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CHAPTER 2 - INDIRECT TAXES

A. Value Added Tax/Sales Tax (National Goverment)

1. Name of Tax, Levied in Terms of Which Act (Name, Number and Year)

Value Added Tax, The Value Added Tax Act (VAT), Cap 331 of the laws of Zambia 1995

2. Department Responsible for Administration

Zambia Revenue Authority

3. Taxpayer

VAT is paid by the final consumer of goods and services but collected at all stages of distribution from the supplier of such goods or services. In Zambia suppliers who collect VAT and pass it on to the Government are described as taxable suppliers.

Under section 28 suppliers with a turnover in excess of K200 million ($ 40,000) per annum are required to register for VAT.
Under VAT General Rules smaller suppliers, with a turnover less than K200 million ($ 40,000)per year are not required to register for VAT. However, they can choose to register voluntarily.

4. Time When Tax is Levied

Under section 13

The tax is due and payable at the time of supply. (this is taken to be the earliest of the date of
issue of an invoice, or receipt of payment or delivery of goods or services)

Under section 14

Tax on imported goods is paid at the same time as any customs duty which may be due (and prior
to the clearance of goods)

5. Included in Tax Base

Under section 7

Any supply of goods or services made by a taxable supplier, in the course or furtherance of a
business, that takes place in Zambia, other than an exempt is a taxable supply. (This includes
imported goods and services.) i.e.

a. Every taxable supply of goods or services in Zambia, other than exempt supplies; and
b. Every taxable importation of goods into Zambia

6. Positive Rates

Under section 9(3) a standard rate of 16%

Note: There are no higher or intermediate VAT rates in Zambia

7. List of Goods/Services at Zero Rate

Under section 15 ZERO RATED

1. Basic unprocessed foods

2. Agriculture (all agriculture-limited in scope)

3. Exports

4. Supplies to privileged persons, which includes
(a) Goods imported by the President;
(b) Goods imported by diplomats or diplomatic missions;
(c) The supply of goods or services to a donor for official purposes;
(d) Goods or services supplied or imported under a technical aid programme;
(e) Eligible goods or services supplied to a diplomat or designated official;
(f) Supplies or imports under a technical aid agreement or project providing for exemption

5. Medical supplies

6. Hotel accommodation in the Livingstone District

8. List of Goods/Services at Positive Rates Other Than Standard

Not applicable for Zambia

9. List of Exemptions

Under section 15 the following goods are exempt from VAT:

1. Water supply services
2. Health supplies
a. the supply of health and medical services by a registered medical practitioner, optician, dentist
or clinic
b. the supply of articles for use by the blind or disabled
3. Educational supplies
a. educational services provided to primary or secondary students
b. educational services provided to other students other than for profit
c. educational services provided to nursery or pre-school children
4. Books and newspapers
5. Transport services
6. Conveyance, etc. of real property
7. Financial and insurance services
8. Metals (gold in bullion form)
9. Funeral services
10. Reliefs at Importation
11. Domestic kerosene
12. Trade Union Subscriptions
13. Treated and untreated mosquito nets
14. Road construction agreements entered into with the Government of the Republic of Zambia prior to
1st July 1995

Note: An exemption implies that the supplier does not levy VAT on the supply. However no input tax deduction will be allowed.

10. Tax Period

Under section 16 a tax period is typically a calendar month, however a supplier can apply for a longer period. A longer tax period would usually be granted in the case of a trader with only occassional business, where a number of monthly returns would be nil returns.

Under section 19 VAT registered suppliers must pay the tax due withing 21 days of the end of a tax period (though the Commissioner General can allow a longer time).

11. Deferement Schemes/Special Schemes

Under the VAT General Rules a limited import VAT deferment scheme, which defers payment of VAT on specified capital goods and raw materials, is in place. Provided the supplier foregoes the equivalent tax deduction or credit.

Under the VAT General Rules there are special methods for retailers to enable them to apportion VAT between standard and zero-rated supplies.

12. Beneficiary of Revenue

National Government

B. Excise Taxes Alcohol (National Government)

1. Name of Tax Levied in Terms of Which Act (Name, Number and Year)

Excise Duty Cap 322 Customs and Excise Act

2. Department Responsible for Administration

Zambia Revenue Authority

3. Taxpayer

Consumers

4. Included in Tax Base

All manufacturers

5. Tax Rate (Tariff Heading, Description, Rate Per Litre or Per Litre of Absolute Alcohol)

1. Beer made from malt (Opaque Beer) HS 2203.00.10 ad valorem rate 35%

2. Beer made from malt (other including ale, lager and stout) 2203.00.90 ad valorem rate 60%

3. Wines of fresh grapes including fortified wines; grapes must other than that of heading 20.09 HS
22.04 ad valorem rate 125%

4. Vermouth and other wine of fresh grapes flavoured with plants or aromatic substances
HS 22.05 ad valorem rate 125%

5. Other fermented beverages (for example, cider, Perry, mead); HS 2206.00.00 ad valorem rate 125%

6. Undernatured ethyl alcohol of an alcoholic strength by volume of 80% vol or higher;
i. For use in a process of manufacture HS 2207.10.00 ad valorem rate 0%

Undernatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol; spirits, liqueurs and other spirituous beverages. HS Ex 22.08 ad valorem rate 125%

6. Rebates

1. Diplomatic Missions and Personnel
2. Aircraft Stores
3. Zambia Defence Forces
4. National Assembly

7. Beneficiary of Revenue

National Government

C. Excise Taxes Tobacco Products (National Government)

1. Name of Tax Levied in Terms of Which Act (Name, Number and Year)

Excise Duty Cap 322 Customs and Excise Act

2. Department Responsible for Administration

Zambia Revenue Authority

3. Taxpayer

Consumers

4. Included in Tax Base

5. Tax Rate (Tariff Heading, Description, Rate Per Kilogramme, or Per 10 cigarettes/Cigars)

1. Cigars, cheroots, cigarillos and cigarettes, of tobacco or tobacco substitutes. HS 24.02 ad valorem
rate 145%

2. Other manufactured tobacco and manufactured tobacco substitutes; "homogenised"
or "reconstituted" tobacco; tobacco extracts and essences. HS 24.03 ad valorem rate 145%

6. Rebates

1. Diplomatic Missions and personnel
2. Aircraft Stores
3. Zambia Defence Forces
4. National Assembly

7. Beneficiary of Revenue

Government

D. Excise Taxes Fuel/Hydrocarbon Oils (National Government)

1. Name of Tax Levied in Terms of Which Act (Name, Number and Year)

Excise Duty Cap 322 Customs and Excise Act

2. Department Responsible for Administration

Zambia Revenue Authority

3. Taxpayer

Consumers

4. Included in Tax Base

5. Tax Rate (Rate of Duty Per Litre, Total Tax Burden as a Percentage of Retail Price)

Petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils.

1. Petroleum spirit (Motor spirit) HS 2710.11.10 ad valorem rate 36%
2. White spirit HS 2710.11.40 ad valorem rate 15%
3. Other light oils HS 2710.11.90 ad valorem rate 15%
4. Kerosene (paraffin) HS 2710.11.50 ad valorem rate 0%
5. Gas Oil HS 2710.19.10 ad valorem rate 7%
6. Fuel Oil HS 2710.19.20 ad valorem rate 15%

6. Rebates/Concessions/Special Schemes

1. Diplomatic Missions and Personnel
2. Public Transport Aircraft
3. Licensed Mining Rights Holders

7. Beneficiary of Revenue

Government

E. Excise Taxes - Non Alcoholic Bevarages/Other (National Government)

1. Name of Tax Levied in Terms of Which Act (Name, Number and Year)

Excise Duty Cap 322 Customs and Excise Act

2. Department Responsible for Administration

Zambia Revenue Authority

3. Taxpayer

Consumers

4. Included in Tax Base

5. Tax Rate (Tariff Heading, Rate Per Litre, or Per Kilogramme, or Per Unit)

1. Waters, including natural or artificial mineral waters and aerated waters, not containing added
sugar or other sweetening matter nor flavoured (soft drinks) HS Ex 22.01 ad valorem 10%

2. Waters, including mineral waters and aerated waters, containing added sugar or other sweetening
matter or flavoured, and other non-alcoholic beverages (soft drinks) HS Ex 22.02 ad valorem 10%

6. Rebates

1. Diplomatic Missions and Personnel
2. Aircraft Stores
3. Zambia Defence Forces
4. National Assembly

7. Beneficiary of Revenue

Government

F. Excise Duty on Luxury Goods - Ad Valorem (National Government)

1. Name of Tax Levied in Terms of Which Act (Name, Number and Year)

Excise Duty Cap 322 Customs and Excise Act

2. Department Responsible for Administration

Zambia Revenue Authority

3. Taxpayer

Consumers

4. Included in Tax Base

5. Tax Rate

Various ranging from 5% - 125%

6. Special Methods (to deal with the specific needs of some industries)

7. Beneficiary of Revenue

National Government

G. Excise Duty on Other Goods (National Government)

1. Name of Tax Levied in Terms of Which Act (Name, Number and Year)

2. Department Responsible for Administration

3. Taxpayer

4. Included in Tax Base

5. Tax Rate (specify ad valorem or specific)

6. Special Methods (to deal with the specific needs of some industries)

7. Beneficiary of Revenue

H. Air Passenger Duty/ Departure Tax (National Government)

1. Name of Tax Levied in Terms of Which Act (Name, Number and Year)

2. Department Responsible for Administration

3. Taxpayer

4. Included in Tax Base

5. Tax Rate

6. Exemptions

7. Beneficiary of Revenue

I. Financial Transaction Taxes/Stamp Duty (National Government)

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

2. Department Responsible for Administration

3. Taxpayer

4. Included in Tax Base

5. Tax Rate

6. Exemptions

7. Beneficiary of Revenue

J. Payroll Taxes/Social Security Taxes (National Government)

1. Name of Tax and Levied in Terms of Which Act (Name, Number and Year

In Zambia there are no payroll taxes but all persons receiving emoluments are subjected to Pay As You Earn (PAYE) which is levied under the income tax act of 1966