Zambia

Corporate - Other taxes

Last reviewed - 17 May 2024

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 Zambian, 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 these goods and services to discourage excessive consumption and 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:

Item

2024 rate 

2023 rate

Non-alcoholic drinks

ZMW 0.60 per litre

ZMW 0.30 per litre

Alcoholic drinks:

Less than 80% by volume

60%

60%

80% or higher by volume

60% + 20% surtax

60% + 20% surtax

Ethyl alcohol and other spirits, denatures of alcoholic strength of less than 80%

60%

125%

Unmanufactured tobacco

145% or K400 per Kg

145% or K361 per Kg

Cigarettes

K400 per mille

K361 per mille

Electronic Cigarettes and similar personal electric vaporising devices

145%

-

Telephone airtime*

17.5%

17.5%

Portland cement

K40/tonne

K40/tonne

Plastic carrier bags

30%

30%

Plastic articles (including floor covering of plastics, tiles, wall or ceilings

15% 

-

* 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 taxes

Zambia imposes a Property Transfer Tax (PTT) on certain property transactions. The PTT is levied on the following:

  • The transfer of Zambian land
  • Intellectual property 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.

Property transfer tax rates

Effective from 1 January 2023, the following property transfer tax rates apply:

Description

Rates (%)

Land (Including buildings)

5%

Shares (including an interest in a mining right)*

5%

Mining right for a mining licence

10

Mineral processing licence

10

Mining right for an exploration licence

5

Intellectual Property

5

*N.B - In Zambia, non-resident companies disposing of at least a 10% interest in a Zambian company are subject to Property Transfer Tax (PTT) at a rate of 5%. 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 value.
  • 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:

Company type

Prescribed registration fees (Nominal Capital) - ZMW

Private Company

20,000

Public Company

2,000,000

Bureau de Change

100,000

Financial Institution

1,000,000

Local Bank

138,666,667

Foreign Bank

693,333,200

Insurance Broker

133,334

Insurance Company

2,000,000

Reinsurance Company

10,000,000

Company Limited by Guarantee

1,267

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.

Turnover taxes

Entities with annual turnovers not exceeding ZMW 800,000 are subject to a 4% turnover tax. 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. However, as of 1 January 2023, artisanal or small-scale mining activities under the threshold are taxed at the same rate.

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 800,000 are taxed at 4%. 

Similarly, rental income earners below ZMW 12,000 annually are exempt, 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 12.5% tax rate.

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 2,981.60 monthly (ZMW 1,490.80 each).

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, totaling a 2% contribution.

Provincial/Local Taxes

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