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Value Added Tax

Value Added Tax may be defined as a consumption-based tax that is levied in the supply chain at each point were value is added to a good or service. Since it is consumption based, the primary legal way of avoiding VAT is by not consuming any goods or services that are standard rated. The other is by consuming only zero-rated or exempt supplies.

WHO PAYS VAT

By its nature, Value Added Tax is incurred by the final person in the chain of supply who is not registered for VAT. Persons registered for VAT will claim back, through the return, the input VAT incurred in the course of their business, and remit to Zambia Revenue Authority, the Output VAT collected in excess of their input VAT. Therefore, registered suppliers do not pay VAT.

STANDARD RATED SUPPLIES: These are supplies that attract VAT at the prescribed standard rate 16 %.

ZERO RATED SUPPLIES: These are supplies that attract VAT at 0%.

EXEMPT SUPPLIES: These are supplies that do not attract any VAT at all.

THE SOURCES OF THE VAT LAW

The VAT Law is premised on five (5) broad areas. These are:

1.The Value Added Tax Act −The Principal Act.
2.The Value Added Tax General Regulations − The Principal Regulations/ Minister's Regulations
3.The VAT General Rules − The Principal Rules/ Commissioner General's Rules
4.The Case Law −The Precedence
5.Common Practice −Practice Notes
       
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