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Thursday, 29 November 2007

Zambia....the low tax economy

Zambia has some of the lowest tax rates in world - TTR world ranking of 6 and African ranking of 1. Here are some numbers for Zambia:

  • Total Tax Rate: 16.1%
  • Corporate Income Tax TTR : 1.7%
  • Labour Tax TRR: 10.4%
  • Other Taxess TRR: 4.0%
Just one of the many fascinating points from the latest World Bank / PWC latest report Paying Taxes 2008, the second in the yearly installment. The study, which compares tax systems of 178 countries, uses the total tax rate indicator (TTR) as a measure of the amount of all taxes and mandatory contributions borne by the business in the second year of operation, and expressed as a percentage of firms' profits. No prizes for guessing why Zambia does so well on "corporate income" (or so bad, depending on which side of the fence you are on).

6 comments:

  1. how well does Zambia do on Tax Revenue ?

    my first guess for the low rate would have been low taxation of manufacturing because other activities are more heavily taxed but then i remember the mining scandal.

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  2. I don't understand ho they can say that the rate is low.

    PAYE income tax goes from 25%-35%and kicks in from about $125,- (K500,000) per month total income. In other words, someone earning $125 per month is deducted $31,25 and takes home $93,75.

    http://www.zra.org.zm/Pay_as_you_earn2.php

    ReplyDelete
  3. PAYE is the income tax paid by employees, right ?
    i'm not sure it's part of their calculation as they're concerned about business taxation.

    and in any case, what they're saying is that the tax burden in Zambia is the lowest in Africa.

    now i don't know if that only refers to rates or takes into consideration the ease of paying taxes (which is itself a big burden all over africa).

    ReplyDelete
  4. I reproduced a chart from McKinley and Weeks 2006 UNDP report as Appendix 9 to the 'For Whom the Windfalls?' report. http://www.minewatchzambia.com/reports/report.pdf
    It's on page 77. I think that explains pretty clearly what's gone on in Zambia since 1991. Company taxes down from about 6.5% of GDP to 1%. Personal taxes up from about 1% to about 6.5%. Zambian workers are PAYEing so foreign bosses don't have to. I am afraid it is that crude. Tragic. Alastair

    ReplyDelete
  5. Company taxes down from about 6.5% of GDP to 1%. Personal taxes up from about 1% to about 6.5%. Zambian workers are PAYEing so foreign bosses don't have to. I am afraid it is that crude. Tragic. Alastair

    By the way, you guys are doing a great job.

    Well this seems like the ultimate neoliberal, corporatist dream, doesn't it?

    There is enough material here for NGOs to take to the government of Zambia, and their own supporters.

    ReplyDelete
  6. It’s a petty that most people look at Zambia from outside not understanding the potential that lay beneath the great African country Zambia is! Zambia can do far much better than how bad it is now, The problem is Luck of Visionary leaders, Dreams, hope, Tenacity to change, exposure, gluttony and the lack of good leadership skills to rebuild the country. The country has everything it needs to be one of the economic African giant. Zambia has abundant great Human and Natural resource, beside it’s the hub of south and central Africa. Its very sad that non of the aspiring leaders speak of Job creation, health care, Education, good infrastructure, changing an economy to a more effective economy and provide all necessary needs for the people. The first priorities are Job creation, Education and Healthy care; this has been neglected for long. Then we will see how the economy will do and all systems are put in place.

    ReplyDelete

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