• This is compared to K26.5 billion collected during the same period last year.
• Low VAT compliance is the major challenge ZRA is facing.
• Lower than expected profitability in the mining sector is having a toll on performance of mining related taxes.

Zambia Revenue Authority (ZRA) has disclosed that it collected gross revenue of K27.3 billion in the first quarter of 2023, compared to K26.5 billion collected during the same period last year, representing revenue target increase of 12.4%.
Speaking during a stakeholder engagement on tax revenue and administrative performance for the first quarter of 2023, Authority Commissioner General Dingani Banda revealed that ZRA refunded K4.1 billion during the same period and paid out K1.35 billion per month.
Mr. Banda stated that the net outturn was K0.4 billion or 1.7 percent below quarter one target of K23.7 billion.
He attributed the negative revenue performance in the quarter under review, to lower than expected profitability in the mining sector, which is having a toll effect on performance of mining related taxes such as mineral royalty tax.
“In Quarter 1 of 2022, ZRA collected gross revenue of K26.5 billion and refunded K4.1 billion by paying K1.35 billion per month. Net outturn was K1.3 billion or 6.4% above target.”

“Key factors for negative performance in Quarter one of 2023 include lower than projected profitability of major mining companies in 2022, which led to downward adjustments of the quarter four 2022 provisional tax payments, lower metal production and ore-grade than forecasted, which affected Mineral Royalty; and low payment compliance by withholding VAT agents with over K13.8 billion cumulatively withheld but not paid to date,” Mr. Banda explained.

He also lamented that the Authority has been experiencing challenges with regards to Valued Added Tax (VAT) on domestic goods due to low compliance.

Mr. Banda however observed that VAT on imports was the highest contributor to revenue at 22. 1 percent, followed by Pay As You Earn (PAYE) at 20.5 percent while mineral royalty recorded the largest drop at -5.7 percent from K3.5 billion last year to slightly under a billion Kwacha this quarter.

He noted that some of the tax payers have dropped from the tax net following the introduction of Tax Payer Identification Number (TPIN) for employees.

“The top contributors to revenue by sector in Quarter one of 2023 were, Mining, wholesale and retail, manufacturing, public administration and Defence, and Financial and Insurance services. These contributed 72.0% of gross collections in 2023 compared to 74.1% in 2022.”

Mr. Banda further highlighted low tax compliance by Artisanal Small and Medium Mining Holders, limited tax base as well as VAT fraud where taxpayers are using fake import certificates, as some of the major challenges related to tax administration.

He said ZRA has since created an artisanal small scale mining unit to deal with challenges affecting the sector with regards to tax compliance.

Meanwhile, Mr. Banda disclosed that the Authority is owed K99.9 billion in taxes by suppliers of goods and services to government.

He said ZRA has since started implementation of withholding of tax liabilities for suppliers of goods and services to government and parastatals before they are paid.

Mr. Banda added that the Authority is also implementing Debt swaps with identified suppliers to government and other parastatals.

“We have a challenge of escalating debt. Taxes which are owed to ZRA now stand at K99.9 billion as at end of 2022 and that is one of the many reasons why we have been supporting the implementation of the tax amnesty.

“We expect to collect tax revenue of K28.3 billion in the second quarter of the year,” he said.