CHAPTER 331
VALUE ADDED TAX ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

   3.   Application of this Act to partnerships

   3A.   Application of Act to sole proprietorships

   4.   Application of this Act to unincorporated organisations

   5.   Application of this Act to groups of companies

   6.   Application of this Act to Government agencies

PART II
VALUE ADDED TAX

   7.   Taxable supplies

   8.   Imposition and scope of tax

   9.   Rate of tax

   10.   Taxable value of supplies and importations

   11.   Place of supply of goods

   12.   Place of supply of services

   13.   Time of supply of goods or services

   14.   Time of importation

   15.   Exemption and zero-ratings

   15A   Reduction of value added tax in tax free zone

PART III
ACCOUNTING FOR AND PAYMENT OF TAX

   16.   Tax returns

   17.   Late lodgment of returns

   18.   Tax deductions and credits

   19.   Payment of tax or credit

   20.   Interest on overdue tax

   21.   Assessment of tax

PART IV
DEFAULT IN PAYMENT OF TAX

   22.   Recovery of tax and interest

   23.   Attachment of debts, etc.

   24.   Security and production of evidence

   24A.   Charge on land

   25.   Requirement for early payment

   26.   Distress

PART V
REGISTRATION OF SUPPLIERS

   27.   Register of suppliers

   28.   Registration

   29.   Offences and penalties.

   29A   Late registration

PART VI
REVIEWS AND APPEALS

   30.   Right of review

   31.   Conduct of review

   32.   Appeals

PART VII
ADMINISTRATION AND ENFORCEMENT

   33.   Functions of Authority

   34.   Delegation by Commissioner-General

   35.   Authorised officers

   36.   Taking of samples

   37.   Furnishing of information and production of documents

   38.   Entry and search

   38A.   Impounding and removal of goods

   39.   Obstruction of authorised officers

   40.   Impersonation of authorised officers

   41.   Immunity of authorised officers

PART VIII
MISCELLANEOUS

   42.   Records and accounts

   43.   False returns and statements

   44.   Evasion of taxation

   45.   Fine in lieu of prosecution

   46.   Advertised retail prices to include tax

   47.   Adjustment of contracts on changes in tax

   48.   Priority of tax debts in bankruptcy

   49.   Evidence by certificate

   50.   Schemes for obtaining undue tax benefits

   50A.   Tax information exchange agreements and mutual assistance in tax matters

   51.   Regulations

   52.   Administrative rules

   53.   Transitional registration provisions

   54.   Other transitional provisions

   55.   Repeal of Cap. 663 of the 1971 edition and Act 25 of 1990

      FIRST SCHEDULE

      SECOND SCHEDULE

      THIRD SCHEDULE

AN ACT

to impose a tax on the supply of goods and services in Zambia and the importation of goods into Zambia; to repeal the Sales Tax Act and the Insurance Levies Act; and to provide for matters connected with or incidental to the foregoing.

[1st May, 1995]

Act 4 of 1995,

Act 2 of 1997,

Act 6 of 1998,

Act 1 of 1999,

Act 6 of 2000,

Act 3 of 2001,

Act 10 of 2001,

Act 2 of 2002,

Act 2 of 2003,

Act 2 of 2004,

Act 2 of 2005,

Act 8 of 2006,

Act 3 of 2007,

Act 3 of 2008,

Act 3 of 2009,

Act 48 of 2010,

Act 30 of 2011,

Act 14 of 2012,

Act 15 of 2013,

Act 13 of 2014.

SI 88 of 1995,

SI 91 of 1995,

SI 103 of 1995,

SI 108 of 1995,

SI 122 of 1995,

SI 146 of 1995,

SI 150 of 1995,

SI 22 of 1996,

SI 27 of 1996,

SI 79 of 1996,

SI 110 of 1996,

SI 11 of 1997,

SI 16 of 1997.

PART I
PRELIMINARY

1.   Short title

This Act may be cited as the Value Added Tax Act.

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

“accounting year” means a period of twelve months ending on 31st December or such other period as the Commissioner-General may prescribe.

[Subs by s 2 of Act 30 of 2011.]

“authorised officer” means a person appointed under section 35 to be an authorised officer for the purposes of this Act;

“Authority” means the Zambia Revenue Authority established by the Zambia Revenue Authority Act;

“commercial property” means a building that is used for commercial purposes, and includes an office building, an industrial building, a health facility, hotel, shopping mall, retail store, shopping centre, warehouse, garage, recreation centre, dwelling house used for commercial purposes and multifacility building;

[Subs by s 2(a) of Act 15 of 2013.]

“Commissioner-General” means the Commissioner-General appointed under Zambia Revenue Authority Act;

"disbursement" means expenditure incurred by a supplier in the course of providing goods or services to a customer;

[Ins by s 2 of Act 3 of 2007.]

“exempt importation” means an importation of goods described in the First Schedule;

“exempt supply” means a supply of goods or services described in the First Schedule;

“finance lease” means a lease of implements, machinery or plant where—

      (a)   the term of the lease, including any period under an option to renew, is equal to or exceeds seventy-five per centum of the effective life of the leased implements, plant or machinery;

      (b)   the lessee has an option to purchase the implements, plant or machinery at the expiration of the lease for a fixed or determinable price;

      (c)   the estimated residual value of the implements, plant or machinery at the expiration of the lease term is less than twenty five per centum of its fair market value at the commencement of the lease; or

      (d)   the lessor does not retain the risks and rewards of ownership; and

[Ins by s 2 of Act 3 of 2008.]

“goods” means any article or substance of value, any immovable property and any interest in land, but does not include money, securities or any chose in action;

“Government agency” means—

      (a)   any Ministry or Department of the Government;

      (b)   any statutory corporation or board; or

      (c)   any Iocal authority.

      (d)   any institution or body in which the Government has direct or indirect control or which is wholly or partially owned by the Government;

[(d) subs by s 2(a) of Act 2 of 1997.]

“health facility” has the meaning assigned to it in the Health Professions Act, 2009;

[Ins by s 2(b) of Act 48 of 2010.]

“importation of goods” includes any dealing with goods that renders the goods liable to any duty or other impost under the Customs and Excise Act;

“industrial park” has the meaning assigned to it in the Zambia Development Agency Act, 2006;

[Ins by s 2 of Act 3 of 2009.]

“input tax” has the meaning ascribed to it in section 18;

"multi-facility economic zone" has the meaning assigned to it in the Zambia Development Agency Act, 2006;

[Ins by s 2 of Act 3 of 2009.]

"operating lease" means any lease of implements, plant or machinery, other than a finance lease.

[Ins by s 2 of Act 3 of 2008.]

“prescribed accounting period”, in relation to a taxable supplier, means the accounting period determined under section 16 that is applicable to that supplier;

“prescribed interest rate” means the rate that exceeds, by two per centum per annum, the prevailing official discount rate, as published by the Bank of Zambia, that is in force on the twenty-second day of each month;

[Subs by s 2(b) of Act 2 of 1997.]

“registered” means registered under Part V;

“supplier” means—

      (a)   a person, corporation, partnership, joint venture or organisation that supplies goods or services;

[Subs by s 2 of Act 6 of 1998; am by s 2(a) of Act 1 of 1999.]

      (b)   any Government agency.

“supply of a service” includes—

      (a)   the provision of goods on lease, hire or loan;

      (b)   a treatment of any goods;

      (c)   any other activity which the Minister, by regulation, declares to be the supply of a service for the purposes of this Act;

but does not include—

      (i)   the provision of any service without consideration, except in so far as the Minister, by regulation, otherwise determines; or

      (ii)   any other activity which the Minister by regulation declares not to be a supply of a service for the purposes of this Act.

“supply of goods” means—

      (a)   a sale of goods;

      (b)   a gift of goods;

      (c)   where goods are obtained by a taxable supplier for the purposes of a business carried on by him or are, in the course of such a business, manufactured or produced for supply, an appropriation or transfer of possession of the goods—

      (i)   for his own use or consumption, or for use or consumption by him and others; or

      (ii)   for use or consumption by his employees or partners, or otherwise in connection with a business carried on by him; or

      (d)   any other dealing with the goods (other than the supply, in relation thereto, of a service) which the Minister, by regulation, declares to be a supply of the goods for the purposes of this Act;

but does not include an importation of the goods, or any dealing with the goods which the Minister, by regulation, declares not to be a supply of the goods for the purposes of this Act;

“tax” means value added tax imposed by section 8 or additional tax payable under section 17, and “taxation” shall be construed accordingly;

“tax commencement day” means such day, being the first day of a month, as the Minister may, by statutory order, appoint;

“tax invoice” means an invoice, showing such particulars as the Commissioner-General may, by administrative rule, prescribe, relating to a taxable supply of goods or services;

“tax return” means a return referred to in section 16;

“taxable importation” means an importation of goods that takes place in Zambia after the tax commencement day, other than an exempt importation;

“taxable supplier” means a person who is registered or is required by this act to be registered and includes a tax agent or recipient of imported services referred to in section 8;

[Subs by s 2 of Act 2 of 2003.]

“taxable supply” has the meaning ascribed to it in section 7;

“taxable value”, in relation to goods or services supplied, or goods imported, means their taxable value ascertained in accordance with section 10,unless the Ministry by regulation, in relation to specified supplies or imports, declares a different value;

[Am by s 2(c) of Act 2 of 1997.]

“Tribunal” means the Revenue Appeals Tribunal established under the Revenue Appeals Tribunal Act, 1998; and

[Subs by s 2(a)(ii) of Act 48 of 2010.]

“zero-rated supply” means a supply of goods or services described in the Second Schedule.

   (2) In this Act, a reference to a supply of goods or services in the course or furtherance of a business includes—

[S 2(2) am by s 2(b)(i) of Act 1 of 1999.]

      (a)   a reference to a supplies made by a supplier during any enterprise or activity which is carried on continuously or regularly, in the course or furtherance of which, goods or services are supplied to any other person for consideration, whether or not for profit, including any trade, profession or vocation and any concern of a continuing nature or in the form of an association or club;

      (b)   a reference to a supply of goods or services for the promotion of a business; or

[S 2(2)(b) am by s 2(b)(ii) of Act 1 of 1999.]

      (c)   anything done in connection with the cessation, liquidation or receivership or the intended cessation, liquidation or receivership;

[S 2(2) subs by s 2(d) of Act 2 of 1997, s 2(2)(c) ins by s 2(b)(iii) of Act 1 of 1999.]

3.   Application of this Act to partnerships

   (1) Where a firm consisting of two or more individuals in partnership is a registered supplier, the firm shall be taken, for the purposes of this Act, to be the supplier of any goods and services supplied in the course of the business of the firm; but in default of such registration, each partner shall be deemed to be the supplier of any such goods and services.

   (2) Without prejudice to any other law providing for the sufficiency of any means of giving notice to a partnership, any notice of assessment or other notice given under this Act to a partnership may be addressed to the partnership in the name under which it is registered under this Act.

   (3) Subject to this section, in determining for the purposes of this Act whether any goods or services are supplied to, or by, a partnership, no account shall be taken of any change in the partnership.

   (4) Without prejudice to the operation of any law providing for the imposition of liability on members of a partnership, until the date on which a change in the partnership is notified to the Commissioner-General, a person who has ceased to be a member of a partnership shall be regarded as continuing to be a partner for the purposes of this Act and, in particular, for the purpose of any liability for tax or interest due from the partnership under this Act.

   (5) Where a person ceases, for the purposes of this Act, to be a member of a partnership, any notice of assessment or other notice given to the partnership under this Act that relates to any matter—

      (a)   arising within or in connection with the prescribed accounting period during which he so ceased to be a member of the partnership; or

      (b)   arising within or in connection with any earlier prescribed accounting period during which, or during any part of which, he was for the purposes of this Act a member of the partnership;

shall be deemed to have been served on him.

3A.   Application of Act to sole proprietorships

   (1) Where a person in business as a sole proprietor is a registered supplier, that person shall be taken to be the supplier of any goods or services supplied in the course of the business and is liable for any tax due under this Act.

   (2) Any notice of assessment or other notice given under this Act to a person referred to in sub-section (1) may be addressed to the person.

   (3) Where a person referred to in sub-section (1) operates several businesses, the aggregate turnover from the businesses shall be used to determine the eligibility of the person for tax registration.

   (4) Notwithstanding sub-section (3), a person referred to in sub-section (1) who operates several businesses may register the businesses separately if each of the businesses reaches the turnover threshold as prescribed by the Minister, by statutory instrument.

   (5) A person referred to in sub-section (1) and operating several businesses shall furnish the Commissioner-General with details of the businesses.

[S 3A subs by s 3 of Act 3 of 2007.]

4.   Application of this Act to unincorporated organisations

   (1) Where a club, association or other unincorporated organisation is a registered supplier, the organisation shall be taken, for the purposes of this Act, to be the supplier of any goods and services supplied in the course of the business of the organisation; but in default of such registration, every member of the organisation shall be deemed to be the supplier of such goods and services.

   (2) The names and other particulars of the members of the management committee of an unincorporated organisation that is a registered supplier shall be recorded in the register, and such members shall bear the liabilities of the organisation under this Act.

   (3) Until the date on which a change in the management committee is notified to the Commissioner-General, a person who has ceased to be a member of the management committee of an unincorporated organisation that is a registered supplier shall be regarded as continuing to be such a member for the purposes of this Act and, in particular, for the purpose of any liability for tax or interest due from the organisation under this Act.

   (4) Where a person ceases, for the purposes of this Act, to be a member of the management committee of an unincorporated organisation that is a registered supplier, any notice of assessment or other notice given to the organisation under this Act that relates to any matter—

      (a)   arising within or in connection with the prescribed accounting period during which he so ceased to be a member of the management committee; or

      (b)   arising within or in connection with any earlier prescribed accounting period during which, or during any part of which, he was for the purposes of this Act a member of the management committee;

shall be deemed to have been served on him.

   (5) Where a person is a member of the management committee of an unincorporated organisation during part only of a prescribed accounting period, his liability for tax on the supply by the organisation of goods or services during that period, and any liability for payment of any interest or additional tax as a consequence, shall be limited to such proportion of the organisation’s liability as may be just in the circumstances.

5.   Application of this Act to groups of companies

   (1) For the purposes of this Act, two or more companies incorporated in Zambia are eligible to be treated as a recognised group if—

      (a)   one of them controls each of the others;

      (b)   one person, whether a company or an individual, controls them all; or

      (c)   two or more individuals carrying on a business in partnership control them all.

   (2) On application made by a company naming itself and other companies in the application, or by the person or persons controlling the companies named in the application, the Commissioner-General, if satisfied that the companies named in the application are eligible to be treated as a recogised group, may by notice in writing—

      (a)   declare that, as from a date specified in the order, they shall form a recognised group for the purposes of this Act; and

      (b)   designate the representative member for the group.

   (3) Where two or more companies form a recognised group, then, for the purposes of this Act, any business carried on by a member of the group shall be regarded as carried on by the representative member, and—

      (a)   any supply of goods or services by a member of the group to another member of the group shall be disregarded;

      (b)   any other supply of goods or services by or to a member of the group shall be regarded as a supply by or to the representative member; and

      (c)   any tax paid or payable by a member of the group on the importation of any goods shall be regarded as paid or payable by the representative member, by whom the goods shall be deemed to have been imported.

   (4) Notwithstanding sub-section (3), all members of a recognised group shall be jointly and severally liable for any tax due from the representative member.

   (5) The Commissioner-General may, on application made on behalf of a recognised group, by notice declare that, as from a date specified in the notice—

      (a)   a further eligible company shall be included in the group;

      (b)   a specified member of the group shall be excluded from the group;

      (c)   another member of the group shall be substituted as the representative member; or

      (d)   the group shall no Ionger be a recognised group for the purposes of this Act.

   (6) An application under this section shall not be refused unless the Commissioner-General considers it necessary to refuse it for the protection of the revenue.

   (7) The Commissioner-General may, of his own motion, by notice exclude from membership of a recognised group any company which has ceased to be eligible to be a member.

   (8) For the purposes of this section—

      (a)   one company shall be taken to control another if it is empowered by any written law to control the other’s activities or if it is the other’s holding company within the meaning of the Companies Act; and

      (b)   one or more individuals shall be taken to control a company if, apart from being individual, he or they satisfy the criteria for being its holding company under that Act.

6.   Application of this Act to Government agencies

   (1) Except to the extent to which provision is otherwise made by or under this Act, this Act applies to a Government agency as though a supply of goods or services to it for the purposes of the performance of its official functions were a supply of the goods or services for the purposes of a business carried on by it.

   (2) The Minister may, by regulation, provide for the modification of any provision of this Act, or of any regulation or rule made under this Act, in its application to a Government agency.

   (3) A government agency which is not engaged in providing taxable supplies shall claim from the ministry responsible for finance a refund of the input tax paid in connection with the supply of goods or service referred to in sub-section (1) including any other goods or services supplied to it.

[S 6(3) subs by s 3 of Act 2 of 2003.]

PART II
VALUE ADDED TAX

7.   Taxable supplies

   (1) For the purposes of this Act, any supply of goods or services made by a taxable supplier, in the course or furtherance of a business, that takes place in Zambia on or after the tax commencement day, other than an exempt supply, is a taxable supply.

[S 7(1) subs by s 3 of Act 1 of 1999.]

   (2) Although tax is not payable on a zero-rated supply, the provisions of this Act, apart from section 8, shall otherwise apply to a zero-rated supply in the same way as to all other taxable supplies.

8.   Imposition and scope of tax

   (1) A tax, to be known as value added tax, shall be charged, levied, collected and paid in respect of—

      (a)   every taxable supply of goods or services in Zambia, other than a zero-rated supply; and

      (b)   every taxable importation of goods or services into Zambia;

[S 8(1)(b) am by s 4(a) of Act 2 of 2003.]

that takes place on or after the tax commencement day.

   (2) The reference in sub-section (1) to a supply of goods or services in Zambia includes a reference to a supply that, by the operation of section 11 or 12 or of any rule made under those sections, is to be regarded as taking place in Zambia.

   (3) Tax on a supply of goods and services is payable by the supplier of the goods or services and, subject to any other provision made by or under this Act in relation to accounting, is due and payable at the time of supply.

   (4) Tax on an importation of goods shall be charged as if it were a duty of customs under the Customs and Excise Act, and is payable, accordingly, by the importer of the goods.

   (5) A recipient of an imported service shall pay tax on the importation of a service, where such a service is performed, undertaken or utilized in Zambia or the benefit of the supply is for a recipient in Zambia:

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