Zambia

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.

Exchange controls

The exchange monitoring regulations and foreign currency regulations in Zambia were repealed in March 2014.

However, the government, through the Bank of Zambia (BoZ), recently developed an Electronic Export Proceeds Tracking Framework. This is intended to facilitate real-time monitoring and reporting between the regulatory authorities.

The BoZ further issued the (Export Proceeds Tracking Framework) Directives in 2023 as subsidiary legislation to govern the implementation of the framework. The Directives became effective on 1 January 2024.

The framework highlights that all exporters are required to complete and submit the customs export declaration Form CE 20 to the ZRA with a unique identification number called the Unique Consignment Reference (UCR). 

In addition to the above, all exporters will be required to open and maintain accounts with commercial banks or financial institutions domiciled in Zambia. This entails that all the earnings derived from the export of goods and/or services would be required to be reflected in the said bank account within 90 days of the export.

Commercial banks and financial institutions that receive the export proceeds are required to notify the BoZ by way of submitting returns of all money and remittances received to the BoZ. The returns submitted should provide the Taxpayer Identification Numbers, details of receipts and utilisation of funds, and correct use of UCRs.

Once the above procedures have been completed, the BoZ will be responsible for the following:

• Reconciliation of the UCRs (as recorded by ZRA by using the ASYCUDA system) and the eBoP returns submitted by commercial banks and financial institutions.
• Follow up unreconciled UCRs.
• Preparation of International Investment Position. 
• Stakeholder sensitisation.

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 IFRS, 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 ZMW 20 million, 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 ZMW 20 Entities under this category are free to use the Zambian Financial Reporting Standard for Micro and Small Entities, and an audit is not required.