Zambia

Value-added tax (VAT)

Zambia's VAT system operates at a standard rate of 16% on most goods and services. Notably, goods and services exported from Zambia are typically zero-rated, with the exception of services physically performed in Zambia, which are taxed at the standard rate regardless of the customer's residency.

Imported standard-rated goods are also subject to the 16% VAT upon entry into Zambia. For services supplied to Zambian customers by non-resident providers, where the services have not been taxed in the originating country, Zambian VAT applies. In such cases, the Zambian customer must account for the output VAT through a reverse-charge mechanism but is initially unable to reclaim the input VAT.

To facilitate input VAT recovery for Zambian customers receiving services from abroad, the foreign supplier may appoint a local tax agent. This agent is responsible for managing output VAT and issuing Zambian tax invoices, enabling the customer to claim input VAT credits.

Customs duties

In Zambia, imported goods attract customs duties, which are levied to regulate the flow of goods into the country. The customs duty rates vary depending on the classification of the goods under the Harmonized System codes.

Excise taxes

The Zambian tax regime imposes excise taxes on specific goods and services. These include, but are not limited to, alcoholic beverages, tobacco products, and mobile communication services. The excise duty rates are predetermined and applied to those goods or services to discourage excessive consumption, and/or generate revenue for the government.

It is important for businesses and individuals engaging in the importation of goods or dealing in excisable products and services to be aware of these tax obligations to ensure compliance with Zambian tax laws. Exercisable goods and services are subject to excise duty at the following rates:

* Airtime includes minutes of voice calls, short message services (sms), multi-media services (mms), Internet bandwidth, and other similar services that a subscriber consumes on a mobile cellular telephone or other electronic communication device.

Property Transfer Tax (PTT)

Zambia imposes PTT on certain property transactions. The PTT is levied on the following:

• The transfer of Zambian land.
• Intellectual property (IP) rights.
• Mining rights and interests therein.
• Mineral processing licences and other mining-related licences.
• Share transfers in Zambian-incorporated companies.

Notably, PTT also applies to indirect share transfers. This occurs when a non-resident company, holding a minimum of 10% in a Zambian company, undergoes a share transfer.

PTT rates

Effective from 1 January 2025, the following PTT rates apply:

* In Zambia, non-resident companies disposing of at least a 10% interest in a Zambian company are subject to PTT at a rate of 8%. The tax base is the higher of three calculated values:

• The ratio of the Zambian company's value to the transferring company's value, multiplied by the transferred shares' market
• The same ratio applied to the consideration received for the shares.
• The ratio applied to the nominal value of the transferred shares.

Typically, the seller is responsible for PTT payment. However, in cases where the seller is unavailable, a provisional tax return may be filed by another individual under specific circumstances, such as:

• The seller has passed away.

• The seller is outside Zambia and cannot be reached.

• Despite diligent efforts, the seller's whereabouts remain unknown.

This substitute filing is permissible only with a court order or if the individual has been designated as a proxy by the court's registrar authorised to submit the provisional return.

Stamp taxes

There is no stamp tax in Zambia. However, effective 1 January 2023, the Patents and Companies Registration Agency (PACRA) has reduced the fees levied on the increase in authorised share capital of a company incorporated in Zambia to 1.5% (previously 2.5%) of the nominal value of the share capital. 

The minimum prescribed fees at initial registration of a company will vary according to the specific type of company being incorporated. The following are the minimum prescribed fees:

However, the total fee shall not exceed ZMW 3,333,333. For a company limited by guarantee, the guaranteed amount shall not be less than ZMW 20,000.

Mobile Money Transactions Levy Act

The Mobile Money Transaction Levy Act, 2024, effective from 1 January 2025, has replaced the Mobile Money Transaction Levy Act, 2023, instituting modifications to the regulation and administration of the mobile money transaction levy (the "Levy"). 

The Act now appoints the ZRA as the primary authority for levy administration. Under this new regulatory framework:

• Mobile money service providers are required to remit the total levies collected for each month directly to the ZRA within ten days following the end of each month.
• The Bank of Zambia (“BoZ”) is obligated to transfer all records, returns, or documents pertaining to previously collected levies to the ZRA.
• The Commissioner-General of the ZRA has enforcement powers as stipulated under the Zambia Revenue Authority Act and the Income Tax Act.
• The Mobile Money Transaction Levy will now range from ZMW 0.16 to ZMW 3.60, contingent on the transaction amount range. Previously, the Transaction Levy ranged from ZMW 0.08 to ZMW 1.80.

Presumptive Taxations for Motor Vehicles Used for the Carriage of Persons

The bands for presumptive taxes have been increased by 20% for motor vehicles used for the carriage of persons. The updated bands are as follows:

Turnover taxes

Entities with annual turnovers not exceeding ZMW 5,000,000 are subject to a 5% turnover tax rate effective 1 January 2025. This tax is exclusive of income tax.
Turnover, for this purpose, does not include interest, dividends, royalties, consultancy services income, or income from standard mining operations. 

The threshold for artisanal and small-scale mining activities remains unchanged at ZMW 800,000.

Gig economy and rental income 

Individuals in the gig economy earning up to ZMW 12,000 annually are exempt from turnover tax. Those with incomes between ZMW 12,000 and ZMW 5,000,000 are taxed at 5% effective 1 January 2025.

Similarly, rental income earners below ZMW 12,000 annually are taxed at 0%, while those with rental incomes within the ZMW 12,000 to ZMW 800,000 range are taxed at a 4% rate. Rental incomes above ZMW 800,000 are subject to a 16% tax rate (previously 12.5%).

Rental income earners must file monthly rental income tax returns by the 14th of the following month. All taxpayers receiving rental income must register for rental income tax and comply with the same monthly payment deadline for submitted returns.

Payroll taxes 

Employers in Zambia must deduct income tax from employee emoluments under the Pay-As-You-Earn (PAYE) system, which applies progressive personal income tax (PIT) rates.

Skills Development Levy (SDL) 

A mandatory monthly levy of 0.5% is imposed on employers, calculated on the gross emoluments of their employees.

Social security contributions 

Both employers and employees contribute to the National Pension Scheme Authority (NAPSA). The combined contribution rate is 10% of an employee's earnings, capped at ZMW 3,416.40 monthly (ZMW 1,708.20 each) for the 2025 charge year.

National Health Insurance contributions 

The National Health Insurance Scheme mandates a 1% contribution from both employers and employees, based on the employee's basic salary, totalling a 2% contribution.

Provincial/local taxes other than income taxes

Employers may be subject to additional levies by local councils, such as the Lusaka City Council.