PROBE HH TAX DEAL

... did he de­clare his con­flict­ing in­ter­est in the ho­tel whose sale he was ne­go­ti­at­ing on be­half of the govern­ment?

Daily Nation Newspaper - - HOME NEWS -

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.

Mr Chanda

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