Tax laws Zambia
Zambia's tax system is administered by the Zambia Revenue Authority (ZRA) under the Ministry of Finance. It encompasses various direct and indirect taxes, including:
Direct Taxes:
Personal Income Tax (Pay As You Earn - PAYE):
- Rates: Progressive rates for individuals, with the following bands effective from 2024 onward:
- Up to ZMW 5,100: 0%
- ZMW 5,101 - ZMW 7,100: 20%
- ZMW 7,101 - ZMW 9,200: 30%
- Above ZMW 9,200: 37%
- Details: These rates are applied to monthly income, with annual adjustments as per the national budget.
Corporate Income Tax:
- Standard Rate: 30% for most companies.
- Mining Sector: A mineral royalty tax regime applies, with rates varying based on copper prices. For example, at prices above US$7,000 per tonne, the rate is 10%.
Withholding Tax:
- Rates:
- Rental income: 10% (final tax).
- Dividends, interest, royalties, commissions, management and consultancy fees, and payments to subcontractors: 20%.
- Non-Residents: Subject to a 20% withholding tax, unless reduced by a double taxation agreement.
Property Transfer Tax:
- Rate: 5% of the open market value realized from the sale of land, buildings, and shares issued by Zambian companies.
- Mining Rights: A 7.5% rate applies to the transfer of mineral rights, reduced from 10% in previous years.
Turnover Tax:
- Rate: 5% for small-scale businesses with annual turnover below ZMW 800 million.
- Details: Introduced to simplify tax compliance for smaller enterprises.
Indirect Taxes:
Value Added Tax (VAT):
- Rate: 16% on goods and services, with certain items exempted or zero-rated.
- Recent Changes: In September 2022, the government reinstated VAT on diesel and petrol.
Excise Duty:
- Details: Applied to specific goods such as petroleum products, alcohol, and tobacco. Rates vary depending on the product.
Import Duty:
- Details: Levied on imported goods, with rates varying based on the product category. In December 2022, customs duty on petrol and low sulphur gas oil was reduced to 0%.
Recent Developments:
- Emerald Export Tax: Effective January 1, 2025, a 15% export tax on emeralds was reintroduced after being suspended in 2019. Gemfields, a major emerald producer, has called for its reversal, citing concerns over sector sustainability and investment attractiveness.
Conclusion:
Zambia's tax system is characterized by a mix of direct and indirect taxes, with rates and regulations subject to change through annual national budgets and policy reforms. For the most current and detailed information, consulting the Zambia Revenue Authority or a tax professional is advisable.
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