Setting Up Business in Zambia
| 
The aim of this article is to explain registration procedures with the Zambia Revenue Authority for TPIN, VAT, Income Tax and PAYE.
TPIN Registration
TPIN (Taxpayer Identification Number) is a unique 13-digit number given to each taxpayer. The TPIN is a pre-requisite to all procedures of tax registration under VAT, direct Taxes and Customs & Excise Divisions. The TPIN was introduced because Zambia Revenue Authority is working towards integrating the operations of the three Divisions (Customs & Excise, Direct Taxes and Value Added Tax) in order to simplify the tax administration and to consequently reduce on the administration costs.
What is a TPIN?
Taxpayer Identification number is a unique thirteen-digit computer generated number allocated to a taxpayer under any of the following types of business:
• Limited company
• Partnership
• Sole trader/proprietor
• Other
When this number is generated, it is presented for collection as a certificate.
Who registers for TPIN?
• Companies or Partnership Businesses
• Individuals
• Non-Governmental Organizations, Clubs, Associations, Missionary bodies & other similar organizations registered with Registrar of Societies
• Entities
How to apply for TPIN Registration
Application form TPIN 1 which can be obtained from the ZRA Advice Centre in Lusaka or any local ZRA office, has to be completed and submitted to the same office, accompanied by copies of the following documents:
Limited company under the companies Act
Required documents:
• Certificate of incorporation
• Certificate of share capital
Foreign company registration under the Companies Act
Required documents:
• Certificate of registration copy
Partnership Firm registered under the Business Names Act
Required documents:
• Certificate of Registration
• Statement of Particulars-approved by the Registrar
• Completed form TPIN 2
Individual (without registration under any Act)
Required documents:
• National Registration Card (NRC) copy
Firm registered under the Co-operative Societies Act
Required documents:
• Certificate of Registration copy
NGO, Club, Association, Ministry body, etc
Required Document:
• Certificate of Registration or Certificate of Exemption from Registrar of societies copy.
GRZ Ministry/institution, foreign Government and agency
Required Document:
• Documentary evidence to show legal existence in Zambia
Income Tax Registration.
Having registered for TPIN, a taxpayer will be required to register for Income Tax. Taxpayers whose turnover is below K200, 000,000 in a charge year, will register for Turnover Tax. Those Taxpayers whose turnover is above K200, 000,000 will register for normal Income Tax. This is applicable to individuals and Limited Companies.
Partnerships and Consultancy businesses do not fall under Turnover Tax regardless of their turnover being below K200, 000,000.
Partnerships will register for Income Tax to facilitate for the receipt of Partnership annual returns on ITAS at the end of the charge year. Partners will register for Income Tax separately as they will be taxed according to their profit sharing ratios.
It is extremely important for every person who registers for TPIN to register for Income Tax because the Income Tax account number is the one they shall be using to remit income tax.
Submission of Tax Returns:
Individuals
All self employed individuals in receipt of income are required to submit Tax Returns not later than 30th September following the end of the charge year. Where an individual submits a Tax Return late, a penalty of 1,000 units (K180, 000) per month or part thereof is charged.
Companies
All companies in receipt of income tax are required to submit Tax Returns not later than 30th September following the end of the charge year. Where the company submits a Tax Return late, a penalty of 340 penalty units (K360, 000) per month or part thereof is charged.
Accounting Date
This refers to the date on which the accounts are made up. The Income Tax Act in Zambia provides that all businesses should make up their accounts to 31st March. Where it is not possible to prepare accounts to 31st March, businesses are required to seek permission from the Commissioner General to adopt an accounting date other than 31st March.
PAYE Registration
This will apply to individuals, companies, partnerships, etc who have employees. Upon registration for PAYE, they will be given a PAYE account number, which they will use to remit PAYE deducted from their employees' salaries every month.
VAT Registration
Businesses intending to register for VAT must ensure that they are registered for TPIN before submitting their application Form. Businesses are required by law to apply for VAT registration if they deal in taxable goods and services and their taxable turnover exceeds registration threshold of K200 million per annum.
Applications for VAT is made using VAT 1 form. Copies of your certificate of incorporation or registration must be attached to the application form and also the form 42 (Directors details) from Registrar of companies. The following requirements must also be attached to the application form:
• Taxpayer Identification number
• Sketch map of location
• Latest Bank Statement
• Certified copy of certificate of registration or incorporation
• Evidence of records like cashbook, purchases daybook, sales daybook, invoice books & set of accounts confirmed orders/contracts signed.
Businesses may also register for VAT on voluntary basis provided they fulfill the conditions set out in Gazette notice No.80 of 2007.
Procedure for VAT registration
All VAT registration applications should be made using the official application form VAT 1 obtained from VAT advice Centre or you're nearest ZRA office. VAT registration like any other registrations is free. The application will be processed and a VAT number allocated within 7working days from the date your application form reaches the VAT Registration Unit, and a VAT certificate will be issued within five working days from the date the VAT registration number is allocated.
Effective Date of registration (EDR)
This is the time when a business will be considered as having started charging VAT and it is prescribed by law as:
• New business: - the date of commencement of trading
• Continuing business: - If a business submitted an application within one month of becoming liable, the effective date of VAT registration is the date when the VAT 1 is submitted. But if an application is not made within a month of becoming liable, the effective date of registration will be the first day the business' taxable turnover exceeds the registration threshold limits. A business will be given an extended tax period to submit the first return depending on when they reached the threshold.
VAT Obligations
• Display the VAT registration certificate
• Submit VAT returns and make payments
• Maintain sufficient records and retain them for a minimum of 5 years
• Advise ZRA of any business changes
• Allow officers of ZRA to enter the business premises and examine goods/records
• For businesses registered on Voluntary basis, notice must be given to the Commissioner General 30 days before expiry of 12 months of the intention to renew registration failure to which de-registration will be effected immediately.
VAT Returns and payments
You are required to submit returns and pay VAT to ZRA before or on the 21st of the month following the tax period. Either company cheques or bank certified cheques could be used to make payment. Once a company cheque is dishonored, you will need to use bank certified cheques on all subsequent payments.
Late Return Penalty
Late submission of returns and non-payment of tax will attract automatic penalties and interest. For each day that a return is late, a penalty of K180, 000 or 5% of the tax due, whichever is greater is chargeable. Interest is also chargeable on all late payments at the rate of one half per centum of the tax due multiplied by the number of days late.
Late Registration Penalty
The penalty attracts ten thousand fee units for each tax period the supplier remains unregistered after meeting the registration threshold. In addition, the supplier will not be allowed to claim input tax 3 months prior to registration.