Key Insights on Mandatory Electronic Invoicing in Zambia: Smart Invoice
The Zambian Revenue Authority (ZRA) has announced that starting from July 1, 2024, all VAT-registered taxpayers are required to issue electronic invoices through the Smart Invoice software solution implemented by the ZRA.
Taxpayers will only be able to claim input VAT or deductions based on invoices generated within this new system.
How does the electronic invoicing system in Zambia, Smart Invoice, work?
Currently in Zambia, devices known as Electronic Fiscal Devices (EFD) are used to record all commercial transactions. These are physical devices that send invoice and receipt information in real-time to the tax authority.
However, from July 1, 2024, it will be mandatory to use the Smart Invoice electronic billing system, a software-based solution implemented by the ZRA. Smart Invoice is an electronic billing system designed to manage all invoices and inventory data, which will be transmitted to the ZRA by taxpayers.
The implementation of EFDs only covered Value Added Tax (VAT) and Insurance Premium Levy (IPL), but Smart Invoice will cover more types of taxes or levies such as VAT, Sales Tax, Rental Income, IPL, Tourist Tax, and the Local Electricity Consumption Tax. Smart Invoice will also feature an inventory management component.
Taxpayers must register with Smart Invoice and obtain validation from the ZRA. They must also download the Virtual Sales Data Controller (VSCD) communication module to send or receive transaction data to and from the Smart Invoice server. It acts as a connecting system that links the ZRA's smart billing systems with the ERP systems of businesses.
Electronic documents must be sent to the VSCD linked to the ZRA, which then sends the data in real-time. The ZRA will validate the electronic documents using a unique identifier code (Mark ID) and a QR code.
