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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.

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 K1,200.00 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 rates below will apply:

Type of vehicle(sitting capacity) Amount of tax per vehicle per annum
64 seater and above K10,800
50-63 seater K9,000
36-49 K7,200
22-35 K5,400
18-21 K3,600
12-17 K1,800
Below 12 seater (including taxis) K900

6. What are the modalities for collecting this tax?

The transporter can go to any of the ZRA offices and make payment. Alternatively, e-payments can also be made. ZRA will issue a prescribed ZRA receipt to the transporter upon collection of the levy.

Please note the following:

-Transporters are encouraged to comply with the law by registering for presumptive tax at the nearest ZRA office or using our e-services.

-Transporters are advised to pay the applicable presumptive tax regularly preferably on a weekly or monthly basis to avoid accumulating tax arrears.

-Transporters need to obtain a Tax clearance Certificate from ZRA as a pre-requisite for obtaining a license from Road Transport and Safety Agency (RTSA)

-Failure to make consistent payment of the tax within the charge year as prescribed will result in arrears and possible penalties and interest on the amount outstanding.

i) What are the applicable penalties for non-compliance?

For late or non- payment of presumptive tax, 5% of the amount that remains unpaid plus interest - charged at the Bank of Zambia Discount Rate plus 2% shall apply.


Presumptive tax on betting and gaming businesses:

The Commissioner-General may make a standard assessment requiring a person carrying on the business of betting and gaming to pay a presumptive tax as set out in Part-III of the Ninth Schedule.

Persons carrying on betting and gaming business will no longer be eligible to register for income tax or turnover tax.


It is therefore, mandatory for a betting and gaming business to notify the Commissioner-General of its establishment as provided below:

A person liable to pay presumptive tax under section sixty-four A of the Act shall, within thirty days of establishing a business, notify the Commissioner-General of the establishment of the business.


What happens to businesses that are already registered on other tax types and are eligible for registration under presumptive tax?

Businesses that are already registered with the Zambia Revenue Authority either on income tax or turnover tax will be required to migrate to the presumptive tax regime effective 1st January 2019.


What is the due date for payment of presumptive tax?

The due date for the payment of presumptive tax is the 14th day of the month following the end of the tax period.


Is there any provision for tax refunds incase excess tax is paid?

A refund of excess tax will be paid in accordance with the Income Tax Act.


What is the due date for submission of presumptive tax returns?

In the case of a return submitted manually, the due date is by the 5th day of the month following the end of the tax period while a return submitted electronically is due by the 14th day of the month following the end of the tax period.


Note: The manual return for January 2019 is due by 5th February 2019 while the electronic return for the same period is due by 14th February 2019.


What is the prescribed period for retention of records for presumptive tax?

The records should be retained in the English language, within the Republic and for a period of six years.

Examples of business records include, but not limited to:

  1. Record of initial deposits
  2. Record of cash payout
  3. Record of machine customer wins
  4. Machine and table reports (daily, weekly, monthly)
  5. Sitting allowances for councillors
  6. Inventory of machines and tables
  7. Cash book
  8. Bank statements

When can a business cease to be liable to pay presumptive tax?

A business shall cease to be liable to pay presumptive tax under any of the following circumstances:

  1. if the person is adjudged bankrupt
  2. in the case of a sole proprietor, upon the death of the person
  3. upon the winding up of the person's business
  4. any other circumstances as may be determined by the Commissioner General
Tax On Betting And Gaming:

Type Of GameMonthly Tax Rates Or Monthly Tax Amount
Casino Live games20 percent of gross takings
Casino Machine Games35 percent of gross takings
Lottery Winnings35 percent of gross takings
Betting10 percent of gross takings
Slot Machines(Bonanza) K250 per machine
Gaming Machines(Limited Pay Out) K500 per machine

The amendment prescribes the specific tax rates and presumptive tax amounts applicable to betting and gaming businesses.

Note:

1) "Net proceeds" means the gross proceeds less sums paid out for the prizes.

2) "Gross takings" means the total amount staked by players less winnings payable.


Note:

The tax payable per month for the casino live games, casino machine games, lottery winnings and betting will be computed on the net income (total takings less pay outs). The tax payable for slot machines and gaming machines is a fixed amount per machine per month.

 
   
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