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CONTENTS

VIEWS: 3 PAGES: 8

									2009
PROFILE

The Zambia Revenue Authority (ZRA) was established on 1 st April 1994 as a corporate body, under
the 1993 Act of Parliament. Under this Act, ZRA is charged with the responsibility of collecting
revenue on behalf of the Government under the supervision of the Minister of Finance and National
Planning.

A governing Board oversees the operations of ZRA. The membership of this board includes: the
Secretary to the Treasury; Permanent Secretary in the Ministry of Legal Affairs; Governor of the Bank
of Zambia; representatives from the Law Association of Zambia, Zambia Association of Chamber of
Commerce and Industry, Bankers’ Association of Zambia, Zambia Institute of Certified Accountants;
and two private persons nominated by the Minister of Finance and National Planning. The Board
elects the Chairman of the Board from amongst its members. The Chief Executive of the ZRA is the
Commissioner General who is appointed by the President of Zambia.

STRUCTURE

The Zambia Revenue Authority is an autonomous body headed by the Commissioner General and is
supported by three Commissioners. The Commissioners head the following divisions: Domestic
Taxes, Customs Services, and Corporate Services. There are also four other support divisions headed
by Directors. These are Research & Planning, Human Resource, Internal Audit and Finance. The
treasury functions are incorporated in the Finance Department under the Corporate Services Division.
There is also an Internal Affairs unit under the Commissioner General’s office that looks at staff
integrity.

ROLES OF ZAMBIA REVENUE AUTHORITY

1. To assess, charge, levy and collect all revenue due to Government through effective
   enforcement and compliance strategies. The taxes administered are:
      Value Added Tax
      Customs Duties
      Excise Duties
      Income Taxes
      Property Transfer Tax
      Mineral Royalty
      Medical Levy
      Motor vehicle Fee


2. To design and implement business strategies that will ensure that all revenue collected is as
   soon as is reasonably practicable credited to the Treasury
   All taxpayers are given an official receipt for taxes paid. The money so collected is banked with
   commercial banks or central bank in accordance with the policy.
3. To increase and sustain the growth and productivity of revenue by developing systems and
   procedures that encourage investment and growth in the country
4. To improve performance by attracting, retaining and motivating human resource
5. To promote good governance through the design and implementation of policies, systems and
   procedures
6. To improve service delivery by implementing the risk management process
7. To improve operational efficiency by creating, strengthening and streamlining inter-
   institutional linkages and partnerships.


TAXES ADMINISTERED.


      Taxes and duties administered by individual divisions include the following:

(i)      Direct Taxes
                Company Tax       : This is tax on the gains and profits for all incorporated
                                     businesses whose turnover is K200 Million and above, the rate of
                                     tax is at 35%.
                                      For income from farming, tax is @ 15%
                                      For companies engaged in mining operations, and they are holders
                                      of large scale mining licenses for base metals, tax is @ 30%.
                                      Other mining companies the tax rate is 35%.
                                      For Charitable organisations on income from business, tax is @
                                      15%
                                      For non traditional exports, tax is @ 15%
                                      For income from the manufacturing of fertiliser, tax is @ 15%
                                      Banks and Financial institutions, the first K250 Million is taxed
                                      @ 35% and anything above K250 Million is taxed @ 40%


                Individual Tax    : This is tax on the net profits of sole traders and partnerships.
                                     Taxation of the same is as follows:
                                       First   K8,400,000    @       0%
                                       Next    K7,620,000    @       25%
                                    Next K33,180,000 @             30%
                                    Balance                 @      35%
                Turnover Tax : This is tax on gross turnover (i.e. earnings, income revenue,
                                   takings, yield and proceeds) which is below K200 Million
                                   threshold. The rate of tax is 3%.
                Pay As You Earn : This is tax levied on income from employment (emoluments). All
                                   employers are required to deduct tax from payments of
                                   emoluments made to their employees whether or not the have
                                   been directed to do so by ZRA (section 71 of the Income Tax Act
                                   Cap 323). Taxation is as follows:
                                       First   K 8,400,000.00         @      0%
                                      Next     K 7,620,000.00       @     25%
                                  Next K33,180,000.00            @ 30%
                                 Balance                         @      35%
             Property Transfer Tax : This is tax charged when property is transferred from one
                                      person to another, and it is levied on the realisable value of
                                      the property.
                                             The rate tax is 3%.
             With-Holding Tax        : This is a withholding tax charged on Rental Income,
                                        Consultancy fees, Management fees, Commissions, Royalties,
                                        Dividends, Contractors, Public entertainment, interest earned
                                        on a savings account and income for non-resident contractors.
                                        The rate of tax is 15% and it is not the final tax, except for
          non-resident contractors.
             Mineral Royalty Tax : This is a payment received as consideration for the extraction
                                    of minerals (Section 133 of the Mines and Minerals
                                    Development Act)
                                    The tax rates are as follows:
                                    - 3% of norm value of base metals produced or recoverable
                                    under the licence
                                    - 3% of the gross value of the industrial minerals produced or
                                    recoverable under the licence
                                    - 3% of the gross value of energy minerals produced or
                                    recoverable under the licence
                                    - 5% of the norm value of precious metals produced or
                                    recoverable under the licence
                                    - 5% of the gross value of the gem stones produced under the
                                    licence


(ii)   VAT

          Domestic Vat:              This is Value Added Tax charged on every taxable goods and
          services that are supplied by VAT registered businesses. This is an indirect tax on
          consumer expenditure, hence borne by the consumer. For VAT purposes, sale or disposal
          of goods or rendering of services is called supplies.

          A taxable supply is a supply of goods or services made by a taxable supplier, in the course
          or furtherance of a business.
          A taxable supplier is a person who is registered or required by the VAT Act to be
          registered and includes a tax agent or recipient of imported services.

          Taxable supplies are subject to VAT at one of two rates:
          Standard – rate: i. e. 16% applies on most supplies of goods and services.

          Zero – rate: i. e. 0% applies on some specified goods and services such as exports,
medical supplies, school exercise books, energy saving appliances and raw materials for
manufacturing nets.
          Exempt supplies are items specifically excluded by law from liability to VAT, (i.e., no
VAT is charged) even when supplied by a registered business.
Examples of exempt supplies include:
    Funeral services
    Health supply services
    Educational services
    Gold in bullion form
    Water supply services
    Conveyance of domestic property
    Domestic Kerosene
    Transportation of persons by road, air, rail and boat
    Financial services
    Insurance services and ancillary services

Vat can only be charged by VAT registered businesses that in turn are eligible to VAT paid on their
business purchases and expenses. There are two types of VAT registrations:

      Statutory Registration – where the taxable turnover of a business exceeds or is likely to
       exceed K200 million per annum or K50 million per quarter, it is a statutory requirement for
       such a business to register for VAT, i.e. it is mandatory for such a business to register for VAT.
      Voluntary registration – Businesses making taxable supplies but whose taxable turnover does
       not meet the registration threshold (K200 million per annum or K50 million per quarter) may
       opt to register for VAT under voluntary registration if they meet the prescribed conditions.

When a registered business supplies goods and services to customers, VAT is charged and collected
by the business. The VAT so charged is called output tax. On the other hand, registered businesses
claim the VAT that they pay on purchases of taxable goods and services for their businesses. The tax
so claimed is referred to as input tax. The net of output and input tax is paid to ZRA or refunded to
the taxpayer as the case may be. Therefore, a business dealing in taxable supplies can claim input tax,
while a business dealing in exempt supplies will not be required to register for VAT and therefore
cannot claim the input tax. For example, educational services from nursery to secondary school are
exempt. A primary school will not register for VAT and will not claim any input tax.




TAXPAYER DUE DATES

The Income Tax Act Cap 323 provides for dates when returns are due for submission and tax is due
and payable as follows:

Self Assessed Tax
The taxpayer is required to submit an Income Tax return and pay the balance of tax due, if any, by 30th
September each year (Section 46 of the IT Act).

Assessed Tax
Assessed Tax arises where an Inspector of Taxes has raised an assessment under sections 63 and
64[(a),(b)] of the IT Act. Such tax is due and payable 30 days after the date of issue of an assessment.
However, an assessment raised under section 64 (c) is payable on demand.
Provisional Tax
Under section 46 of the IT Act, Provisional Tax is payable in four quarterly instalments as follows:

1st instalment is due on 30 th June and payable on or before 14 th July

2nd instalment is due on 30 th September and payable on or before 14 th October

3rd instalment is due on 31 st December and payable on or before 14 th January

4th instalment is due on 31 st March and payable on or before 14 th April

It should be noted that the 1st listed above are payable in the current calendar year, that is to say, the
year for which the return is made, and the fourth instalment falls in the following calendar year.
However, all the four instalments are due and payable in the same charge year.

Paye
All employers are required to deduct tax from payments of emoluments made to their employees,
whether or not they have been directed to do so by the Zambia Revenue Authority. (Section 71 of the
Income Tax Act and Paye Regulations)

The Paye tax so deducted must be remitted by employers to Zambia Revenue Authority by the 14 th of
the month following deduction..

Turnover Tax
Payment is due by the 14 th day of the subsequent month of sale.

Withholding Tax
This is Withholding Tax on Interest, Royalties, Management and Consultancy fees, Dividends, Rents,
Commissions, Public Entertainment fees and Non-Resident Contractors.
Withholding tax deducted from these payments should be remitted on or before the 14 th day of the
subsequent month of deduction.

Lumpsum payment
Payment is due within 14 days from the date of completion of the transaction.

Employer’s Annual Return
Payment and submission of Annual Return is due by 31st May

Income Tax Annual Return
Payment is due by 30 th September

Property Transfer Tax
Payment is due within 14 days from the date of completion of the transactions.

Mineral Royalty
Payment is due by the 14th day of the subsequent month in which the sale of the minerals was done.

Value Added Tax
Returns and payments are due by 21 st of the subsequent month following the tax period and if the 21 st
falls on a Sunday or public holiday, the next business day becomes the due date.




(iii)   Customs and Excise
              Customs Duty      : This is a tax levied on all goods imported into the country or
                                   exported out of the country. Customs duty is levied at 0%, 5%,
                                   15% and 25% depending on the nature of goods and is based on
                                   the CIF (cost, insurance and freight) value.
              Excise Duty       : Taxation on a range of selected products whether produced
                                   locally or imported, determined by government policy. Currently,
                                   the following items attract excise duty.
                                     Electricity                          Mineral Royalty        3%
                                     Mineral/Aerated waters                     10%
                                     Domestic Kerosene                          15%
                                     Industrial Kerosene                        30%
                                     Other light oils                            15%
                                     Diesel                                      30%
                                     Petrol                                      60%
                                     Other Hydro-carbon oil products             30%
                                     Opaque beer                                 K145 /Lt
                                     Clear beer                                  60%
                                     Ethyl alcohol (spirits)                     125%
                                     Wine                                        125%
                                      Tobacco                     145% or K90, 000/Mille
                                     Cosmetics                                     20%
                                     Salon Cars/Station Wagons (less than 1500cc) 20%
                                                                   (1500cc & above) 30%
                                     Buses (less 14 sitting capacity)                25%
                                     Pick ups/Light Trucks (less than 20 tones)     10%

              Import VAT        : This is Value Added Tax charged on all imported goods
                                   according to the applicable domestic rate of Standard rate (16%),
                                   Zero rate (0%) or exempt.


DUE DATES FOR CUSTOMS

Excise Return
Payment is due by the 20 th day of the subsequent month

Excise Manufacturer and Bonded Warehouse License Renewal Application
Due date is by 30th September

								
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