• The Income Tax Act constitutes the principal legislation

Corporate income tax

  • Corporate taxation is defined at the national level.
  • The corporate tax year is based on the calendar year (January-December).
  • The following table presents CIT rates according to the source of income
Activity CIT rate (%) Comment
General case 35 Correspond to the standard rate applicable on taxable income of corporate entities
Agro-processing 10 Farming/agro-processing or export of non-traditional
products from farming or agro-procession 
Electronic communication network or service licensee 40 Apply only for income > ZMW 250,000, otherwise the general rate (35%) applies
Export of other non-traditional products 15  
All other companies except mining companies 35  
Production of organic fertiliser and chemical manufacture of fertiliser 15  
Mining (base metals and industrial minerals) 30  
Mineral processing 35  

Note: For commercial imports, a 15% advance income tax is requested in the absence of a valid tax clearance certificate.

Turnover tax of 4% is levied on businesses with turnover below k800,000 (excludes passive income and income earned from consultancy service’, property rental, mining and vat registered businesses). Last update: 2020.
Sources: Zambia Revenue Authority, PricewaterhouseCoopers, KPMG.

Mineral royalty tax

  • Under the Mines and Minerals Act, a mineral royalty tax is charged on the extraction of minerals.
  • The following mineral tax rates apply
Type of value Type of good Mineral royalty tax rate
Norm value (equivalent to the monthly international price) Base metals  (unless otherwise specified) 5%
Copper 5.5% if norm price<USD4,500 per ton

6.5% if norm price ≥USD4,500<USD6,000 per ton

7.5% if norm price ≥USD6,000 per ton<USD7,500 per ton

8.5% if norm price ≥USD7,500 per ton<USD9,000

10% if norm price USD9,000 per ton and above

Precious metals 6%
Gross value Energy and industrial minerals 5%
Gemstones 6%

Note: last update: 2020.
Sources: Zambia Revenue Authority, PricewaterhouseCoopers, KPMG

Corporate withholding taxes

  • A withholding tax is charged on the following payments
Type of payment Resident rate (%) Non-resident rate (%)
Commissions 15 20
Construction and haulage contractors 0 20
Coupon income (interest) on government bonds 15 15
Dividend 15

0% if paid by a mining company and/or a company listed on the Lusaka Stock Exchange to an individual shareholder

20

0% if paid by a mining company and/or a company listed on the Lusaka Stock Exchange to an individual shareholder

Interest 15 20
Interest from a Lusaka Stock Exchange listed Property Loan Stock Company 0 15
Management or consultancy fee 15 20
Public entertainment fees to entertainers/sports persons (final tax) 0 20
Rent from a Zambian source (final tax) 10 10
Royalties 15 20

Note: last update: 2020.
Sources: Zambia Revenue Authority, PricewaterhouseCoopers, KPMG

Indirect taxes

Value added tax and turnover tax

  • Companies with an annual turnover exceeding ZMW 800,000 are subject to the value added tax (VAT) scheme.
  • Smaller companies —i.e. companies with an annual turnover of no more than ZMW 800,000 per annum— are subject to the turnover tax.

VAT

  • Value added tax is a tax on consumption neutral for businesses (i.e., not a direct final cost for companies).
  • The principal legislation is the VAT Act (1995).
  • VAT returns have to be submitted on a monthly basis (within 21 days).

 

  • Taxable supplies are either subject to the standard VAT rate (16%, last update: August 2018) or zero rated -i.e. charged at the rate of 0%.
  • The Value Added Tax (Zero-Rating) Order (2010 and subsequent amendments) lists zero-rated goods. Zero-rated goods include agricultural equipment and spares, books, ethanol based biofuel, exports, mosquito nets, medical supplies and supplies to privileged persons.

Turnover tax

  • Only companies with an annual turnover not exceeding ZMW 800,000 are able to choose the turnover tax scheme.
  • Income subject to the turnover tax is not subject to the income tax or VAT.
  • Income from interest, rental revenues, dividends, royalties, mining operations or consultancy services are not eligible to this scheme.  
  • The calculation of the (monthly) turnover tax is straightforward and is as follows:

 

Monthly turnover category (thousands of K) Fixed monthly taxed payable (thousands of K) Variable monthly tax payable (K)
Turnover≤4.2 0 +3 % of the monthly turnover
4.2<Turnover≤8.3 0.225
8.3<Turnover≤12.5 0.400
12.5<Turnover≤16.5 0.575
16.5<Turnover≤20.8 0.800
Turnover>20.8 1.025

Note: last update: 2018.
Sources: Zambia Revenue Authority, PricewaterhouseCoopers

Customs duties

General import duties

  • The table displayed below provides an overview of the Zambian customs tariff
Type of goods Tariff (%)
Raw materials [0;5]
Capital goods [0;5]
Intermediate goods 15
Finished goods 25

Note: last update: July 2018.Sources: Zambia Revenue Authority, PricewaterhouseCoopers, IGuide Zambia.

Tariff exemptions

  • The following imports may benefit from tariff exemptions
Imports made by companies of priority industries mentioned in the Zambia Development Agency Act  (5-years) Imports made by companies located into the multi-facility economic zones (5-years) Imports for approved organizations
Imports for diplomatic missions and personnel Mining sector equipment Personal and households effects of new residents

Source: WTO Trade Policy Review 2016

Preferential tariffs

Export taxes

  • In order to encourage value addition, the Government of Zambia taxes a fraction of exported (unprocessed) goods falling into the HS chapters mentioned below.
  • Export duties range from 10% (mineral ores and mineral concentrates) to 40% on some types of timber products.

Lists of HS chapters with at least one item subject to export taxes

HS chapter Denomination
26 Ores, slag and ash.
44 Wood and articles of wood; wood charcoal.
72 Iron and steel.
74 Copper and articles thereof.
75 Nickel and articles thereof
78 Lead and articles thereof.
79 Zinc and articles thereof.
80 Tin and articles thereof.
81 Other base metals; cermets; articles thereof.

Database source: WTO Trade Policy Review 2016

Excise taxes

  • A few products are subject to an excise tax.
  • Excisable goods include items such as beverages (e.g. alcohol), tobacco, petroleum products, motor vehicles, cosmetics, jewellery. Excisable services include cell phone airtime, fees charged for money transfer services, and other fees charged by financial institutions.

List of selected excisable goods and services

Good/Service Excise tax
Alcoholic beverage 60% if less than 80% by volume
125% if 80% or higher by volume
Cement ZMW 2 per 50 kilogram
Cosmetic 20%
Electricity 3%
Petroleum oils–LPG ZMW 0.45 per kilogram
Petroleum oils–Petrol ZMW 1.14 per litre
Petroleum oils-Diesel ZMW 0.62 per litre
Petroleum oils-Heavy fuel oil ZMW 0.87 per litre
Petroleum oils-Other light oils 15%
Petroleum oils-White spirits 15%
Plastic bags 20%
Telephone airtime 17.50%
Tobacco Max{145%; ZMW 240 per kilogram}
Max{145%; ZMW 240 per thousand} if cigars, cheroots,  cigarettes, cigarillos or tobacco substitutes

Sources: Zambia Revenue Authority, PricewaterhouseCoopers, KPMG, WTO Trade Policy Review Zambia (2016)

Carbon Emission tax

  • Owners of vehicles have to pay an annual carbon tax. The following table presents rates
Engine size category (cubic centimeter) Carbon tax (ZMK)
Size<1,500 70
1,500≤Size<2,000 140
2,000≤Size<3,000 200
3,000≤Size 275

Note: last update: August 2018. Vehicles propelled by non-pollutant energy sources are exempted.
Sources: Zambia Revenue Authority, KPMG.

  • Regarding the importation of used vehicles, the Customs and Excise Amendment No.14 of 2017 introduced specific import and excises duties.
  • The taxation depends on characteristics of cars, including the age of the used vehicle (less than or above 5 years), the body type, the fuel type, the cylinder capacity, the sitting capacity and the tonnage.

Property transfer tax

  • A 5% tax is charged on the transfer of land and on the transfer of intellectual property (trademarks, patents and brands).
  • In case of transfer of mining rights, a higher rate (10%) applies.

Double taxation treaties

  • Zambia has tax treaties with a number of countries.
  • Double taxation agreements usually specify reduced rates for non-residents.
  • The tax treaty with China is in force.
Treaty partners Treaty rate Agreement
Dividends (%) Interest (%) Royalties (%)
Bostwana 5*/7 10 10
Canada 15 15 15
China 5 10 5
Denmark 15 10 15
Finland 5*/15 15 5a/15b, c
France 15 15 15
Germany 5*/15 10 10
India 5*/15 10 10
Ireland 7.5 10 8***/10
Italy 5*/15 10 10
Japan No Zambia tax is due if subject to taxation in Japan 10 10
Kenya No Zambia tax is due if subject to taxation in Kenya No Zambia tax is due if subject to taxation in Kenya No Zambia tax is due if subject to taxation in Kenya
Mauritius 5*/15 10 5
Netherlands 5**/15 10 7.5
Norway 5*/15 10 10
Romania 10 10 15
Seychelles 5*/10 5 10
South Africa 15 15 15
Sweden 5*/15 10 10
Switzerland 5*/15 No Zambia tax is due if subject to taxation in Switzerland No Zambia tax is due if subject to taxation in Switzerland
Tanzania No Zambia tax is due if subject to taxation in Tanzania No Zambia tax is due if subject to taxation in Tanzania No Zambia tax is due if subject to taxation in Tanzania
Uganda No Zambia tax is due if subject to taxation in Uganda No Zambia tax is due if subject to taxation in Uganda No Zambia tax is due if subject to taxation in Uganda
United Kingdom 5****/15 10 5

Notes: last update: August 2018.
* The lower rate applies  if the non-resident recipient owns at least 25% of the share capital of the capital of the Zambian company
** The lower rate applies  if the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends, or if the beneficial owner is a pension fund
*** The lower rate applies in the case of payment of royalties in respect of any copyright of scientific work, patent, trade mark, design or model, plan, secret formula or process, or information concerning industrial, commercial, or scientific experience
**** The lower rate applies where the dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 of the treaty
a: for the use of, or the right to use, any copyright of any cinematograph films, and films or tapes for television or radio broadcasting
b: for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or any industrial, commercial or scientific equipment;
c: for the use of information concerning industrial, commercial or scientific experience.

Sources: Zambia Revenue Authority, PricewaterhouseCoopers, Deloitte.