ZCCM-IH gets 25p.c. Kagem Mine shares
IN todays article, we are going to discuss local excise duty. An Excise Duty is a special type of tax that is charged on selected types of goods and services.
This Tax is mainly charged on goods and services that are considered as primarily luxurious such as alcohol, cigarettes among them. These are usually highly consumed due to their nature or are consumer-based products.
Excise duty is sometimes charged on particular goods to make them expensive and discourage people from consuming that particular product because of health or environmental reasons as an example.
For instance cigarettes are the highest product attracting 300% excise duty as a way of deliberately making the product expensive due to the possible health implications to human life.
The Smoker may choose to smoke at own will but at the point they are sick, they are likely to use the government hospitals for free hence creating unnecessary cost to the government in terms of treatment.
In Zambia, Excise Duty is administered by the Zambia Revenue Authority (ZRA) in accordance with the applicable rates in the Excise Tariff of the Customs and Excise Act, Cap 322 of the Laws of Zambia.
The selected types of goods and services on which Excise Duty is charged in Zambia include; Alcoholic Beverages, Fuels, Spirits, Cigarette, Cosmetics, Cement, and airtime. These products may therefore be referred to as ‘Excisable Products’
Non Alcoholic drinks such as carbonated drinks are also included in the list of products that attract excise duty while mineral water and pure fruit juices are excluded from the list because government wants to encourage citizens to live health lifestyles.
Excise Duty is paid for by the Consumers of the above mentioned excisable products. Therefore, this tax is an indirect type of tax charged to the manufacturer, distributor or importer on consumers of the mentioned Excisable Products.
THE Industrial Development Corporation (IDC) will transfer 25 percent equity stake in Kagem Mining Limited to ZCCM-IH.
In the same vein, ZCCM-IH will transfer 71.4 percent and 100 percent of its equity stake in Investrust Bank and Mushe Milling Limited respectively, to the IDC.
This is part of its reorganisation exercise. This will enable the two entities achieve optimisation of operations and unlock opportunities for synergy.
ZCCM-IH Company Secretary, Chabby Chabala, posted the announcement about the changes on Lusaka Securities Exchange (LuSE).
Mr Chabala said the ZCCM-IH board had approved the proposed the IDC/ZCCM-IH group reorganisation exercise where IDC transfers 25 percent of its equity stake in Kagem Mining Limited at fair market value.
He indicated that ZCCM-IH would transfer 71.4 percent equity stake in Investrust Bank Plc at fair market value to IDC.
The group will also transfer its 100 percent stake in Mushe Milling Limited to IDC at fair market value.
“These three corporate actions listed above will be undertaken simultaneously as a corporate group reorganisation exercise involving IDC and ZCCM-IH and constitute the proposed group portfolio rationalisation and reorganisation,” Mr Chabala said.
Mr Chabala explained that the rational for the proposed group reorganisation was that the board considered the measure to enhance, improve operational efficiency and performance of ZCCM-IH.
He said the group was streamlining management oversight on its investments portfolio to support and sustain company growth and unlock value for its shareholders going forward.
“As per the LuSE listing requirements, the proposed group reorganisation involving ZCCM- IH and IDC was a related party transaction and was thus subject to approval by shareholders of ZCCM-IH via a meeting and also subject to approval by statutory regulatory authorities in
Essentially, Excise Duty is included in the selling price of the Excisable Products by the manufacturer, distributor or importer of these Excisable Products.
By law, the excise tax paid by consumers of Excisable Products is remitted to ZRA by the Manufacturer, Distributor and Importer of the said Excisable Products.
Kindly note that for: Importers of Excisable Products, have to pay Excise Duty at the time of Importation of the Excisable Products; However, for Distributors and Importers of Cigarette, prior authority to distribute or import cigarette has to be obtained from ZRA; Local Manufacturers of Excisable Products, they have to obtain an ‘Excise Manufacturer’s License’ to deal with Excisable Products
Any person or company that locally produces Excisable Products is require to be registered by ZRA, including persons or companies dealing in fuels.
In case you are not yet registered, it time you visited the nearest ZRA office for registration. Only local manufacturers of Excisable Goods require to obtain an ‘Excise Manufacturer’s License’ from ZRA.