Turn over tax – Zambia Revenue Authority (ZRA)

turnover tax

What is turnover tax?

This tax that is charged on gross sales/turn over (that is: earnings, income, revenue, takings, yield & proceeds).

Who qualifies to apply for turnover tax?

  • Any person carrying on any business with an annual turn over of K800, 000 or less. So if your business makes K800,000 or less from January to December each year, then your should register for turn-over tax with ZRA.
  • Any person whose business earnings are subject to withholding tax, and it is not the final tax such as, rental income, commissions, interest earned by companies, royalties earned by residents, etc.

Who does not qualify to apply for turnover tax?

  • Any person carrying on business with an annual turn-over of more than K800, 000
  • Any individual or partnership carrying on business of public service vehicles for the carriage of persons.
  • Partnerships carrying on any business irrespective of whether the annual turn-over is K800, 000 or less.
  • Any person who is involved in mining operations as provided under the Mines and Minerals Development Act.
  • Any person whose business earnings are subject to withholding tax and it is the final tax, such as:-
    • Bank interest for individuals
    • Dividends
    • Interest on Government Bonds
    • Interest earned on Treasury Bills for Charitable Institutions and other exempt persons.
    • Management and Consultancy fees paid to non – residents.
    • Payments made to non – resident contractors.
    • Public Entertainment Fees paid to non – residents.
    • Royalties paid to non – residents, etc.

At what rate is turnover tax calculated?

Turnover tax is calculated at 4% of the total turnover amount for each particular month or year (for those who default for the whole year and are required to pay that particular year in which they defaulted).

How is turnover tax calculated?

Turnover tax is calculated as follows:

LIVING HOPE IT SOLUTIONS carries on business as a retailer. In the month of January 2022 the business made the following sales:

  • Cash sales = K2000
  • Credit sales = K5000
  • Total (gross) sales = K7000 (cash sales + credit sales)
  • Turnover tax due for the month of January, 2022 = K280 (K7000 * 4% over 100)
  • Net sales for the month of January, 2022 will therefore be = K6720

When is turnover tax returns supposed to be remitted to ZRA?

Turnover tax returns are to be submitted by the 14th of the month following the month in which the transactions occurred (i.e. returns for January are to be made in February and February returns are to be made in March).

  • Manually by the 5th of the following month to which the return relates and
  • Electronically by the 14th of the month following the month in which the transactions occurred.

What are the penalties for late filling in of turnover tax returns to ZRA?

Any late submission of turnover tax return to ZRA attracts a penalty fee of K75 (or 250 penalty units) per month or part of the month thereof.

Are taxpayers who have signed up for turnover tax required to pay income tax or provisional tax?

No. 

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