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Zambia

Special rules apply for the place of supply of radio, television, telephone or other communication services, where the signal or service originates outside Zambia. The place of supply of these services is taken to be the place where the recipient receives the signal or service, provided that a consideration is payable for receiving the service or signal.

Time of supply

The time at which any goods are supplied, or at which any services consisting of the lease, hire, loan or treatment of, or other activity in relation to any goods is supplied, is the earliest of the time when:

  • goods are removed from the premises of the supplier;

  • goods are made available to the person to whom they are supplied;

  • payment for the supply is received; or

  • a tax invoice is issued.

The time of supply of services is the earliest of the time when:

  • payment for the supply is received;

  • a tax invoice is issued; or

  • services are actually rendered or

performed.

If, for the supply of any goods or services referred to above, payment is made or a tax invoice is issued in respect of part of the supply, VAT is payable only on the part relating to the supply.

Value of supply Where goods or services are supplied:

  • otherwise than for a monetary

consideration;

  • for a consideration that consists only partly of money; or

  • for a consideration that is less than the open market value of the goods or services;

the taxable value will be the open market value of the goods or services. The open market value is the price at which the goods or services being supplied would have been supplied in the ordinary course of business to a person independent of the supplier.

Where a taxable supplier supplies ‘specified supplies’ locally, the taxable value of the supplies shall be the greater of:

  • the taxable value ascertained in accordance with the general value of supply rules above; or

  • the amount by which the recommended retail price exceeds the tax payable in respect of the supply.

Every taxable supplier involved in the supply of goods and services listed as specified supplies below needs to submit to the ZRA a schedule of recommended retail prices. Specified supplies include the following:

  • bulk and bagged cement (local and imported);

  • carbonated drinks (local and imported);

  • non-carbonated drinks (local and imported);

  • maheu products;

  • clear beer (local and imported, bottled and canned);

  • opaque beer (bulk and packed);

  • cigarettes (local and imported);

  • airtime; and

  • mineral water (local and imported).

VAT compliance

Returns and payment of VAT

Returns must be submitted monthly. However, some businesses are allocated tax periods of either three or six months upon application and approval by the ZRA.

VAT returns and any VAT payable must be lodged with the ZRA within 21 days after the end of the prescribed accounting period.

VAT due must be paid within 21 days following the end of the prescribed accounting period.

VAT may be paid in cash, per cheque or by way of a bank transfer. Payments must be in Zambian Kwacha (ZMK).

Interest and penalties

Businesses that do not lodge a return within the time allowed are liable to a penalty, the higher of either:

  • 1000 penalty units (K180,000, approximately US$35 currently); or

  • 0.5% of the tax payable in respect of the tax period covered by the return,

for each day the return has not been submitted.

For late payment of VAT, the penalty is 0.5% of the tax due for each day the VAT is unpaid. Interest is also chargeable for each month that a payment is overdue and is charged at the Bank of Zambia discount rate plus 2%.

Refunds

The business is allowed to deduct any input VAT that it has paid from the output VAT that it is liable to pay. Where the input VAT exceeds the output VAT in any given tax period, the excess input VAT is refunded to the

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