Supreme Court orders Professional Insurance Corporation (Z) Limited to pay Zambia Revenue Authority K1, 300,000
By Derrick Sinjela – Rainbow Newspaper Zambia Limited
PROFESSIONAL Insurance Corporation (Z) Limited has been ordered to pay the Zambia Revenue
Authority (ZRA) Value Added Tax (VAT) from its salvage sales, confirms ZRA Corporate Communications Manager Topsy Sikalinda.
A delighted Mr. Sikalinda said in its ruling on Friday 19th February 2021, the Supreme Court ordered the insurance company to pay the VAT due and the costs awarded to ZRA within thirty (30) days of the judgment.
In 2013, ZRA found that Professional Insurance was owing K1, 300,000.00 in VAT from the
Sale of Salvage when the Authority audited the business activities for VAT purposes for the period 2008 to 2012.
However, the insurance firm argued that the ‘Sale of Salvage Motor Vehicles’ was exempt from
VAT and subsequently appealed to the Tax Appeals Tribunal which agreed with it.
“ZRA, being dissatisfied with the Ruling of the Tax Appeals Tribunal, appealed to the Supreme Court arguing that the Tax Appeals Tribunal erred in law when it held that the sale of ‘Salvage Vehicles’ was not an ordinary transaction of sale of goods and, therefore, was
within the contemplation of the VAT Exemption Order, 2014, and secondly that the Tax Appeals Tribunal erred when it interpreted section 21(4) of the VAT Act, Cap 331 to mean that the Commissioner-General Mr. Kingsley Chanda or ZRA is deemed or ought to know the inadequacy or the incorrectness of a return at the point of filing of such return,” read a Press Release on Friday 26th February 2021, signed by ZRA Corporate Communications Manager Topsy Sikalinda.
The Supreme Court held the firm view that the wording of the Exemption Order was not
broad enough to include the ‘Sale of Salvage Motor Vehicles’ and that there was no intention
whatsoever in the Exemption Order to extend the exemption to sale of salvage motor
The Supreme Court further held that the Tax Appeals Tribunal erred when it found that the
‘Sale of Salvage Motor Vehicles’ was incidental to the business of insurance.
Further, the Supreme Court stated that the Commissioner-General Mr. Kingsley Chanda could only decide as to the incorrectness or inadequacy of a return after it has been scrutinized by way of an audit as this would be the first time he would have “reason to believe, thus ZRA won the case with costs.