ZAMBIA REVENUE AUTHORITY ZAMBIAN TAX REGIME APPLICABLE TO LAWYERS & LAW FIRMS A Presentation to the LAZ 2018 AGM by Moses Shuko Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Presentation Outline - Income tax Introduction Zambian Tax Regime in General - Income tax - Withholding Tax - Property Transfer Tax - Value Added Tax - Customs and Excise Duty Taxes applicable to lawyers and law firms 4. Current Tax Compliance levels 5. The way forward Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

INTRODUCTION “Taxation is the price which civilised communities pay for the opportunity of remaining civilised” Albert Bushnell Hart “ Taxes are the lifeblood of government and no taxpayer should be permitted to escape the payment of his just share of the burden of contributing thereto” Arthur Vanderbilt Tax justice is ensuring that all companies and individuals pay the right amount of tax at the right time. Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

INCOME TAX The Income tax is administered under the Income Tax Act Chapter 323 of the Laws of Zambia Income in Zambia is taxed on the basis of the source principle. Residents are taxed on income that has a source within the Republic and on certain types of foreign income that are deemed to have a source within the Republic Non residents are taxed on income that has a source within the Republic Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

INCOME TAX Cont’d The income taxes comprises of four tax types (i) company income tax (ii) personal income tax (iii) withholding taxes (iv) presumptive taxes Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Company Income Tax This is a tax charged on profits and gains earned by limited companies. The general company tax rate is 35% For companies involved in agriculture, manufacture of chemical fertilizer and non-traditional exports, the rate is 15% Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Personal Income Tax This is a tax charged on income earned by individuals. It is taxed at graduated rates ranging from 0 percent for incomes of K39,600 per annum and below and the balance at graduated rates of 25 percent, 30 percent and 37.5 percent Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Personal Income Tax cont’ Note on Partnership Taxation Partners share business profits from the partnership using the Sharing Ratios and these profits are taxed separately on the individual partners The Income tax bands are used in computing tax payable for each partner. Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Withholding Taxes This is a 15% tax withheld by the payer before making certain payments. Interest Dividends Commissions Management and consultancy fees Rents (10%) Royalties (R-15%/NR-20%) Non resident contractors (20%) Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Property Transfer Tax This tax is administered under the Property Transfer Tax Act Chapter 340 of the Laws of Zambia. Property transfer tax is charged at the rate of 5 percent of the open market value realised from the sale of any land, building or shares issued by any company incorporated in Zambia. Mining right or an interest in the mining right 10% Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Value Added Tax This tax is administered under the Value Added Tax Act Chapter 331 of the Laws of Zambia Value Added Tax is a consumption-based tax that is levied in the supply chain at each point were value is added to a good or service. VAT is charged at the standard rate of 16 percent on all goods and services apart from those listed in the exempt and zero rated schedules. Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Value Added Tax Cont’ Exempt goods include agricultural product, books and newspaper etc. Zero rated good include exports mosquito nets, packaged tours etc. Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

CUSTOMS AND EXCISE These taxes are administered under the Customs & Excise Act Chapter 322 of the Laws of Zambia Import duties on imports at the varied rates of zero percent for capital and basic raw materials, 5 percent for other raw materials and equipment, 15 percent for intermediate goods and 25 percent for finished goods are charged Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

CUSTOMS AND EXCISE Cont’ Excise duties on goods such as petroleum products, selected motor vehicles, beer and liquor, spirits, cigarettes and carbonated drinks are levied Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Taxes applicable to Lawyers &Law Firms Customs & Excise – on imports & excisable goods Income Tax – For purposes of filling the returns Personal Income Tax – For partners & employees Value Added Tax – On all taxable supplies Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Taxes applicable to Lawyers & Law Firms Withholding Tax – on legal services & rentals Property Transfer Tax – as agents and own right Turnover Tax – Firms excluded as partnerships & lawyers by virtue of services offered Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Return filling Compliance for legal entities 2017 Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

Payment Compliance for legal firms in 2017 Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

THE WAY FORWARD FOR LAWYERS & LEGAL FIRMS Timely registration for all applicable taxes Timely filling of tax returns Timely Payment tax Well maintained accounting records up to 6 years Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

THE WAY FORWARD FOR LAWYERS & LEGAL FIRMS Correct and complete declarations Timely provision of information & updates on partnership changes Voluntary Self - Disclosures Timely application for deregistration upon winding up of business Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times

END OF PRESENTATION Luke 20:25 He said to them, “Then give back to Caesar what is Caesar’s, and to God what is God’s” Power, Privilege & the pursuit of Justice: Legal Challenges in Precarious Times