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is made and the business is required to complete the final VAT return. The business will be required to account for VAT on any stock and capital assets on hand at the date of deregistration.

Output tax

VAT is charged on the value of consideration or open market value, whichever is greater, at 16%.

Exemptions and zero rating

Exempt supplies

Supplies that are exempt from VAT, but in respect of which the supplier may not deduct input tax, include (but are not limited to):

  • water supply and sewerage services provided by a local authority;

  • nursery, primary and secondary school education;

  • financial and insurance services:

    • the arrangement, provision or transfer of ownership of any contract of insurance or re- insurance;

    • the issue, transfer, receipt of or other dealing with money or any note or order for the payment of money;

    • the provision of credit and the interest component of finance leases;

    • the operation of any account at a bank or other financial institution;

    • the issue, allotment or transfer of shares; and

    • uncirculated new kwacha notes;

  • funeral services;

  • books and newspapers:

    • booklets;

  • maps;



    • charts;

    • newspapers; and

    • journals;

  • health and medical services supplied by a registered medical practitioner, optician, dentist, hospital or clinic;

  • equipment designed for use by the blind and disabled persons;

  • transport services – transport of persons by air, rail, boat or bus;

  • conveyance of real property – the sale or lease of an interest in land, other than the lease or rental of commercial property;

  • the sale or lease of domestic buildings;

  • any fee, royalty or similar right to explore or remove any natural resource;

  • the supply of gold in bullion form to a bank;

  • trade union subscriptions;

  • domestic kerosene;

  • importation of certain goods;

  • treated and untreated mosquito nets, including insecticides and kits used to treat mosquito nets;

  • road construction agreements entered into with the Government of the Republic of Zambia prior to 1 July 1995;

  • statutory fees that are prescribed and regulated by an Act of Parliament or Statutory Instrument; and

  • certain food and agricultural

products and supplies.

Zero rated supplies

Supplies that are zero rated in respect of which the supplier may deduct input tax, include (but are not limited to):

  • export of goods;

  • supply of services that are physically rendered outside Zambia;

  • supplies to privileged persons, such as diplomats and donor agencies;

  • medical supplies and drugs, including implements for the medical industry;

  • supplies by licensed tour operators for certain services;

  • hotel accommodation, lodge or similar establishment in the Livingstone District between 31 January 2001 and 31 December 2009;

  • raw materials used in the production of mosquito nets;

  • books and school exercise books;

  • energy-saving appliances, machinery and equipment;

  • goods or services supplied to or imported by a developer of a multi- facility economic zone (MFEZ), an industrial park, or a business enterprise operating in the MFEZ or industrial park, licensed as such by the Zambia Development Agency;

  • certain building supplies to charitable organisations approved by the Minister of Finance;

  • certain agricultural equipment and spares; and

  • ethanol based biofuel – green gel.

Input tax

Input tax expressly denied

VAT incurred in respect of the following goods and services cannot be deducted as input tax:

  • entertainment;

  • saloon cars and double cabs;

  • petrol – with effect from 10 February

2007, 20% of the VAT paid on petrol

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