ZAMBIA Law and Practice Contributed by: Mulenga Chiteba, Constance Namatai Mwango and Bwalya Milunga, Mulenga Mundashi Legal Practitioners
however, the ZRA has an integrated tax administra - tion system called ASYCUDA (Automated System for Customs Data) which captures customs information and uses this as intelligence data in audits. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies Zambia’s domestic transfer pricing controversy pro - cess is as follows. Where the ZRA issues a notice of assessment follow - ing a transfer pricing audit and a taxpayer is unhappy with this, the taxpayer can challenge the assessment within 30 days of receiving notice of it. This can be done by objecting to the results of the transfer pricing audit in the notice of assessment by way of writing to the Commissioner-General of the ZRA, setting out the taxpayer’s grounds of objection. If the Commissioner-General makes a determination following the taxpayer’s objection, and the taxpayer is still dissatisfied with this, they have the right to appeal to the Tribunal within 30 days of receiving the Com - missioner-General’s decision. The decision of the Tri - bunal will be enforced as if it were the decision of the High Court of Zambia. Where a decision made under Section 97A of the Income Tax Act is under appeal or pending before a court, the date of assessment will be deemed to be the date when a final decision relating to the appeal is made. The 30-day period to challenge such an assessment will only begin to run once the decision is made. It is important to note that all tax laws in Zambia, including the Transfer Pricing Rules, are based on the “pay now, argue later” rule of taxation. As such, no legislation contains any express provision that empowers the Tribunal to grant a stay of execution to prevent the ZRA from collecting dispute tax in cases where there is an appeal lodged with the Tribunal. If either the ZRA or a taxpayer is aggrieved by the decision of the Tribunal, they have the right to appeal against the Tribunal’s decision to the Supreme Court of Zambia. The Supreme Court may determine the
matter or refer it back to the Tribunal for re-hearing, confirmation, reduction, increment or annulment of the assessment or decision made by the Tribunal, and may make such further or other order on appeal, as to costs or otherwise, as the Supreme Court considers necessary. Because the Supreme Court is Zambia’s final court of appeal, its decision on a particular transfer pricing dispute is final as it does not have the jurisdiction to review its judgments, or to set aside and re-open an appeal. 14. Judicial Precedent 14.1 Judicial Precedent on Transfer Pricing Although Zambia has a well-established legal frame - work for pursuing transfer pricing, and the ZRA formed a dedicated Transfer Pricing Unit in March 2016, the judicial precedent on transfer pricing is not yet well developed as not many disputes on transfer pricing have been taken to the courts. 14.2 Significant Court Rulings Mopani Copper Mines Plc v The Zambia Revenue Authority – SCZ/8/269/2016 This case is considered the landmark case on trans - fer pricing in Zambia. It arose from an appeal from the Tribunal in which the Tribunal held against Mopani on a complaint raised by the ZRA disputing certain tax assessments made by the ZRA. In brief, the ZRA undertook an audit on the mining industry’s cost lev - els, and the exercise involved a tax audit on costs, revenues and transfer pricing practices. The audit was largely centred on possible transfer pricing practices between Mopani and its shareholder, Glencore Inter - national AG (GIAG), a related party that bought copper at a significantly lower price than the price at which it was sold to third parties. The tax audit raised some concerns regarding certain related party transactions. The issue was whether the transactions between Mopani and GIAG were at arm’s length, given GIAG’s shareholding in Mopani. The ZRA had issued a tax assessment following conclusions that the internal pricing was not decided in line with
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