ANNUAL REPORT 2021

Letter of Transmittal

CHAIRMAN OF THE ZAMBIA REVENUE AUTHORITY GOVERNING BOARD

25th April, 2022

Honourable Dr. Situmbeko Musokotwane, MP

Minister of Finance and National Planning
Ministry of Finance and National Planning
P.O. Box 50062
LUSAKA

Honourable Minister,

On behalf of the Governing Board, I have the pleasure of presenting to you, the 27th Annual Report of the Zambia
Revenue Authority, covering the Financial Year 1st January 2021 to 31st December 2021.

This report has been prepared pursuant to the requirements of the Zambia Revenue Authority Act, Chapter 321 of the
Laws of Zambia and the Public Finance Management Act No. 1 of 2018.

Yours sincerely,

Dr. Caleb Fundanga

Chairman of the Governing Board

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 ANNUAL REPORT 2021

VISION

“To be a world class model of excellence in revenue

administration and trade facilitation.”

MISSION
STATEMENT

“To optimise and sustain revenue collection and

administration for a prosperous Zambia.”

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ANNUAL REPORT 2021

VALUES

Our commitment to serving all stakeholders is embedded in our Corporate Values:

WE believe in delivering excellent services and value our taxpayers.

Taxpayer Focus We provide timely, responsive and proactive service. We take time
to understand taxpayers’ needs and always strive to surpass
their expectations;

WE do what we say we will do. We will uphold professional and

Integrity ethical business practices. The company’s interactions with
stakeholders will be done transparently for mutual benefit. We
will ensure honesty, integrity and respect to all;

WE uphold high quality standards and etiquette in our dealings

Professionalism to enhance professional competence by providing the highest
level of service;

WE are creative, bold and believe in continuous learning

Innovation and improvement. We believe these will sustain total quality
consciousness in the organization;

WE collaborate inside and outside ZRA to maximise our shared

knowledge and bring greater value to one another and most
Networking importantly, to our customers. We work together as one ZRA
family, in partnership with other organizations, and always embrace
diversity and inclusiveness.

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ANNUAL REPORT 2021

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ANNUAL REPORT 2021

ABBREVIATIONS

ASYCUDA Automated System for Customs Data

BMS Block Management System

CSP Corporate Strategic Plan

DT Direct Taxes

EFD Electronic Fiscal Device

GDP Gross Domestic Product

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit

ICT Information and Communication Technology

IMF International Monetary Fund

ITE Indirect Taxes and Excise

KPI Key Performance Indicator

KRA Key Result Area

PACRA Patents and Companies Registration Agency

PAYE Pay As You Earn

PMDC Performance Management and Development Contract

TPIN Tax Payer Identification Number

USAID United States Agency for International Development

USSD Unstructured Supplementary Service Data

VAT Value Added Tax

VDP Value for Duty Purposes

WHT Withholding Tax

ZRA Zambia Revenue Authority

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 ANNUAL REPORT 2021

Corporate Profile
The Zambia Revenue Authority was established on 1 st April 1994 as a corporate body to collect revenue on behalf of the
Government of the Republic of Zambia. This is pursuant to the Zambia Revenue Authority (ZRA) Act No. 28 of 1993.
The specific functions of the Authority are to:

1. Properly assess and collect taxes, duties, levies and fees at the right time;
2. Ensure that all monies collected are properly accounted for and banked;
3. Properly enforce all relevant legislation and administrative provisions;
4. Provide revenue and trade statistics to the Government;
5. Give advice on tax policy to the Government; and
6. Facilitate international trade.

Corporate Governance

As a corporate body, the operations of ZRA are overseen by the Governing Board as provided under the ZRA Act. In addition to
the specified functions, the Act empowers the Minister responsible for finance to give the Governing Board such general directives
with respect to the carrying out of its functions as the Minister considers necessary or expedient.

In performing its oversight role, the Governing Board is guided by the Code of Corporate Governance and the Board Charter in
providing direction and control of the Authority. The Governing Board provides strategic direction to Management through guidance
on accountability and good stewardship in the operations of the Authority. To aid its work of enhancing corporate governance,
the Board has put in place various governance policies such as the Board Evaluation Policy, Conflict of Interest Policy and the
Whistle-Blower Policy.

As provided for in the ZRA Act, the ZRA Governing Board is comprised of:

A representative of A representative of the

the Secretary
to the Treasury Attorney General

The Governor of the A representative of the Law

Bank of Zambia Association of Zambia

A representative of the Zambia

A representative of the
Association of Chambers of
Commerce and Industry Bankers’ Association of Zambia

A representative of the Zambia Two other members appointed

Institute of Chartered by the Minister responsible for
Accountants finance

The members of the Board elect the Chairman and the Vice-Chairman from amongst themselves.

The Chief Executive Officer of ZRA is the Commissioner General who is appointed by the President of the Republic of Zambia
and is an ex-officio member of the Governing Board.

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ANNUAL REPORT 2021

Taxes, Duties, Levies and Fees Administered by ZRA

The Authority administers the following tax types, duties, levies and fees:

Income Taxes;

Value Added Tax;

Mineral Royalty;

Excise Duties;

Customs Duties;

Property Transfer Tax;

Taxes, levies and fees
Carbon Emission Surtax;
administered by
the Authority Export Duty;

Skills Development Levy;

Rural Electrification Levy;

Insurance Premium Levy;

Tourism Levy; and

Motor Vehicle Fees.

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 ANNUAL REPORT 2021

STAKEHOLDERS

The stakeholders1 in the operations of the Authority include:

The people of Zambia The Government of the

Republic of Zambia and
its agencies

The taxpayers, the business Members of regional Cooperating Partners;

community and their and other multilateral
interest groups, together groupings;
with their professional
advisors

Research and academic Non-governmental Tourists, travellers

institutions organisations and and traders crossing
other interest groups Zambia’s borders;

The media The Governing

Board, Management
and Staff of ZRA.

1
See Annex for a comprehensive list of stakeholders that collaborated with ZRA in 2021

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ANNUAL REPORT 2021

PERFORMANCE HIGHLIGHTS - 2021

Tax to GDP
ratio increased to Recorded Surplus

19.7% in 2021 of K24.5 Billion

or 41.3%
from
above target
17.3% in 2020

Tax registrations
100% of customs processed in an average
declarations were of
processed within 1.4 days in 2021,
the Taxpayer Charter an improvement from
standard of 1.5 days
2.2 days in 2020

Registered a total of
329,190 TPINs
in 2021,
posting a growth of 5%
from 2020

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 ANNUAL REPORT 2021

MEMBERS OF THE ZRA GOVERNING BOARD 2021

Amb. Bwalya S. K. Chiti

Chairman

Mr. Willis Chipango Mrs. Cecilia B. Zimba Mr. Christopher M.Mvunga

Member and Chairman of the Vice Chairperson and Chairperson

of the Innovation and Project Member
Finance Committee Management Committee

Mr. Andrew Nkunika Mr. James Koni Mrs. Lydia M. Sibanda

Member and Chairman of the Member and Chairman of the
Legal Staff and Disciplinary Audit and Risk Committee Member
Committee

Mrs. Grace T. Bwanali LAZ REPRESENTATIVE

Member VACANT

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 MEMBERS OF THE ZRA SENIOR MANAGEMENT AS AT 31ST DECEMBER, 2021

Mr. Sydney Chibbabuka Mr. Moses Shuko Mr. Dingani Banda Mrs. Brigitte N. Muyenga Mr. Peter Phiri

Commissioner Customs Commissioner Indirect Commissioner General Commissioner Finance Acting Commissioner
Services Taxes & Excise Direct Taxes

Mr. Kwegyer Msimuko Mrs. Patricia B. Lungu Mr. Wagner Chilembo Mr. George Mwale Mr. Ignatius Mvula Mrs. Mirriam Sabi
Director Design Monitoring &
Deputy Commissioner Deputy Commissioner Deputy Commissioner
International Relations Director VAT Operations
Operations - North Operations - South Support Director Excise
(Indirect Taxes & (South)
(Customs Services) (Customs Services) (Customs Services)
Excise)

Mr. Shadreck Kachusha Mr. Richard Kapasa Mr. Ronald Chalwe Mr. Timothy Milambo Mr. Benjamin Simpungwe Ms. Catherine Chilambe

Director VAT Director Design Monitoring Director Informal Sector & Director Treasury
Operations (North) & International Relations Medium Taxpayer Office Management Director Finance Director Investigations
(Direct Taxes)

Mr. Ezekiel Phiri Mrs. Suzyo M. Ng’andu Mr. Moffat Nyirenda Mr. Monday M. Katongo Mr. Morgan Mukwasa
Director Research & Director Human Director Information Director Legal
Corporate Strategy Board Secretary Resource & Communication services
Technology

Mrs. Gladys Matamwadi Mr. Moonga Mumba Mr. Chimambo Chibale Mr. Callistus Kaoma

Acting Director Large Director Internal Director Innovations

& Specialised Audit & Risk and Project Director Adiministation
Taxpayer Office Management

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 ANNUAL REPORT 2021

CHAIRMAN’S STATEMENT

Let me begin by thanking the Minister of Finance and National Planning

for appointing me and my colleagues to serve as members of the ZRA
Governing Board with effect from 15th March, 2022. I also wish to thank
my fellow Board members for subsequently electing me as the Chairman
of the Governing Board on 28th March, 2022.

The year 2021 began in the middle of the second COVID-19 wave. Neverthe-
less, lessons from the first wave were invaluable in navigating the second
wave. For ZRA, it was our decision to fine-tune our electronic channels
and our COVID-19 responses, primed for such an eventuality, that saved
the day. This helped us start on a strong note with a healthy surplus of
K2.5 billion at the end of the first quarter, a testament to the quality of
effort we put in planning.

A brief period of normalcy followed the initial COVID-19 wave of 2021 before
a deadlier third wave struck yet again during the winter months preceding
the general election. By year end, COVID-19 had clearly established itself
with seasonality. The 2021 general elections demonstrated yet again Zambia’s signature democratic credentials, that elections
would go by smoothly and a new government installed. In early October, there was change of guard in ZRA when Dr. Kingsley
Chanda handed the baton to Mr. Dingani Banda as Commissioner General. Despite the midstream changeover of leadership at
national and corporate level, ZRA consolidated its sprint in the last quarter to close the year at K83.9 billion against a target of
K59.4 billion. This resulted in a surplus of K24.5 billion or 41.3 percent. The unexpected sustained uptick in copper prices propelled
the emphatic finish to the year.

Other key milestones achieved by ZRA during the year include the successful implementation of the SAP upgrade project and
the enhancement of the USSD platform to include withholding tax on rental income. The former adaptation allowed staff working
remotely to access resources and was instrumental in sustaining operations. ZRA also completed formulating its 2022-2024
Corporate Strategic Plan. Among the medium-term goals is the transformation of ZRA into a truly data driven institution that
embraces evidence to inform tax administration decisions while using technology to improve taxpayer compliance. ZRA’s achieve-
ment of a net revenue growth of 45.5 percent and a tax to GDP ratio of 19.7 percent from 17.3 percent in 2020, underscores the
power of unity of purpose, among other factors, in the face of an existential threat posed by COVID-19.

On behalf of the Board, I would like to thank the Minister of Finance and National Planning, Honourable Situmbeko Musokotwane
MP, and his officials for their continued support to ZRA. I would also like to thank the former Board Chairman, Amb. Bwalya S.K.
Chiti, and members of his Governing Board, for steering ZRA through a difficult period. To the Management and staff of ZRA,
may I simply say, “Bravo”. What a spectacular finish to a difficult and unusual year. This notwithstanding, my Board will in 2022
continue to persue reforms that will further strengthen tax administrations in Zambia.

It is now my honour to present to you the 27th Annual Report of the Zambia Revenue Authority for the financial year 1st January,
2021 to 31st December, 2021. The report is dedicated to the memory of Dr. Kenneth David Kaunda, founding President of the
Republic of Zambia who passed away on 17th June 2021.

Dr. Caleb Fundanga

Chairman of the Governing Board

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ANNUAL REPORT 2021

COMMISSIONER GENERAL’S REPORT

This report presents the Zambia Revenue Authority’s tax

revenue and operational performance, and the audited
financial statements for the fiscal year 1st January, 2021
to 31st December, 2021.

First and foremost, I am grateful to His Excellency

Mr. Hakainde Hichilema, President of the Republic of
Zambia for appointing me Commissioner General of
the Zambia Revenue Authority on 8th October, 2021.
This is a responsibility I take seriously as the revenue
collection effort of ZRA is what enables the Government
to better the lives of its citizens.

During the year under review, the global economy

continued to grapple with the effects of the COVID-19
pandemic, albeit with less disruption. Domestically,
economic growth was sluggish with real GDP growth
projected at two percent. Notwithstanding the harsh
economic environment, the Authority defied all odds
to surpass its annual revenue target four months
before the end of the year. By year end, the Authority
collected K83,915.2 million against the annual target of
K59,369.2 million, thereby registering a surplus of
K24,545.9 million or 41.3 percent. This outturn was
19.7 percent of GDP compared to 17.3 percent in 2020.

This outstanding revenue performance was largely aided by favourable copper prices, and also by the implementation of several
compliance initiatives such as enhanced enforcement efforts focused on non-compliant taxpayers.

Furthermore, the Authority undertook initiatives necessitated by the need to realign itself with an ever-changing business environ-
ment. These included the operationalisation of the Kazungula One- Stop-Border Post for simplified customs processes, signing of
contracts with 33 local Councils to enhance compliance for rental income taxation and provision of virtual classes on taxpayers’
rights and obligations. This was in recognition of the fact that a well-functioning tax authority is key to fostering sustainable socio-
economic development.

The lifespan of the ZRA 2019-2021 Corporate Strategic Plan (CSP) ended in the year under review. Under this Plan, significant
innovative milestones were scored all aimed at easing tax administration and compliance. To ensure continued strategic focus,
the Authority began in earnest the development of a new 2022-2024 Corporate Strategic Plan through a stakeholder consultative
approach which helped to identify the Authority’s challenges and opportunities.

With a risk management framework and a resilient Business Continuity Plan firmly in place, the Authority was able to navigate
the challenges posed by the COVID-19 pandemic. This was through adopting responsive mitigation strategies in line with the
evolving nature of the pandemic.

To improve voluntary compliance, the Authority intensified its customer engagements and education activities using various
modes of interaction. The Authority also undertook continuous training and development programmes for its staff to improve
service delivery. In this regard, 4,260 participants undertook training programmes during the year compared to 3,438 participants
in 2020. Further, the Authority undertook an evaluation of its training and development programmes to assess their impact and
inform the design of future programmes.

During the year, the Authority continued to attach great importance to staff integrity as it is an essential aspect of retaining public
confidence in its operations. The ZRA Integrity Committee engaged more than 1,100 members of staff on matters of integrity
while 25 focal point persons were trained by the Anti-Corruption Commission. In addition, the Code of Ethics, Conflict of Interest
Policy, Whistle Blower Policy, and the Gifts and Benefits Policy were augmented. I am optimistic that with these interventions, we
will continue to be professional and deliver to the expectation of all stakeholders.

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 ANNUAL REPORT 2021

I would like to thank the Minister of Finance and National Planning, Honourable Dr. Situmbeko Musokotwane, MP and his officials
for their support and guidance since my appointment. I also wish to acknowledge my predecessor Dr. Kingsley Chanda for his
contribution to strengthening our revenue mobilisation efforts. In the same vein, I want to thank the Governing Board for its
oversight and support to Management. Management will, in 2022, propose tax administration reforms aimed at further augmenting
the revenue mobilisation efforts.

I wish to pay sincere gratitude to our cooperating partners for supporting the different segments of our operations, which enabled
us to achieve our mandate. I further applaud all taxpayers who honoured their tax obligations despite the challenges of the
COVID-19 pandemic.

Finally, I would like to pay special gratitude to the Management and staff for posting a record-breaking revenue performance. It
is my hope that this remarkable performance is now our new normal that will be replicated in 2022 and beyond.

Dingani Banda
Commissioner General

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ANNUAL REPORT 2021

OVERVIEW OF
THE AUTHORITY

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 ANNUAL REPORT 2021

Overview of the Authority

The Zambia Revenue Authority is a semi-autonomous statutory body responsible for collecting revenue on behalf of the
Government of the Republic of Zambia. The organisational arrangement of the Authority is presented in this section.

1. The Governing Board Customs Services Division

The Authority has a Governing Board as provided under the The Customs Services Division administers trade taxes, fees and
ZRA Act comprising nine members drawn from both public and charges in accordance with the Customs and Excise Act, Chapter
private sectors. The appointment of members of the Governing 322 of the Laws of Zambia. As part of its mandate, the division
Board is executed by the Minister responsible for finance carries out enforcement of regulatory controls on imports, exports
while the Commissioner General, who is the Authority’s Chief and goods in transit, which helps to secure international supply
Executive Officer, is appointed by the President of the Republic chains. The Division also facilitates legitimate international trade,
of Zambia. thereby supporting the country’s economic growth.

In the year under review, the Governing Board performed its Direct Taxes Division
work through the following committees:
The Direct Taxes Division is responsible for administering income
1.1 Audit and Risk Committee taxes as provided for under the Income Tax Act, Chapter 323 of
the Laws of Zambia, and property transfer tax under the Property
The Audit and Risk Committee reviews the Authority’s reports Transfer Tax Act, Chapter 340 of the Laws of Zambia. In addition,
on the integrity of financial statements, the effectiveness of the division collects mineral royalty under the Mines and Minerals
internal controls and compliance with relevant statutory and Development Act No. 11 of 2015 and skills development levy
regulatory obligations. pursuant to the Skills Development Levy Act No. 46 of 2016.

1.2 Finance Committee Indirect Taxes and Excise Division

The Finance Committee considers the Authority’s reports on the The Indirect Taxes and Excise Division is charged with
utilisation of operational funds and assets as well as collection administering inland consumption taxes in accordance with the
and remittance of revenue to ensure accountability and efficiency. Value Added Tax Act, Chapter 331 of the Laws of Zambia, the
Tourism and Hospitality Act No. 13 of 2015 and the Insurance
1.3 Innovation and Project Management Committee Premium Levy Act No. 21 of 2015. The division also administers
local excise pursuant to the Customs and Excise Act, Chapter
The Innovation and Project Management Committee oversees 322 of the Laws of Zambia.
the governance, management and delivery of the Corporate
Strategy, Information and Communication Technology (ICT), Finance Division
innovations and related organisational reform projects.
The Finance Division is responsible for both treasury and
1.4 Legal, Staff and Disciplinary Committee accounting functions of the Authority. This involves facilitating
efficient remittance of government revenue to the treasury and
The Legal, Staff and Disciplinary Committee provides guidance managing the funds appropriated for the operations of the
on the appropriateness of management decisions on legal and Authority. The division is also responsible for debt recovery.
human resource related matters.
Administration Department
Divisions and Departments
The Administration Department is responsible for the acquisition,
The organisational structure of the Authority comprises three development and maintenance of physical assets of the Authority.
operating divisions headed by Commissioners; these are Customs In addition, the department is also responsible for occupational
Services, Direct Taxes, and Indirect Taxes and Excise Divisions. health and safety, physical security, transport, purchasing and
The operating divisions are supported by one other division in supplies management.
charge of finance headed by a Commissioner, nine departments
headed by Directors and two units headed by Assistant Directors.
All these heads report directly to the Commissioner General.

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ANNUAL REPORT 2021

Human Resource Department Research and Corporate Strategy Department

The Human Resource Department is responsible for all aspects of The Research and Corporate Strategy Department’s mandate
human resource management and development in the Authority. encompasses executive support and related functions. These
In line with this function, the department ensures fair treat- include undertaking tax policy research and coordination,
ment of staff, open communication, integrity, trust and mutual statistical analysis, bulk data analytics services, corporate planning
respect; all aimed at maximising the value and productivity of and business process that continuously improve operations whilst
the human capital. involving all employees. The department is also responsible for
implementing institutional data quality initiatives and taxpayer
Information and Communication Technology Department account reconciliations to improve the integrity and quality of
data for compliance management and enforcement purposes.
The Information and Communication Technology Department
ensures that the Authority has reliable and efficient ICT systems Units under Commissioner General’s Office
and services to support its mandate. This involves the acquisi-
tion, maintenance and security of all the ICT equipment and i. Corporate Communications Unit
systems in the Authority.
The Corporate Communications Unit coordinates the
Innovation and Project Management Department Authority’s corporate communications, advertising, public
relations and branding activities. The unit also manages stake-
The Innovation and Project Management Department is responsible holder engagements with the aim of promoting the corporate
for translating innovative ideas into tangible ICT and customer- image of the Authority.
centric solutions using the project management framework in
furtherance of the reform and modernisation agenda of the ii. Enforcement Unit
Authority. The department’s mandate includes spearheading
the delivery of holistic customer experience in the Authority for The Enforcement Unit is responsible for conducting customs
the benefit of all stakeholders. enforcement activities to curtail smuggling and providing
intelligence to facilitate investigations, prosecutions and
Internal Audit and Risk Department enforcement activities.

The Internal Audit and Risk Department is mandated to provide

objective assurance and consultancy regarding internal controls,
governance processes and risk management in the Authority.
Functionally, the department reports to the Audit and Risk
Committee of the ZRA Governing Board, and administratively
to the Commissioner General.

Investigations Department

The mandate of the Investigations Department is to investigate

suspected cases of tax offences committed under the various
laws administered by the Authority with a view to prosecuting
offenders.

Legal Services Department

The Legal Services Department is responsible for legal

representation of the Authority in all legal related matters and
reviews appeals and objections from taxpayers aggrieved by
the Authority’s decisions on tax matters. The department is also
responsible for prosecuting tax offenders.

Office of the Board Secretary

The Office of the Board Secretary provides secretarial and

related services to the Governing Board. The Board Secretary
also oversees the Internal Affairs Unit, which is responsible for
investigating cases of impropriety by officers of the Authority.

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Governance Structure

The governance structure of the Authority as at 31st December 2021 is depicted in Figure 1.

Figure 1: ZRA Organisation Structure for Senior Management

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ANNUAL REPORT 2021

Taxpayer Charter

To maintain public confidence, the Authority has a Taxpayer The service standards outlined in the Charter are broadly divided
Charter that sets out the minimum service standards that into three categories:
taxpayers and other relevant stakeholders can expect. The
Authority routinely monitors its performance against the set a) standards related to processing efficiency2;
standards through the Taxpayer Charter Monitoring Survey to b) standards related to taxpayer advisory services; and
ensure continuous improvement in its service delivery. c) standards related to service efficiency.

Processing Efficiency
The performance of all tax refunds was unfavourable against their to 1.4 days in 2021 from 2.2 days in 2020 against the Charter
respective Charter standards. The average processing time for standard of 3 days. This improvement is attributable to the
VAT refunds increased to 563.5 days in 2021 from 305.8 days automation of the registration process on TaxOnline, TaxOn-
recorded in 2020 against the set standard of 30 days. The poor Phone and TaxOnApp. Further, 100 percent of applications for
performance of this standard is due to insufficient resources for Tax Clearance Certificates were processed within the Charter
refund payments, limited audit capacity and system challenges. standard of 48 hours.

The average processing time for income tax refunds increased Customs declarations processed within the Charter standard of
to 69.9 days in 2021 from 51.9 days in 2020 against the Charter 1.5 days of registration of the entry increased to 100 percent in
standard of 45 days. Similarly, the average processing time for 2021 from 99 percent in 2020. The sustained positive performance
customs refunds in 2021 increased to 191.5 days from 104.7 is attributable to the continued roll-out of the self-clearance
days in 2020 against the Charter standard of 45 days. The modules and the stabilisation of the pre- clearance module on
poor performance on both standards is attributable to funding ASYCUDAWorld.
constraints.
Figure 2 summarises the processing efficiencies of tax refunds
Regarding registrations, the average processing time reduced (VAT, Income Tax and Customs) and tax registrations.

Figure 2: Processing Efficiency of Refunds and Registrations (average number of days) in 2021 and 2020

2
Processing efficiency refers to the turnaround time for completing a business process. It is monitored with respect to refunds, taxpayer registrations and customs
declarations.

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 ANNUAL REPORT 2021

Service Standards
During the year, the Authority also monitored the performance 87 percent in 2020. The reduction is attributable to the reduced
of taxpayer service standards. On Privacy, 90 percent of the physical interaction between ZRA and the public because of the
taxpayers were satisfied with the Authority’s performance with COVID-19 pandemic.
respect to the service standards on confidentiality and privacy
policy. This was lower compared to the rating of 96 percent in Further, 93 percent of comments and complaints received were
2020. With regard to Service efficiency, 83 percent of taxpayers acknowledged while 75 percent were responded to within the
indicated that they were served within 20 minutes of their arrival, Charter standard. This is a reduction from the performance
similar to 2020. posted on both standards in 2020.

With regard to clarity of information, there was a decline in the Figure 3 summarises the efficiencies of the various services the
number of taxpayers who rated the tax information received Authority offers to the public.
from ZRA as clear, to 74 percent in 2021 from

Figure 3: Efficiency of Customs Declaration and Advisory Services in 2021 and 2020

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ANNUAL REPORT 2021

PRIORITIES FOR
THE YEAR

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 ANNUAL REPORT 2021

Priorities for the Year

Our priorities for the year were dictated by our desire to enhance Widening the Tax Net
services that facilitate revenue collection, compliance management
Activities of ZRA Tax Agents
and legitimate international trade. With the COVID-19 protocols
firmly in place, the Authority in 2021 went through most of the During the year, the Authority appointed 33 local authorities
year managing within a largely virtual and remote setting. To this as tax agents for rental income tax, base tax and turnover
effect, the Authority accelerated its journey towards a digitalised tax within their jurisdictions. The appointment of local
revenue agency to enhance its services, improve the integrity authorities as agents is aimed at increasing compliance among
of outcomes, and assist in detecting non-compliance. As the taxpayers in the informal sector. By year end, 13,742 properties
use of data and technology increased, the Authority remained and 12,733 taxpayers were visited, resulting in 3,534 taxpayers
conscious of its obligation to taxpayers and hence prioritised being registered for withholding tax on rental income across the
the development of secure systems to ensure data integrity. 33 local authorities.

To accelerate the fiscalisation agenda and ensure the full realisa- Mobile Compliance Enforcement Activities
tion of benefits, a review of the implementation and performance
of the Electronic Fiscal Devices (EFDs) was done during the Despite the challenges posed by the COVID-19
year. Following the review, the fiscalisation is expected to be pandemic during the year, the Authority continued with
extended to all VAT registered taxpayers and will also cover other its mobile compliance enforcement activities through the
tax types such as turnover tax, tourism levy and local excise. Enforcement Unit. The enforcement operations resulted in
The Authority also enhanced the Unstructured Supplementary 2,452 interceptions with corresponding assessments valued at
Service Data (USSD) platform to include withholding tax on rental K140.1 million.
income and successfully implemented the SAP upgrade project.
Taxation of Small and Medium Taxpayers
The Authority is committed to continuously improve its services
and systems to deliver better experiences for its customers to In 2021, the Authority continued to encourage taxpayers to utilise
manage their tax obligations. In this regard, further enhancements e-services through simplified platforms such as the TaxOnPhone
were made to the TaxOnline system to make it more interactive. and TaxOnApp especially in this era of the COVID-19 pandemic.
The key services accessed on these platforms include Tax
To improve online service delivery and voluntary tax compliance, Payer Identification Number (TPIN) and tax type registration,
the Authority placed a high premium on improved customer deregistration, return filing and payments on TaxOnApp. The
experience by adopting a customer-centric culture anchored Authority further embarked on the development of a payment
onsimplified and improved processes. Efforts were also made module on TaxOnPhone.
to enhance system stability, user functionality and customer
experience on the core tax administration platforms, TaxOnline A total of 221,899 registrations were recorded on TaxOnPhone
and ASYCUDAWorld. These interventions were intended to in 2021 compared to 154,458 recorded in 2020. In addition, the
make tax administration systems robust and more accessible. number of returns filed on this platform increased to 72,087
in 2021 from 20,488 in 2020. Further, the number of non-nil
The Authority also prioritised the modernisation of trade logistics returns filed increased to 10,924 in 2021 from 2,206 in 2020, with
to facilitate international trade and revenue collection. To this declared liabilities increasing to K9.0 million in 2021 compared
end, several initiatives were implemented such as the Customs to K0.6 million in 2020. The increased usage of this platform
Validation System for transit acquittals, operationalisation of could partly be attributed to the ease of access as it does not
the Kazungula One-Stop-Border- Post for simplified customs require internet connectivity (see Table 1).
processes, addition of five more Government ministries to the
electronic Voucher of Exemption and the addition of another
two Government ministries onto the single payment window.

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ANNUAL REPORT 2021

Table 1: Number of Returns filed on TaxOnPhone in 2021 and 2020

With regard to TaxOnApp, 92,619 registrations were recorded in Enhancing Revenue Collection using the Block
2021. The high uptake on this platform was driven by registrations Management System
of individual TPINs amounting to 91,815, followed by turnover
and withholding tax registrations at 319 and 311, respectively. In 2021, the Block Management System (BMS) continued
Pay As You Earn (PAYE) and base tax registrations were 159 leveraging on remote management solutions such as TaxOnline,
and 15 respectively. In terms of returns, 38,274 were filed using TaxOnPhone and TaxOnApp to manage 81 blocks, an increase
TaxOnApp in 2021. Of these, 31,250 were nil returns while from 72 managed in 2020. The corresponding revenues attributed
7,024 were non-nil returns. In addition, 10,629 Payment Reference to the BMS activities significantly increased to K130.4 million from
Numbers (PRNs) were generated using this platform in 2021. K42.0 million recorded in 2020. Total registrations recorded under
BMS increased to 6,758 in 2021 from 861 in 2020 (see Table 2).

Table 2: Registration by Tax Type in 2021 and 2020 under the Block Management System

Electronic Fiscal Devices

The Authority continued to implement the fiscalisation project and of the VAT taxpayer population. In addition, 23 software vendors
by year-end, a total of 2,869 taxpayers had installed Electronic were accredited as at the end of 2021 after successfully devel-
Fiscal Devices (EFDs) namely, Fiscal Cash Registers and Electronic oping interface solutions for taxpayers using accounting software.
Signature Devices. Further, 95 taxpayers successfully integrated
their Point-Of-Sale systems through the Virtual Electronic Fiscal Through the analysis of EFD data, a total of 11,668 invoices that
Device solution thereby bringing the total number of taxpayers were suspected to be misclassified as zero rated or exempt
connected to fiscal devices to 2,964, representing 18.5 percent with a total sales value of K2,233.8 million and 862 credit notes

20.
 ANNUAL REPORT 2021

valued at K11,754.5 million were identified for inspection. In Physical Infrastructure Development
addition, a total of 3,822 returns were identified to have declared
transactions on the Tax Invoice Management System (TIMS) with During the year under review, the Authority constructed and
total sales valued at K3,590.3 million but were not declared on rehabilitated infrastructure at its various locations across the
TaxOnline. It was also established that a total of 6,772 returns country at a cost of K16.9 million. Among the projects completed
were underdeclared by K3,651.3 million in gross sales and were were the construction of new staff houses at Kipushi and Kashiba
flagged for audit. Further, 2,430 audits arising from cases identi- Border Posts, the construction of new ZRA offices in Chinsali,
fied by the EFD audit team were conducted and assessments and the alterations to existing offices, warehouses and external
amounting to K125.9 million were raised. works at the new Makeni Yard.

Despite the successes scored, the EFD implementation process Office Furniture and Equipment
faced a number of challenges during the year. These included
system sustainability, inadequate number of devices, failure to The Authority acquired assorted office furniture and non-ICT
issue multiple credit notes, lack of automated return and invoice equipment for its various offices countrywide at a total cost of
comparison and low uptake of Electronic Signature Devices. K1.5 million. The office furniture and equipment were procured
Additionally, the EFD implementation lacked adequate technical for the new ZRA offices at Chinsali, Kenneth Kaunda International
system support to attend to issues such as TIMS invoice download Airport and at Simon Mwansa Kapwepwe International Airport.
failure and timely device repair, among others.
Enforcement and Compliance Actions
To expedite the resolution of issues surrounding the fiscalisation
process, a review of the performance of the EFDs was done in Customs Services Division
2021. The major outcome of the review was the launch of the
EFD II Project. The EFD II project commenced in September (a) Scanner Operations
2021 with a primary objective of extending fiscalisation to all VAT
registered taxpayers and to ensure the full realisation of benefits In an effort to enhance operational efficiency relating to customs
anticipated in the first phase. Another objective of phase II was clearance, the Authority has installed non-intrusive scanners to
to extend fiscalisation to cover other tax types such as turnover speed up the examination of imports and exports. Scanners
tax, tourism levy and local excise. serve an additional purpose of aiding enforcement activities
aimed at increasing compliance among importers and exporters.
Improving Operational Efficiency
Out of the 611,127 trucks that passed through stations with
A number of projects were carried during the year all aimed at scanners during the year, 76,613 trucks or 12.5 percent were
improving the operational efficiency of the Authority as follows: scanned. Among the scanned trucks, 370 trucks were found
with discrepancies from which a total of K18.7 million additional
revenue was collected (see Table 3).

Table 3: Scanners Activity Report for 2021

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ANNUAL REPORT 2021

(b) Inland and Border Enforcement

Every year, the Authority conducts random and risk-based In 2021, the Value for Duty Purposes (VDP) of goods detained
enforcement and compliance activities at various ports in form and seized declined by 0.5 percent relative to 2020 (see Table 4).
of inspections, roadblocks and follow-ups on intelligence.

Table 4: Detentions and Seizures in 2021 and 2020 (K ’Million)

Enforcement activities yielded a total of K33.3 million in 2021 compared to K26.1 million collected in 2020 as shown in Table 5.

Table 5: Revenue Yield from Detentions and Seizures in 2021 and 2020 (K)

Enforcement Unit

In 2021, the operations of mobile compliance enforcement interceptions. From these interceptions, assessments worth
activities focused on curbing smuggling through risk based K140.1 million were raised.
random patrols and enforcement operations resulting in 2,452

Investigations Department

a) Investigations Activities

During the year, the Authority had a stock of 700 cases out of administratively while 69 cases were terminated for various
which 541 were brought forward from 2020 and 159 were new reasons and three were undergoing further action. A total of 510
cases. A total of 190 cases were concluded during the year out cases were carried forward to 2022 (see Table 6).
of which seven were referred for prosecution, 111 were settled

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 ANNUAL REPORT 2021

Table 6: Investigation Cases in 2021

Of the 700 cases investigated, 381 related to customs, while Direct Taxes and Indirect Taxes Divisions
319 related to direct taxes, indirect taxes and excise. This
represents an increase of 3 percent for customs related cases During the year under review, the Direct Taxes and Indirect Taxes
and 19 percent for domestic taxes related cases from the 370 Division identified and selected audit cases through the analysis
and 269 cases handled in 2020, respectively. of various risk parameters on TaxOnline, as well as third-party
data and other intelligence information.
b) Digital Forensics Activities
a) Tax Audits
During the year, the Authority completed 34 digital forensic
cases involving the examination of 94 digital items compared In 2021, the value of tax audit assessments was K4,181.7
to 50 cases involving 147 digital items in 2020. million3 compared to K3,789.5 million in 2020. Income tax and
domestic VAT accounted for 86 percent of the total value of audit
assessments with amounts of K2,578.8 million and K1,009.9
million, respectively (see Table 7).

Table 7: Tax Audit Assessments in 2021 (K’ million)

b) Block Management System

Taxpayer engagements and education aimed at enhancing additional 6,758 tax registrations recorded. This resulted to
compliance among small and medium taxpayers identified a cumulative total number of taxpayers managed under this
in blocks, continued through the Block Management System initiative to 10,844. The accompanying revenue yield from the
(BMS) initiative in 2021. The number of blocks managed across program to K42.0 million in 2021 from K42.0 million collected
the country marginally increased to 81 from 72 in 2020 with an in 2020 (see Table 8).

3
The amount does not include income tax and VAT rule-18 assessments of K29.6 billion that were finalised in the year following an administrative decision.

23.
ANNUAL REPORT 2021

Table 8: Block Management Activities in 2021 by Tax Office

Customer Experience

The Authority recognises the need to have improved customer remote working tools such as mobile internet routers and Virtual
experience in line with its key strategic pillars espoused in Private Network (VPN) access.Other strategic risks on the
the Corporate Strategic Plan. The Authority has established a watch list were: low taxpayer compliance; instability of core ICT
customer experience unit to enhance customer relationship and systems; the uncertainty of the sustainability of the fiscalisation
improve voluntary compliance. programme; high debt stock; the threat of terrorism; fraud and
corruption; inadequate BCP for core systems and cybercrime.
Using the customer experience (CX) model, the Authority
intensified engagements and education activities using different A new Business Continuity Management strategy was developed
channels to disseminate information to the public. This was done to support the implementation of the 2022 to 2024 Corporate
through virtual classes and workshops, tax clinics, live social Strategic Plan. This was in addition to other planned activities
media chats, YouTube tutorials, television, radio programmes, which were fully implemented during the year such as BCP
and tax literature. Key customer messages included tax and systems tests for core ICT systems.
administrative changes, general awareness, taxpayer rights and
obligations, compliance requirements as well as promotion of
the use of ZRA e-service platforms. Enhancements on TaxOnline and uptake of e-services

The Authority actively pursued the procurement of a new National During the year, the Authority continued with measures to stabilise
Call Centre and a Customer Relationship Management System and enhance the TaxOnline system, resulting in the resolution
to assist in managing customer enquiries and complaints. of a number of issues and bugs.

With regard to e-services, the number of new sign-ups for

Business Development e-services reduced to 95,650 in 2021 from 189,296 in 2020.
However, e-registration applications increased to 344,830 in
Enterprise Risk Management and Business Continuity Planning 2021 compared to 309,951 in 2020. Similarly, the proportion
of returns filed electronically increased to 99.8 percent in 2021
The Authority continued to actively manage strategic and compared to 98.1 percent in 2020 (see Table 9).
operational risks in line with the Risk Management Policy and
Framework. Due to their dynamic nature, risks continued to
evolve and so were the mitigative strategies adopted.

One of the gravest risks during the year was the COVID-19
pandemic. The pandemic posed a severe threat to the health of
staff and revenue collection. This risk was mitigated by putting
in place containment measures and providing treatment and
support to those affected. To sustain revenue collection, work
rotation arrangements were put in place through the provision of

24.
 ANNUAL REPORT 2021

Table 9: Uptake of e-services in 2021 and 2020

System Upgrades under Customs

During the year under review, several upgrades and d) the implementation of the Zambia-Malawi customs to customs
enhancements were made on ASYCUDAWorld and other systems data exchange interface; and
for customs management as follows: e) deployment of the exceptional list for exempting TPINs
from suspension..
a) the implementation of the Customs Electronic Licensing
System appointment module which mandates taxpayers to E-Payment Platform
appoint a customs agent;
b) the implementation of the automated Electronic Rules of Origin As at end year, 18 commercial banks and other financial institutions
module to facilitate trade; in Zambia were connected to both TaxOnline and ASYCUDAWorld.
c) the Customs Validation System for real-time acquittal of transits Of these, 11 provided their e-payment platform to non - account
was implemented at Kapiri Mposhi, Kazungula, Victoria Falls, holders (see Table 10).
Katima Mulilo and Chirundu;

Table 10: Banks Connected with ZRA e-Payment Platforms in 2021

The Authority continued to leverage its partnerships with service c) addition of five Government ministries to the electronic
providers to offer multiple payment options for taxpayers. Among Voucher of Exemption and two Governmentministries on the
these are the USSD mobile tax payment platform available on all Single Payment Point bringing the total number of entities
mobile telecommunications providers as well as cGrate suite of connected to the Zambia Electronic Single Window to 45;
services such as cGrate Point of Sale Machines, cGrate Konse d) implementation of electronic data exchange between
Konse and the cGrate online portal. Zambia Revenue Authority and Malawi Revenue Authority;
e) piloting of the Clearing Agents Management Module; and
Modernisation of Trade Logistics f) launch of the electronic Rules of Origin for registration
of exporters.
To facilitate legitimate international trade and continue
modernising trade logistics, the Authority in 2021 undertook the
following initiatives:
a) introduction of Customs Validation System for real-time transit
acquittals;
b) operationalisation of the Kazungula One-Stop-Border-Post
for simplified customs processes;

25.
ANNUAL REPORT 2021

Stakeholder Relations
Cooperating Partner Relations also undertook a virtual mission in November, 2021 to evaluate
the data matching exercise between customs and domestic
The Zambia Revenue Authority received support from a number taxes data. The data matching exercise is aimed at identifying
of cooperating partners in different areas of its operations. Among discrepancies and procedural weaknesses that may generate
the cooperating partners were the following: revenue vulnerability.

Deutsche Gesellschaft fur International African Tax Administration Forum and Organization
Zusammenarbeit (GIZ) for Economic Cooperation and Development

GIZ has been supporting the Authority under the Good Financial The Authority continued to benefit from its membership with
Governance Programme to undertake modernisation programs the African Tax Administration Forum (ATAF). In its capacity as
aimed at improving operational efficiencies, while at the same Chairman of the Finance and Audit Committee, ZRA participated
time reducing the cost of compliance for taxpayers. Projects in the development of ATAF’s strategic direction into the new
supported by GIZ were; the implementation of phase one of decade. In addition, ATAF provided capacity building programmes
the Bulk Intelligence Data Analytics (BIDA), development of the to ZRA staff in several areas including revenue forecasting,
payment platform on TaxOnPhone, capacity building for auditors leadership and tax audit, among others.
in the Large and Specialised Taxpayer Office, development of
The Authority also participated in a survey to inform Pillar I proposal
the Apple operating system (iOS) on the TaxOnApp platform and
on the taxation of digital services of the Inclusive Framework of
the procurement of the Mobile Tax Offices. Further support was
the Organization for Economic Cooperation and Development
in the introduction of the e- learning platform including training
(OECD) supported by ATAF.
of training coordinators from all divisions and departments.
Local Partners
Common Market for Eastern and Southern Africa
(COMESA) ZRA continued to engage local stakeholders to ensure buy-in
and support regarding the various changes that the organisation
COMESA remained committed to supporting the development of is carrying out to improve its operations. Such engagements
the customs management system to enhance customs controls, have also helped to improve public perception of the Authority.
revenue administration and trade facilitation. The support was Among the Government ministries and agencies engaged were
towards the upgrade of ASYCUDAWorld. the Patents and Companies Registration Agency, the Zambia
Statistics Agency, the Financial Intelligence Centre, the Anti-
United States Agency for International Development Corruption Commission, the Drug Enforcement Commission,
(USAID) the Copperbelt University, the Energy Regulation Board, the
Road Development Agency, Ministry of Local Government and
The United States Agency for International Development (USAID) Rural Development, Zambia Compulsory Standards Agency,
under its Revenue for Growth Activity (R4G) commenced support the Zambia Development Agency, the Road Traffic and Safety
to ZRA in the following major areas: Agency and the Bank of Zambia.

a) optimisation of audit processes for Indirect Taxes and Excise; ZRA also worked closely with the Ministry of Commerce, Trade
b) capacity building in debt management; and and Industry in implementing the Zambia Electronic Single
c) tax gap studies. Window as a trade facilitation tool.

The R4G is a five-year activity aimed at helping Zambia improve Corporate Social Responsibility
domestic revenue mobilisation and expand the fiscal space for
investments in public service delivery and poverty reduction. The Authority has in place a Corporate Social Responsibility
(CSR) Policy aimed at improving its corporate image. During
African Development Bank (AFDB) the year, the Authority reached out to disadvantaged members
of society in various parts of the country through donations of
The African Development Bank (AfDB) continued to support assorted items. Other donations of food stuffs and clothing
ZRA in implementing trade facilitation initiatives. In this regard, were made through the Disaster Management and Mitiga-
the Bank procured equipment for customs and other border tion Unit. Other CSR activities that were undertaken included
agencies and provided training in trade facilitation related areas. the donation of linen to the University Teaching Hospital in
Lusaka and seized items to various government and charitable
International Monetary Fund (IMF) institutions around the country.

The International Monetary Fund (IMF), through its Fiscal Affairs

Department, continued to offer technical assistance to the Authority.
The Fund provided training and capacity building programs 27
to ZRA staff in the taxation of the extractive industry. The Fund

26.
ANNUAL REPORT 2021

27.
ANNUAL REPORT 2021

Tax Policy Support The Authority also appeared before the Committee on National
Economy, Trade and Labour Matters that was considering the
Tax Policy Review Committee
Property Transfer Tax (Amendment) Bill, N.A.B No. 44 of 2021;
the Insurance Premium Levy (Amendment) Bill, N.A.B No. 45 of
During the year under review, the Authority was appointed by
2021; and the Zambia Development Agency (Amendment) Bill,
the Ministry of Finance and National Planning to sit on the Tax
N.A.B No. 46 of 2021.
Policy Review Committee (TPRC) to consider tax and non-tax
proposals for the 2022 National Budget. Through this process,
Lastly, the Authority made submissions and appeared before the
the Authority provided technical and expert advice on tax matters
Planning and Budgeting Committee that considered the Income
to the TPRC, which is composed of representatives from different
Tax (Amendment) Bill, N.A.B No. 41 of 2021; the Value Added
Government ministries and agencies.
Tax (Amendment) Bill, N.A.B No. 42 of 2021; and the Customs
and Excise (Amendment) Bill, N.A.B No. 43 of 2021.
The major activities undertaken by the Authority to support the
national budget preparation process included submission of tax
In keeping with its objective of having a knowledgeable taxpayer
policy and administrative proposals, the provision of revenue
population, the Authority participated in post 2022 Budget
impact analysis of proposed tax measures, provision of input
dissemination seminars organised by different stakeholders
and participation in the drafting of the 2022 National Budget
across the country. The objective was to provide clarity on certain
Address, and drafting of tax legislation.
matters and get feedback from taxpayers on the proposed tax
measures. The Authority took advantage of these sessions to
Provision of Revenue Statistics and Information
distribute 2022 Budget Highlights pamphlets and other tax litera-
ture. Furthermore, the 2022 Budget Address and the Highlights
One of the major functions of the Authority is to provide revenue
were posted on the ZRA website to ensure wider circulation.
and trade statistics to the Government and other stakeholders.
These statistics are critical in national planning and informing
In addition, taxpayers were kept abreast with the tax changes
decision-making processes. As an Authority we are conscious
arising from the 2022 National Budget through our Customer
of this important role and have therefore invested a lot of efforts
Service Centres for walk-in clients and the National Call Centre
in ensuring that the statistics we generate are credible and our
for phone-in clients.
systems are secure to ensure data integrity. In this regard, revenue
and trade statistics were provided to the Ministry of Finance and
Ministerial and Parliamentary Services
National Planning and the National Assembly to aid the 2022
national planning and budgeting process.
To effectively carry out its mandate, the Authority in 2021
collaborated with a number of Government Ministries, Agencies
Furthermore, the Authority continued to collaborate with other
and Parliament. The Authority provided the Ministry of Finance
consumers of statistics such as the Zambia Statistics Agency, the
and National Planning with weekly, monthly and annual revenue
Bank of Zambia, the IMF, international research institutions such
projections to assist with expenditure profiling. The Authority
as the United Nations University World Institute for Development
also provided revenue performance reports and tax policy
Economics Research, academia and students, among others.
advice to the Minister of Finance and National Planning in line
with its mandate. Furthermore, the Authority partnered with other
In keeping with its strategic objective of improving public percep-
border agencies such as the Zambia Medicines
tion, the Authority communicated and disseminated information
Regulatory Authority and Zambia Compulsory Standards
about its performance to the general public. This was through
Agency to secure the supply chain.
the production of the Authority’s Annual Report for the year
2020 and the attendant statistical bulletin which outlined the
To support the oversight function of Parliament, the Authority
revenue, operational and financial performance. In addition, the
responded to several requests from the National Assembly.
Authority held media briefings and issued press statements on
In this regard, the Authority submitted 12 written memoranda
its operations.
to seven different Parliamentary Committees of the House on
various subject matters. The Authority also made physical and
Budget Legislation
virtual appearances before these Committees. Other interactions
The Minister of Finance and National Planning, announced the were through joint appearances with the Ministry of Finance
2022 National Budget on 29th October 2021 which contained and National Planning before the Parliamentary Committees.
a number of tax and non-tax measures requiring changes in The Parliamentary Committees engaged in 2021 were: The
legislation. The Authority was requested to make submissions Planning and Budgeting Committee; the Expanded Planning and
on the ramifications of the measures to the Committees of the Budgeting Committee; the Committee on Health, Community
House that were considering the Budget. Development and Social Services; the Joint Committee on Media,
Information and Communication Technologies and National Security
The Authority appeared before the Committee on Delegated and Foreign Affairs; the Committee on Media, Information and
Legislation that was considering the Betting Control (Amendment) Communication Technologies; the Public Accounts Committee;
Bill N.A.B No. 48 of 2021; the Money Lenders (Amendment) Bill, the Committee on National Economy, Trade and Labour and the
N.A.B No. 49 of 2021; and the Road Traffic (Amendment) Bill, Committee on Delegated Legislation.
N.A.B No. 47 of 2021.

28.
 ANNUAL REPORT 2021

TRENDS IN DOMESTIC
AND GLOBAL
ECONOMIC INDICATORS

29.
ANNUAL REPORT 2021

Trends in Domestic and Global Economic Indicators

Zambia’s tax revenue performance is determined by domestic The Domestic Economy in 2021
and global macroeconomic developments. In 2021, the outturn
in factors such as GDP, inflation, exchange rate, interest rates, Similar to the trajectory of the global economy, Zambia recovered
commodity prices on international markets and developments from the COVID-19 induced recession to record a positive real
around the COVID-19 pandemic affected economic performance GDP growth rate of 3.6 percent from the 2020 contraction rate
in Zambia. This section highlights the performance of the global of negative 2.8 percent. This growth was mainly spurred by the
and domestic economy in 2021 as well as developments in sustained high copper prices on the global market which traded
selected macroeconomic indicators. above US$9,000 per tonne for most of the year. The easing of
COVID-19 restrictions which consequently minimised disruptions
The Global Economy in 2021 in the global supply chain especially during the second half of
the year also played a significant role in the realisation of positive
In 2021, global economic growth rebounded at a rate of 5.9 GDP growth in Zambia.
percent4 amidst the resurging COVID-19 pandemic, stalling
employment growth, rising inflation, food insecurity, a halt in In 2021, the wholesale and retail trading, construction, and mining
human capital accumulation, and adverse impacts of climate and quarrying sectors continued being major contributors to
change. This was from a contraction of 4.4 percent recorded in real GDP with a respective share of 18.7 percent, 10.6 percent
2020. The remarkable global economic growth was spurred on by and 10.1 percent of the total output. These were followed by
strong monetary and fiscal support, coupled with the resumption the manufacturing, agriculture and forestry, information and
of economic activity in developed countries following the deploy- communication, education, and financial and insurance activities
ment of COVID-19 vaccines on a large scale. Global economic sectors with respective contributions of 8.5 percent, 7.2 percent,
growth was further propelled by a sustained rise in commodity 7.0 percent, 6.2 percent, and 5.0 percent to the real GDP (see
prices, favouring production in the energy, mining and agricultural Table 11).
sectors. Prices of copper and oil on the international markets
also posted increases ranging from 50 to 60 percent in 2021.

Table 11: Growth and Share of Real GDP in 2021 and 20205

4
IMF World Economic Outlook 2021
5
The 2021 computations are based on the preliminary GDP estimates while the 2020 computations are based on the finalized GDP estimates.
30.
 ANNUAL REPORT 2021

During the year, most of the economic sectors posted positive followed by the electricity generation and supply, construction,
growth rates. The highest growth rates were recorded in the arts, accommodation and food services activities, and the transport
entertainment and recreation, and information and communication and storage sectors. On the other hand, the mining and quarrying
sectors at 25.2 percent and 19.7 percent, respectively. This was sector suffered the heaviest contraction of negative 6.3 percent.

Inflation Interest Rates

The average annual inflation rate in 2021 recorded a 6.4 percentage In 2021, the average commercial bank lending rate reduced
point increase to 22.1 percent from 15.7 percent recorded in to 25.7 percent from 26.7 percent recorded in 2020. This was
2020. The lowest annual inflation rate was recorded in December attributable to the reduction in the Bank of Zambia policy rate to
2021 at 16.4 percent, while the maximum was recorded in June an average of 8.5 percent from 9.5 percent in 2020, which was
and July at 24.6 percent. The rise in inflation was driven by intended to stimulate economic growth following the adverse
increases in the cost of both food and non-food items in 2021 impact of the COVID-19 pandemic on economic activity (see
amidst continued disruptions in the global supply chains due Figure 4).
to COVID-19 and a depreciating Kwacha exchange rate against
major trading currencies (see Figure 4).

Figure 4: Inflation and Interest Rates in 2021

Exchange Rates

During the year, the average monthly exchange rate of the of the Kwacha against the US Dollar amid rising oil prices on
Zambian Kwacha to the US Dollar increased to K19.9 per US the international market. The foreign debt service payments also
Dollar from K18.3 recorded in 2020. The resurging COVID-19 contributed to the marginal depreciation of the Kwacha against
continued exerting unfavourable pressure on the performance the US Dollar (see Figure 5).

31.
ANNUAL REPORT 2021

Figure 5: Exchange Rate Movements in 2021

Commodity Prices

The average price of copper on the London Metal Exchange due to the resumption of economic activity following the easing
in 2021 increased by 50.9 percent to US$9,301.2 per metric of COVID-19 containment measures in the major economies.
tonne from an average of US$6,163.4 in 2020. Similarly, the The average price of crude oil on the global market increased
average price of cobalt rose to US$50, 445.0 per metric tonne by 58.5 percent to US$68.8 per barrel in 2021 compared to
from US$31,819.2 in 2020, indicating a 58.5 percent increase. US$43.4 per barrel recorded in 2020 (see Table 12).
This notable increase in copper and cobalt prices was mainly

Table 12: Commodity Prices in 2021 and 2020

On a monthly basis, the average price of cobalt steadily increased Copper prices maintained a constant trajectory between February
between January and March 2021 but declined between May and December.
and August before rising steadily from September to December.

Figure 6: Average Monthly Prices of Copper and Cobalt in 2021

32.
 ANNUAL REPORT 2021

The global price of crude oil showed an upward trend throughout the year except for the last quarter (see Figure 7).

Figure 7: Average Monthly Price of Crude Oil in 2021

33.
ANNUAL REPORT 2021

OPERATIONAL
PERFORMANCE
OF THE AUTHORITY

34.
 ANNUAL REPORT 2021

Operational Performance of The Authority

Revenue Performance in 2021
During the year under review, the Authority collected K96,283.6 Indirect tax collections recorded a surplus of K683.5 million or
million in gross taxes while a total of K12,368.4 million was paid 7.8 percent above the annual target of K8,730.2 million. Despite
in refunds. This translated into a net tax take of K83,915.2 million this performance, local excise on cement, local fuel levy and
against the annual target of K59,369.2 million, thereby registering tourism levy recorded deficits of 15.8 percent, 98.3 percent and
a surplus of K24,545.9 million or 41.3 percent above target. 0.6 percent against their respective targets.

The revenue collections under direct taxes exceeded the Trade taxes were K1,670.5 million or 9.4 percent above the target
respective annual target of K32,929.5 million by K22,192.0 million of K17,709.5 million. This outturn was as a result of positive
or 67.4 percent. This positive performance was buoyed by strong performance of import VAT, customs duty, import excise and
performance in mining company tax, mineral royalty, withholding motor vehicle fees, which were above their respective targets
taxes and others, and PAYE, which recorded respective surpluses by 14.4 percent, 20.2 percent, 32.0 percent and 7.9 percent.
of K8,118.2 million, K6,731.2 million, K2,937.4 million and On the other hand, export duties, import fuel levy and carbon
K2,104.5 million. tax were below their targets by 44.1 percent, 84.9 percent and
81.5 percent, respectively (see Table 13).

Table 13: Revenue Performance by Tax Type in 2021 (K’Million).

6 Based on the preliminary normal GDP estimate for 2021 of K424,269.0 million.

35.
ANNUAL REPORT 2021

Composition of Revenue in 2021

In 2021, income taxes increased in share to 65.7 percent from hand, VAT and excise duty reduced in share to 22.9 percent7
an average of 53.1 percent during the past four years, while the and 5.2 percent from a four-year average of 32.2 percent and
combination of customs and export duties largely maintained 7.9 percent, respectively (see Figure 8).
their share at 6.3 percent of the total tax revenues. On the other

Figure 8: Composition of Tax Revenue 2017 – 2021

In the year under review, company tax accounted for the largest contribution of customs duty to import and export duties in 2021
share of income taxes at 35.5 percent followed by PAYE at 27.3 increased to 98.1 percent from 96.3 percent recorded in 2020,
percent. Collections from mineral royalty and withholding taxes while the share of export duties declined to 1.9 percent from
respectively accounted for 22.6 percent and 14.6 percent of 3.7 percent recorded in 2020.
income tax collections.
Figure 9 depicts the shares of specific tax types for the
Further, import VAT accounted for 65.5 percent of total VAT aforementioned categories.
collections while domestic VAT accounted for 34.5 percent. The

Figure 9: Share of specific Tax Types in 2021

7
Includes Insurance Premium Levy contribution of 0.2 percent

36.
 ANNUAL REPORT 2021

Factors underlying Revenue Performance by Tax Type in 2021

Income Taxes

In 2021, nominal revenues from income taxes recorded a 58.7 K2,937.4 million and K2,104.5 million. The positive performance
percent increase over the 2020 level, continuing the upward of mining company tax and mineral royalty was driven by the
revenue trend for the tax type in the prior four years. The positive sustained favourable copper prices in the year under review. The
performance was attributed to strong performances in mining performance in withholding taxes was driven by a higher uptake
company tax, mineral royalty, withholding taxes and PAYE which of Government securities while PAYE was driven by improved
posted respective surpluses of K8,118.2 million, K6,731.1 million, compliance and payment of tax arrears (see Figure 10).

Figure 10: Trend in Income Taxes 2017 - 2021 (K’Million)

Value Added Tax

In 2021, import VAT and domestic VAT recorded respective imports compared to 2020 that was primarily driven by activity in
surpluses of K1,559.0 million and K459.3 million which reversed the mining sector. The surplus posted in domestic VAT was mainly
the downward drift in net VAT collections observed in the due to intensified compliance enforcement efforts that involved
prior two years. The positive performance of import VAT was proactive taxpayer engagement and enhanced administration
attributed to an increase in the taxable volumes and value of of the withholding VAT mechanism (see Figure 11).

Figure 11: Trend in VAT 2017 - 2021 (K’Million)

37.
ANNUAL REPORT 2021

Excise Duties

Excise tax collections were above target in the year 2021. The outturn in 2021 was 7.3 percent lower than the 2020 excise
The positive performance was attributable to increased collection, mainly attributable to the suspension of excise duty
consumption of taxable items such as airtime, clear beer collection on fuel and the shutdown of operations at Indeni
and electricity; increased payments for audit assessments; Petroleum Refinery Company Limited.
and improved compliance amongst taxpayers resulting from
intensified taxpayer engagement and enforcement activities
(see Figure 12).

Figure 12: Trend in Excise Taxes Collections, 2017 – 2021 (K’ Million)

Customs and Export Duties

Collections from customs and export duties increased by increased importation of capital equipment and consumables by
48.4 percent in 2021 compared to 2020. The positive outturn the mining sector and the depreciation of the Kwacha exchange
was primarily due to an increase in the taxable value for duty rate against major convertible currencies. The positive perfor-
purposes by 56.0 percent in 2021 compared to 2020. During the mance was in spite of the revenue foregone due to customs
year, customs and export duties recorded surplus collections of concessions granted to mitigate the adverse economic impact
K787.9 million or 17.7 percent. This performance was driven by of the COVID-19 pandemic (see Figure 13).

Figure 13: Customs and Export Duty Collections, 2017 – 2021 (K’ Million)

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Performance of Mining Sector Taxes

In 2021, the ratio of core8 mining sector tax payments to total by mineral royalty at 49.2 percent and export duty at 0.4 percent.
taxes increased to 30.2 percent from 18.8 percent in 2020. Further, the percentage of core mining taxes to GDP increased
Mining company tax contributions accounted for 50.4 percent to 5.9 percent from 3.2 percent in 2020 (see Figure 14).
of revenues from the mining sector followed

Figure 14: Tax Revenues from the Mining Sector, 2017 to 2021 (K’ Million)
K’Million

Contribution of Tax Types to GDP

Against the backdrop of economic recovery following the In 2021, the ratios of tax to GDP for direct and indirect taxes
COVID-19 induced economic slowdown, ZRA recorded a 45.5 respectively increased to 13.0 and 2.2 percent from 10.5 and
percent increase in nominal revenue collections between 2021 1.8 percent in 2020. The tax to GDP ratio for the trade-based
and 2020. The outstanding revenue performance increased the taxes declined to 4.6 percent in 2021 from 5.1 percent recorded
proportion of tax revenue to GDP to 19.7 percent in 2021 from in 2020 (see Table 14).
17.3 percent in 2020.

8
Core mining taxes refer to Mining Company Tax, Mineral Royalty, and Export Duty on mineral concentrates

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Table 14: Total Revenue as Share of GDP in 2021 and 2020

As shown in Figure 15, the ratio of tax to GDP averaged 15.9 percent in the period 1995 to 2021. Since the lowest recorded rate
in 2009, there has been a moderately upward trend in the tax to GDP ratio which peaked at 19.7 percent in 2021.

9
The 2021 GDP figure is a preliminary estimate.
10
Based on final 2020 GDP figure.

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Figure 15: Trend in Tax Revenue to GDP ratio 1995-2021

Trend in Collection of individual Tax Types and Total Revenue

Figures 16 to 23 present the ratio of each tax type to GDP followed by a sustained rise to 1.9 percent in 2021.
between 1995 and 2021. As depicted, the ratios of company
income tax and mineral royalty to GDP have largely displayed an The ratio of VAT to GDP exhibited a downward trend between
upward trend in the period and peaked in 2021. Further, PAYE the periods 1996 to 2010 and thereafter fluctuated. On the other
collections as a proportion of GDP was fairly stable at an average hand, excise and import duties have exhibited a downward
of 4.0 percent. The withholding tax to GDP ratio was fairly stable trend since 1996.
between the periods 1997 to 2011 at an average of 0.7 percent

Figure 16: Company Income Tax as Percentage of GDP, 1995 – 2021

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Figure 17: Pay As You Earn as Percentage of GDP, 1995 – 2021

Figure 18: Withholding Tax as Percentage of GDP, 1995 – 2021

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Figure 19: Value Added Tax as Percentage of GDP, 1995 – 2021

Figure 20: Mineral Royalty as Percentage of GDP, 1995 – 2021

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Figure 21: Excise Duties as Percentage of GDP, 1995 – 2021

Figure 22: Import Tariffs as Percentage of GDP, 1995 – 2021

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Figure 23: Tax Revenue (K’ Million) 1995 – 2021

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Performance of Operating Divisions and Corporate Initiatives

Customs Services Division

In 2021, the Authority continued to reform its customs processes and procedures to improve its operational efficiency and trade
facilitation.

Customs Declarations

The registration to payment conversion ratio shows the improvement in this ratio can partly be attributed to the imple-
proportion of registered entries that are paid. During the mentation of the customs self-assessment which allows for
year, the proportion of total paid entries increased to 93.7 percent entries to be paid for before customs intervention (see Table 15).
compared to 92.8 percent recorded in 2020. The marginal

Table 15: Registration to Payment Conversion Ratio for all transactions in 2021 and 2020

Customs Refunds

The Authority administers a duty drawback scheme which allows Between 2020 and 2021, the number of duty drawback claims
local manufacturers to claim a proportion of import duties paid increased by 12.5 percent while the corresponding value increased
on inputs used in the manufacture of exported goods. The aim by 11.8 percent. The number of general refund claims declined
of the scheme is to improve the competitiveness of Zambian by 44.6 percent while the value of refund claims decreased by
exports. The Authority also administers other customs refunds 39.2 percent in 2021 compared to 2020 (see Table 16).
arising from claims on import and export transactions.

Table 16: Number and Value of Customs Refunds in 2021 and 2020

Import and Export Declarations

In the year under review, the volume of permanent import by one percent while the corresponding VDP increased by 41.2
transactions declined by 0.2 percent while the corresponding percent. The increase in VDP relative to the increase in volumes
Value for Duty Purposes increased by 22.4 percent. By contrast, is partly due to the depreciation of the Kwacha exchange rate
the volume of permanent export transaction marginally grew against major currencies (see Table 17 and Figure 24).

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Table 17: Entries of Permanent Imports and Permanent Exports in 2021 and 2020

Figure 24: Number and Value of Permanent Import and Export Entries in 2021 and 2020

Processing Efficiency

The processing efficiency as measured by the actual revenue review was K17,449.0 million of which K17,027.9 million was
collected against the potential revenue was recorded at 97.6 collected. A further K419.4 million or 2.4 percent was registered
percent in 2021 compared to 96.1 percent in 2020, representing and assessed but not paid, while K1.7 million was not assessed
a marginal increase of 1.5 percentage points. Specifically, the and therefore no collections were made (see Table 18).
potential revenue in the period under

Table 18: Processing Efficiency in Tax Yield from all Taxable Transactions in 2021 and 2020

In 2021, the total VDP increased by 70 percent to K576,771.9 2020. The significant increase in the non-taxable VDP can be
million from K338,512.6 million recorded in 2020. The non-taxable attributed to the depreciation of the Kwacha exchange rate
VDP, on which duty is not applicable, accounted for 94.6 percent against major convertible currencies and the tax relief measures
of the total VDP and grew by 71 percent in 2021 compared to to mitigate the effects of the COVID-19 pandemic (see Table 19).

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Table 19: VDP and Tax Yield from Taxable and Non-Taxable Transactions in 2021 and 2020 (K’ Million)

The revenue foregone due to trade related concessions increased to K18,626.1 in 2021 from K12,074.9 million in 2020,
representing a 53.7 percent growth (see Table 20).

Table 20: Tax Revenue Foregone from Concessions, 2021 and 2020 (K’ Million)

Risk Profiling Analysis

The Authority utilises risk management techniques to examine In 2021, the proportion of entries channelled to the red lane
customs declarations in order to reduce revenue leakages and marginally increased to 16.2 percent compared to 16.1 percent
ensure effective utilisation of resources. There are four lanes under in 2020. Furthermore, there was a marginal decrease of 60.3
the risk profiling analysis to which entries can be channelled. percent of the entries which were channelled to the yellow lane
These are red, yellow, blue and green. Goods channelled to the in 2021 compared to 60.8 percent in 2020. The percentage of
red lane require physical inspection; while goods channelled to entries directed to the blue lane increased to 10.1 percent from
the yellow lane require documentary checks. Goods channelled 8.3 percent in 2020, while the entries channelled to the green
to the blue lane require post clearance audits. However, goods lane decreased to 13.4 percent in 2021 compared to 14.7 percent
channelled to the green lane are considered low risk and are not in 2020 (see Table 21).
subjected to scrutiny.

Table 21: Lane Analysis by Business Volume in 2021 and 2020

Direct and Indirect Taxes Divisions Tax Registrations

Taxpayer compliance is built on four pillars namely; taxpayer In the year under review, the total number of TPIN registrations
registration, return filing, payment of taxes and accurate increased by 5 percent to 329,190 in 2021 from 312,673 in 2020.
reporting. To fulfil their compliance requirements, taxpayers are The increase in the number of TPIN registrations is in part due to
expected to register for all required taxes, file due returns and enhanced taxpayer education, the requirement for the TPIN to
make due payments on time. The Authority conducts taxpayer undertake certain transactions such as opening of bank accounts,
education to ensure that taxpayers understand and meet their connection to the national electricity grid, buying and selling of
obligations. This section reviews the Authority’s performance real property and new business entrants. Figure 25 shows the
trend of TPIN registrations from 2013 to 2021 .
11
on these compliance pillars.

11 The sharp increase in TPIN registrations from 2017 is due to the amendment to the Income Tax Act requirement for all bank account holders to have a TPIN.

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Figure 25: TPIN Registrations, 2013 – 2021

In the period under review, there was an increase in the 2021 compared to 4,202 registrations in 2020. For other income
number of registrations for VAT, PAYE and other income taxes. taxes, a total of 36,631 registrations were approved in 2021
Specifically, there were 1,615 VAT registrations in 2021 compared compared to 27,640 in 2020 (see Figure 26).
to 1,349 registrations in 2020 and 7,013 PAYE registrations in

Figure 26: Registrations by Tax Type in 2021 and 2020

Return Filing

The number of returns filed in 2021 on account of income taxes The number of PAYE refund applications increased to 10,558
were 1,167,553 compared to 1,086,203 in 2020, representing in 2021 from 7, 936 in 2020, representing a 33 percent increase.
an increase of 7.5 percent. The number of income tax returns On the other hand, the number of income tax refund applications
filed increased by 6.4 percent to 447,323 in 2021 from 420,433 decreased by 19.7 percent to 572 in 2021 from 712 in 2020.
in 2020. Turnover tax returns filed increased by 8.2 percent to In terms of value, a total of K106.1 million in direct taxes was
720,230 in 2021 from 665,770 in 2020. refunded in 2021 compared to K72.4 million in 2020, representing
an increase of 46.6 percent. The refunds comprise K50.6 million
The number of refund applications for the direct taxes received PAYE, K30.4 million income tax and K25.1 million withholding
in 2021 increased by 28.7 percent to 11,130 from 8,648 in 2020. taxes (see Table 22).

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Table 22: Income Tax Return Statistics

The number of VAT returns submitted reduced to 129,433 in With respect to VAT refunds, the number of claims received in
2021 from 138,869 received in 2020, representing a 6.8 percent 2021 reduced by 4.1 percent to 14,119 from 14,728 in 2020. In
reduction. The number of payment returns filed during the year contrast, the value of claims increased by 40.1 percent in 2021
decreased by 2.9 percent to 57,178 from 58,866 received in 2020. to K19,793.3 million from K14,128.8 million in 2020. A total of
Similarly, the number of nil returns decreased by 10.9 percent K12,238.4 million was refunded in 2021 compared to K12,642.6
while repayment returns decreased by 4.1 percent. million in 2020 (see Table 23).

Table 23: VAT Return Statistics

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Compliance Initiatives that Supported Revenue Collection

To enhance revenue collection, the Authority implemented submission of returns and payments;
several initiatives during the year that included the following: g) operationalised the Kazungula One-Stop-Border-Post
a) engagements with key stakeholders including virtual for simplified customs processes;
classes for taxpayers on TaxOnline processes h) addition of five Government ministries to the electronic
and taxpayer education on obligations and duties; Voucher of Exemption and two Government ministries
b) engagements with the 33 appointed Councils on the Single Payment Point bringing the total number
to register and follow up on payments from taxpayers of ministries and agencies connected to the Zambia
on their respective withholding tax on rent databases; Electronic Single Window to 45;
c) engaging the Office of the Accountant General in the i) implementation of electronic data exchange between
Ministry of Finance and National Planning to ensure Malawi Revenue Authority and Zambia Revenue Authority;
that institutions under their charge remitted withheld j) rollout of the Customs Validation System for real-time
VAT to the Authority; transit acquittal nationwide at 15 stations;
d) ensuring that unregistered businesses in the hospitality k) initiating tax gap studies with the United Nations
industry were registered; University World Institute for Development Economics
e) analysed third-party information of electricity producers Research (UNU-WIDER) and USAID to inform revenue
which resulted in the registration of four new electrical mobilisation in Zambia; and
energy producers and brought in additional revenue l) commissioning the first phase of the BIDA System
of about K40 million; aimed at automating compliance analysis using internal
f) the use of targeted text messages and emails to remind and external data.
taxpayers on their obligations such as due dates for

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Debt Management

Direct and Indirect Taxes Debt

The stock of domestic taxes debt increased to K85,781.3 million and K3,359.5 million,respectively. The penalties and interests
in 2021 from K59,659.4 million in 2020, representing an increase were cumulative positions of audit assessments on tax accounts
of 43.8 percent. Of this amount, the principal tax was K64,074.0 mainly through account reconciliations (see Table 24).
million12 while penalties and interest were K18,347.9 million

Table 24: Composition of Domestic Debt, 2018 - 2021 (K’ Million)

Domestic VAT and company income tax constituted the largest tax, turnover tax and property transfer tax accounted for
share of inland debt stock at K37,029.0 million and K27,737.2 K4,977.2 million, K3,637.5 million, K3,245.7 million, K2,539.1
million, respectively. This was followed by withholding VAT with million and K288.4 million respectively. The remaining tax types
a stock of K6,202.3 million. PAYE, mineral royalty, withholding had debt of below K100.0 million each (see Table 25).

Table 25: Trend in Domestic Debt Accumulation, 2013 - 2021 (K’ Million)

Customs Debt

The customs debt increased by 14.7 percent to K1,760.8 million in 2021 from K1,534.7 million recorded in 2020 (see Table 26).

12
Amount includes income tax and VAT rule-18 assessments for prior periods concluded in 2021 amounting to K29.6 billion

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Table 26: Trend in Customs Debt Accumulation, 2013 - 2021 (K’ Million)

Total Debt Stock

In 2021, the total stock of tax debt recorded a 43.0 percent million or 98.0 percent of the total stock. Customs only accounted
increase to K87,542.0 million from K61,207.6 million in 2020. for K1,760.8 million or 2.0 percent of the total debt stock (see
This was mostly due to inland taxes debt amounting to K85,781.3 Table 27).

Table 27: Total Debt Stock, 2013-2021

Figure 27: 2021 Total Debt Stock: Inland versus Customs debt

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The Authority in 2021 reconciled 3,137 taxpayer accounts resulting tax clinics were members of the public operating in the informal
in a tax debt of K2,870.5 million. The reconciliation process sector. However, no public lecture or school chat was conducted
involved posting missing returns and audit assessments and due to the COVID-19 pandemic which resulted in the closure of
reallocating payments to reflect accurate tax positions. Initia- learning institutions for a considerable period of the year.
tives such as time to pay agreements, debt swaps, and waiver
of penalties and interests were utilised to collect K8,945.1 million Facebook live chats and Radio Programs
of the accrued debt in 2021.
The Authority introduced and conducted 51 Facebook live chat
Taxpayer Education and Advisory Services sessions in 2021. The shows display live streams on the Authority’s
social media platforms such as Facebook. Further, radio platforms
The Authority in 2021 continued to provide tax education to were also utilised in communicating tax matters related to tax
taxpayers and the general public through its taxpayer educa- compliance, promotion of available services to help taxpayers
tion strategy. This was in an effort to improve tax compliance and on awareness of tax due dates. A total of 140 programmes
and promote a tax paying culture in the country. The Authority targeted at various audiences were broadcast in 2021.
engaged with stakeholders through the following fora:
Tax Literature
Workshops
To enhance taxpayer education, the Authority distributed various
In 2021, the Authority conducted a total of 231 physical and types of literature to different stakeholders in 2021. Among the
virtual sensitisation engagements on various tax matters across literature distributed were Practice Notes, Budget Highlights,
the country. In addition, key stakeholder institutions such as the VAT Guide and VAT Liability Guide. Other leaflets were uploaded
Law Association of Zambia, the Zambia Association of Chambers on the website and TaxOnApp for taxpayers to access. These
of Commerce and Industry, the Zambia Institute of Chartered included; Frequently Asked Questions; Self-assessment
Accountants and various clearing agents’ associations were procedures for customs and PAYE Refund Guide, among others.
engaged, among others. The literature was made available at all ZRA service centres and
at stakeholder engagements (see Table 28).
Tax Clinics, Lectures and School Chats

The Authority conducted a total of 10 tax clinics in an effort to

enhance public education on tax matters. The main target of these

Table 28: Number of Taxpayer Outreach Programmes in 2021 and 2020

Website and Social Media Taxpayer Contact

In 2021, the Authority continued using Facebook, Instagram, The number of walk-in contacts at Customer Service Centres
Twitter, LinkedIn and YouTube to engage with taxpayers and the reduced to 136,369 in 2021 from 141,130 in 2020. Similarly,
general public. The number of followers on the ZRA Facebook the number of emails received by the Service Centre reduced
page increased to 69,972 in 2021 from 49,661 in 2020. to 39,306 in 2021 from 40,115 in 2020. These reductions could
be attributed to the increased use of e- services following the
The ZRA website also continued to be used as a platform through simplification of the TPIN registration process, which can easily
which taxpayers could easily access e-services and download tax be done on TaxOnPhone (using USSD) and automation of the
information without having to visit ZRA offices. This is aimed at application for Tax Clearance Certificate. However, the number
improving service delivery and reducing the cost of compliance. of phone calls received increased to 60,222 in 2021 from 51,805
in 2020. Figure 28 shows taxpayer contact in 2020 and 2021.

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Figure 28: Taxpayer Contact in 2021 and 2020

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MANAGING PUBLIC
CONFIDENCE

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Managing Public Confidence

Staff Strategy

The Authority attaches importance to staff integrity as it is international organisations in promoting integrity programmes.
essential in instilling public confidence in its operations. To this
effect, the Conflict of Interest, the Whistle Blower, and the Gifts In this regard, the Authority hosted a delegation from the
and Benefits Policies were operationalised in 2021, which hitherto Gambia Revenue Authority and facilitated training on integrity
were contained in the Code of Ethics. matters for five local partners.

During the year, the Zambia Revenue Authority Integrity Committee In recognition of its organisation wide integrity promotion efforts,
(ZRAIC) conducted integrity sessions for 1,100 members of staff. the Authority was in 2021 awarded for Outstanding Performance
In addition, a total of 25 newly appointed focal point persons and Leadership in Integrity work by the Secretary to the Cabinet
were trained by the Anti-Corruption Commission while 32 station during the Integrity Committee Chief Executive Officer’s Forum.
and unit managers were jointly trained with the Anti-Corruption
Commission. Handling Comments and Complaints

Integrity Promotion Partnerships In 2021, the ZRA Integrity Committee received 283 comments
and complaints compared to 183 in 2020 as outlined in Table 29.
The Authority sustained its collaboration with local and

Table 29: Number of Complaints and Comments Received by ZRAIC

The matters received were mainly referred to the appropriate offices for attention while those that were within ZRAIC mandate were
taken up and resolved by the ZRAIC members. The types of complaints and comments received by ZRAIC are depicted in Table 30.

Table 30: Types of Comments and Complaints Received

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Reducing Compliance Costs

In its continued effort to reduce taxpayer compliance costs, the option available with the mobile network operators. The TaxOn-
Authority in 2021 embarked on the development of a payment Phone payment module will enable taxpayers to make payments
module on TaxOnphone to complement the USSD payment and authenticate EFD invoices, among others.

Performance of the Authority’s Corporate Strategic Plan

The Authority’s Corporate Strategic Plan (CSP) 2019 – 2021 was anchored on four Strategic Pillars, four corresponding Key
Result Areas (KRA) and thirteen Strategic Objectives as depicted in Figure 29.

Figure 29: Strategic Pillars, Key Result Areas and Strategic Objectives

The performance of the CSP is assessed based on tracking In the year under review, 12 out of 13 high level KPIs representing
active Key Performance Indicators (KPIs) using the Red, Yellow 92 percent were achieved resulting in attainment of 86 percent
and Green rating scale. Out of all KPIs in the CSP, a few are of the strategic objectives. One KPI representing 8 percent was
identified and labelled high level KPIs as they are deemed to be not achieved. In terms of all the 57 active KPI’s contained in the
the key drivers of the strategic objectives under which they fall; CSP, 43 were achieved, representing 75 percent (see Figure 30).
and ultimately used to determine the performance of the CSP.

Figure 30: Overall Implementation of Corporate Strategic Plan

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The performance of each high-level KPI under their respective strategic objectives is highlighted in Table 31:

Table 31: Performance of High-Level KPIs

KAIZEN Activities

The Authority continued to support KAIZEN activities across The Authority won silver and par excellence awards at the National
its structures. KAIZEN is both a philosophy and framework KAIZEN Conference and the International Convention on Quality
for promoting continuous improvement in all aspects of an Control Circles respectively, for increasing the processing efficiency
organisation’s operations. of penalty waiver applications from 66 percent to 94 percent.

In the year under review, a total of 17 KAIZEN projects were

under implementation with varying degrees of progress.

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Total, 2016

INTERNAL AND
EXTERNAL SCRUTINY

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Internal and External Scrutiny

Internal Audit

A total of 29 reports were tabled before the Audit Committee of the ZRA Governing Board for consideration in 2021. Of these, 19
were from 2021 and 10 were brought forward from 2020 (see Table 32).

Table 32: Audits and Investigations Undertaken in 2021 and 2020

Internal Affairs

The Authority recorded a total of 54 cases in 2021 relating to is in part due to heightened internal campaigns on integrity (see
fraud allegations, malpractices and misconduct involving ZRA Table 33).
officers compared to 63 recorded in 2020. The reduction in cases

Table 33: Cases of Allegations of Fraud and Misconduct by Employees in 2020 and 2021

A total of 12 active cases were brought forward from 2020 bringing for disciplinary hearing resulted in 26 summary dismissals, 19
the total number of cases investigated to 66 in 2021. Of these, officers served with lower sanctions and 14 acquittals. A total
58 cases were recommended for disciplinary hearing and three of 14 cases were carried forward to 2022.
were recommended for prosecution. The cases recommended

External Scrutiny

Parliamentary Committees

Parliament oversees Government administration and subjects to seven Parliamentary Committees. These included; the Planning
its activities to scrutiny on behalf of the electorate. To effectively and Budgeting Committee; the Joint Committee on Media, Infor-
carry out this function, Parliament has established Parliamentary mation and Communication Technologies and National Security
67 Committees that scrutinise particular areas of Government and Foreign Affairs; and the Committee on Health, Community
administration. ZRA, being a public body, is one such institution Development and Social Services. Subjects of interaction included
that is subject to Parliamentary scrutiny. commenting on proposed pieces of legislation and other matters
of interest to the Committees.
In 2021, the Authority made 12 submissions on different subjects

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Office of the Auditor General Furthermore, all the six prior year audit queries were followed
up and resolved resulting in their closure after verification by the
The office of the Auditor General has a constitutional mandate to Office of the Auditor General.
audit institutions financed from public funds in order to among
others ascertain that money appropriated by Parliament has been Litigation
applied for the purpose for which it was intended.
Litigation provides an alternative avenue for the Authority to
It is in this regard that the Authority was in 2021 subjected to enforce compliance and resolve disputes with respect to the
three audits by the Office of the Auditor General. These audits interpretation of the law. The Authority, during the year, was
covered tax revenue collection activities, operations and public involved in civil and criminal litigation.
finance management for the year ended 31st December 2020.
Arising from these audits, 33 queries were raised in the Tax Civil Litigation
Revenue Collection Audit Report and the Operations of the
Authority Audit Report. No queries were raised in the Public The number of civil cases litigated by the Authority in 2021 was
Finance Management Audit. The Authority managed to close 48 compared to 51 in 2020, representing a 5.9 percent reduction.
22 queries during the year while six in the Revenue Audit and Of these, six were before the Supreme Court; 12 were before the
five on operations of the Authority, were still being attended to High Court; 19 were before the Tax Appeals Tribunal; 10 were
as at the end of the year. before the Industrial Relations Court and one was before the
Subordinate Court (see Table 34).

Table 34: Tax Related Litigation in 2021 and 2020

In terms of litigation by tax type, a total of 25 cases or 52 percent Tax Appeals

were related to customs and excise, while eight cases or 17
percent related to direct and indirect taxes. The labour related During the year under review, the Authority handled 236 tax
cases were 10 or 21 percent and five cases or 10 percent were appeal cases compared to 224 in 2020, representing an increase
general civil cases. of five percent. Of these, 68 were appeals on assessments while
168 were on other determinations such as seizure and forfeiture.
The total number of cases concluded during the year was 16 A total of 93 appeals were against decisions of the Enforce-
out of which 12 were concluded in favour of the Authority, three ment Unit which accounted for 39 percent of the total appeals.
cases through consent settlements and one case was withdrawn Appeals from decisions of the Customs, Direct Taxes, Indirect
by the taxpayer. As at the end of the year, a total of 32 cases Taxes and Excise Divisions, and the Investigations Department
were active in the various courts and at the Tax Appeals Tribunal. accounted for 61 percent. The number of cases resolved stood
at 178, giving a resolution rate of 75 percent in 2021 compared
to 84 percent in 2020 (see Table 35).

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Table 35: Tax Appeals Handled in 2021 and 2020

Criminal Litigation (Prosecutions)

During the year, 23 cases were prosecuted out of which 19 were further investigation. The total number of cases prosecuted in
customs related while 4 related to domestic taxes. The number 2021 decreased to 23 from 29 cases in 2020. As at end of year,
of cases concluded was five, out of which two convictions were 16 cases were under prosecution and one was at planning stage
secured while one was acquitted, and two cases were withdrawn. (see Table 36).
One other case was referred for

Table 36: Prosecuted Cases by Tax Type in 2021

Seizure of Goods

In 2021, the Authority seized goods on account of various tax either forfeited to the State and auctioned to recover taxes or
offences valued at K90.7 million, representing a 14.8 percent donated to public and charitable organisations in accordance
decrease from K106.4 million seized in 2020. The goods were with the law.

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MANAGING PEOPLE

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Managing People
Staff Strategy Staff Complement

To ensure adequate staff levels and enhance productivity, the The Authority’s staff complement in 2021 was 2,261 employees
Authority in 2021 promoted 222 employees in line with the compared to 2,066 employees at the close of 2020, representing
Promotion Policy, appointed 96 employees through internal job an increase of 9.4 percent. This increment was attributable to
advertisements and recruited 286 new employees. operational and structural changes implemented during the year.
The staff complement stood at 92.2 percent of the approved
establishment of 2,451 employees compared to 96.4 percent
of 2,144 approved in 2020 (see Table 37).

Table 37: ZRA Staff Complement by Division/Department/Unit as at end 2021 and 2020

As an equal opportunity employer, the Authority is committed contract staff was unchanged at 12.6 percent of the workforce
to achieving gender balance and this is reflected in the increase between 2020 and 2021. Staff numbers in the represented
in the share of female staff in 2021 to 40.3 percent from 38.1 contract/permanent staff category increased to 50.0 percent in
percent in 2020. 2021 from 47.3 percent in 2020 while the share of staff in the
represented non-contract staff category declined to 37.3 percent
With regard to category of employees, the share of non-represented from 40.1 percent in 2020 (see Table 38).

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Table 38: ZRA Staff Complement by Category and Gender in 2021 and 2020

The staff complement in the operating divisions/departments was 1,422 or 62.9 percent in 2021 compared to 1,311 or 63.5 percent
in 2020 (see Table 39).

Table 39: ZRA Staff Classification as Operations and Support in 2021 and 2020

Resourcing and Selection Launch of eLearning Platform

Out of a total of 604 vacancies that were filled in 2021, internal During the period under review, the Authority with support from
recruitment accounted for 318 while 286 were filled through GIZ launched an e-learning Platform called Atingi for delivery of
external recruitment. its training programmes. The platform was launched together
with the customer service e-learning course which is accessible
Staff Development and Training to all employees in the Authority. Atingi provides an alternative
platform for delivering the Authority’s training programmes
The Authority implements a continuous training and development through virtual learning, access to recorded lessons and training
programme for its staff to improve service delivery in a dynamic materials. By year end, the Authority was developing e-learning
business environment. In this regard, 4,260 participants undertook content to be uploaded on the platform.
training programmes in 2021 compared to 3,438 participants in
2020. Further, the Authority undertook an evaluation of its training
and development activities to assess the impact of programmes
on participants.

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Performance Management and Development Process

The performance of staff in the Authority is monitored through committees namely the Finance and Investment Committee,
the Performance Management Development Contracts (PMDC) the Audit and Risk Committee and the Administration and
between supervisors and subordinates. In 2021, the performance Communications Committee and also automated the annual
rating of staff indicated that 99.5 percent of employees met member statement distribution.
their performance objectives compared to 97.8 percent in 2020.
In December 2021, the Trustees convened an inaugural Annual
Staff Pension Scheme General Meeting for the ZRAPTS members.

At the end of the year under review, the ZRA Pension Trust Staff Separations
Scheme (ZRAPTS) had a membership of 1,653 with a total
Fund value of K202.7 million. Following the approval of the During the year under review, 96 employees separated from
scheme’s financial statements for the year 2020, the Trustees the Authority compared to 89 in 2020. The separations were on
approved a bonus declaration of 10 percent. Furthermore, in line account of dismissals, resignations, early/normal retirement,
with corporate governance guidelines issued by Pensions and expiry of fixed term contracts, discharges from employment
Insurance Authority, the Trustees established three sub- and deaths (see Table 40).

Table 40: Separations Recorded in 2021 and 2020

Staff Welfare and Employee Relations

Employee Wellness

In its quest to promote a healthy workforce, the Authority has in During the year, 103 members of staff tested positive and
place a compulsory wellness scheme. This scheme encourages recovered from COVID-19. As at end- year, a total of 757
lifestyle changes and healthy living through fitness programmes. members of staff were vaccinated against the COVID-19,
Under this Wellness Scheme, 70 employees and their families representing 36.2 percent of the workforce.
were accessing Anti-Retroviral Therapy. The implementation
of some activities under the Employee Wellness Policy were Employee Relations
however, hampered by the COVID-19 pandemic.
During the year under review, employee relations remained stable
and cordial between management, the union and members of staff.

67.
ANNUAL REPORT 2021

Physical Asset Management and

Information & Communications
Technology

68.
 ANNUAL REPORT 2021

Physical Asset Management

In 2021, the Authority undertook to implement a number of across the country. The total value of the construction and
infrastructure development projects at its various locations rehabilitation projects was K32.4 million (see Table 41).

Table 41: Major Construction Projects in 2021

Information and Communication Technology

Corporate Systems Support

During the year, the Authority undertook to enhance system and real estate management, gratuity computation, business
stability, user functionality and customer experience on its core intelligence and the bridge toll payment system at Kazungula
tax administration platforms, TaxOnline and ASYCUDAWorld. were automated and upgraded on SAP.

Other initiatives undertaken during the year included the launch Furthermore, there was an extension of remote working
of the e-learning platform called Atingi, and the upgrade of Oracle capabilities to more staff to facilitate offsite access to critical
WebLogic servers running TaxOnline. In addition, some internal systems during the height of the pandemic. Virtual Private Network
business processes namely leave application, plant maintenance (VPN) connections were configured for staff and provisions for
internet connectivity were put in place.

69.
ANNUAL REPORT 2021

MANAGING RESOURCES

70.
 ANNUAL REPORT 2021

Managing Resources

For the year 2021, ZRA received total income of K2,101.3 million In comparison to 2020, Government funding to ZRA in 2021
and recorded total expenditure amounting to K1,784.0 million, increased by 27.6 percent.
thereby posting a surplus of K317.3 million. The largest source of
financing in 2021 was Government funding at K1,640.7 million. Table 42 provides a comparative summary of the Authority’s
operating income and expenditure for 2021 and 2020.

Table 42: Summary of Income and Expenditure, 2021 and 2020

Other significant sources of income in 2021 included the ASYCUDA Recurrent Expenditure
processing fees, financing income and the Kasumbalesa Joint
Venture Project where ZRA is the appointed profit collection In 2021, staff related expenditure, operating expenses and
agent on behalf of the Government. In terms of the ASYCUDA administrative expenses respectively were K1,443.1 million or
processing fee, the Authority collected K440.7 million in 2021 77.0 percent, K111.1 million or 5 percent and K197.0 million or
compared to K378.4 million in 2020. 5.9 percent of the recurrent expenditure. Further, the Authority
incurred K123.0 million as depreciation and amortization expenses,
Further, a total of K6.3 million was received as commission while gains on foreign exchange transactions amounted to
from the Kasumbalesa Joint Venture Project from which the K90.0 million.
Authority retains 10 percent of the total amount collected as
administration fee in accordance with the approval granted by When compared to 2020, administrative expenses increased
the Minister of Finance. by 4.6 percent while other operating expenses reduced by 35.4
percent in 2021. Staff related expenditure in 2021 increased by
25.7 percent relative to 2020, largely on account of the expanded
staff establishment and improved emoluments.

71.
ANNUAL REPORT 2021

Capital Expenditure Cost of Tax Revenue Collection

For the fiscal year ended 31st December 2021, capital expenditure The cost of tax collection is the ratio of government funding
for the Authority was pegged at K336.4 million and this included to the total taxes collected. It represents the efficiency of the
additions to capital work in progress. tax system in mopping up domestic resources using a unit of
government’s money.
The detailed financial performance based on International Public
Sector Accounting Standards (IPSAS) and Accrual Basis of The cost of tax collection in 2021 was recorded at 2.0 percent,
Accounting is shown in the Financial Statements. a decline from 2.2 percent in 2020, indicating an improvement
in efficiency. During the last five years, the cost of revenue
collection ratio has averaged at 2.0 percent (See Figure 31).

Figure 31: Government Funding as a Percentage of Collected Tax Revenue, 2017 - 2021

72.
 ANNUAL REPORT 2021

ANNEX
List of institutions that the Zambia Revenue Authority collaborated with in 2021.

1. African Tax Administration Forum (ATAF)

2. Anti-Corruption Commission (ACC)
3. Bank of Zambia (BoZ)
4. Botswana Unified Revenue Services (BURS)
5. Common Market for Eastern and Southern Africa (COMESA)
6. Department for International Development (DFID)
7. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ);
8. Drug Enforcement Commission (DEC)
9. Financial Intelligence Centre (FIC)
10. Gambia Revenue Authority (GRA)
11. International Growth Centre (IGC)
12. International Monetary Fund (IMF)
13. Law Association of Zambia (LAZ)
14. Malawi Revenue Authority (MRA)
15. Ministry of Agriculture
16. Ministry of Commerce, Trade and Industry
17. Ministry of Finance and National Planning
18. Ministry of Local Government and Rural Development
19. Ministry of Mines and Minerals Development
20. Ministry of Health
21. National Assembly of Zambia
22. National Institute of Public Administration (NIPA)
23. National Pension Scheme Authority (NAPSA)
24. Organization of Economic Cooperation and Development (OECD)
25. Patents and Companies Registration Agency (PACRA)
26. Road Transport and Safety Agency (RATSA)
27. Southern African Development Community (SADC)
28. Tanzania Revenue Authority (TRA)
29. The Copperbelt University (CBU)
30. United Nations Conference on Trade and Development (UNCTAD)
31. United Nations University World Institute for Development Economics Research (UNU-WIDER)
32. United States Agency for International Development (USAID)
33. United States Department of the Treasury
34. World Bank
35. World Customs Organization (WCO)
36. World Trade Organization (WTO)
37. Zambia Compulsory Standards Agency
38. Zambia Chamber of Commerce and Industry (ZACCI)
39. Zambia Development Agency (ZDA)
40. Zambia Institute for Policy Analysis and Research (ZIPAR)
41. Zambia Institute of Chartered Accountants (ZICA)
42. Zambia Information and Communications Technology Authority (ZICTA)
43. Zambia National Broadcasting Corporation (ZNBC)
44. Zambia Police Service
45. Zambia Postal Services (ZAMPOST)
46. Zambia Public Procurement Agency (ZPPA)
47. Zambia Statistics Agency (ZAMSTATS)
48. Zimbabwe Revenue Authority (ZIMRA)

73.
ANNUAL REPORT 2021

FINANCIAL STATEMENTS

74.
 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST DECEMBER 2021

Table of contents Page

Page

Governing Board’s Report 76

1- -277

Statement of Governing Board’s responsibilities 78 3

Independent auditor’s report 4 -7

79 - 82

Financial statements:

Statement of Financial Performance 83 8

Statement of Financial position 84 9

Statement of changes in Net assets 8510

Statement of Cash flows 8611

Statement of Comparison of Budget and Actual Amounts 8712

Notes to the financial statements 1388 - 112

- 38

75.
ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

GOVERNING BOARD’S REPORT

The Governing Board submit their report together with the audited financial statements for the year ended 31
December 2021, which disclose the state of affairs of the Authority.

PRINCIPAL ACTIVITIES
The principal activities of the Authority are to assess, charge, levy and collect revenue due to the Government
of the Republic of Zambia ("the Government") under such laws as the Minister of Finance and National
Planning may, by enacted legislation or statutory instrument, specify; and to ensure that revenue collected is,
as soon as reasonably practicable, credited to the Government Treasury. The Authority is a grant aided institution.

RESULTS 2021 2020

K K

Revenue 2,101,359,943 1,686,376,107

Surplus/(deficit) for the year 317,352,944 (52,171,993)

The surplus for the year of K317.4 million (2020: deficit of K52.2 million) has been adjusted in the capital fund.

GOVERNING BOARD

The members who held office during the year until 3 December 2021 were:

Amb. Bwalya S. K. Chiti - Chairperson

Mrs. Cecilia M. B. Zimba – Vice Chairperson
Mr. James Koni
Mr. Andrew Nkunika
Mr. Willis Chipango
Mrs. Lydia M. Sibanda
Mrs. Grace T. Bwanali
Mr. Christopher M. Mvunga

Mr. Christopher M. Mvunga resigned as Bank of Zambia Governor on 6 September 2021. Mr. Fredson K
Yamba’s appointment to the Board was revoked on 11 May 2021 and he was replaced by Mr. Willis Chipango.

There was no representative from the Law Association of Zambia on the Board during the year. The Board was
dissolved by the Minister of Finance and National Planning on 6th December 2021.

The following who were members of the Board at the date of approval of the financial statements were appointed
by the Minister of Finance and National Planning on 15th March 2022.

Dr. Caleb Fundanga - Chairperson

Ms. Nana M. Mudenda - Vice Chairperson
Mr. Willis Chipango
Dr. Denny Kalyalya
Mrs. Mutinta M. Pensulo
Ms. Valerie A. Nambeye
Ms. Grace N. Likando
Ms. Venus Hampinda
Mr. Allan Nyirenda

76. 1.
 ANNUAL REPORT 2021

Y TI R O H T U A E U N EV E R AI BMAZ
ZAMBIA REVENUE AUTHORITY
S T N EM E T A T S L AI C NA NI F D NA T R O P E R LA U N NA
ANNUAL REPORT AND FINANCIAL STATEMENTS 1202 REBMECED TS13 DEDNE RAEY EHT ROF
FOR THE YEAR ENDED 31 DECEMBER 2021
SEEYOLPME
GOVERNING
.)noillim 0.84BOARD’S
1,1K :0202REPORT(CONTINUED)
( noillim 0.344 ,1K ot detnuoma raey eht gnirud seeyolpme fo noitarenumer latot ehT
:swollof sa saw raey eht fo htnom hcae rof seeyolpme fo rebmun egareva ehT
EMPLOYEES
The total remuneration of rebemployees
muN during the year amountedhtnotoMK1,443.0 rebmmillion
uN (2020: K1,148.0 million). htnoM
The average number of employees
192,2 for each month of the year wasylas uJ follows: 590,2 yraunaJ
813,2 ts u g u A 490,2 yraurbeF
Month 823,2 Number Month rebmetpeS 801,2Number hcraM
January 613,2 2,095 July rebotcO 221,2 2,291 lirpA
February 003,2 2,094 August rebmevoN 111,2 2,318 ya M
March 492,2 2,108 September rebmeceD 632,2 2,328 enu J
April 2,122 October 2,316
May sti fo eraflew dna ytef2,111
as ,htlaeh lanoiNovember
tapucco eht draugefas ot serudecorp 2,300dna seicilop sah ytirohtuA ehT
June 2,236 December 2,294 .seeyolpme

The Authority has policies and procedures to safeguard the occupational health,TNsafety
EMPandIUQwelfare
E DNAofYits
TREPORP
employees.
gnirud )noillim 7.07K :0202( noillim 4.082 K ot gnitnuoma tnempiuqe dna ytreporp desahcrup ytirohtuA ehT
rieht naht erom ton si tnempiuqe dna ytreporp fo eulav gniyrrac eht ,srotceriD eht fo noinipo eht nI .raey eht
PROPERTY AND EQUIPMENT .eulav elbarevocer
The Authority purchased property and equipment amounting to K280.4 million (2020: K70.7 million) during
the year. In the opinion of the Directors, the carrying value of property and equipment
SNO is Inot
TAN more
ODthan
DNA their
STFIG
recoverable
.)960value.
,983,1K :0202( 469,658 K ot detnuoma raey eht gnirud stneve dna snoitasinagro elbatirahc ot snoitanoD

GIFTS AND DONATIONS ROTIDUA

Donations
a gniwtoolcharitable
lof sraey eorganisations
erht fo mretand
a roevents
f detnduring
ioppa the
erewyear
noamounted
tnrohT tnto K856,964
ar G srsseM (2020:
,srotidK1,389,069).
uA s’ytirohtuA ehT
dedne sraey laicnanif eht fo tidua eht fo tcepser ni si eciffo fo mret tnerruc riehT .ssecorp gniddib evititepmoc
AUDITOR .3202 dna 2202 ,1202 rebmeceD ts13
The Authority’s Auditors, Messrs Grant Thornton were appointed for a term of three years following a
competitive bidding process. Their current term of office is in respect of the audit of the financial years 31
December 2021, 2022 and 2023.

ROTCERID

:e ta D
DIRECTOR

Date:

.2
2. 77.
ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

ZAMBIA REVENUE AUTHORITY
STATEMENT OF GOVERNING BOARD’S RESPONSIBILITIES
STATEMENT OF GOVERNING BOARD’S RESPONSIBILITIES
The Zambia Revenue Authority Act, Chapter 321 of the Laws of Zambia (the “Act”) requires the Governing
The
BoardZambia
to: Revenue Authority Act, Chapter 321 of the Laws of Zambia (the “Act”) requires the Governing
Board to:
● assess, charge, levy and collect all revenue due to the Government of the Republic of Zambia under such
● assess,
laws ascharge, levy and
the Minister collect all
of Finance andrevenue duePlanning
National to the Government
may, by enactedof the Republicorofstatutory
legislation Zambia instrument,
under such
laws as the Minister of Finance and National Planning may, by enacted legislation or statutory instrument,
specify;
specify;
● ensure that all revenue collected is, as soon as reasonably practicable, credited to the Government Treasury;
● ensure that all revenue collected is, as soon as reasonably practicable, credited to the Government Treasury;
● keep proper books of account and other records which disclose with reasonable accuracy at any time the
● keep proper
financial booksofofthe
position account and other records which disclose with reasonable accuracy at any time the
Authority;
financial position of the Authority;
● safeguard the assets of the Authority and hence take reasonable steps for the prevention and detection of
● safeguard the assets
fraud and other of the Authority
irregularities; and and hence take reasonable steps for the prevention and detection of
fraud and other irregularities; and
● prepare financial statements for each financial year which comply with International Public Sector
● prepare
Accountingfinancial statements
Standards (IPSAS).for each financial year which comply with International Public Sector
Accounting Standards (IPSAS).
The Governing Board is responsible for the maintenance of adequate accounting records and the preparation
The Governing
and integrity of Board is responsible
the annual for the maintenance
financial statements and relatedof information.
adequate accounting records and
The independent the preparation
external auditors,
and
Grantintegrity of the
Thornton, annual
have financial
audited statements
the annual and and
statements related
theirinformation.
report is shownTheonindependent
pages 4 to 7.external auditors,
Grant Thornton, have audited the annual statements and their report is shown on pages 4 to 7.
The Governing Board is also responsible for the systems of internal control. These are designed to
The Governing
provide Board
reasonable, butisnotalso responsible
absolute, for the
assurance as systems of internal
to the reliability control.
of the These
financial are designed
statements, and to
provide reasonable, but not absolute, assurance as to the reliability of the financial
adequately safeguard, verify and maintain accountability for assets and to prevent and detect material statements, and to
adequately
misstatements. safeguard, verify and maintain accountability for assets, and to prevent and detect material
misstatements.
The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of
The systems
authority andare implemented and monitored by suitably trained personnel with an appropriate segregation of
duties.
authority and duties.
Nothing has come to the attention of the Governing Board to indicate that any material breakdown in
Nothing has come
the functioning to the
of these attention
controls, of the and
procedures Governing
systems Board to indicate
has occurred duringthat any under
the year material breakdown in
review.
the functioning of these controls, procedures and systems has occurred during the year under review.
In the opinion of the members of the Governing Board, the Authority has complied with the requirements of the
In the opinion of the members of the Governing Board, the Authority has complied with the requirements of the
Act.
Act.

Signed on behalf of the Board by:

Signed on behalf of the Board by:

________________________________ ______________________________
________________________________
DIRECTOR ______________________________
DIRECTOR
DIRECTOR DIRECTOR

3.
78. 3.
 ANNUAL REPORT 2021

INDEPENDENT AUDITOR'S REPORT

TO THE GOVERNMENT OF ZAMBIA THROUGH THE MINISTER OF FINANCE AND

NATIONAL PLANNING

Report on the financial statements

Opinion
We have audited the accompanying financial statements of the Zambia Revenue Authority (the "Authority") as
set out on pages 8 to 37, and which comprise the statement of financial position as at 31 December 2021, the
statement of financial performance, the statement of changes in net assets, the statement of cash flows and the
statement of comparison of budget and actual for the year then ended, and the notes to the financial statements,
including a summary of significant accounting policies.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Authority as at 31 December 2021, and its financial performance and cash flows for the year then ended in
accordance with International Public Sector Accounting Standards (IPSAS) and in the manner required by the
Zambia Revenue Authority Act, Chapter 321 of the Laws of Zambia.

Basis of opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Authority in accordance with the International
Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA
Code) and other independence requirements applicable to performing audits of financial statements in Zambia,
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

4.

79.
ANNUAL REPORT 2021

INDEPENDENT AUDITOR'S REPORT

TO THE GOVERNMENT OF ZAMBIA THROUGH THE MINISTER OF FINANCE AND

NATIONAL PLANNING (CONTINUED)

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

Key audit matters How our audit addressed the key audit matter
Actuarial valuation of pension obligations
The Authority operates an unfunded lump sum In considering the actuarial valuation of
gratuity arrangement. As the arrangement is unfunded, pension obligation, we performed the following
gratuity benefits are paid out of the Authority's procedures:
general revenues. Upon retirement of unionised and
contract employees, a liability is settled by the • Obtained the actuarial report based on 31
Authority under the final salary principles. The December 2021 numbers.
Authority has legal or constructive obligations to pay
further contributions if the fund does not hold • Reviewed that the valuation in relation to
sufficient assets to pay all employees the benefits IPSAS 39 requirements.
relating to employees’ service in the current and prior
periods. • Reviewed key inputs used within the report
as well as challenged key assumptions made.
International Public Sector Accounting Standard
No. 39 Employee Benefits states that " An entity shall
• Performed a retrospective review to assess
determine the present value of defined benefit
obligation for reasonableness.
obligations and the fair value of any plan assets with
sufficient regularity that the amounts recognised in
the financial statements do not differ materially from • Corroborated the inflation rates used to
the amounts that would be determined at the end of the inflation projections in the region and tested
reporting period.” for reasonableness.

We focused on this audit area because of the significant Compared the discount rates to used Government
assumptions and judgements which are included to arrive bond yield rates available with the Bank of Zambia.
at the pension obligation. Key assumptions that are
involved in the calculation of the defined benefit Reviewed the reasonableness the mortality rates by
obligation as per note 23 to the financial statements are: comparing the rates to those of the Central Statistics
Agency.
● Discount rate; Reviewed the qualifications of the Independent
Actuaries who carried out the valuation.
● Expected rate of salary increment; and
Tested assumptions for reasonableness.
● Average longevity at retirement age for current
employees. Further, we reviewed the disclosures pertaining to
the pension obligations as to whether they were
found to be appropriate and comprehensive in
the financial statements.

5.
80.
 ANNUAL REPORT 2021

INDEPENDENT AUDITOR'S REPORT

TO THE GOVERNMENT OF ZAMBIA THROUGH THE MINISTER OF FINANCE AND

NATIONAL PLANNING (CONTINUED)

Other information

The Governing Board is responsible for the other information. The other information comprises the
Governing Board's Report and the statement of Governing Board's responsibilities, as required by the
Zambia Revenue Authority Act, Chapter 321 of the Laws of Zambia. The other information does not include
the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance or conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work
we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.

Responsibilities of the Directors for the financial statements

The Governing Board is responsible for the preparation and fair presentation of the financial statements in
accordance with International Public Sector Accounting Standards and the requirements of the Zambia
Revenue Authority Act, Chapter 321 of the Laws of Zambia, and for such internal control as the
Governing Board determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Governing Board is responsible for assessing the Authority's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Governing Board either intend to liquidate the Authority or to
cease operations, or has no realistic alternative but to do so. The Directors are responsible for overseeing the
financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Authority's internal control.

6. 81.
ANNUAL REPORT 2021

82.
 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

STATEMENT OF FINANCIAL PERFORMANCE

FOR THE YEAR ENDED 31 DECEMBER 2021

Note 2021 2020

K K

Revenue from non-exchange transactions

Government grants 6 1,640,689,768 1,285,366,971
Deferred income 10 4,651,173 3,819,399
1,645,340,941 1,289,186,370

Revenue from exchange transactions

Asycuda processing fees 7 440,725,747 378,420,006
Other income 8 6,632,369 8,886,148
Finance income 9 2,350,828 2,762,534
Kasumbalesa Agency Fees 12 (a) 6,280,744 7,089,219
Kariba Dam Agency Fees 12 (b) 29,314 31,830
456,019,002 397,189,737

Total revenue 2,101,359,943 1,686,376,107

Expenditure
Personnel expenses 13 (1,443,025,682) (1,147,996,922)
Administrative expenses 14 (111,056,918) (106,222,015)
Other operating expenses 15 (196,970,848) (145,495,244)
Gain/(loss) on foreign exchange transactions 16 90,041,925 (224,711,324)
Depreciation and amortisation expenses 17, 18 (122,995,476) (114,122,595)

Total expenses (1,784,006,999) (1,738,548,100)

Surplus/(Deficit) for the year 317,352,944 (52,171,993)

8.

83.
ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2021

Note 2021 2020

K K
ASSETS
Current assets
Inventories 19 4,329,788 9,042,847
Employee loans and advances (exchange transactions) 20 48,807,131 67,860,510
Other assets 21 49,917,623 50,803,909
Cash and cash equivalents 22 130,675,899 149,346,111
Customs deposit bank accounts 26 1,009,945 3,092,782
Tax refunds bank accounts 27 220,110,938 53,680,821
454,851,324 333,826,980
Non-current assets
Property, plant and equipment 17 986,037,826 801,104,512
Intangible assets 18 134,007,186 108,366,320
Employee loans and advances (exchange transactions) 20 73,210,697 22,620,170
1,193,255,709 932,091,002

TOTAL ASSETS 1,648,107,033 1,265,917,982

Liabilities
Current liabilities
Deferred income 10 1,324,947 835,029
Post employment benefits 23 108,290,846 49,717,020
Payables 24 186,431,680 115,121,370
Borrowings 25 95,486,116 119,003,981
Customs deposits bank accounts 26 1,009,945 3,092,782
Tax refunds for taxpayers 27 220,110,938 53,680,821
Total current liabilities 612,654,472 341,451,003

Non-current liabilities
Deferred income 10 2,926,751 1,677,132
Post employment benefits 23 613,648,128 265,923,953
Borrowings 25 234,669,269 407,524,425
Total non-current liabilities 851,244,148 675,125,510

TOTAL LIABILITIES 1,463,898,620 1,016,576,514

NET ASSETS 184,208,413 249,341,469

Capital deficiency (187,681,811) (130,261,715)

Revaluation reserve 371,890,224 379,603,184

NET ASSETS/EQUITY 184,208,413 249,341,469

9.

84.
 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED 31 DECEMBER 2021
Capital Revaluation
deficiency reserve Total
K K K

At 1 January 2020 (89,019,682) 387,316,144 298,296,462

Deficit for the year (52,171,993) - (52,171,993)
Other comprehensive income:
Gain on employee retirement benefit plan 3,217,000 - 3,217,000
Amortisation of revaluation surplus 7,712,960 (7,712,960) -
Total comprehensive loss for the year (41,242,033) (7,712,960) (48,954,993)
At 1 January 2021 (130,261,715) 379,603,184 249,341,469
Surplus for the year 317,352,944 - 317,352,944
Other comprehensive income:
Loss on employee retirement benefit plan (382,486,000) - (382,486,000)
Amortisation of revaluation surplus 7,712,960 (7,712,960) -
Total comprehensive loss for the year (57,420,096) (7,712,960) (65,133,056)
At 31 December 2021 (187,681,811) 371,890,224 184,208,413

10.
85.
ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021
Notes 2021 2020
K K
Cash flows from operating activities
Surplus/(deficit) for the year 317,352,944 (52,171,993)
Adjustments for:
Amortisation of capital grant 10 (4,651,173) (3,819,399)
Depreciation and amortisation 17,18 122,995,477 114,122,595
Amortisation of staff benefits 23 14,979,652 27,311,267
Impairment loss on employee loans and advances 20 109,125 -
(Gain)/loss on disposal of equipment 99,639 (1,787,800)
Net exchange/(gain) losses on borrowings 25 (87,946,022) 225,436,602
Unrealised exchange losses 21,513,275 46,235,700
Interest paid on borrowings 25 (4,457,749) (5,149,410)
Net finance income (2,350,828) (2,762,534)
Capital work in progress written off 17 2,651,915 973,177
Defined benefit obligation expense 23 255,184,000 160,290,000
Operating cash flows before movements in working
operating funds 635,480,255 508,678,205
Changes in operating funds:
(Increase) decrease in inventories 19 4,713,059 (6,786,515)
Increase in employee loans and advances 20 (46,625,925) (74,586,824)
Decrease (increase) in other assets 21 886,286 294,533
Increase (decrease) in payables 23 71,310,308 21,693,514
30,283,728 (59,385,292)
Employee benefits paid from plan 23 (231,372,000) (164,445,000)
Net cash generated from operating activities 434,391,983 284,847,913

Cash flows from investing activities

Interest received 17, 18 2,350,828 2,762,534
Acquisition of property and equipment and intangible
assets (336,384,069) (102,727,866)
Proceeds from disposal of equipment 62,860 1,995,448
Capital grant received 10 6,390,711 3,004,437
Net cash used in investing activities (327,579,670) (94,965,447)

Cash flows from financing activities

Repayment of borrowings 25 (103,969,250) (98,358,750)
Net cash used in financing activities (103,969,250) (98,358,750)

Net increase in cash and cash equivalents 2,843,063 91,523,716

Cash and cash equivalents at beginning of the year 149,346,111 104,058,096
Effect of foreign exchange rate changes (21,513,275) (46,235,700)
Cash and cash equivalents at end of the year 22 130,675,899 149,346,112

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STATEMENT OF COMPARISON OF BUDGET AND ACTUAL

AMOUNTS FOR THE YEAR ENDED 31 DECEMBER 2021

Performance
Note Approved budget Revised budget Actual amounts difference
K K K K
Revenue
Government grants 31.1.1 2,086,314,568 2,098,551,205 1,640,689,768 (457,861,437)
Asycuda processing fees 31.1.2 435,254,663 435,254,647 440,725,747 5,471,100
Other income 31.1.3 15,899,139 6,899,139 6,632,369 (266,770)
Finance income 31.1.4 2,958,904 2,958,904 2,350,828 (608,076)
Deferred income 31.1.5 - - 4,651,173 4,651,173
Kasumbalesa Agency Fees 31.1.6 6,283,396 7,643,023 6,280,744 (1,362,279)
Kariba Dam Agency Fees 31.1.7 - - 29,314 29,314
2,546,710,670 2,551,306,918 2,101,359,943 (449,946,975)
Expenditure
Personnel expenses 31.2.1 1,432,549,333 1,410,362,670 1,443,025,682 (32,663,012)
Administrative expenses 31.2.2 113,737,103 124,520,888 111,056,918 13,463,970
Other operating expenses 31.2.3 300,016,276 334,822,672 196,970,848 137,851,824
Depreciation and amortisation expenses 31.2.4 - - 122,995,476 (122,995,476)
Net exchange losses 31.2.5 - - (90,041,925) 90,041,925
Total expenditure 1,846,302,712 1,869,706,230 1,784,006,999 85,699,231

Surplus/(deficit) for the year 700,407,958 681,600,688 317,352,944 (364,247,744)

12.

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ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1. General Information
The Zambia Revenue Authority ("the Authority") was established following the enactment by Parliament
of the Zambia Revenue Authority Act, Chapter 321 of the Laws of Zambia (the "Act"), to carry out the
affairs of the former Customs and Excise Department and the Department of Income Taxes. The Act,
which came into effect on 1 April 1994, also transferred the assets and liabilities of those former
Departments to the Authority. The address of its registered office is:

Revenue House
Kabwe Roundabout
P. O. Box 35710
Lusaka

2. Statement of Compliance
The financial statements of the Authority have been prepared in accordance with and comply with
International Public Sector Accounting Standards ("IPSAS"). The financial statements are presented in
Zambian Kwacha (K), which is the functional and reporting currency of the Authority. The accounting
policies have been consistently applied to all the years presented.

3. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out below.

(a) Basis of preparation

The financial statements have been prepared on the historical cost basis except for certain properties
and financial instruments that are measured at revalued amounts at the end of each reporting
period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique.

In estimating the fair value of an asset or a liability, the Authority takes into account the characteristics
of the asset or liability if market participants would take those characteristics into account when pricing
the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes
in these financial statements is determined on such a basis, except for, leasing transactions that are
within the scope of IPSAS 13 Leases, and measurements that have some similarities to fair value
but are not fair value, such as value in use in IPSAS 21 Impairment of non-cash generating assets.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or
3 based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and

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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

3. Summary of Significant Accounting Policies (continued)

(a) Basis of preparation (continued)

• Level 3 inputs are unobservable inputs for the asset or liability.

The Authority had a capital deficiency of K187,681,211(2020: K130,261,715) as at the

reporting date. On the basis that the Authority is Grant aided and funding by the
Government has continued in the subsequent period, the Governing Board is of the opinion
that the preparation of these financial statements on the going concern basis
remains appropriate. In this respect, the Government of the Republic of Zambia through the
Ministry of Finance and National Planning has confirmed that it will continue to provide
operational funding to the Zambia Revenue Authority.

(b) Foreign currency translation

In preparing the financial statements of the Authority, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates
of the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.

Exchange differences are recognised in income and expenditure in the year in which they arise.

(c) Revenue recognition

Revenue from non-exchange transactions

Government revenue grants

Income represents the revenue grants receivable from the Government and other co-operating partners
during the year and is accounted for on an accruals basis. Government Grants are recognised
when there is reasonable assurance that they will be received and the Authority will comply with the
conditions associated with the grant. Grants that compensate the Authority for expenses incurred are
recognised in income and expenditure as other income on a systematic basis in the periods in which
the expenses are recognised.

Capital grants
Capital grants are recognised initially as deferred income at fair value where there is reasonable
assurance that they will be received and the Authority will comply with the conditions associated with
the grant, and are then recognised in the income and expenditure as other income on a systematic basis
over the useful life of the asset. Specifically, government grants whose primary condition is that the
Authority should purchase, construct or otherwise acquire non-current assets are recognised as
deferred income in the statement of financial position and transferred to surplus or deficit on a
systematic and rational basis over the useful lives of the related assets.

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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

3. Summary of Significant Accounting Policies (continued)

(c) Revenue recognition (continued)

Revenue from exchange transactions

Other income
Other income is recognised on an accruals basis in accordance with the substance of the relevant
agreements.

Rental income
Rental income from properties is recognised in income and expenditure on a straight line basis over
the term of the relevant lease agreement.

Sale of cigarette stamps

Revenue from the sale of cigarette stamps is recognised upon transfer of control of promised goods
or services to customers in an amount that reflects the consideration the Authority expects to receive
in exchange for those goods or services. Revenue is measured net of returns, trade discounts and volume
rebates.

Interest income
Interest income is recognised using the effective interest rate method.

(d) Property and equipment

Leasehold land and buildings are shown at fair value, based on valuations by external independent
valuers, less subsequent depreciation for buildings. Valuations are performed with sufficient regularity
to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any
accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of
the asset and the net amount is restated to the revalued amount of the asset.

All other property, plant and equipment are stated at historical cost less depreciation. Historical
cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Authority and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial
period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other
comprehensive income and shown as revaluation reserve in equity. Decreases that offset previous
increases of the same asset are charged in other comprehensive income and debited against the
revaluation reserve. All other decreases are charged to profit or loss. Each year the difference between
depreciation based on the revalued carrying amount of the asset (the depreciation charged to profit
or loss) and depreciation based on the asset’s original cost is transferred from the revaluation reserve
to retained earnings.

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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

3. Summary of Significant Accounting Policies (continued)

(d) Property and equipment (continued)

Leasehold land is not depreciated. Depreciation on other assets is calculated using the straight-line
method to allocate their cost or revalued amounts to their residual values over their estimated useful
lives, as follows:

Leasehold buildings 2%
Office equipment, furniture, fixtures and fittings 20%
Furniture, fixtures and fittings 20%
Motor vehicles 25%
Equipment 10%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.

Property and equipment are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible
reversal of the impairment at each reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and
are included in income and expenditure. When revalued assets are sold, the amounts included in the
revaluation reserve relating to those asset are transferred to retained earnings.

An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

(e) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

(f) Inventories
Inventories are stated in the statement of financial position at the lower of cost and net realisable
value. Cost comprises direct material costs. Cost includes all costs that have been incurred in bringing
the inventories to their present location and condition. Net realisable value takes into account all
directly related costs to be incurred in marketing, selling and distribution. Provision is made where
necessary, for defective, slow moving and obsolete inventories.

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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

3. Summary of Significant Accounting Policies (continued)

(g) Impairment of intangible assets

At each reporting date, the Authority reviews the carrying amounts of its tangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss (if any).

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying
amount of the asset is reduced to its recoverable amount. Impairment losses are recognised as an
expense immediately, unless the relevant asset is leasehold land or buildings, other than investment
property, carried at a revalued amount, in which case the impairment loss is treated as a revaluation
decrease.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset in prior years. A reversal of an impairment loss is recognised as income
immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.

(h) Provisions
Provisions are recognised when the Authority has a present obligation (legal or constructive) as a
result of a past event, for which it is probable that the Authority will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle
the present obligation at the reporting date, taking into account the risks and uncertainties surrounding
the obligation. Where a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement
will be received and the amount of the receivable can be measured reliably.

(i) Financial instruments

Financial assets and financial liabilities are recognised when the Authority becomes a party to the
contractual provisions of the instrument.

(i) Financial assets

Financial assets within the scope of IPSAS 29 Financial Instruments: Recognition and Measurement
are classified as loans and receivables or held-to-maturity investments, as appropriate. The Authority
determines the classification of its financial assets at initial recognition.

Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the marketplace (regular way trades) are recognised on the trade
date, i.e., the date that the Authority commits to purchase or sell the asset. The Authority's
financial assets include: cash and short-term deposits, employee loans and advances and other
receivables.

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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
3. Summary of Significant Accounting Policies (continued)

(i) Financial instruments (continued)

(i) Financial assets (continued)

(a) Effective interest rate method

The effective interest method is a method of calculating the amortised cost of a financial
instrument and of allocating interest income over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash receipts (including all fees and
points paid or received that form an integral part of the effective interest rate, transaction
costs and other premiums or discounts) through the expected life of the financial instrument,
or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

(b) Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Receivables (including trade and other receivables, bank
balances and cash) are measured at amortised cost less any impairment.

(c) Impairment of financial assets

Financial assets that are measured at amortised cost are assessed for indicators of impairment
at the end of each reporting period. Financial assets are considered to be impaired when there
is objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the financial asset have
been affected.

Objective evidence of impairment could include:

● significant financial difficulty of the issuer or counterparty;
● default or delinquency in interest or principal payments;
● it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or
● the disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial assets, such as receivables, assets that are assessed not to be
impaired individually are, in addition, assessed for impairment on a collective basis. Objective
evidence of impairment for a portfolio of receivables could include the Authority's past
experience of collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period of one year, as well as observable changes in national
or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised
is the difference between the asset's carrying amount and the present value of estimated
future cash flows, discounted at the financial asset's original effective interest rate.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through profit or loss to the extent that the carrying
amount of the investment at the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been recognised.

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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
3. Summary of Significant Accounting Policies (continued)

(i) Financial instruments (continued)

(i) Financial assets (continued

(d) De-recognition of financial assets (continued)

The Authority derecognises a financial asset only when the contractual rights to the cash flows
from the asset expire, or it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Authority neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Authority recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Authority retains substantially all the
risks and rewards of ownership of a transferred financial asset, the Authority continues to
recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
On derecognition of a financial asset measured at amortised cost, the difference between
the asset's carrying amount and the sum of the consideration received and receivable is
recognised in the statement of financial performance.

(ii) Financial liabilities

Financial liabilities within the scope of IPSAS 29 are classified as financial liabilities at fair value
through surplus or deficit or loans and borrowings, as appropriate. The Authority determines the
classification of its financial liabilities at initial recognition.
All financial liabilities are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method.

The Authority’s financial liabilities include payables, other payables and borrowings.

The effective interest method is a method of calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash payments through the expected life of the financial
liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
(j) Deferred income
Income intended to compensate costs over a period of time is deferred and released to the profit or
loss over the periods necessary to match it with the costs for which it is intended to compensate.

(k) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is due
within one year or less (or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
(l) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

3. Summary of Significant Accounting Policies (continued)

(m) Employee benefits

i) Retirement benefit obligations

The Authority operates various post-employment schemes, including both defined benefit and
defined contribution pension plans.

(a) Pension obligations

A defined contribution plan is a pension plan under which the Authority pays fixed
contributions into a separate entity. The Authority has no legal or constructive obligations to
pay further contributions if the fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and prior periods.

A defined benefit plan is a pension plan that is not a defined contribution plan.

Typically defined benefit plans define an amount of pension benefit that an employee will
receive on retirement, usually dependent on one or more factors such as age, years of service
and compensation.

The liability recognised in the statement of financial position in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The defined benefit obligation is calculated annually
by independent actuaries using the projected unit credit method. The present value of the
defined benefit obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are denominated in the
currency in which the benefits will be paid, and that have terms to maturity approximating to
the terms of the related pension obligation. In countries where there is no deep market in such
bonds, the market rates on government bonds are used.

Actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are charged or credited to equity in other comprehensive income in the period in
which they arise.

Past-service costs are recognised immediately in income.

For defined contribution plans, the Authority pays contributions to publicly administered
pension insurance plans on a mandatory basis. The Authority has no further payment
obligations once the contributions have been paid. The contributions are recognised as
employee benefit expenses when they are due.

The Authority and all its employees also contribute to the appropriate National Social
Security Fund, which is a defined contribution scheme.

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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

3. Summary of Significant Accounting Policies (continued)

(m) Employee benefits (continued)

(b) Termination benefits

Termination benefits are payable when employment is terminated by the Authority before the
normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for
these benefits. The Authority recognises termination benefits at the earlier of the following
dates:

(a) when the Authority can no longer withdraw the offer of those benefits; and

(b) when the entity recognises costs for a restructuring that is within the scope of IPSAS 39
and involves the payment of termination benefits. In the case of an offer made to encourage
voluntary redundancy, the termination benefits are measured based on the number of
employees expected to accept the offer. Benefits falling due more than 12 months after the
end of the reporting period are discounted to their present value.

4. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including experience of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Authority makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are addressed below.

Retirement benefit obligations

The present value of the pension obligations depends on a number of factors that are determined on an
actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income)
for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of
pension obligations.

The Authority determines the appropriate discount rate at the end of each year. This is the interest rate that
should be used to determine the present value of estimated future cash outflows expected to be required
to settle the pension obligations. In determining the appropriate discount rate, the Authority considers the
interest rates of Government bonds that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating the terms of the related pension obligation. Other key
assumptions for pension obligations are based in part on current market conditions.

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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
5. Financial risk management objectives and policies
The Authority’s activities expose it to a variety of financial risks: credit risk and liquidity risk. The Authority’s
overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on its financial performance. The Authority does not hedge any of its risk
exposures.

Financial risk management is carried out by the Finance Department under policies approved by the
Governing Board. The Governing Board provides written principles for overall risk management, as well
as written policies covering specific areas such as credit risk and investment of excess liquidity.

Credit risk

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions,
including outstanding receivables. The Authority does not have significant concentrations of credit risk.

For cash and cash equivalent balances, the Authority’s exposure and credit ratings of counterparties are
regularly monitored and the aggregate value of transactions spread amongst approved financial
institutions. The Authority actively seeks to limit the amount of credit exposure to any one financial
institution.

Foreign currency risk management

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. The Authority undertakes certain transactions
denominated in foreign currencies hence exposure to exchange rate fluctuations arise. Exchange rate
exposure is managed within approved policy parameters as approved by the Board of Directors.

The Authority is exposed to foreign exchange risk which arises primarily with respect to bank and cash
balances which are denominated in US Dollars. Foreign exchange risk also arises from a loan from Ministry
of Finance and National Planning (a subsidiary loan which the Government of the Republic of Zambia
secured from the People's Republic of China denominated in Chinese Yuan) and supplier payments
denominated in US Dollars. Below is the Kwacha equivalent of the financing assets and liabilities that are
denominated in foreign currencies:

2021 2020
K K
Assets
US Dollar denominated 14,744,514 19,818,789

Liabilities
Chinese Yuan denominated 330,155,385 526,528,406
US Dollar denominated 16,603,563 13,531,172
346,758,948 540,059,578

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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
5. Financial risk management objectives and policies (continued)
Liquidity risk
Liquidity risk is the risk that the Authority will not be able to meet its financial obligations as they fall
due. Prudent liquidity risk management includes maintaining sufficient cash balances, and the
availability of funding from an adequate amount of committed credit facilities. Due to the dynamic nature
of the underlying businesses, the Finance department maintains flexibility in funding by maintaining
availability under committed credit lines.

Management performs cash flow forecasting and monitor rolling forecasts of the Authority’s liquidity
requirements to ensure it has sufficient cash to meet its operational needs while maintaining sufficient
headroom on its undrawn committed borrowing facilities (note 25) at all times so that the Authority
does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. The
Authority's approach when managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or risking damage
to the Authority's reputation.

The table below analyses the Authority’s financial liabilities that will be settled on a net basis into relevant
maturity groupings based on the remaining period at the reporting date to the contractual maturity
date. The amounts disclosed in the table below are the contractual undiscounted cash flows.

Less than 1 Between 1

year and 5 years Over 5 years
K K K
31 December 2021:
- borrowings 95,486,116 234,669,269 -
- payables 186,431,680 - -
- employee benefits 108,290,846 386,598,321 227,049,807
390,208,642 621,267,590 227,049,807
Liquidity risk

Less than 1 Between 1

year and 5 years Over 5 years
K K K

31 December 2020:
- borrowings 119,003,981 407,524,425 -
- payables 115,121,370 - -
- employee benefits 49,717,020 167,532,090 98,391,863
283,842,371 575,056,515 98,391,863

Capital management
The Authority’s objectives when managing capital are to safeguard the Authority’s ability to continue as
a going concern. Adequacy of the capital of the Authority is maintained by the Authority on a regular
basis. As and when required the Authority will request supplementary funding from the Ministry of Finance
and National Planning.
Fair value measurements
This hierarchy requires the use of observable market data when available. The Authority considers
relevant and observable market prices in its valuations where possible.
Fair value of the Authority’s financial assets and financial liabilities that are measured at fair value on a
recurring basis.

23.
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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
5. Financial risk management objectives and policies (continued)
There were no financial assets and liabilities that are measured at fair value on a recurring basis during the
period. Except as detailed in the following table, the Directors consider that the carrying amounts of
financial assets and financial liabilities recognised in the financial statements approximate their fair values.

Carrying value Fair value Carrying value Fair value

2021 2021 2020 2020
Financial assets K K K K
Employee loans and advances 122,017,828 122,017,828 90,480,680 90,480,680
Other assets 49,917,623 49,917,623 50,803,909 50,803,909
Customs deposits bank
accounts 1,009,945 1,009,945 3,092,782 3,092,782
Tax refunds bank accounts 220,110,938 220,110,938 53,680,821 53,680,821
Financial liabilities
Borrowings 330,155,385 330,155,385 526,528,406 526,528,406
Payables 186,431,680 186,431,680 115,121,370 115,121,370
Customs deposits bank accounts 1,009,945 1,009,945 3,092,782 3,092,782
Tax refunds bank accounts 220,110,938 220,110,938 53,680,821 53,680,821

Fair value hierarchy as at 31December 2021

Level 1 Level 2 Level 3 Total

Financial assets K K K K
Employee loans and advances - - 122,017,828 122,017,828
Other assets - - 49,917,623 49,917,623
Customs deposit bank account - - 1,009,945 1,009,945
Tax refunds bank accounts - - 220,110,938 220,110,938

Financial liabilities
Borrowings - - 330,155,385 330,155,385
Payables - - 186,431,680 186,431,680
Customs deposit bank accounts - - 1,009,945 1,009,945
Tax refund bank accounts - - 220,110,938 220,110,938

Fair value Hierarchy as at 31 December 2020

Level 1 Level 2 Level 3 Total

Financial assets K K K K
Employee loans and advances - - 90,480,680 90,480,680
Other assets - - 50,803,909 50,803,909
Customs deposits bank accounts - - 3,092,782 3,092,782
Tax refunds bank accounts - - 53,680,821 53,680,821
Financial liabilities
Borrowings - - 526,528,406 526,528,406
Payables - - 110,829,430 110,829,430
Customs deposits bank accounts - - 3,092,782 3,092,782
Tax refunds bank accounts - - 53,680,821 53,680,821

24.
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ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

6. Government Grants 2021 2020

K K
Annual budgetary allocation 918,664,001 905,587,024
Supplementary funding 722,025,767 379,779,947
1,640,689,768 1,285,366,971

Supplementary funding includes K300 million for the purchase and development of a parking yard in
Makeni, K75 million for the development of a Customs Management System, K180.2 million for
recruitment of 300 new staff to support the modernisation drive, K12 million for the construction of a data
centre in Lusaka and Ndola and K154 million for other modernisation activities which includes K55.8
million from Kasumbalesa government profit sharing which has been allocated to ZRA for use as part of
modernisation fund.
.
7. Asycuda processing fees
Asycuda processing fees are derived from the charge of K500.10 per transaction for the processing of
imported goods at the borders. This income is partly used to maintain the scanners thatare used to process
imported goods.
2021 2020
K K
440,725,747 378,420,006

8. Other income
Cigarette stamps sales proceeds 2,919,420 3,127,265
Rental income 2,559,647 2,338,249
(Gain)/loss on disposal of property and equipment (99,639) 1,787,799
Sundry income 1,252,941 1,632,835
6,632,369 8,886,148

Rental income arises from the excess office space that is let to third
parties.
9. Finance income
Relates to interest income on short term bank deposits. 2,350,828 2,762,534
10. Deferred income
At beginning of the year 2,512,161 3,327,123
Receipts during the year 6,390,710 3,004,437
Recognised in statement of financial performance (4,651,173) (3,819,399)
At end of the year 4,251,698 2,512,161

Amounts falling due within one year 1,324,947 835,029

Amounts falling due after one year 2,926,751 1,677,132
4,251,698 2,512,161

In October 2016, the Authority received assets from the World Bank, in the form of motor vehicles
valued at K3,602,292 and office equipment valued at K497,766. These have been treated as deferred
income and are being depreciated over their respective estimated useful lives of 5 and 4 years respectively,
with the associated deferred income being amortised accordingly.
In May 2018, the Authority received various assets from the German Development Cooperation, in the
form of computers and office furniture valued at K293,400 and K16,691 respectively. These have been
treated as deferred income and are being depreciated over their respective estimated useful lives of 5
years with the associated deferred income being amortised accordingly.

25.
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 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

10. Deferred income (continued)

In 2019, the Authority received various assets from the World Bank which included handheld scanners,
sirens and drones all valued at K1.5 million. The German Development Cooperation donated various
office furniture and ICT equipment valued at K952,411. The Public Financial Management Reform
Programme (PFMRP) donated Canon document scanners valued at K154,104. The World Customs
Organisation donated ICT equipment valued at K66,833. These have been treated as deferred income
and are being depreciated over their respective estimated useful lives with the associated deferred income
being amortised accordingly.
During the year 2020, the Authority received K2.3 million worth of seals from the World Bank for
use in the management of transit cargo vehicles for customs purposes, laptops worth K0.4 million from
the German Agency for International Co-operation - Deutsche Gesellschaft fur Internationale
Zusammenarbeit, (GIZ) GmbH and laptops worth K0.14 million from the Ministry of Commerce Trade
and Industry.
During the year 2021, the Authority received assets valued at K6 million from GIZ. These consisted of
computers and related accessories. The Authority also received donations of furniture and equipment from
UNCTAD and the Ministry of Transport and Logistics valued at K400,000.

11. Mineral Value Chain and Norwegian Tax 2021 2020

Administration Grants K K
At beginning of the year - 1 375
Refunds - (1 375)
At end of the year - -

12. Agency fees

(a) Kasumbalesa Agency Fees 7 089 219 4 127 609

In March 2017, the Authority was appointed by the Government of the Republic of Zambia
(GRZ) as a Profit Collection Agent in respect of the Concession Agreement between the GRZ and
the Zambian Intellectual Property Border Crossing Company Limited (ZipBCC) for collection of
profits on its behalf. The income of K6,280,744 (2020: K7,089,219) reported in the statement of
financial performance represents 10% administrative fees for collectinge Government’s share of
profits during the year.

(b) Kariba Dam Agency Fees 31 830 29 970

In January 2013, the Authority signed a memorandum of understanding with Zambezi River Authority
for the collection of toll fees on the Kariba Dam on its behalf. The income of K29,314 (2020: K31,830)
reported in the statement of financial performance represents 10% agency fees on the toll fees collected
on behalf of Zambezi River Authority during the year.

26.
101.
ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

13. Personnel expenses 2021 2020

K K
Basic pay 574,085,212 474,826,524
Retirement benefit expenses 258,485,257 177,111,088
Housing allowance 166,281,976 135,373,887
Leave pay 133,400,507 129,918,543
Other allowances 69,335,746 50,722,446
Overtime 49,386,842 44,447,790
Bonuses 68,151,246 38,287,142
Pension Scheme contributions 42,649,981 26,474,411
NAPSA contributions 28,369,682 24,991,531
Medical expenses 31,626,071 23,490,068
Training 3,970,620 8,176,456
Staff welfare and professional subscriptions 10,116,773 7,645,459
Insurance 5,652,041 5,431,862
ART/Employee wellness contributions 1,513,728 1,099,715
1,443,025,682 1,147,996,922
14. Administrative expenses
Repairs and maintenance - buildings 17,322,818 20,355,781
Travel expenses 20,304,422 13,393,245
Advertising and public relations 4,934,300 10,348,116
Office rentals 10,952,945 9,467,582
Postage and telephones 5,896,206 4,350,637
Fuel 5,352,931 6,543,020
Staff uniforms 4,878,535 5,288,661
Electricity, water and rates 9,197,916 6,881,138
Printing and stationery 4,812,021 7,100,094
Motor vehicle repairs 9,094,238 7,094,400
Subscriptions and publications 5,771,805 4,351,237
Board expenses 2,428,768 2,300,228
Motor vehicle insurance and licences 3,307,258 2,321,389
Conferences and seminars 3,998,950 3,610,420
Corporate social responsibility 856,964 1,389,069
Audit expenses 950,000 632,858
Bank charges 197,069 326,094
Insurance 799,772 468,046
111,056,918 106,222,015
15. Other operating expenses
Repairs and maintenance - IT 105,576,046 67,452,386
Travel/relocation 43,046,716 31,627,061
Security 26,995,340 22,044,274
Advertising/promotional material and conferences 4,319,208 8,298,803
Field work - fuel 5,976,447 6,566,041
Scanner operations 2,550,682 2,973,196
Printing and stationery 2,319,307 2,506,580
Cigarette stamps 3,846,141 2,091,754
Legal and professional expenses 382,677 949,976
Tender Expenses 1,823,893 659,923
Other professional fees 134,391 325,250
196,970,848 145,495,244

27.
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ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

16. Gain/(loss) on foreign exchange transactions

The movements in the US Dollar exchange rates

during the year were as follows:

Mid market exchange rate at 1 January 21.2 14.1

Mid market exchange rate at 31 December 16.7 21.2
Average (appreciation)/depreciation (21%) 50%

The Zambian Kwacha appreciated against the US Dollar and other major convertible foreign currencies
during the year. The impact of the appreciation of the Zambian Kwacha during the year is that the Authority
earned some net unrealised exchange gains on its foreign currency denominated monetary liabilities.

28.
103.
104.
ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021
17. Property, plant and equipment
ANNUAL REPORT 2021

Furniture
Leasehold Leasehold Plant and Office Motor fixtures and Capital work
land buildings machinery equipment Vehicles fittings in progress Total
Cost/valuation K K K K K K K K
At 1 January 2020 39,570,402 507,291,380 437,372,637 131,152,894 72,444,355 32,381,510 6,991,616 1,227,204,794
Additions - - 139,645 46,599,818 4,662,462 3,731,920 15,520,576 70,654,421
Disposals - - - (348,745) (2,773,969) (563,563) - (3,686,277)
Transfers - 4,391,177 - - - - (4,391,177) -
Expensed* - - - - - - (973,177) (973,177)
At 1 January 2021 39,570,402 511,682,557 437,512,282 177,403,967 74,332,848 35,549,867 17,147,838 1,293,199,761
Additions - 288,005 35,281,631 2,328,765 242,547,306 280,445,707
Disposals - (2,320) (334,926) (6,463,372) (223,135) - (7,023,753)
Transfers 249,722,390 - - - - (249,722,390) -
Expensed* - (770,135) - - - - (1,881,780) (2,651,915)
At 31 December 2021 39,570,402 760,634,812 437,797,967 212,350,672 67,869,476 37,655,497 8,090,974 1,563,969,800
Depreciation and impairment losses
At 1 January 2020 - 29,295,521 242,202,699 69,941,819 48,128,752 15,604,288 - 405,173,079
Depreciation charge - 10,182,985 41,095,819 23,196,372 10,943,891 4,981,731 - 90,400,798
Eliminated on disposal - - - (273,554) (2,669,564) (535,511) - (3,478,629)
At 1 January 2021 - 39,478,506 283,298,518 92,864,637 56,403,079 20,050,508 - 492,095,248
Depreciation charge - 10,430,935 41,112,191 26,785,814 8,934,294 5,434,747 - 92,697,981
Eliminated on disposal - - (2,321) (180,177) (6,463,372) (215,385) - (6,861,255)
At 31 December 2021 - 49,909,441 324,408,388 119,470,274 58,874,001 25,269,870 - 577,931,974
Carrying amounts
At 31 December 2020 39,570,402 472,204,051 154,213,764 84,539,330 17,929,769 15,499,359 17,147,838 801,104,513
At 31 December 2021 39,570,402 710,725,371 113,389,579 92,880,398 8,995,475 12,385,627 8,090,974 986,037,826

* The capital work in progress expense asset relates to the renovation costs incurred by the Authority in creating a Data Centre at Head Office.

29.
 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
17. Property and equipment (continued)
Fair values of buildings
An independent valuation of the Authority’s buildings was performed by valuers, Hallmark Properties
Limited to determine the fair value of the land and buildings. This revaluation was performed at the end
of 2018. The revaluation surplus is credited to other comprehensive income and is shown in revaluation
reserves in capital fund and reserves. The Authority carries out a valuation every five years to ensure that the
carrying amount of the buildings does not significantly differ from the fair value.
The different levels have been defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly (for
example, as prices) or indirectly (for example, derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data.
The buildings are all classified as Level 2 and are recurring fair value measurements with significant
observable inputs. There were no transfers between different levels during the year.
Valuation techniques to derive Level 2 fair values
Level 2 fair values were derived using comparable value of similar buildings adjusted for differences in
key attributes such as property size and condition. The most significant input into this valuation is the price
per square metre. If buildings were stated on the historical cost basis, the amounts would be as follows:
2021 2020
K K
Cost 431,758,786 196,967,451
Accumulated depreciation (67,242,311) (45,654,372)
Carrying amount 364,516,475 151,313,079
The Authority holds title to the Revenue House and a few other properties. However, the Government holds
title to all other properties transferred to the Authority in 1994. There is a project committee that has been
tasked with the responsibility of ensuring that all title deeds currently with the Government are transferred to
the Authority. Management has engaged the Ministry of Local Government, Ministry of Lands and the
respective Local Authorities and Planning Authorities to, among other things, prepare and approve site plans,
number the plots and survey the plots before title deeds can be processed.
18. Intangible assets Capital work in
Software progress Total
Cost K K K
At 1 January 2020 109,909,359 31,908,758 141,818,117
Additions - 32,073,445 32,073,445
Transfers 54,142,410 (54,142,410) -
At 1 January 2021 164,051,769 9,839,793 173,891,562
Additions - 55,938,362 55,938,362
Transfers 13,758,878 (13,758,878) -
At 31 December 2021 177,810,647 52,019,277 229,829,924
Amortisation
At 1 January 2020 41,803,445 - 41,803,445
Amortisation charge for the year 23,721,797 - 23,721,797
At 1 January 2021 65,525,242 - 65,525,242
Amortisation charge for the year 30,297,496 - 30,297,496
At 31 December 2021 95,822,738 - 95,822,738
Carrying amount
At 31 December 2021 81,987,909 52,019,277 134,007,186
At 31 December 2020 98,526,527 9,839,793 108,366,320

30. 105.
ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2021 2020
K K
19. Inventories

Uniforms 1,772,095 6,838,816

Cigarette stamps 974,127 1,031,582
Stationery 1,391,518 1,007,052
Other consumables 192,048 165,397
4,329,788 9,042,847

No allowance has been made for obsolescence and slow moving inventory (2020: Nil).

2021 2020
K K
20. Employee loans and advances
Advances against gratuity 66,438,828 42,121,507
Vehicle ownership loans 24,408,814 22,442,719
Other loans 18,387,313 14,537,344
Personal loans 13,155,212 11,642,324
122,390,167 90,743,894
Impairment allowance (372,339) (263,214)
122,017,828 90,480,680

Amounts falling due within one year 48,807,131 67,860,510

Reconcile amounts falling due after one year 73,210,697 22,620,170
Total employee loans and advances 122,017,828 90,480,680

Interest is charged at 5% per annum for all employee loans except for senior management car loans
which are charged at 18%.
House, car and personal development loans are enhanced by collateral of landed property and in the case
of car loans, the vehicle registration certificate is endorsed with the Authority as the absolute owner

31.
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 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

20. Employee loans and advances (continued) 2021 2020

% %

The prevailing interest rates on staff loans were as follows:

Personal loans 5 5
Personal Development loans 5 5
House loans 5 5
Car loans 5 5
Car loans-senior management 18 18

Movement in the impairment allowance 2021 2020

K K
At beginning of year 263,214 280,801
Amounts recovered in the year - (17,587)
Impairment in the current year 109,125 -
Balance at end of the year 372,339 263,214

21. Other assets

Funds receivable from Kasumbalesa Concession 14,744,514 19,818,789
Prepayments 19,904,539 22,347,869
Other receivables 15,268,570 8,637,251
49,917,623 50,803,909

The carrying amounts of the other receivables approximate to their fair values. None of the above assets are
past due or impaired.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables
mentioned above.
2021 2020
K K
22. Cash and cash equivalents
Cash at bank and in hand 130,675,899 149,346,111
Held as follows:

Zambia National Commercial Bank Plc 102,391,850 122,182,340

Bank of Zambia (Asycuda Fees) 10,059,312 11,621,487
Citi Bank Limited 8,511,331 7,645,356
Atlas Mara Bank Limited 7,681,484 5,976,134
Cash on hand 1,230,329 1,087,531
Indo Zambia Bank Limited 732,890 760,790
Investrust Bank PLC 14,543 12,710
First Capital Bank Limited 11,700 10,000
First Alliance Bank Limited 10,000 10,000
Cavmont Bank Limited 10,000 10,000
Standard Chartered Bank Plc 8,901 9,501
Stanbic Bank Limited 6,390 8,362
First National Bank Limited 4,369 6,700
Eco Bank Limited 2,800 5,200
Total cash and cash equivalents 130,675,899 149,346,111

32.
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ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

23. Post employment benefits 2021 2020

K K
End of contract gratuity and retirement benefits 721,938,974 315,640,973

Amounts falling due within one year 108,290,846 49,717,020

Amounts falling due after one year 613,648,128 265,923,953
721,938,974 315,640,973

Movement in the present value of the defined benefit

obligations:
Defined benefit obligations at 1 January 315,640,974 323,012,973
Benefits paid by the plan (231,372,000) (164,445,000)
Service costs 168,078,000 105,034,000
Interest cost 87,106,000 55,256,000
Actuarial loss/(gain) 382,486,000 (3,217,000)
Defined benefit obligation at end of year 721,938,974 315,640,973

Expense recognised in surplus or deficit

Service costs 168,078,000 105,034,000
Interest costs 87,106,000 55,256,000
255,184,000 160,290,000

The significant actuarial assumptions were as follows:

31 December 2021 31 December 2020
Retirement End of contract Retirement End of contract
benefits gratuities benefits gratuities
Discount rate 21.4% 21.4% 30.1% 30.1%
Inflation 10.7% 10.7% 10.0% 10.0%
Future salary increases 12.2% 12.2% 11.5% 11.5%

Assumptions regarding future experience are set based on the Authority’s observations and experience.

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Impact on defined benefit obligation

Change in
Assumption K

Discount rate 1% 22,914,000

Salary growth rate -1% 25,005,000

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the
same method (present value of the defined benefit obligation calculated with the projected unit credit
method at the end of the reporting period) has been applied when calculating the pension liability
recognised within the statement of financial position.

33.
108.
 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
24. Payables 2021 2020
K K
Accrued leave pay 75,340,699 66,137,053
Trade payables 68,763,657 27,660,355
Accrued expenses 42,327,324 21,323,962
186,431,680 115,121,370
The carrying amounts of the above payables and accrued expenses
approximate to their fair values.

25. Borrowings
Loan from Ministry of Finance and National Planning 330,155,385 526,528,406

Amounts falling due within one year 95,486,116 119,003,981

Amounts falling due after one year 234,669,269 407,524,425
330,155,385 526,528,406

At beginning of year 526,528,406 404,599,964

Loan repayments during the year (103,969,250) (98,358,750)
Loan interest paid during the year (4,457,749) (5,149,410)
Net exchange (gains)/losses during the year (87,946,022) 225,436,602
330,155,385 526,528,406

CNY CNY
At beginning of year 161,437,500 198,275,000
Loan repayments during the year (35,000,000) (35,000,000)
Loan interest paid during the year (1,487,500) (1,837,500)
Balance at the end of the year 124,950,000 161,437,500
In 2012, the Authority assumed a subsidiary loan which the Government of the Republic of Zambia
secured from the People’s Republic of China for the procurement, installation and operation of 8 non-
intrusive scanners from Exim Bank.
The loan is for a duration of 13 years at a fixed interest rate of 1% per annum (revised). Under the terms
of this loan, the Authority is to pay annual interest amounts in two instalments March and September with
effect from 2013, while principal repayments commenced in 2015.
26. Customs deposits bank accounts 2021 2020
K K
Customs deposits bank accounts 1,009,945 3,092,782
The Customs deposits bank accounts relate to monies held on
behalf of importers pending assessments. The Customs and Excise
Act, Chapter 322 of the Laws of Zambia requires that after 30 days
any monies not refunded to importers must be returned to the
Government. The corresponding liability to refund importers is
included as a payable.

27. Tax refunds bank accounts

Value Added Tax (VAT) refunds 207,905,170 5,038,073
Income tax refunds 7,415,276 44,346,808
Customs refunds 4,790,492 4,295,940
220,110,938 53,680,821

The tax refunds bank accounts relate to monies from the Government being amounts payable to taxpayers
on their claims for tax paid. The corresponding liability to refund taxpayers is shown as a payable.

34.

109.
ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021

28. Contingent liabilities

There were legal proceedings outstanding against the Authority, which were awaiting ruling/judgement by
courts of law as at 31 December 2021. One such case was the case of the Post Newspapers and Dr. Fred
M'membe Vs 5 others and Zambia Revenue Authority whose judgement was made by the Supreme Court on
17th February 2022 in favour of The Post Newspaper and Dr. Fred M'membe. Further, a letter demanding
costs in the sum of K5 million was received from Dr. M'membe's lawyers. However, in the opinion of the
Governing Board, this claim and other lawsuits in aggregate will not have a significant adverse effect on the
financial statements of the Authority. Besides, all tax related litigation claims will be funded by the
Government of the Republic of Zambia.

29. Commitments
Capital expenditure at the end of the reporting period but not recognised in the financial statements is
as follows:

2021 2020
K K

Property, plant and equipment 72,460,897 11,577,766

Operating lease commitments
The Authority leases various properties under non-cancellable operating leases. The lease terms are
between 1 and 5 years, and the majority of the lease agreements are renewable at the end of the lease
period at market rates.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

2021 2020
K K

Not later than 1 year 7,727,119 9,580,078

Later than 1 year and not later than 5 years 8,383,941 19,160,156
16,111,060 28,740,234

30. Related party transactions

Funding received from Government 1,640,689,768 1,285,366,971

Scanner loan and interest repayments to Government 108,426,999 103,508,161

Key management personnel compensation

Key management includes Governing Board and members of Senior management. The compensation
paid or payable to key management for employee services is shown below:

Salaries and other short-term employment benefits 34,079,296 24,479,210

Post-employment benefits 12,045,096 10,654,657
Directors Fees 1,078,913 1,119,052
47,203,305 36,252,919
Loans to Commissioners
Loans and advances 14,101,521 16,356,621

The Authority has been providing short term loans to key management personnel at rates below average
commercial rates of interest. The loans are unsecured.

110. 35.
 ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

31. Budget information

The annual budget is prepared on the accrual basis, that is, all planned costs and income are presented in
a single statement to determine the needs of the Authority. As a result of the adoption of the accrual
basis for budgeting purposes, there are no basis, timing or entity differences that would require
reconciliation between the actual comparable amounts and the amounts presented as a separate
additional financial statement in the statement of comparison of budget and actual amounts.
Explanatory comments are provided in the notes to the annual financial statements; first, the reasons
for overall growth or decline in the budget are stated, followed by details of overspending or
underspending on line items.

31.1 Revenue

31.1.1 Government grants

The actual grant received in the current year is lower than the approved budget because
some supplementary funds which were provided for in the budget for various
modernisation initiatives were not funded by the Goverment. There was also a negative
variance on the performance of the Kasumbalesa profit sharing budget line owing to
the decline in the number of trucks due to the covid-19 which saw the reduction in the
number of transits.

31.1.2 Asycuda processing fees

The Asycuda processing fee per transaction was maintained at K500.10 per transaction.
The actual transaction volumes were more than the budgeted volumes by 10,940
transactions in the year resulting in a favourable variance of K5,471,100.

31.1.3 Other income

Other income was less than budgeted because the planned auction of the Authority's
disused and obsolete assets did not take place during the year. Sales of cigarette tax stamps
was also lower than budgeted.

31.1.4 Finance income (Mineral Value Chain and NTA)

The projects sponsored by the Royal Norwegian Government for strengthening of Tax
administration came to an end in 2018. No activity was recorded in the current year.
31.1.5 Deferred income
This comprises of amortization of various assets donated to the Authority (including
office equipment and motor vehicles) by Public Expenditure Management and
Financial Accountability (PEMFA), Public Financial Management Reform Programme
(PFMRP), World Bank and World Customs Organisation (WCO). These figures are
not included in the budget due to the uncertainty of the grant income from donors.
31.1.6 Kasumbalesa Agency Fees
The Authority's agency fee of 10% on the Kasumbalesa profit sharing was lower than
the budget in the period due to the gain of the Zambian Kwacha against the United
States Dollar (US$). The fees are paid in United States Dollars (US$).

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ANNUAL REPORT 2021

ZAMBIA REVENUE AUTHORITY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

31. Budget information (continued)

31.1 Revenue (continued)

31.1.7 Kariba Dam Agency fees

This relates to the 10% agency fee on Kariba Dam toll fees collected on behalf of Zambezi
River Authority.
31.2 Expenditure
31.2.1 Administrative expenses
The actual expenditure remained within budget for the year despite an increase in some
operating costs.

31.2.2 Other operating expenses

The expenditure was well within budget. Most activities were carried out within the
allocated budget amounts.

31.2.3 Depreciation and amortization expenses

The actual depreciation and amortisation of both tangible and intangible assets for the year
is not included in the annual budget but is shown in the final audited financial statements
of the Authority. This is due to the uncertainty of the number of assets and class which the
Authority will have at the end of any reporting period.

31.2.4 Net exchange gains

The Authority had assumed a subsidiary loan on non -intrusive scanning equipment from
Exim bank through the Government. As this is denominated in Chinese Yuan (CYN), the
outstanding balance is translated into Zambian Kwacha at year end. Net exchange gains
were recorded in the year due to movements in the exchange rate between the CYN and
the Kwacha. The Scanner loan balance at the reporting date was CNY 124,950,000 ( 2020:
CNY 161,437,500).

32. Events after the Reporting Date

There have been no material facts or circumstances that have occurred between the reporting date and
the date of these financial statements that require disclosure in or adjustment to the financial statements.

37.
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