For businesses operating in Zambia, tax compliance is a crucial responsibility. Depending on your business size and activities, you may need to register for various types of taxes, including Value Added Tax (VAT), Income Tax, and Turnover Tax. Each tax category is distinct, with specific criteria and registration processes.
In this blog, we’ll cover everything you need to know about how to register your business for VAT, Income Tax, and Turnover Tax with the Zambia Revenue Authority (ZRA). We’ll also provide an easy-to-understand guide with simple steps to ensure your business is tax compliant.
1. What Taxes Do You Need to Register For?
Before we get into the details, let’s understand the three major types of taxes that businesses in Zambia may be required to register for:
- VAT (Value Added Tax): This applies to businesses with an annual turnover exceeding K800,000. VAT is a tax on goods and services that is ultimately paid by the consumer.
- Income Tax: All businesses, regardless of size, must register for Income Tax. This tax is paid on profits earned by the business.
- Turnover Tax: Businesses with an annual turnover of less than K800,000 are eligible for Turnover Tax instead of VAT. It’s a simplified tax regime for small businesses.
Knowing which tax applies to your business is the first step in becoming tax compliant. Let’s look at the registration process for each.
2. How to Register for VAT (Value Added Tax)
If your business has a turnover exceeding K800,000 per year, you are required by law to register for VAT with ZRA. Here’s how you can do it:
Step 1: Check Eligibility
Confirm that your business meets the turnover threshold of K800,000. If your business is expected to exceed this limit, registration for VAT is mandatory.
Step 2: Visit the ZRA e-Services Portal
The easiest way to register for VAT is through the ZRA e-Services Portal at www.zra.org.zm. If you already have an account, log in using your details. If not, you’ll need to create one.
Step 3: Complete the VAT Registration Form
Once logged in, navigate to the Taxpayer Services section and select “VAT Registration.” You will need to provide the following information:
- Company details (name, registration number, address)
- Details of the business’s operations
- Annual turnover estimate
- Bank account information for the business
Step 4: Submit Required Documents
You’ll need to upload documents, such as your Certificate of Incorporation, Taxpayer Identification Number (TPIN), and proof of the business’s physical location.
Step 5: Receive VAT Certificate
After submitting the form and documents, ZRA will review your application. If approved, you will be issued a VAT Certificate, which allows you to start charging VAT on your goods or services.
Step 6: File VAT Returns
Once registered, you’ll need to submit VAT returns regularly (usually monthly or quarterly) and pay any VAT due to ZRA.
3. How to Register for Income Tax
Income tax is a tax on the profit your business generates. Unlike VAT, all businesses—whether they are small or large—are required to register for Income Tax. Here’s how:
Step 1: Obtain a TPIN
The first step in registering for Income Tax is ensuring your business has a Taxpayer Identification Number (TPIN). If you haven’t registered for a TPIN yet, you can do this through the ZRA e-Services Portal.
Step 2: Log into the ZRA e-Services Portal
Once you have a TPIN, log into the ZRA e-Services Portal using your credentials.
Step 3: Complete Income Tax Registration Form
Navigate to the Taxpayer Services section and select Income Tax Registration. Fill out the form with details about your business, such as:
- Business type (e.g., sole proprietorship, partnership, or company)
- Business activities and sources of income
- Names of directors or business owners
Step 4: Submit Documents
ZRA may ask for supporting documents, such as your business registration certificate and annual financial statements.
Step 5: Receive Confirmation
Once you submit your application, ZRA will process it and confirm your registration for Income Tax. You’ll then be required to file annual tax returns and pay tax on your business’s profits.
4. How to Register for Turnover Tax
If your business has an annual turnover below K800,000, you can register for Turnover Tax. This is a simplified tax regime for small businesses that eliminates the need to file VAT returns, but still allows you to pay taxes based on your gross turnover.
Step 1: Confirm Eligibility
Ensure that your business’s annual turnover does not exceed K800,000. If your turnover surpasses this limit, you’ll need to register for VAT instead of Turnover Tax.
Step 2: Log into the ZRA e-Services Portal
Just like with VAT and Income Tax, the registration for Turnover Tax is done online through the ZRA e-Services Portal.
Step 3: Complete the Turnover Tax Form
After logging in, navigate to the Turnover Tax Registration section. You’ll need to provide basic information about your business, including:
- Business name and registration number
- Annual turnover estimate
- Bank account details
Step 4: Submit Documents
You may be required to upload documents such as your Certificate of Incorporation (for companies) or Business Name Registration Certificate (for sole traders and partnerships).
Step 5: Receive Confirmation
Once ZRA approves your application, you’ll be registered for Turnover Tax. You’ll need to file quarterly returns based on your gross revenue.
5. What Happens After Registration?
Once you’ve registered for VAT, Income Tax, or Turnover Tax, you’ll need to stay on top of your tax obligations. Here are some tips:
- Keep Accurate Records: Maintain up-to-date records of your sales, expenses, and revenue. This will help you file accurate returns and avoid penalties.
- File Tax Returns on Time: Whether you’re registered for VAT, Income Tax, or Turnover Tax, you must submit your returns and make payments on time. Failing to do so can result in penalties and interest charges.
- Consult a Tax Professional: If you’re unsure about which taxes apply to your business or how to file, consider seeking advice from a tax professional.
6. Choosing the Right Tax Option
If you’re just starting out and your business has a small annual turnover (below K800,000), Turnover Tax might be the best option for simplicity. However, as your business grows, you may need to transition to VAT and Income Tax.
For established businesses with larger turnovers, registering for VAT is a legal requirement. It allows you to collect VAT from your customers and claim back VAT on business expenses.
Conclusion
Registering for the appropriate taxes with ZRA is essential for running a compliant and successful business in Zambia. Whether you need to register for VAT, Income Tax, or Turnover Tax, the process is straightforward and can be completed online through the ZRA e-Services Portal.
In future blogs, we’ll explore how to file tax returns online with ZRA and understanding the Zambian tax system.