Increasing tax revenues from SMEs in Zambia

This challenge is in phase: Sustainable Business

How might we improve Zambia's taxation of small and medium-sized enterprises?

Only 35 of the 72 districts of Zambia offer tax offices for citizens and enterprises to declare and pay their taxes, resulting in common delays in tax payments from one to two years. Tax collection from small and medium-sized enterprises (SMEs) has been further complicated by a predominant reliance on cash as the medium of exchange and a lack of accounting records and poor bookkeeping.

The challenge was identified in cooperation with fellow GIZ projects and companies with knowledge of the local context and needs, thus identifying a challenge with a true need for innovative business solutions.

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Understand

While the informal sector including SMEs has been rapidly growing in Zambia, its tax contributions to the Zambian Government has continued to be insignificant: 70 % of the VAT revenues come from 1% of the enterprises, while only 5-10 % of the revenue comes from 90 % of the SMEs. According to estimates, SMEs generate between 40 to 60 % of GDP in Zambia.

We looked into the local context of the challenge through interviews, site visits and academic research to enable the participants to create their business ideas based on the facts and needs on the ground. Learn more about taxes and SMEs in Zambia in our report, which you can download by scrolling down.