Zambia

Corporate - Branch income

Last reviewed - 17 May 2024

Zambia's tax system determines branch profits based on the branch's functions, assets, and risks within the country. To ascertain the profits attributable to a branch, a transfer pricing benchmarking study is often necessary. This study compares the branch's profit margins with those of independent entities to establish a benchmark for Corporate Income Tax (CIT) purposes.

Financial Reporting and Taxable Income Calculation

Both Zambian resident companies and branches must adhere to International Financial Reporting Standards (IFRS) when preparing their financial statements. Taxable profits are calculated by adjusting the accounting profit according to the rules that govern the determination of taxable income for resident companies.

Corporate Income Tax Rates

The standard CIT rate is set at 30%. However, businesses operating in specific sectors may be subject to alternative CIT rates, which are detailed in the Taxes on corporate income section.

Withholding Tax on Branch Profits

Branches of foreign companies face a 20% Withholding Tax (WHT) on repatriated profits. It is important to note that branches may not benefit from double taxation relief under tax treaties when repatriating profits.