Sector/Policy Disadvantages, Shortcomings, Weaknesses or
Area of Interest Challenges
1. (Tax Impact of introduction of SI88:
Proposal) 1) Lost revenue: As Zambia now no longer
has the benefit of ancillary services
being taxed at Zero Rated VAT, has seen
an impact on business relating to
- Handling
- Storage
- Clearing charges for movement of
goods/ stocks in and out of bonded
warehouse
- Security Services linked to escort
services for over border movement.
2) These services are expended by all
Zambian over border business partners,
has resulted a drastic impact on our
charges being elevated in line with the
16% Standard Rated VAT charge that
companies are unable to absorb due to
their given competitive profit margins.
3) Cashflow – the elevated charges for the
client and the monthly liability on the
books to Zambia Revenue Authority has
also impacted all cash positions as well.
This monthly liability also has an effect
on manpower allocated to prepare the
returns that follow.
2. Withholding As per the Section 81A of the Income Tax Act, all
Proposed Policies or Measures Expected Implications or Impact of
the Proposed Policies or Measures
We propose to the amendment Zambia has always been a key
introduced and allow all corridor in the international freight
ancillary services to be taxed at sector given its geographical
Zero Rated VAT.on cargo location.
handled for export from the
bonded warehouse Allowing ancillary services provided
by Zambian entities at Zero Rated
Thus includes clearance in VAT makes services offered more
bond, handling and storage in lucrative for all stakeholders in the
bond international freight industry.
In addition to the benefit on the
operational side, it will also
alleviate the added pressure on
cashflow to meet the statutory
payments in time.
The added benefit to increased
business opportunities for Zambian
companies will also lead to higher
foreign currency reserves in the
country as most trades on this line
of business are conducted in United
States Dollars.
- Propose to remove the The Zambian transporters and
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 Sector/Policy Disadvantages, Shortcomings, Weaknesses or
Area of Interest Challenges
Tax on for Zambian entities are liable to withhold a part of
international the payment due to be paid for non-resident
freight contractors and remit the withheld amount to
(Tax Zambia Revenue Authority.
Proposal) As non-resident contractors to foreign
companies, the payments received by Zambian
contractors are now also subject to a deduction
of similar withholding tax (WHT) at source.
As a result of the above, Zambian transporters
and forwarders are losing business to non-
resident service providers as they are unable to
provide end to end service to foreign clients. To
provide the end to end services Zambian
transporters and forwarders need to engage
non-resident freight providers and the payments
to them shall be subject to withholding tax.
Proposed Policies or Measures Expected Implications or Impact of
the Proposed Policies or Measures
Withholding tax on forwarders will be able to affiliate
international freight on services and subcontract with foreign
procured by Zambian transporters with higher capacities
companies as per the Section to move freight and provide the
81A of the Income Tax Act end to end services which are in
(Example: South Africa and very high demand.
Democratic Republic of Congo).
- Propose to engage the Increase in revenues for Zambian
neighbouring states in the companies will also strengthen the
region to waive off the forex reserves in our country with
withholding tax introduced by increased business opportunities.
their regulatory body where
applicable (Example:
Democratic Republic of Congo).

This results in loss of revenue for Zambian

transporters and forwarders as well as loss of
forex reserves for the country.

3.

4. Bonded As per Chapter 322 of the Customs and
Warehouse Excise Act Part VI on Bonded Warehousing has
Module limitation on the operations of the bonded
warehouse. Which doesn’t support the
intermodal transhipment model for transit cargo
We propose introduction of
Intermodal Transhipment hubs
to support the Government
Vision of taking advantage of
Zambia being a landlocked
This will see growth in the
transhipment industry that will see
the stakeholder industries grow
such as
Zambian transporters will be able to

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 Sector/Policy Disadvantages, Shortcomings, Weaknesses or Proposed Policies or Measures Expected Implications or Impact of
Area of Interest Challenges the Proposed Policies or Measures
via in Country Country. The private sector has participate in the movement of
invested a lot in this sector, but cargo in and out of the
we need a flexible transhipment hub.
transhipment system that can Equipment hiring companies will
operate 24 hours under also benefit as most transit cargo
customs control. will need to be handled.
Insurance and Banks will be able to
put up bonds to support the hubs.
The clearing agents will increase
volume of customs clearances.
Overall, this will increase
employment for the Country

Will reduce the cost of doing

We also propose to have business by removing cost of
special warehousing double handling of goods which
regulations and procedure must first be offloaded in the
models for transit bonded Customs Area and later moved to
goods. The current regulations the bonded warehouse.
are biased towards bonding of
goods for longer periods of up Will Increase truck turnaround as
to 365days, and later clear delays are reduced through
them for home consumption. selective physical inspections and
reporting of truck arrival at the
bonded warehouse for goods
removed in bond.

Will increase the overall volumes on

imports for bonding purposes which
would translate into higher profits
for stakeholders and higher

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 Sector/Policy Disadvantages, Shortcomings, Weaknesses or Proposed Policies or Measures Expected Implications or Impact of
Area of Interest Challenges the Proposed Policies or Measures
domestic taxes for the Government

5. Insurance - This new SI 105 of 2022 dictates to have We propose total scrap off this  Local Companies
Statutory clearing agents to up 100% collateral against the SI as it will close a lot of will face
Instrument bonds with Zambia Revenue Authority Zambian Clearing challenges to raise
105 of 2022 Companies.With the current 100% collateral
bond structure companies are
and therefore will
struggling to raise
be eliminated.
bonds ,introducing this SI will
mean a decline to Zambian  Management of
Companies transit cargo will
be affected as the
bonds will not be
enough to cover
available cargo.
This will leave
multinational
companies with a
monopoly of
handling most of
the transit cargo.
International Companies will get
their bonds through the banks
and therefore depriving the local
insurance Companies the much-
needed revenue. Point to note is
that majority of the banks are not
locally owned

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