Taxation 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.
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).
Mineral royalty tax
Under the Mines and Minerals Act, a mineral royalty tax is charged on the extraction of minerals
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.