Zambia
paint ball shooting and quad biking safaris. • The period for pre-production input credit for mineral prospecting companies is five years. • The VAT Act provides for the application of VAT to a sole proprietorship. • The VAT Act excludes from taxation, services that constitute local supplies in other VAT jurisdictions. • The VAT Act provides for the taxation of a service consisting of a lease, hire or loan of goods that involves the removal of goods from Zambia. • VAT at the standard rate is also levied on services provided by foreign suppliers to clients in Zambia by means of a reverse charge for such services. The corresponding input VAT is not reclaimable. This means that the Zambian client is effectively bearing the foreign company’s VAT. The reverse charge only applies in cases where the non-resident supplier has not appointed a local tax agent to act on its behalf. Input VAT relating to the commission charged by the reverse VAT agents, is non-deductible in the principal’s VAT return. • The cash accounting basis of accounting for VAT also applies to mining companies. • Late payments of VAT attract additional tax of 0.5% of the amount due per day. Additional tax equal to K180 000 or 0.5% of the tax payable, whichever is greater, is charged per day for failure to file a VAT return.
Mineral Royalty Tax Rates Type of Licence
Note
Base metals
1
6%
Industrial and energy minerals
1
6%
Precious metals and gemstones
6%
Notes: 1. The mineral royalty rate for base metals, industrial and energy minerals is 6%. 2. Mineral royalty returns and payments are due by the 14th of the month following the month of sale.
Presumptive Tax Presumptive Tax is levied at 3% on businesses with turnover of up to K800 million per annum (previously K200 million per annum) and on operators of buses, mini buses and taxis but excluding consultancy businesses. The taxes payable for transport operators are as follows: Presumptive Tax on Transport Operators Seating Capacity of Vehicle
600 000
12-17
1 200 000
18-21
2 400 000
22-35
3 600 000
36-49
4 800 000
50-63
7 200 000
Mineral Royalty Tax Guide to Fiscal Information
Tax per Vehicle per Annum (K)
Below 12 (including taxis)
Proposed changes to take effect from 1 January 2013 include: • The VAT registration threshold is increased from K200 million to K800 million per annum. • Goods supplied to, or imported by, businesses operating in an MFEZ, or Industrial Parks, are to be standard rated. • Wheat, wheat flour and bread, are to be zero-rated. • The validity period for a document to be used as a basis for claiming input tax credit, is reduced from 12 months to six months.
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