Introduction of Statutory Instrument no. 125 of 2020: Zero-Rating of VAT on fuel
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Secretary to the Treasury Fredson Yamba listens to Finance Minister Bwalya Ng’andu address Zambian on the Sate of the Economy on Wednesday 12th February 2020
By Blessings Kafwanka
Zambia Institute of Chartered Accountants (ZiCA) Accountancy programmes
Value Added Tax, (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production up to the point of sale to the consumer.
It is a tax that is incurred by the final consumer of a product or service.
Therefore, zero-rating VAT on petroleum products should remove that burden from the final consumer and not anybody else.
Dr. Katele Kalumba, Ng’andu Magande, Ng’andu Peter Magande, Edith Nawakwi, Dr. Situmbeko Musokotwane, Alexander Chikwanda and Rabson Chongo
In Zambia, the VAT rate is currently at 16% and is applicable to supplies of standard-rated goods and services.
We should therefore expect the introduction of Statutory instrument No. 125 of 2020 to translate into a reduction in the pump price of fuel by at least 16%.
Blessings Kafwanka ZiCA (Zambia Institute of Chartered Accountants) Accountancy programmes
Unless the Energy Regulation Board (ERB) has quietly increased prices due to the depreciation of the Kwacha against the Dollar and the opted to absorb that increment by zero-rating VAT on fuel.
Bank of Zambia Governor, Dr. Denny Kalyalya and BoZ Deputy Governoer Operations, Bwalya Ng’andu with Alexander Bwalya Chikwanda and Amos Chanda
If Government goes ahead to reduce the pump price of fuel, it might actually help to mitigate the impact of high inflation which can be seen in the rapid rise in the prices of basic goods and services on the market.
The introduction of SI 125 of 2020 will marginally reduce the revenue that government expects to generate through VAT as planned in the 2021 national budget. But the benefits that will accrue to consumers and overall impact on the economy will certainly outweigh this revenue loss.
Starting the day at the Mining Indaba in Capetown. Head of delegation Hon. Christopher Yaluma, Hon. Bowman Chilosha Lusambo, Deputy Secretary to Cabinet, Christopher Mvunga
