Turnover Tax or VAT: Choosing the Best Tax Regime for Zambian SMEs

• Turnover Tax (TOT) is a simple 3% tax on gross turnover for Zambian SMEs with annual turnover below ZMW 800,000; it is easy to file but does not allow input tax recovery.
• Value Added Tax (VAT) is a 16% tax on value added, mandatory for businesses with turnover above ZMW 800,000, and allows input tax recovery but requires complex record-keeping and regular filings.
• TOT is suitable for small, low-expense businesses, while VAT benefits businesses with high input costs or those seeking large contracts and tenders.
• VAT registration is often required for government and corporate contracts, while TOT may limit eligibility for such opportunities.
• SMEs should consider turnover, business expenses, and contract requirements when choosing between TOT and VAT.

Source: mjconsultants.co.zm

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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