What is PAYE?

Pay As You Earn (PAYE) is a system of deducting tax at source from an individual whose income is from employment

Whose responsibility is it to deduct the tax?

It is the employer’s responsibility to deduct tax from the employee’s emoluments.

What happens to the tax deducted?

The employer is obliged to remit to the Zambia Revenue Authority, tax deducted by the 14th day of the month following the month of deduction.

Are there penalties for late payment of PAYE?

Yes. There’s a monthly penalty of 5% of the unpaid amount. Interest is also charged at 2%.

What is the allowable rebate for return/ new residents and what are the requirements

i) New Residents New Residents can bring in their household & personal effects including one vehicle per household free of duty and tax as long as: • The new resident has been outside Zambia for a period of not less than two years before the date of arrival in, or return to, Zambia. • The effects were the property of the new resident before the date of departure for Zambia from previous country of residence. • The effects must be imported within six months from the date of arrival of the new resident. • The effects should not be disposed off within 5 years unless customs is notified and duty and VAT is paid on disposal. ii) Returning Resident Returning Residents can bring in goods free of duty and tax as long as: • The goods are for personal use • they are in the baggage accompanying that resident, on the same ship, aircraft or vehicle • The articles have been in use by the resident prior to importation • The goods do not exceed in value equivalent of USD 250 and are not for commercial use. • The following goods do exceed the following quantities; 2.5 litres of beer & wine, 1.5 litres of spirites, 400 sticks of cigarettes & 0.5Kg of Cigars. • The resident is 18 years and above

COMESA and SADC Trade protocols

D. COMESA & SADC Trade Protocols i) COMESA Trade Protocol Member States The Common Market for Eastern and Southern Africa (COMESA) is a regional integration grouping of 20 African states which have agreed to promote regional integration through trade development and to develop their natural and human resources for the mutual benefit of all their people. The Member states of COMESA are: • Angola • Burundi • Comoros • DR Congo • Djibouti • Egypt • Eritrea • Ethiopia • Libya • Kenya • Madagascar • Malawi • Mauritius • Rwanda • Seychelles • Sudan • Swaziland • Uganda • Zambia • Zimbabwe Member States in the Free Trade Area Eleven Member States (Burundi, Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Zambia and Zimbabwe) deepened their trade relations when they began to trade on duty and quota- free terms as from 31st October 2000. They have, however, maintained their national external tariffs for goods originating from outside COMESA. Trade between the Free Trade Area (FTA) and non-FTA countries is being conducted on preferential terms determined by the level of tariff reduction given by the FTA country. Rules of Origin (RoO) Trade within the region is regulated by origin conferring criteria. The Rules of Origin enable importing countries to distinguish between products that have undergone substantial transformation within the region and those coming from outside the region or have not been sufficiently processed within the region. The COMESA Rules of Origin have five independent criteria and goods qualify as originating in COMESA if they meet any of the five . ii) SADC Trade Protocol Member States Southern African Development Community (SADC) is a regional integration grouping of 13 African states which have agreed to promote regional integration through trade development and to develop their natural and human resources for the mutual benefit of all their people. The Member States of SADC are: • Angola • Botswana (Headquarters) • DR Congo • Lesotho • Malawi • Mauritius • Madagascar • Namibia • South Africa • Swaziland • Tanzania • Zambia • Zimbabwe SADC Free Trade Area The achievement of a Free Trade Area by 2008 is a fundamental target for all Member States of SADC. Trade between the SADC member States is being conducted on reciprocal preferential terms. The Member States have agreed to phase down their customs rates on all products to zero by the year 2008. The phase down started in 2004 for products categorized in A. These products in category A are mostly raw materials and are used in the manufacturing industry. The other category is B and the rates for these products will all be at 0% in 2006. These products are mostly intermediate goods. The last category is C and most of the products in this category are finished products. These products in C will be at 0% in 2008 (for more information on the phase down rates, please refer SI 75 of 2004 which can be obtained from Government printers). Rules of Origin (RoO) Rules of Origin are necessary to define the conditions for products to qualify for preferential trade in the SADC region. Products will only qualify if they meet the condition of either being „wholly produced” in the SADC region or of being „sufficiently processed” to be considered compliant with the RoO. It should be mentioned that RoO for SADC are product specific and not generic like the ones for COMESA, care must be taken to ensure that only products that meet the RoO criteria enjoy preferential treatment under SADC.