Advance income tax
Advance income tax may apply at 15% on the value of commercial imports where the importer is non-compliant with its tax obligations. This can be credited against the importer’s CIT liability on submission of the annual tax return.
The exchange monitoring regulations and foreign currency regulations in Zambia were repealed in March 2014.
Choice of business entity
A non-Zambian resident company can establish a business in Zambia, either as a branch of a foreign company or a subsidiary (i.e. a Zambian registered limited liability company).
Adoption of IFRS
Zambia has adopted a three-tier financial reporting framework as guided by the governing accounting body, the Zambia Institute of Chartered Accountants (“ZiCA”). The reporting and auditing requirements for the three tiers under the framework are as follows:
Publicly accountable entities: These include listed companies, public interest entities and government-owned enterprises must use full IFRSs and must be audited.
Economically significant companies: These include companies that are not in the first tier and have annual turnover equal to or exceeding K20 million (approximately USD 960 thousand) have a choice of using the IFRS for SMEs or full IFRS, and they must be audited.
Micro and small enterprise: These refer to those businesses with annual turnover below K20 million. Entities under this category are free to use the Zambian Financial Reporting Standard for Micro and Small Entities, and an audit is not required