It is refreshing to read Elias Chipimo's insightful contribution on the VAT refund - see the article VAT refunds to mining exporters . Our only observation is that what he has written is factually correct. And we would like to offer some additional points that perhaps he could have made more clearer.
First, the way VAT is applied is an issue of "international best practice" rather than international legality. Every country is entitled to apply VAT refunds in a way that is consistent with its domestic policy and laws. Whether you follow best practice is a question of knowledge and competition rather cast iron laws.
Secondly, the article could have more explicitly noted that ZRA is merely trying to enforce the law and regulations as it understands them today. The fact that previous Finance Ministers have coerced ZRA to act in a certain way is irrelevant to the discussion. We need to distinguish policy and best practice from the legal position of the actors involved. We felt that this distinction was not adequately addressed in the article.
Finally, we are skeptical with Elias Chipimo's suggestion that Zambia cannot remove zero rating of VAT on mining producers because it allegedly goes against "the principle of a consumption tax". It seems what Elias Chipimo means is that taxing an input does not make economic sense. But we must remember that governments around the world tax input costs in many areas.
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