UNDER the Nation Pension Scheme Authority Act of Parliament of 1996, a defaulter requires to pay penalties computed at 20 per cent cumulatively for every month defaulted.
The Zambia Revenue Authority Act, which ushered in the Zambia Revenue Authority (ZRA), has the provision of forgiveness for the taxpayer who accumulates penalties through late submission of returns.
My article today looks at the waiving of penalties by ZRA as the Act provides for forgiveness to those taxpayers who apply for waiving of penalties.
However, it is important to know by any taxpayer that it is at the discretion of the commissioner general to grant the penalty waiver status.
As most of the readers of my column know by now, my main focus is to advise the Small and Medium Enterprises (SMEs) on issues that affect them in one way or another.
The introduction of tax online technology from October 28 2013 by ZRA has brought its own challenges to both ZRA staff and the taxpayers.
The launch of the web portal www.zra.org,zm brought with it interactive services with the taxpayers and the submission of returns online is one of them.
According to the description of who the small business is by ZRA, in the small taxpayer office (STO),it  has set the threshold of annual gross earnings or turnover of K800,000 or less as a target to reach.
Consequently the authority has introduced the tax suitable for taxpayer in this tax band which is charged on gross sales or turnover and this include earnings, income, revenue takings, yields and proceeds.
The tax rate is currently pegged at three per cent.
However,  it is important for SMEs to know that small businesses whose annual income falls below K800, 000.00, the commissioner general has excircised his powers vested in him by the Act to allow them to register for Value Added Tax(VAT) under voluntary registration with prescribed conditions.
My advice to SMEs who are taxpayers under turnover tax (TOT) type is that a payment and tax returns are independent of each other and attract penalties individually if submitted late.
It is, therefore, important that taxpayers under this tax type submit their returns in time to avoid accumulation of penalties under the new system.
The staff at ZRA have migrated from using computer programmes called integrated tax administration system(ITAS) and the inbuilt tax administration refund processes (TARPS) which gave them powers to make adjustments here and there without any problems to the web controlled system which does not operate in this way.
It acts as the authority on its own.
Once the returns are filed late the system computes penalties on its own and the only way to remove that penalty is to pay for it or apply for penalty waiver by the taxpayer.
The application of the penalty waiver need to be approved in some cases by the commission general himself.
In this way obtaining documents like tax clearance certificates is becoming difficulty to taxpayers who are not compliant to tax obligations.
Whereas in the past the ZRA staff dealt with internal computer programs to sort out these issues, now they face the tax online system which is the authority on its own.
Last week I was called in by one of my clients who wanted to move away from TOT tax type to voluntary VAT tax type.
It was discovered that my client was making payments on the returns to the cash office, but was not submitting the actual returns to the advice centre manually or through online.
The system piled up penalties on his account despite making payments.
Under the new system the returns which were not submitted to the advice centre manually or through online accumulated penalties the time they remained not submitted.
The system will not allow the taxpayer to change from TOT tax type to voluntary VAT until the penalties are paid or waived.
The taxpayers in the SMEs category should be knowledgeable about the new system to go online.
This is a friendly interaction with ZRA and offers several functionalities on the web portal such as e-registration e-amendment, e-payment, e-enquiry, e-information and others.
For any comment please contact 0950458228 or e-mailwklpublications699@gmail,com