Zambian government says VAT zero-rating averts fuel price increase


The Zambian government said on Tuesday that the decision to zero-rate value-added tax on fuel has averted a price increase of the commodity.

Secretary to the Treasury Fredson Yamba said the zero-rating of tax on fuel, which came into effect on January 1, 2021, will stabilize fuel pump price in the medium term.

He said in a release that the government decided to zero-rate the tax on fuel after considering various options aimed at keeping fuel pump prices unchanged as well as reducing the cost of doing business.

According to him, the depreciation of the local currency against the major convertible currencies augmented by an increase in world fuel prices necessitated an imperative need to mitigate the potential upward pump price movement by removing the value-added tax from the fuel supply chain.

He said players in the petroleum sector have experienced higher costs of doing business which could have impacted the price of fuel as the fuel was being imported at a high cost.

Various stakeholders have commended the move, saying it will go a long way in reducing the cost of doing business in the country. Enditem

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