By Chinoyi Chipulu
Nestlé Zambia has been ordered to pay K13.8 million to the Zambia Revenue Authority (ZRA) following a ruling by the Supreme Court of Zambia on 20th August, 2025.
The ruling in favour of ZRA followed a transfer pricing audit conducted by the Authority with respect to Nestlé Zambia Trading Limited’s operations on the basis that Nestlé had consistently reported losses for a period of five years, between 2010 and 2014.
According to a statement by ZRA corporate communications manager Oliver Nzala,
ZRA issued an assessment adjusting Nestlé Zambia’s profit to K56,579,048 and levied a gross tax of K13,860,103.
Nzala stated that Nestlé Zambia lodged an appeal with the Tax Appeals Tribunal in Lusaka.
“The Six grounds of appeal included allegations of wrongful assessment by the Zambia Revenue Authority and the allegation that ZRA issued its assessment on the basis that Nestlé Zambia could not run at a loss since incorporation, but disregarded Nestlé Zambia’s reasons for the losses and allegations that the Authority failed to objectively test the related party transactions, but rather relied on (unreasonable) assumptions and estimates,” read the statement in part.
He stated that Nestle Zambia also alleged that ZRA characterized the company as a limited risk distributor, when Nestlé Zambia performs functions, builds customer relationships and assumes risks akin to a fully-fledged distributor.
He stated that the company alleged that ZRA’s benchmarking study was neither comparable to the nature of its business nor the economic conditions in Zambia because the Authority used comparables from the Western world.
The company also alleged that the ZRA added back unrealized foreign exchange losses due to financial assistance, that were not included as part of expenses in the financial statements.
“Nestle Zambia succeeded on five out of the six grounds of appeal submitted,” he stated.
He stated that ZRA was dissatisfied with the judgement of the Tribunal and appealed to the Supreme Court, contending that the Appeals Tribunal erred when it improperly shifted the burden of proof to the ZRA.
Nzala stated tbat ZRA further argued that the Tax Appeals Tribunal erred in law when it held that the transactions between the Respondent and its related parties could not be aggregated but should have been tested individually contrary to globally established guidelines on Transfer Pricing for developing countries and the evidence tendered at trial.
He stated that in delivering the ruling, Judge of the Supreme Court, Kajimanga Kabuka Chisanga agreed with ZRA’s arguments as it was supported by evidence and facts at trial.
“Nestle will now have to pay its tax liability of K13,860,103,” he stated.
