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You are here >> Home >> Insurance Premiun Levy
Insurance Premiun Levy
 

With effect from 1st January, 2016 Act number 21 of 2015 provides for a three percent (3%) levy on premiums for all classes of insurance business excluding re-insurance.
However, the commissions that are earned on insurance brokerage are not subject to a charge of the levy because commissions are not classified as insurance business. The brokers merely facilitate or act on behalf of the insurer and the insured.

What is Insurance Premium Levy?
The Insurance Premium levy is a tax imposed on all insurance premiums for all classes of insurance business excluding re-insurance and commissions earned on brokerage.

When will the Insurance Premium Levy commence?
The collection of the Levy commenced on 1st January, 2016.

What amount will be paid?
The Insurance Premium levy is charged at the rate of 3% on premiums for all classes of insurance business excluding re-insurance.

When is the Insurance Premium Levy due?
The return filing due date for Insurance Premium Levy is the 18th day of the month following the end of the prescribed period and the due date for payment of the Levy is also the 18th day of the month following the end of the prescribed accounting period.

Section 5 of the Principal Act is amended by the deletion of the word "fourteenth" and the substitution therefore of the word "Eighteenth".

This amendment changes the due date for the payment of Insurance Premium Levy to the 18th day from the 14th day of the month following the end of the prescribed accounting period to align with the return filing due date for the Insurance Premium Levy return.

NOTE:
For a return in the period ending 31st December 2018, the submission due date shall be 18th January 2019 while the payment will be due on 14th January 2019. This is because the return and corresponding payment for December 2018 relates to the 2018 accounting year.

Who has the obligation to collect and remit the Levy?
The obligation to remit the levy lies with the insurer, insurance agent or broker.

Premiums paid in 2015 for 2016 insurance covers
Where a payment is made in 2015 for the 2016 cover or where an invoice is issued in 2015 for the 2016 contract period.

The insurance premium will be deemed to have been paid in January 2016 and the levy shall be paid by 14th February 2016.

Recovery of Insurance Premium Levy
The Value Added Tax Act will apply in enforcement and administration of Insurance Premium Levy for the following:

  • (a) Recovery of the levy
  • (b) Filing of returns
  • (c) Assessments
  • (d) Keeping of records
  • (e) Furnishing of information and production of documents
  • (f) Delegation of authority
  • (g) The appointment of authorised officers
  • (h) Penalties and sanctions
  • (i) Reviews and appeals and
  • (j) The priority of tax debts in bankruptcy.

    • NoPenalty TypePenalty rate
      1Late Registration10,000 penalty units
      2Late Submission Of Returns1,000 penalty units per day or 0.5% of the tax due
      3Late payment1,000 penalty units per day or 0.5% of the tax due
      4Late payment interestInterest Bank of Zambia discount rate plus 2%

      Note:One penalty unit is equal to K0.30
       
* All Dates are displayed in dd/mm/yyyy