The Taxation System in Zambia

Zambia is facing tax performance challenges that need to be addressed urgently. The declining tax performance in the recent past has been caused by the proliferation of tax incentives in Zambia. The premise of this study is that Zambia can equitably and efficiently raise enough resources through taxation and raise the necessary finances for development, address the needs of the poor and improve social justice. The purpose of the study is to contribute to the existing body of knowledge on the tax system in Zambia by identifying the key challenges and possible success factors. It made use of qualitative and quantitative analysis based on data compiled from various sources. The study found that the Zambian tax system has performed well In terms of meeting set targets and increasing domestic revenues in the national budget. However, it has not fully exploited other sources of revenue that can supplement tax revenues. The tax system has shown signs of becoming less productive due to the fall in trade tax revenues and a long term decline in VAT. The tax system in Zambia was found to be unfair as it puts high burden especially on the middle-class and some economic sectors. Tax regime were put in place for the informal sector but its performance has not been impressive. Administrating the informal sector has several challenges such as a cash-based economy that reduces ability to audit transactions, improper record keeping and political interference. This study has endeavoured to contribute to the existing body of knowledge on the tax system in Zambia by identifying the key challenges and possible success factors. The study will assist the JCTR to fully comprehend the taxation system in Zambia with the aim of forming knowledgeable and evidence based opinions on how it affects social justice.