PROBE HH TAX DEAL
... did he declare his conflicting interest in the hotel whose sale he was negotiating on behalf of the government?
FOR 20 years now, the Panama registered but Livingstone based, Sun International Hotel, jointly owned among others by Hakainde Hichilema and his proxy chief Mukuni, has been paying 15 percent corporate tax instead of 35 percent that all companies pay. The Zambia Revenue Authority (ZRA) has now abolished the “incentive” which was provided under the 1999 Development Agreement, saying that it gave unfair advantage to Sun Hotel. The provision would have run in perpetuity as there was no closure clause. Now former UPND spokesperson Edward Mumbi has called for a comprehensive forensic investigation to determine how Mr Hichilema, as the chief negotiator on behalf of government, managed to sell the former Intercontinental Hotel to Sun International a company in which he has shares. The probe, he said, should also determine how the Mr Hichilema negotiated for Sun International to be paying only 15 percent corporate tax instead of 35 percent and to determine the terms under which the transaction took place. Mr. Mumbi also wondered whether it was true that Zambia Privatization Agency documents revealed that Mr Hichilema, in his role as negotiating chairman selected the lowest bid by Sun International instead of competing bids of $20 million by Victoria Falls Travel Bureau, $10 million by Stocks and Stocks Ltd and $9.4 million by Marassa Holdings Ltd, which were rejected in preference to the lowest bid of $5.65 million by Sun International of South Africa was chosen. “Is this true and if so what will the Government do with this revelation?” he asked. In his budget brief, ZRA Commissioner General, Kingsley Chanda proposes amending paragraph 5(c) of the charging Schedule in order to abolish the tax incentive that was granted to sun International Limited under the 1999 Development Agreement. “This provision gives an incentive of paying company income tax at the rate of 15 percent to Sun International Limited and its successors leading to distortions. The incentive does not have a sunset clause and runs for an indefinite period, therefore this incentive gives an unfair advantage to Sun International Limited as other players in the tourism sector pay company tax at the rate of 35 percent. The removal of this provision will level the playing field as Sun International Limited and its successors will no longer pay company tax at the rate of 15 percent,” Mr Chanda said. Mr Mumbi charged that if it was discovered that there was a conflict of interest, the property question should be reverted back to the state, because it would have been disposed of fraudulently. Did the UPND leader, Mr Hichilema declare interest as the negotiating chairman during the privatization of the company ? Mr Mumbi questioned. And former UPND vice president for politics, Canisius Banda also called for quick investigations into the awarding of such ‘unfair’ tax incentives. “For 20 years, through the Development Agreement of 1999, whose origins require investigating, Hakainde Hichilema and his Sun International Limited were given significant concessions by being permitted to pay only 15 per cent Corporate Tax when all other actors in the tourism sector paid 35 per cent,” he said. Mr Mumbi wondered whether there was a cartel within the system that had helped the Sun International Limited owners to secure such deals with government. He charged that the whole syndicate should be brought to book if found wanting. Mr Mumbi questioned how important Sun International Hotel in Livingstone was than other entities operating in Zambia for the company to be given such a tax incentive. He reiterated that it was unfair for Sun International to be paying 15 percent corporate tax when other players in the sector where paying 35 percent.