. Chikwanda

By SYLVESTER MWALE –
FINANCE Minister Alexander Chikwanda has proposed to increase capital allowance for power generation equipment to 50 per cent from the current 25.
The move, which would take effect on January 1, 2016 is aimed at encouraging the development of sustainable and alternative source of energy amid the power crisis in the country.
Mr Chikwanda said when he presented the 2016 National Budget in Parliament yesterday that he had also extended the 10-year period for carrying forward losses to companies generating electricity using other sources of energy such as wind and solar.
Until now, the carrying forward of losses only applies to companies that are generating electricity using hydro and thermal.
The minister also announced the increase in the period for claiming input Value Added Tax (VAT), as an intending trader for electricity generation, to four years from the current two.
Mr Chikwanda removed five per cent customs duty on pitch coke as well as the 15 per cent customs duty on petroleum coke.
“I am confident that these tax concessions will encourage capital investment and act as a catalyst to enhancing the development of and diversification of the energy sector,” he said.
Mr Chikwanda also announced the reduction of excise duty on clear beer to 40 per cent from 60 per cent in an effort to spur local manufacturing as well as promote investment and curb smuggling.
He removed the 15 per cent and five per cent customs duty currently applicable on greenhouse and rose seedlings, respectively. The decision was made to promote economic diversification and expansion of the non-traditional exports.
The minister announced the removal of the withholding tax applicable on the discount income but maintained it on coupon income.
The measure was aimed at spurring vibrancy in the financial markets and to address the current low level of liquidity in the secondary market.
Property Transfer Tax was reduced to five per cent from 10 while customs duty on transmission equipment for television and radio has been suspended in order to reduce the cost of upgrading existing digital migration infrastructure. The Government will, however, forgo K138 million by implementing the measure.
Mr Chikwanda increased customs duty on selected categories of motor vehicles except buses and trucks and introduced a surcharge of K2,000 on motor vehicles older than five years from the year of manufacture.
“Mr Speaker, the estimated gains in 2016 as a result of these measures will be K93.9 billion,” he said.
Mr Chikwanda also increased the specific excise duty rate on cigarettes to K200 from K90 per 1,000 sticks and introduced incentives to support local manufacturers of cigarettes.