Overview
Legislation
- The Value Added Tax Act, 1995, as amended (“VAT Act”)
- The VAT (Amendment) Act No 27 of 2023
- The VAT Cross Border Electronic Services Regulations, Statutory Instrument No.18 of 2024
- The VAT General (Amendment) Rules, 2024
- The Zambia Revenue Authority (ZRA) Practice notes
The VAT Act, under Section 8A, imposes VAT in Zambia on electronic services which are performed, undertaken, or utilised in Zambia, or where the benefit of the supply is for a recipient in Zambia, regardless of whether the supplier has a place of business in Zambia.
Electronic services are currently defined under Section 2 of the VAT Act as "a service provided or delivered on or through the internet, electronic or digital network." This definition, effective from 1 January 2024, replaced the original, narrower definition introduced in 2020 (which limited electronic services to those "capable of delivery of data across multiple electronic commerce platforms"), and materially broadens the scope of services that may fall within the ESS regime.
Where the electronic service provider has a permanent business address or a registered office in Zambia, the service provider will be required to register and account for VAT in accordance with normal rules.
In the event that the non-resident service provider does not have a permanent address of the business address or a registered office in Zambia, there is a requirement to register for VAT under the simplified registration regime. In the event that the non-resident service provider is unable to register, there is a requirement to appoint (on application to the Commissioner General) a person resident in Zambia to act as a tax agent on their behalf.
Upon appointing a tax agent, the non-resident must also notify the Commissioner General of the tax agent’s appointment. This notification may be submitted to the ZRA by the tax agent on behalf of the non-resident.
Aspects related to the implementation process of VAT on ESS have been outlined in the VAT Cross Border Electronic Services Regulations of 2024, read together with the VAT General (Amendment) Rules, 2024.
Key provisions applicable to VAT on ESS
| Particulars | Description |
| Scope | Both business to business (B2B) and business to customer (B2C) transactions. |
| Liability to remit VAT | Non-resident supplier / the “local tax agent” appointed by the non-resident supplier |
| VAT rate | 16% |
| Taxable value | The VAT ACT guides that where services are supplied for monetary consideration, the taxable value is the price that is charged for services onto which VAT at the prescribed rate (currently 16%) is added. |
| Effective date | 1 January 2020 (VAT amendment act No 14 of 2019) |
| VAT registration threshold | Non-resident suppliers must register under the simplified regime upon reaching the annual threshold of ZMW 800,000 (circa USD 42,000) or ZMW 200,000 (circa USD 10,000) in any consecutive three-month period. |
| Tax invoice | Registered suppliers must issue simplified tax invoices denominated in ZMW, using ZRA-prescribed exchange rates as determined by the Bank of Zambia, and including prescribed particulars such as supplier details, customer identification (for B2B/B2G), supply date, pre-tax amount, the exchange rate applied, and a sufficient service description. |
| Bank of Zambia Currency Directives, 2025 | In late December 2025, the Bank of Zambia issued new ‘Currency Directives’ requiring all domestic transactions to be settled in Zambian Kwacha, even if prices are quoted in a foreign currency. The implications are significant, but the picture is more nuanced than it appears. Notable distinctions apply to non-resident suppliers of electronic services, and sector-specific carve-outs could reshape compliance obligations for key industries. |
Services in scope
The VAT Act defines electronic services as services provided or delivered via the internet or any electronic or digital network. Cross-border electronic services (CBES) are services supplied in Zambia by a supplier that is a resident or has a business outside, Zambia.
The CBES Regulations prescribe the following categories: streaming services, software services, downloadable digital content, website related services, subscription-based media, search engines and automated help desks, electronic data management, online presence services, ticket servicing and online marketplace services.
Registration and compliance
The non-resident supplier offering electronic services (under B2B or B2C arrangement) in Zambia is required to register for VAT under the simplified regime, regardless of whether the services are provided remotely.
Where a non-resident supplier is unable to register under the simplified registration mechanism, the supplier should request approval from the Commissioner General to appoint a local tax agent, stating the reasons for the failure to register. The local tax agent will arrange for tax invoices to be issued on behalf of the foreign service provider to the recipient of the service in Zambia.
At the end of the VAT accounting period (one calendar month), the non-resident supplier or the local tax agent will submit the VAT return declaring the output charged during the period. The return should be submitted by the 25th of the month following the end of the relevant period. Similarly, VAT payments to ZRA are due by the 25th of the month following the end of the relevant period.
Invoicing
Currently, both the non-resident and the local tax agent are required to issue invoices for purposes of accounting for VAT on ESS.
Zambia has implemented an electronic invoicing system, effective July 2024, known as the Smart Invoice system. Currently, the non- resident supplier is exempt from registering and issuing invoices from the Smart Invoice system. Instead, the non-resident supplier is required to issue invoices in a simplified format, as outlined above.
VAT on costs
Currently, non-resident suppliers cannot claim or deduct input tax on CBES. However, recipients of CBES in Zambia can claim input tax, subject to the provisions of the principal VAT Act.
Other considerations
The following services are exempt from the provisions the CBES regulations:
- Broadcasting and telecommunication services.
- Physical media including read only memory compact disk, floppy disks and similar tangible media.
- Physical audio or video media including compact disks, audio cassettes, video cassettes and digital video disks.
- Physical game media such as games on a read only memory compact disk.
- Professional services such as advice given by lawyers and financial consultants to clients by electronic mail.
VAT on cryptocurrency/digital assets
Currently, Zambia does not have specific VAT rules or regulations relating to cryptocurrency-related activities or digital assets.
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