TODAY, we take a break from a series of articles on debunking the unbundling of ZESCO by featuring an article by a guest writer.
The article is focusing on some of the tax changes in this year’s national budget.
HAROON GHUMRA writes:
The Zambia Revenue Authority (ZRA) has provided information on their website which gives an overview of the changes in the tax legislation for the fiscal year 2022.
This follows the presentation of the 2022 National Budget to Parliament last year by Finance and National Planning Minister, Dr Situmbeko Musokotwane.
The K173-billion 2022 National Budget was approved by Parliament on December 23, 2021 and will cover the 12 month period, from January 1, 2022 to December 31, 2022.
One of the key changes relates to the income tax which encompasses Pay As You Earn (PAYE), Corporate Income Tax, Rental Income, Presumptive Tax, Mineral Royalty and Income Tax in the hospitality industry.
These changes became effective from January 1, 2022.
1) PAYE
The PAYE threshold has been increased to K4,500 per month from K4,000 to provide relief to employees and self-employed individuals, especially those in the lower income bracket.
The chart below, compiled by the Times of Zambia for the benefit of the readers, outlines how much PAYE an employee will pay on his/her monthly earnings.
INCOME PER MONTH PAYE – JANUARY 2022
K4,500 NIL
K4,800 K75
K6,900 K705
K8,000 K1,117.50
K10,000 K1,867.50
K12,000 K2,617.50
K14,000 K3,367.50
K16,000 K4,117.50
K18,000 K4,867.50
K20,000 K5,617.50
2) CORPORATE INCOME TAX
This has been reduced to 30 per cent from 35 per cent, however, the top marginal tax rate for telecommunication companies has been maintained at 40 per cent.
3) RENTAL INCOME
The tax regime has been reformed with those in receipt of rentals of K800,000 and BELOW per annum being charged turnover tax at the rate of four per cent.
Individuals and companies receiving rental income in EXCESS of K800,000 per annum will pay tax at the rate of 12.5 per cent.
In the past, it was the responsibility of the tenant to deduct tax at 10 per cent and account for it to ZRA under the Withholding Tax account.
For the year 2022, the burden has now shifted to the landlord/lady who will receive rent in full and will be responsible for paying the tax.
Rental Income has now been isolated as a separate source of income and will not be bundled with other income sources.
The landlord or landlady will be required to account for the income by submitting a new monthly RENTAL – TURNOVER TAX return, which is presently being designed.
The chart below shows the implications of the changes.
YEAR 2021
ANNUAL RENTAL INCOME TAX RATE TAX PAYABLE
K800,000 10% K80,000
K820,000 10% K82,000
YEAR 2022
ANNUAL RENTAL INCOME TAX RATE TAX PAYABLE
K800,000 4% K32,000
K820,000 12.50% K102,500
4) PRESUMPTIVE TAX
This Tax is applicable on taxis and buses and was last revised in 2018. The chart below shows the Presumptive Tax which will be payable this year on motor vehicles for the carriage of persons.
VEHICLE SITTING CAPACITY TAX PER ANNUM
64 seater and above K12,960
50 – 63 seater K10,800
36 – 49 seater K8,640
22 – 35 seater K6,480
18 – 21 seater K4,320
12 – 17 seater K2,160
Below 12 seater K1,080
5) MINERAL ROYALTY – MINING SECTOR
Mineral Royalty will now qualify as a deductible expense for Income Tax purposes in line with international good practice.
This will enhance investment in the mining sector and contribute to economic growth and job creation.
6) CORPORATE INCOME TAX – HOSPITALITY INDUSTRY
The Corporate Income Tax rate of 15 per cent on income earned by hotels and lodges on accommodation and food services has been extended from last year up to December 31, 2022.
This measure is aimed at providing relief to businesses in the hospitality industry to safeguard employment and investment in the sector amid the COVID-19 pandemic.
7) TAX ON CERAMIC PRODUCTS MANUFACTURING
The Corporate Tax for businesses involved in the manufacturing of ceramic products has been suspended for the charge years 2022 and 2023.
This is to promote the production of locally-manufactured ceramic products and to create employment.
The due dates for payment of the various Taxes is tabulated below:
TAX DUE DATE
PAYE 10TH DAY OF EVERY MONTH
TURNOVER TAX 14TH DAY OF EVERY MONTH
WITHOLDING TAX 14TH DAY OF EVERY MONTH
VALUE ADDED TAX (VAT) 18TH DAY OF EVERY MONTH
MINERAL ROYALTY 14TH DAY OF EVERY MONTH
EXCISE RETURN 15TH DAY OF EVERY MONTH
ANNUAL INCOME TAX RETURN 21ST JUNE OF EACH YEAR
PROPERTY TRANSFER TAX 14TH DAY OF THE MONTH AFTER TRANSACTION
The author is a veteran journalist with massive experience in tax issues
For comments: 0977 246099, 0955 431442 or e-mail: jmuyanwa@gmail.com