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Presumptive Tax
What is Presumptive Tax?
These are estimates of tax payable that are used in dealing with incomes or activities that are hard to tax, e.g. the informal sector.
Presumptive taxation offers the possibility of reducing tax evasion at low cost and broadening the revenue base.

The above have compelled the Zambia Revenue Authority to seek to tax this group of taxpayers differently, hence presumptive tax. The main objective of this measure is to increase compliance by simplifying our tax process and ultimately reducing the transporter's compliance cost.

What are the benefits of this tax over the regular assessed system?

1. Simplified Process:
a) No filing of returns.
b) No need for elaborate business records.
c) Predictable amount of tax to be paid hence eased planning.

2. Cash-flow friendly:
Since operators find it fairly easy to pay a whole range of fees on daily basis, such as loading fees, etc. (some out of extortion), and because the amounts do not seriously disrupt their cash – flow position, the same principle of small regular payments of tax has been adopted in the presumptive tax approach.
The levies can be broken down into smaller amounts to be paid more regularly, e.g. the K2,400.00 levy for a 17 seater bus works out to be a K100.00 a month or K 300.00 a quarter.

3. No need for professional consultancy services:
Paying the levies will be straight forward as paying loading fees or other fees currently in place. Hence very little intellectual or professional effort required.

4. Equity:
As the system is made simpler, all transporters will be expected to pay their part hence no “free riders” as is currently the case.

5. Allowance for break-down:
The levies will only be charged for vehicles that are on the road during the accountable period.

Does ZRA still audit taxpayer's business records under the Presumptive Tax System?
As Presumptive Tax is a levy, there is no need to keep records for tax purposes and as such no audits are conducted on a transporter’s business. The only requirement is for the transporter to pay his presumptive tax as stated in the law.

Are all operators of buses, minibuses or taxis liable to pay presumptive tax?
Presumptive tax does not include limited companies. Only individuals and partnerships are taxed under Presumptive Tax. This is because (from the ZRA perspective) compliance is not a big problem with transporters in this category. They have the capacity to fully comply with all the standard requirements under the Income Tax Law.

Consequently, “luxury and semi – luxury coaches” are excluded. This is because most of them are, as a matter of fact, incorporated businesses and they submit returns and accounts regularly. Where necessary, audits by the tax office are carried out to verify the amounts in the accounts and returns.

How much will each category of vehicle be charged?
The Income Tax (Amendment) Act 2003 introduced the following rates for Presumptive tax:


Type of vehicle (sitting capacity) Amount of tax per vehicle (per annum)
64 seater and above K 14,400
50-63 seater K 12,000
36-49 seater K 9,600
22-35 seater K 7,200
18-21 seater K 4,800
12-17 seater K 2,400
Above 12 seater (including Taxis) K 1,200

To further make the amounts more affordable, the following seven categories of daily tickets have been provided for.

Category Amount on Ticket (per month)
Below 12 seater (including taxis) K 3.33
12-17 seater K 6.66
18-21 seater K 13.33
22-35 seater K 20.00
36-49 seater K 26.67
50-63 seater K 33.33
64 seater K 40.00
 
   
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