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. Zambia has the following direct taxes: Company Income Tax, Personal Income Tax, Withholding Tax, Presumptive Tax and Property Transfer Tax.

Corporate Income Company Income Tax The general rate is 35 percent for both resident and non-resident companies. For companies involved in agriculture, manufacture of chemical fertilizer and non-traditional exports, the rate is 15 percent while that for mining is 30 percent and 40 percent on bank profits above K250 million

Reduced Rates and Suspension of Corporate Income Tax on profits from manufacturing of ceramic products. The table below gives a breakdown of the 2022 tax rates. +Breakdown of Tax Reformation 2022 - 2023Tax Rate 2023Tax Rate 2022Prev. RateNotesStandard Corporate Income Tax Rate30.0%30.0%35.0%Telecoms Companies 35.0%40.0%40.0%2022: Rate with income exceeding ZMW 250,000. 2023: Plan to abolish two-tier taxation system in sector.Manufacture of Ceramic Products0.0%0.0%N/ASuspended for the 2022 and 2023 Charge yearsGemstone Industry Value Addition: Lapidary and Jewellery facilities25.0%30.0%35.0%Land based (brick and mortar) betting companies presumptive tax15.0%25.0%25.0%Corn Starch Agro ProcessorOperating in Multi-Facility Economic Zone (MFEZ), Industrial Park and Rural Area. Corporate Income Tax to be graduated from 2023 to 2038 Withholding Tax on dividends to be waived from 2023 to 2033 +Additional Breakdown of Tax Reformation 2022 - 2023Rate 2023Rate 2022Prev. RateNotePublic Private Partnership (PPP) Wear and Tear Allowance100%on Implements, Plant and Machinery to be specifically used on a PPP ProjectRental Income and Turnover Tax0.0%on first ZMW 12,000 (annually) Balance at applicable tax rateFarm Improvement AllowanceZMW 100,000ZMW 20,000Allowable Deduction on construction cost of employee housing Reintroduction of tax incentives for companies operating Multi Facility Economic Zone (MFEZ) or Industrial Parks. The table below gives a breakdown of the Incentives +2022 Budget IncentiveCategoryNotesDividend Withholding Tax Relief0% for a period of 10 years starting from the year of commencement of operations on profits derived from exports.Corporate Income Tax for companies operating in a MFEZ or Industrial Park will be charged at the

following rates on profits derived from exports0% for a period of 10 years from first year of commencement of works50% or profits taxed from 11th to 15th year75% of profits taxed from 14th to 15th year

Mineral Royalty In 2022, for Mining Companies, the deductibility of mineral royalty for corporate income tax assessment purposes was reintroduced. +Mineral Royalty Tax Regime with respect to Copper 2023 Onward Price RangeTaxable AmountRate %Less than US$4,000 per tonneThe first US$4,0004.0US$4,001 per tonne up to US$5,000 per tonneThe next US$1,0006.5US$5,001 per tonne up to US$7,000 per tonneThe next US$2,0008.5US$7,001 per tonne or moreThe Balance10

Import Taxes on Mining Equipment and Machinery In September 2022, under Statutory Instrument (SI) No. 50 of 2022, the government offered additional tax exemptions by suspending import taxes on mining equipment and machinery.

Personal Income Tax Personal Income Tax 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. The rest at rates of 25 percent, 30 percent and 37.5 percent.

Changes were made to the PAYE tax brackets. The below table shows the breakdown. +Pay As You Earn 2022Current Income Band (ZMW)Tax Rate % 2022Prev. Income Band (ZMW)Tax Rate % Prev.0 - 4,50000 - 4,00004,501 - 4,800254,001 - 4,800254,801 - 6,900304,801 - 6,90030Above 6,90037.5Above 6,90037.5 +Pay As You Earn 2023Upcoming Income Band (ZMW)Tax Rate % 2023 -Prev. Income Band (ZMW)Tax Rate % Prev.0 - 4,80000 - 4,50004,801 - 6,800204,501 - 4,800256,801 - 8,900304,801 - 6,90030Above 8,90037.5Above 6,90037.5 +Pay As You Earn 2024 OnwardUpcoming Income Band (ZMW)Tax Rate % 2023 -Prev. Income Band (ZMW)Tax Rate % Prev.0 - 5,10000 - 4,80005,101 - 7,100204,801 - 6,800207,101 - 9,200306,801 - 8,90030Above 9,20037Above 8,90037.5

Turnover Tax Turnover Tax The rate of 5 percent (from Jan 2025) is charged on business income for small scale businesses below a turnover threshold of K5 million per annum

Property Transfer Tax This is charged at the rate of 5 percent of the open market value realised from the sale of any land and building and shares issued by a company incorporated in Zambia. +Tax Reformation 2022 - 2023Rate 2023Rate 2022Prev. RateNotesTransfer of Mineral Rights7.5%10.0%10.0%Held by Exploration CompaniesTransfer of Land, Shares and Intellectual Property7.5%5.0%5.0%Share in Mining Right and an Interest in Mineral Processing LicenseGoldenForfeiture or Surrender of Shares0.0%5.0%5.0%Exempt from PPTDisposal of a Distressed Property by a Financial Services ProviderRealized ValueRealized Value to be the Actual Price Received

Withholding Tax Withholding Tax 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). VAT rate is at 16%, with some items being exempted or zero-rated.Tax Policy Zambia Revenue Authority The table below gives a breakdown of the Withholding Tax rate reforms. +Tax Reformation 2022 - 2023Rate 2023Rate 2022Prev. RateNotesWithholding tax on interest earned by individuals from loans advanced by members under the savings groups such as co-operatives and village banking.0.0%15.0%15.0%Withholding tax on investment income on life insurance funds0.0%15.0%15.0%Withholding tax interest income earned on green bonds listed on the securities exchange in Zambia with maturity of at least 3 years0.0%20.0%20.0%Withholding tax on re-insurance including retrocession0.0%20.0%20.0%Withholding tax on winnings from gaming and betting15.0%20.0%20.0%

Value Added Tax Value Added Tax on Goods and Services is rated at 16% unless otherwise specified.

In September 2022, the UPND government reinstated Diesel and Petrol VAT rate.

The table below gives a breakdown of the VAT rate reforms. +Tax Reformation 2022 - 2023Rate 2023Rate 2022Prev. RateNotesSelect ICT and Telecommunications Equipment0.0%16.0%16.0%Supply of Milk Cans, Churns and Milking Machines0.0%16.0%16.0%Gaming, Betting and Lotteries0.0%16.0%16.0%Imports of Game Animals (Breeding Stock)0.0%16.0%16.0%Public Private Partnership (PPP) Projects Imported Machinery0.0%VAT relief where duty is waived under the customs and excise regulations Public Private Partnership (PPP) Projects Special Purpose Vehicle (SPV)ClaimInput VAT for first four (4) years

Customs and Excise 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%). This applied to importation of petrol and low Sulphur gas oil and came into effect on 1 January 2023.

The table below gives a breakdown of the Custom and excise rate reforms. +Tax Reformation 2022 - 2023Rate 2023Rate 2022Prev. RateNotesTourism: Customs Duty on Importation of Safari Vehicles0.0%0.0%Suspended till 31 December 2025Tourism: Customs Duty on Select Imported Capital Equipment, Machinery, Fittings and Fixtures0.0%Suspended till 31 December 2025Agriculture: Customs Duty on Biological Agents0.0%5.0%5.0%RemovedAgriculture: Customs Duty on Greenhouse Plastics0.0%Suspended till 31 December 2025Agriculture: Customs Duty on Machinery, Equipment and Articles used in Aquaculture0.0%Suspended till 31 December 2025Agriculture: Customs Duty on Vegetable Seedling Growing Media, Peat Moss0.0%RemovedAgriculture: Customs Duty on Select Tree Crop Seedlings0.0%5.0%5.0%RemovedCustoms duty on gas cylinders for liquefied petroleum gas0.0%15.0%15.0%Customs duty on electric vehicles 15.0%30.0%30.0%Customs duty on electric motorbikes15.0%25.0%25.0%Customs duty on bicycles15.0%25.0%25.0%Construction and Infrastructure: Customs duty on Plant, Machinery and Equipment for PPP0.0%RemovedConstruction and Infrastructure: Customs duty on Pre-Fabricated Buildings0.0%25.0%25.0%ICT and Telecommunications Equipment0.0%25.0%Suspended till 31 December 2025Financial Services: Automated Teller Machines (ATMs)0.0%15.0%Suspended till 31 December 2023

Taxation in Zambia

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