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Zambian Tax Alert

At the end of June 2013, the Zambian Government issued Statutory Instrument 55 of the Bank of Zambia (Monitoring of Balance of Payments) Regulations, 2013.  The new SI 55 came into effect on the 1st of July 2013.

An overview

The regulations are applicable to a number of parties including financial service providers licensed under the Banking and Financial services act, any importer of goods or services exceeding US$20 000, foreign investors and local investors who invest outside Zambia, to name a few.

The SI 55 dictates the transactions that will be monitored, by the bank, in relation to outflows, inflows and international transactions. It goes on to discuss what actions should be undertaken as an exporter or foreign investor and as an importer in order to be compliant with new regulations.

Recommended actions for exporters and foreign investors

  • Open and maintain and foreign currency denominated account with commercial bank locally;
  • Deposit the cash component of the pledged investment with ZDA within the stated period in the investment certificate;
  • Acquit the pledged capital equipment and other non- cash components with ZDA to the Bank by producing documentation indicating the monetary equivalent;
  • For any proposed export, complete the exports proceeds monitoring Form I;
  • Notify the commercial bank where the foreign currency denominated account is maintained, of receipt of export proceeds within one hundred and twenty days from the date of receipt of the export proceeds.

Recommended actions for importers

  • For any proposed import of goods or services complete and submit to a commercial bank the import monitoring form in Form II;
  • Provide.the5commercial bank with customs clearance of imported goods or evidence of provision of the relevant service before remission of funds, within one hundred and twenty days from the date of the transfer of the funds; and
  • Apply for an extension to the period within which you may make an acquittal under sub regulation 2.

Additional implications and actions covered

Additional points outlined by the Statutory Instrument include the various documents required for certain transaction types, the actions that should be taken for external private debt and the respective modes of payment. The SI goes on to outline the actions that the Zambian Bank commits to undertake in regard to the new regulations, and advises on the penalties for contravention of the regulations.

Download the SI 55 for a comprehensive view of the revised regulations: Download

David Okwara

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