various websites for Vehicle exporters from Japan revealed that Insurance premium is charged at between three to five percent of the value.
This, he stated, was even more than the prevailing marine insurance rates in the country that are between the ranges of 0.75 percent to 1.5 percent, depending on the risk profile.
“All imports and exports must be insured by an Insurer licenced by the Pensions and Insurance Authority provided for under the Insurance Act. Equally all reinsurances of Marine business be reinsured with a reinsurer licenced or authorised under protocol by the regulator in Zambia.
“A phased approach could be adopted starting with importation of Motor Vehicles. The Zambia Revenue Authority should be made the lead implementing agency in the enforcement,” Mwashika said.
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