On 3 May 2019, the Zambia Revenue Authority (ZRA) published a proposed schedule of exemptions from Sales Tax, which would become effective on 1 July 2019. The purpose of this list is to mitigate against the cascading effect of the effective Sales Tax rate.

The Sales Tax will replace the current Value Added Tax Act.

Exemptions

Under the proposed Sales Tax Bill of 2019, the Minister is empowered to reduce the rate applicable to a taxable supply by Statutory Instrument. In addition, the Minister is empowered to provide exemptions to Sales Tax by means of Statutory Instrument for:

• Capital goods
• Inputs
• Designated basic and essential goods or services
• Designated suppliers to privileged persons
• Exports

The proposed exemption schedule is based on the Harmonized Commodity Description and Coding System (HS codes) for various products as provided in the Customs and Excise Act. The exemptions are focused on items that are presently subject to Customs Duty rates of between 0% to 5%.

Taxpayers should review the schedule and pay specific attention to the HS codes on the schedule and compare it with their inputs and products. The Minister has indicated that further submissions with respect to exemptions may still be made as the Bill undergoes consultation.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

EY Advisory Services Limited, Lusaka

• Patrick Mawire
  patrick.mawire@zm.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg

• Marius Leivestad
  marius.leivestad@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

• Rendani Neluvhalani
  rendani.mabel.neluvhalani@uk.ey.com
• Byron Thomas
  bthomas4@uk.ey.com

Ernst & Young LLP (United States), Pan African Tax Desk, New York

• Dele A. Olaogun
  dele.olaogun@ey.com

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ATTACHMENT

PDF version of this Tax Alert