Advance Income

TOPSY SIKALINDA writes THOSE that are involved or have involved themselves in imports of goods have obviously heard of Advance Income Tax (AIT). This is what people are greeted with as they receive an assessment of their imports and then the hustle to have it dropped (eliminated) from the assessment begins.  This push for the AIT to be dropped in most cases result into some delay in clearing the imported goods at the borders, thereby, increasing the dwell time at the border which increases the cost of doing business for the entire supply chain.  Remember the role of the Zambia Revenue Authority (ZRA) is to facilitate international trade and the essence of trade facilitation is to ensure goods move between countries quickly.  It is not the desire of the authority for people to spend more time at the border for whatever reason. Today’s article will highlight what importers can do to avoid being charged AIT which is currently at 15%.  To begin with, AIT is a tax withheld in respect of imported goods for commercial purposes.  Commercial goods are goods whose value exceeds US$2,000. Why was this tax introduced?  This tax was introduced in an effort to capture unregistered business importers who make commercial imports, thereby broadening the tax base and to enhance tax compliance for registered taxpayers.  Goods for commercial purposes include; goods for resale, for provision of services or for use in businesses. Advance Income Tax is computed at the point of entry at the rate of 15% of the Value for Duty Purposes (VDP) of the imported goods and it is not the final tax.  A removal of this tax is granted to taxpayers who are compliant with submission of returns and payments of all tax types that they are registered for.  For individuals who are not in business but have a Taxpayer Identification Number (TPIN) they need to login to their on TaxOnline and apply for a Tax Clearance Certificate (TCC) for the tax to be removed.  Those without a TPIN need to first apply for a TPIN then login to TaxOnline and apply for a TCC. Immediately a TCC is issued the AIT drops automatically on the Customs side.  The interface between Taxonline and ASYCUDA systems has provided for automatic configurations for all AIT waivers with effect from 1st January, 2017.  Therefore, all AIT configurations are no longer done manually but are activated once the taxpayer has a valid Tax Clearance Certificate (TCC) obtained either manually or electronically from TaxOnline system.  Note that the AIT waiver configuration is tied to the Tax Clearance Certificate validity period hence the need to be compliant all the time. Is there remedy for a taxpayer who has paid AIT because he/she wasn’t able to have it dropped immediately? Yes there is.  For individuals not in business but have suffered AIT all they need to do is to submit an annual Income Tax Return at the end of the charge year accompanied by copies of the following: Customs and Excise Declaration (Form CE 20), Customs assessment notice on which the AIT was charged and ASYCUDA generated receipt on which payment was made.  For motor vehicles, taxpayers need to show evidence that they are the owner by producing copies of a white book. The submitted refund requests go through a process of assessment to verify the correctness of the request.  Those that are in business they can claim it back through the submission of annual returns for the charge year in which the AIT was paid. The return should be accompanied by the following documents; Customs and Excise Declaration (Form CE 20), Customs assessment notice on which the AIT was charged and ASYCUDA generated receipt on which payment was made.  In this case the AIT is treated as an advance tax paid already if the attachments are not availed to support the refund. For taxpayers on Turnover Tax the AIT claim is paid through the Turnover Tax Remittance card for month 12 (December tax return) by attaching copies of the following documents; Customs and Excise Declaration (Form CE 20), Customs assessment notice on which the AIT was charged and ASYCUDA generated receipt on which payment was made.  Just like in any situation trying to correct something is always time consuming and similarly reclaiming AIT is time consuming since taxpayers have to wait until the end of the year to claim it. Therefore, the best option is to avoid being charged AIT in the first place so that the resources can be used for other business transactions. So to avoid being charged AIT, be tax compliant all the time. The Sun