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January 13, 2020
Zambia amends VAT legislation
Following the announcement in Zambia’s 2020 National Budget that the Government would not proceed with the introduction of the Sales Tax, the Zambian Minister of Finance (the Minister) indicated that changes would be made to the Value Added Tax (VAT) Act as part of broader reforms aimed at increasing tax revenue.
To achieve this objective, the Minister has now issued amendments to the VAT Regulations and Zero-Rating Order. The amendments were issued on 31 December 2019 through Statutory Instrument Nos. 88 and 90 of 2019, the VAT (Zero Rating) (Amendment) Order 2019 and the VAT (General) (Amendment) Regulations 2019.
The amendments are effective 1 January 2020.
The VAT (Zero Rating) (Amendment) Order 2019 includes the following changes:
The amended Order introduces new groups of items to be zero rated. This includes Copper cathodes under Group 10 (Minerals) and Group 11 (Capital Equipment). Further, the amended Order introduces a schedule specifically listing equipment and machinery (per Harmonized Schedule (HS) Code and Tariff Description) to be zero rated when supplied to taxable suppliers carrying out mining operations, mineral processing and exploration.
The VAT (General) (Amendment) Regulations 2019 includes the following changes:
For additional information with respect to this Alert, please contact the following:
EY Advisory Services Limited, Lusaka
Ernst & Young Advisory Services (Pty) Ltd., Africa ITTS Leader, Johannesburg
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York