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Smuggling, illicit trade costing Zambia K50m

NANCY SIAME, Lusaka
GOVERNMENT is losing approximately K50 million annually in revenue collection due to increased smuggling and illicit sell of cigarettes.
The British American Tobacco Zambia (BATZ) says the year- to-year growth in illicit trade incidence is of concern.
BATZ board chairperson Michael Mundashi said illicit cigarettes market in Zambia is currently estimated to be between 25 and 30 percent of the national consumption, representing approximately 500 million sticks based on unaccounted exports from Zimbabwe into Zambia.
“The sale of these tax evaded products continues to hurt the economy and runs contrary to the government’s health agenda as these products remain unregulated and untested,” he said in a statement.
Mr Mundashi said BATZ continues to work with Government and relevant authorities in a bid to address illicit trade in cigarettes.
“We hope Government will implement the necessary measures and allocate adequate resources to mitigate this threat,” he said.
He said despite the challenges faced by the company last year, the BATZ has recorded an increase in trade volume by four percent due to strong distribution, innovation and the high equity of its brands.
Mr Mundashi said revenue for last year was K195 million, representing a one percent increase, from 195.0 million recorded in 2014.
“This was mainly due to the volume and price increase taken in September for the Dunhill premium segment, and safari in the low segment, partially offset by poor product mix and higher excise,” he said.
He said operating profit was K58.7 million from K75.9 million recorded in 2014, which constituted a 22.7 percent decline.
“This was mainly due to higher product cost and excise duty as a result of the kwacha’s depreciation and partially offset by higher volumes,” Mr Mundashi said.
Mr Mundashi said the company’s contribution to the treasury in taxes including excise corporate tax, value added tax, pay as you earn and withholding tax, increased from K188.9 million in 2014, to K200.9 million last year, representing an increase of 6.4 percent.

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