The Zambia Revenue Authority (ZRA) plays a critical role in Zambia's economic development. It holds the mandate to assess and collect taxes and duties, enforce relevant statutory provisions, facilitate international trade, and plays a key advisory role in matters of tax policy.
Functions of the Zambia Revenue Authority (ZRA)
The major responsibilities of ZRA as per the ZRA Act No. Its primary function is to ensure the efficient and effective collection of taxes and other government revenue.
The ZRA also works to promote voluntary tax compliance through education and outreach programs. They aim to simplify tax procedures and make it easier for individuals and businesses to comply with tax regulations.
Furthermore, the ZRA is responsible for enforcing tax laws and regulations. This involves investigating cases of tax evasion and fraud, and taking appropriate action against those who violate tax laws. This ensures fairness and prevents revenue loss to the government.
Finally, the ZRA is responsible for managing and accounting for all revenue collected. They ensure transparency and accountability in the handling of public funds.
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Taxation in Zambia
In Zambia, the Zambia Revenue Authority, a body under the Ministry of Finance, is in charge of collecting taxes on behalf of the Zambian Government. Income in Zambia is taxed on the source principle or deemed source basis in some instances.
- Residents are taxed on domestic source of income and certain types of foreign income.
- Non-residents are normally taxed on Zambian source of income.
- The general rate is 35 percent for both resident and non-resident companies.
- Reduced Rates and Suspension of Corporate Income Tax on profits from manufacturing of ceramic products.
- Reintroduction of tax incentives for companies operating Multi Facility Economic Zone (MFEZ) or Industrial Parks.
All individuals are liable to tax on personal income after deducting personal relief at a graduated rate from 0 percent for incomes of K39600 per Annum (K3300 per month) and below. Changes were made to the PAYE tax brackets.
Withholding tax of 10 percent on rental income (final tax) and 20 percent on dividends, interest payments, royalties, commissions, management and consultancy fees and payments to subcontractors. Payments made to non-residents are also subject to withholding tax at 20 percent in all cases except where there is a double taxation agreement in effect.
Zambia also charges Indirect taxes: Import Duty, Excise Duty and VAT (Value Added Tax). In September 2022, the UPND government reinstated Diesel and Petrol excise duty. In December 2022, the government amended the customs duty rate in Chapter 27 of the Customs and Excise Act Cap 322 from 25% to free rate (0%).
Stakeholder Engagement Strategy
To promote greater tax compliance, the authority has successfully implemented a stakeholder engagement strategy, fostering collaboration and understanding among its partners and the broader community.
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The purpose of this research was to establish the effectiveness of the ZRA’s stakeholders’ engagement strategy, identify key barriers to effective stakeholder engagement, and propose evidence-based strategies for enhancing stakeholder collaboration and trust.
Conducted at ZRA’s Head Office in Lusaka, the study utilised a descriptive research design that integrated both quantitative and qualitative methodologies. Data was gathered from 72 respondents through structured interviews and questionnaires and subsequently analysed using regression analysis for quantitative data and saturation analysis for qualitative data.
The results revealed that ZRA’s stakeholder engagement strategy is highly effective, with unanimous affirmation from respondents regarding its role in fostering trust, promoting tax compliance, and strengthening collaborative relationships. The strategy has achieved remarkable success in areas such as revenue collection, improved taxpayer awareness, and strengthening stakeholder relationships.
Despite these achievements, challenges persist in effectively engaging underserved groups, including SMEs, informal traders, and users of online platforms. Additionally, systemic barriers such as limited access to digital platforms, inadequate communication, and resource constraints continue to hinder progress.
Key barriers identified include a lack of awareness among stakeholders, challenges with system functionality, and the economic hardships that affect tax compliance.
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Proposed Strategies for Improvement
To address these issues, the proposed strategies focus on targeted outreach programs to reach underserved groups, improving digital inclusion through infrastructure investments, and establishing enhanced feedback mechanisms to build trust and collaboration. The proposals further emphasised expanding incentives such as tax holidays and recognition programmes to encourage compliance and reward stakeholders; and of improve communication channels and feedback mechanisms to foster transparency and trust. Leveraging partnerships with regulatory bodies and maximising the use of digital platforms were also key strategies aimed at broadening stakeholder engagement in ensuring more inclusive and efficient collaboration.
This study concludes that while ZRA’s stakeholder engagement strategy aligns with its mission of fairness, efficiency, and sustainable revenue growth, addressing identified gaps will enhance collaboration, build trust, and achieve long-term compliance and revenue targets to support Zambia’s development goals.
What is known is that from 2021 to 2024, stakeholder engagement coverage increased by 15%, customer satisfaction improved from 65% to 75%, and on-time filing rates for core taxes rose from 60% to 70%. Additionally, excessive tax arrears were reduced by 20% (Zambia Statistics Agency, 2025). However, what remains unknown is the extent to which these improvements have translated into enhanced tax compliance, transparency, and trust between ZRA and its stakeholders.
Despite these gains, stakeholder participation remains limited, feedback mechanisms are inadequate, and decision-making processes lack transparency. The marginal increase in on-time filing rates and the continued existence of excessive arrears suggest that engagement efforts may not be fully addressing compliance and revenue collection challenges.
This study is justified as it seeks to evaluate the effectiveness of ZRA’s stakeholder engagement strategy in improving tax administration and compliance. By identifying gaps in participation, feedback mechanisms, and transparency, the research will provide evidence-based recommendations for strengthening engagement practices, enhancing voluntary tax compliance, and improving overall revenue collection efficiency.
Strategic Implementation
Strategy is about the ’s long-term goals and its cornerstone is strategy orientation in different sectors. Hiksen et al. (1986) describes strategy as decisions that affect the organisation’s long-term performance and progress. Strategy is a collection of decisions and actions that are considered as strategy formation, implementation, and control of plans aimed to meet a corporation’s vision, goal, and long-term performance.
The strategic implementation process is described as the procedures and actions taken to fulfill the strategic plan’s goals and objectives (Mohammad, 2011). Employees and managers in institutional s are critical factors that have a large impact on implementation effectiveness (Jofre, 2011). Furthermore, how employees perceive the plan is determined by their function, authority, and interest, and this influences their attitude toward it.
In order to be effective at the implementation stage, managers must first understand how their people think and view the world. The success of strategy implementation in the private sector is largely dependent on resources, but in the public sector, the main difficulty is to achieve appropriate employee involvement. To be successful, the strategy, the organisation, the people and their relationships, the systems, and the measures must all be linked and made to work towards a shared purpose (Mwangoe, 2011).
Change is always introduced into an organisation as part of strategy implementation. Managers spend a lot of time weighing options and deciding on a plan. This plan is then frequently publicised to the organisation, with the hope that members will naturally realise why the alternative is the best one and will begin quick execution.
Large s in Zambia, including the National Pension Scheme Authority (NAPSA), the Zambia Revenue Authority (ZRA), and the Office of the Auditor General (OAG), have recently implemented a variety of strategic management techniques to ensure their compatibility with their environment. This is the case with the OAG’s Stakeholder Engagement Strategy, which ran from 2018 to 2021.
However, it must be noted that putting strategy into action and moving the organisation in the desired direction necessitates a separate set of managerial talents. Working through others, organising, inspiring, culture-building, and developing good fits between strategy and how the organisation does things are all necessary for successful strategy execution.
The Zambian government embarked upon a tax reform programme in 1992. In addition to the many tax initiatives, the reform programme sought to bring the department of income tax and excise and customs under one roof. This resulted in the setting up of the Zambian Revenue authority (ZRA), which is now CAP 321 of the Zambian Law.
ZRA is a semi-custom our institution that is in charge of tax administration in Zambia. ZRA falls under the Ministry of Finance, with the Permanent Secretary sitting on the ZRA board. In the new administration, a department called Value Added Tax was included to replace the Sales Tax department.
The Vat Division only became operational after the enactment of the Value-Added Act No.
The public sector has the best strategic policies; however, implementation of the strategic plan is more important than formulation; otherwise, it is nothing except well documented pieces of paper in the organisation.
The new Corporate Strategic Plan 2022 (CSP) of ZRA builds on significant innovative milestones achieved under the CSP 2019-2021, all of which were designed to simplify tax administration and tax compliance. We are currently in an advanced stage of creating our own customs system, another revolutionary milestone.
One of the major responsibilities of the new CSP is to make sure that the Authority is appropriately integrated with key local and regional institutions at the system level. When this is accomplished, its operational efficiency will be significantly increased.
ZRA is sure that it will continue to contribute to the economic and social wellness of Zambians with the cooperation of all its stakeholders.
In the case of the Stakeholder Engagement Strategy, little is known at this time as to whether or not the strategy has achieved its objectives, and if so, what were the key drivers that led to these objectives being achieved or what were the shortcomings that led to the strategy not achieving its four laid out objectives.
TaxOnline Project
In 2012, the Zambian Revenue Authority (ZRA) put together a project team to guide the development and delivery of a new electronic tax administration system, called TaxOnline, to replace an inefficient, fragmented system that relied on processing tax registrations, returns, and payments by hand, using paper forms.
The revenue authority had contracted with Tata Consultancy Services, a private vendor, to develop a software system, which adapted an e-tax model built for Uganda to the Zambian system. The project team was responsible for creating blueprints to guide the developers’ work, testing the system, training internal staff and educating taxpayers, and encouraging people to embrace the new system.
Project Solution
The Zambian Revenue Authority contracted with a private firm to purchase an electronic tax administration system. In 2012, the authority created a project team to oversee implementation. The team identified the features and functions needed in the system through consultations with revenue authority staff and created blueprints to guide the work of the private firm, which developed the system. The team arranged for staff to test parts of the system as it was rolled out, trained staff on how to use the system, and educated taxpayers on the coming changes. After the system went live, the team arranged for continued assistance and education to taxpayers.
Project Results
In less than one and a half years, in October 2013, the TaxOnline project team delivered an electronic tax administration system. Instead of processing registrations, returns, and payments manually and using paper forms, users could carry out their tax activities online.
The usage of TaxOnline’s electronic services steadily grew over time. In 2017, a total of 1,987,675 returns were filed electronically while only 49,977 returns were filed manually. By 2019, over 90 percent of registrations were processed electronically and around 70 percent of payments were submitted to ZRA electronically.
The time it took for filing, payment, and processing of tax returns dropped from 10 to 16 days before the system launched to within one day in 2014.
Understanding the importance of Stakeholder Engagement
Stakeholder Analysis and Legitimacy
Stakeholder analysis is done using either a grid method or the salience model. The grid method uses two parameters about the stakeholders to analyze and create a grid. One of the most popular grids used is a “power-interest” grid. In this grid, every stakeholder is assessed based on their power and interest in the project.
Stakeholder involvement fosters legitimacy because when individuals actively participate in planning and decision-making, they feel committed to the outcome, which increases a sense of ownership (Placht, 2007). Legitimacy is seen as the moral justification for submission to authority (Parkinson, 2013). Communities and stakeholders become accountable for the choices made and the actions performed when they are involved in decision-making and execution.
Decisions are more readily accepted, and their sense of obligation to carry them out is also increased (Huitema et al., 2010). Representatives must be accountable and transparent in order to be considered legitimate. People accept the decisions made by representatives when they are held accountable to the constituents they serve.
Legitimacy is also achieved by building credibility for the authorities. Credibility in turn is achieved by authorities (a) being respectful to the public and open at every step (seeking out and valuing local knowledge and experiences shows respect for the public of the authorities and willingness to learn from the public); and (b) seeking public approval for final action plans (Webler and Tuler, 2011).
The participatory method that may be employed to obtain legitimacy is involving stakeholders in planning workshops. Legitimate decisions, policies and projects become popularly accepted and are more implementable. Legitimacy has instrumental value in that it makes political processes more efficient by reducing the cost of enforcing compliance.
Dynamic Stakeholder Engagement
Stakeholder engagement is dynamic, as audiences continually evolve in terms of demographics and cultural backgrounds. Consequently, managers must consistently evaluate and refine their engagement approaches to align with these changes (Ban et al., 2013).
Interviewees in a study identified five key metrics that assess stakeholder perceptions of outreach practices, measure the effectiveness of engagement strategies, and gauge public sentiment regarding decision-making. These include surveys to evaluate attitudes, web analytics to track stakeholder interaction with newsletters and information, and reduced opposition as an indicator of increased trust in management (Ban et al., 2013).
Two of these metrics-Online Engagement and Attendance/Participation-directly monitor stakeholder involvement, while three-Stakeholder Feedback, Reduced Backlash, and Compliance-serve as proxies for assessing how engagement contributes to achieving broader management objectives. However, implementing and standardizing these metrics can be challenging, and they may not always accurately reflect stakeholders’ perceptions of engagement. Therefore, the development of more systematic and easily measurable indicators of meaningful engagement is crucial.
Challenges and Significance of Stakeholder Engagement
In the contemporary business environment, stakeholders demand more attention than ever before (Nair & Ndubisi, 2011). Despite this, there are relatively few companies that adopt a fully comprehensive stakeholder engagement approach (Engster, 2011). This presents a significant challenge, as inadequate engagement with stakeholders can negatively affect corporate profitability, hinder growth, and even jeopardize a company’s long-term viability (Menoka, David, Damian, & Edward, 2013).
Furthermore, neglecting stakeholders in decision-making has led to workplace accidents, fatalities, environmental degradation, global warming, and various social and economic crises affecting both local communities and the broader global landscape (Baumgartner & Romana, 2017; Maria, Medeiros, & Maria, 2019).
A study conducted in Europe’s energy sector examined the role of stakeholder engagement in shaping corporate policies. The findings highlighted that involving stakeholders in policy formulation helps mitigate conflicts in daily business interactions (Karakosta & Papapostolou, 2020). Additionally, research on sustainability reporting revealed that organizations often fail to provide adequate disclosure on stakeholder involvement in the preparation of such reports, leading to gaps in transparency (Moratis & Brandt, 2017).
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