In particular focus on Box 4.1 which highlights income tax incentives by sector in Zambia.  please discuss each of the sector incentives highlighted in this section and state whether you agree with the current incentive policy and amount of incentive or if you would modify or eliminate the incentives for that sector and why. Be specific regarding any adjustments you would make and why.

Transcribed Image Text:

Sector Agriculture Manufacturing Tax incentives . . Income tax is at a reduced rate of 15%. Farm improvement allowance is at 100% on fencing, brick or stonewall and an allowance of K10 million for farm dwelling occupied by farm workers. Farm works allowance is at 100% for the full cost of stumping and clearing, works for prevention of soil erosion, boreholes, wells, aerial and geophysical surveys and water conservation. Dividends paid out of farming profit are exempt from tax for the first five years the distributing company commences farming. Development allowance is given for any person who incurs expenditure on the growing of tea, coffee, or banana plant or citrus trees or other similar plants or trees. An allowance of 10% of such expenditure shall be deducted in ascertaining the gains or profits of that business. Income from chemical manufacturing of fertilizers is taxed at a reduced rate of 15%. Capital allowances on industrial buildings used for the purposes of manufacturing shall be entitled to a deduction of 10% in case of low cost housing (low cost housing does not exceed K20 million) and 5% for other industrial buildings of the cost of the building. Persons who incur capital expenditure on an industrial building are entitled to claim a deduction called initial allowance at 10% of the cost incurred in the charge year in which the industrial building is first brought into use. Any person who incurs capital expenditure on an industrial building is entitled to an investment allowance at 10% of such expenditure in the first year used for manufacturing purposes. Sector Agriculture Manufacturing Tax incentives . . Income tax is at a reduced rate of 15%. Farm improvement allowance is at 100% on fencing, brick or stonewall and an allowance of K10 million for farm dwelling occupied by farm workers. Farm works allowance is at 100% for the full cost of stumping and clearing, works for prevention of soil erosion, boreholes, wells, aerial and geophysical surveys and water conservation. Dividends paid out of farming profit are exempt from tax for the first five years the distributing company commences farming. Development allowance is given for any person who incurs expenditure on the growing of tea, coffee, or banana plant or citrus trees or other similar plants or trees. An allowance of 10% of such expenditure shall be deducted in ascertaining the gains or profits of that business. Income from chemical manufacturing of fertilizers is taxed at a reduced rate of 15%. Capital allowances on industrial buildings used for the purposes of manufacturing shall be entitled to a deduction of 10% in case of low cost housing (low cost housing does not exceed K20 million) and 5% for other industrial buildings of the cost of the building. Persons who incur capital expenditure on an industrial building are entitled to claim a deduction called initial allowance at 10% of the cost incurred in the charge year in which the industrial building is first brought into use. Any person who incurs capital expenditure on an industrial building is entitled to an investment allowance at 10% of such expenditure in the first year used for manufacturing purposes.

Answer rating: 100% (QA)

Certainly I will provide an analysis of the income tax incentives by sector in Zambia as highlighted in Box 41 I will discuss each sector and express ... View the full answer