Barring any last minute changes, the Zambian government will start taxing internet services from January 2020. The move could effectively see internet services such as Netflix, WhatsApp and others taxed. According to Zambia’s VAT Amendment Bill 2019 which was issued on 20th November 2019, taxing of internet services companies will come into operational January 2020.

Here Is All You Need To Know

• Under the new tax regime, companies offering internet services in Zambia but domiciled out of the country will be expected to appoint a tax agent to handle all tax matters in the country.
• The Bill defines “Electronic Commerce” as the buying, selling and advertising or marketing of goods and services using the internet, mobile telecommunication networks and other electronic commerce infrastructure.

“A taxable supplier shall issue a tax invoice for the supply of goods and services using an electronic fiscal device. A taxable supplier who fails to issue a tax invoice commits an offence and is liable on conviction to a penalty not exceeding 300 penalty units or to imprisonment for a term not exceeding three years or to both,” the Bill says.

• In the Bill, “Electronic Service” is defined as a service capable of delivery of data across multiple electronic platforms.
• The Bill says the Supplier who does not have a registered office or Permanent address in Zambia shall appoint a tax agent resident in the Republic to act on behalf of the Supplier in tax matters.

“For the purposes of this Section, “Supply of Services” includes the supply of a service that is made by a supplier who is resident in Zambia or carries on a business outside the Republic to a recipient who is resident in Zambia.”

Comments:

With an estimated number of 7.1 million people connected to the internet in Zambia, out of its population of 15 million, Zambia, for the first time, is showing other African countries that global internet giants such as Netflix that makes money off Zambians could be taxed. Extending the tentacles of taxation across the barriers of geography could be a deal breaker for the nascent internet industry in Africa. However, it could be argued that companies with physical presence are already paying so much taxation. With Zambia’s tax to gdp ratio ( last reported in 2013) standing at 20.3 %, it makes sense that the Southern African country, rich in copper and other mineral resources, is turning to the 14.3 percent of its population who access the internet. 

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world