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PICZ ordered to pay ZRA K1, 300,000 VAT

• 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.
• The insurance firm argued that the sale of salvage motor vehicles was exempt from VAT
• ZRA appealed to the Supreme Court arguing that the Tax Appeals Tribunal erred in law

The Supreme Court of Zambia has ordered Professional Insurance Corporation Zambia Limited to pay the Zambia Revenue Authority (ZRA) K1, 300,000 Value Added Tax (VAT) from its Salvage Sales.
In a statement Issued to Money FM News ZRA Corporate Communications Manager Topsy Sikalinda noted in its ruling on 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.
Mr. Sikalinda explained that 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.
He however said, 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,” he added, “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 or ZRA is deemed or ought to know the inadequacy or the incorrectness of a return at the point of filing of such return,” said Mr. Sikalinda.
He noted that 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 vehicles.
Mr. Sikalinda narrated that 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 could only decide as to the incorrectness or inadequacy of a return after it has been scrutinized by way of an audit. ZRA won the case with costs,” he said.

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