TODAY we will continue looking at the motor vehicle clearance, which, as we stated last time, is just like any other importation.
Duties are based on the Customs Value or Value for Duty Purposes (VDP) which is derived from the Cost Freight and Insurance (CIF) and
expressed in Zambian Kwacha based on the prevailing exchange rate.
The basis for establishing Customs Value or VDP is guided by the provisions of the fifth schedule to the Customs and Excise Act which
gives six alternative methods that have to be applied sequentially, depending on the completeness of the declaration including supporting
documentation.
Where the declared value fails the test of the first method, which is the transaction value method of valuation, customs then undertakes to
use the next appropriate method, taking into account all legal adjustments to establish the VDP.
Customs will therefore adjust values declared by importer if insufficient information/documentation has been provided to support
the declared value.
Revaluation will also occur in cases where there is no sale or the transaction is influenced by a relationship or subject to condition or
consideration for which a value cannot be determined.
From the onset it is important to point out the challenges associated with used items, vehicle for that matter. A number of factors that
contribute to the variation in the customs values for used vehicles
include:
1. Supplier – different suppliers will charge different amounts for
similar vehicles.
2. Country of supplier – similar vehicles may have different
costs in different countries
3. Condition of the vehicle – similar vehicles could be in
different`conditions. One could have been over used and this impact
the value.
4. Sea port used and respective port charges- Charges vary from
Port to Port.
5. Distance from the sea port to the Zambian border
6. Type of inland transport
7. Time of the year vehicle is bought
8. Exchange rate at time of importation
But does valuation depend on the officer one finds at the border or indeed the type of border one is using?
No. Same control reference data is used. Valuation may defer according to border used to the extent of the different sea port and inland cost
factors as highlighted above.
One can avoid re- valuations of a motor vehicle by providing sufficient information and documentation in respect of their
transactions and customs declarations. Among the details required are the following:
• Genuine Invoices, with original date stamp impressions of
other customs of administrations prior to importation
• Bills of lading
• Sea freight, Inland freight and port charges invoices/payment receipts
• Insurance charges
• Export/transit customs declarations, with original date stamp
impressions
• Bank transfers
• Email/fax correspondence with the seller
• Internet print outs of the vehicle during your shopping/enquiry
• Auction participation certificate/receipts
There is a common practice to alter or forge invoices with the intention of paying lower taxes and thus defraud the Government of the
much-needed revenue. The ZRA is alive to this method of tax evasion.
The provision of false information or forged documents is an offence and could lead to prosecution and stiffer penalties.
The taxes paid are even more than what the price the vehicle was bought at due to the fact that duties are based on the CIF value (i.e.
VDP or CIF the Kwacha equivalent) other than the cost only, and the effective tax rate on motor vehicles is high due to high duty rates.
The effective rate on saloon and station wagons works out to be more than 90 per cent of the CIF value.
There is a facility that allows pre-clearance; one may do so and advise their Clearing Agent to utilise this trade facilitation tool.
However, used vehicles are peculiar and require adequate inspection to determine correct engine number, chassis number, among other things as
these should be gotten right if the vehicle is to be registered by RTSA.
Before importing a vehicle one needs to know what constitutes the VDP and the estimated duties and taxes to enable them budget
appropriately.
We are available to assist with estimates of duties and taxes provided enough documentation is provided.
Over and above this, a Motor Vehicle Tax Calculator is also available on the ZRA website (www.zra.org.zm) which can be utilised to simulate
the amount of taxes to be paid as a reference guide.
Importers also need to prepare documentation listed above in addition to having an active Taxpayer Identification Number.