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 follows a transfer pricing audit conducted by the Authority with respect to Nestlé Zambia Trading Limited’s (Nestlé Zambia) operations on the basis that Nestlé had consistently reported losses for a period of five years, between 2010 and 2014.
ZRA Corporate Communications Manager Oliver Nzala says the Authority issued an assessment adjusting Nestlé Zambia’s profit to K56,579,048 and levied a gross tax of K13,860,103. 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 what ZRA termed as unreasonable assumptions and estimates”, said Mr. Nzala in a statement issued to RCV News in Lusaka today.
Mr. Nzala says 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.
Mr. Nzala notes that the company further 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 comparable from the Western world.
“The company also alleged that ZRA added back unrealized foreign exchange losses due to financial assistance, that were not included as part of expenses in the financial statements”, added Mr. Nzala.
Mr. Nzala revealed that Nestle Zambia succeeded on five out of the six grounds of appeal submitted, however dissatisfied with the judgement of the Tribunal, ZRA appealed to the Supreme Court, contending that the appeals Tribunal erred when it improperly shifted the burden of proof to the ZRA.
By Christabel Kamunu
