Value-added tax (VAT)
The VAT rate is 16% and is applicable to supplies of standard-rated goods and services.
The export of goods from Zambia is zero-rated. However, the provision of services that are classified as standard-rated supplies from a Zambian place of business is subject to VAT at 16%, irrespective of whether the customer is a Zambian resident or a non-Zambian resident.
Standard-rated goods imported to Zambia are subject to import VAT at 16%.
The supply of standard-rated services to customers in Zambia by a non-Zambian supplier that has not been subject to VAT in the country from which the services are provided will be subject to VAT in Zambia. The non-Zambian supplier can appoint a local tax agent to account for output VAT on their services; this procedure enables the Zambian customer to reclaim the corresponding input VAT. Otherwise, the Zambian VAT-registered customer would be required to account for the output VAT referred to as ‘reverse-charge VAT' on the services procured from the non-resident supplier. In this instance, there is no mechanism for the Zambian customer to recover reverse-charge VAT.
The proposed replacement of VAT with a sales tax has been dropped. However, a prescribed number of taxable supplies, unless where the supplies are stock in trade, have been excluded from input VAT claim.
Goods imported into Zambia are generally subject to customs duties. In 2017, a surtax of 5% was introduced on selected goods that are imported into, manufactured in, or produced in the country.
Certain goods and services, such as alcoholic drinks, tobacco, and mobile communications airtime, are subject to excise duty at the following rates:
|Item||2020 rate (%)||2019 rate (%)|
|Non-alcoholic drinks||ZMW 0.30 per litre||ZMW 0.30 per litre|
|Less than 80% by volume||60||60|
|80% or higher by volume||125||125|
|Plastic carrier bags||30||30|
* Airtime includes minutes of voice calls, short message services (sms), multi-media services (mms), Internet band width, and other similar services that a subscriber consumes on a mobile cellular telephone or other electronic communication device.
Zambia does not have a property tax other than Property Transfer Tax (PTT) (see below).
Property Transfer Tax (PTT)
PTT applies on the transfer of land and buildings situated in Zambia and the transfer of shares issued by a company incorporated in Zambia, including on the indirect transfer by a non-resident company that indirectly holds at least 10% of the shareholding of a company incorporated in Zambia.
PTT on the transfer of land and buildings is payable at 5% of the realised value or the open market value.
PTT on the sale of shares is payable at 5% of the open market value or nominal value, whichever is greater.
PTT on the indirect transfer by a non-resident company that indirectly holds at least 10% of the shareholding in a Zambian incorporated company will be levied at 5%. The tax will be levied on the greater of the:
- proportion of value that the Zambia entity bears to the total value of the shares transferred in the non-Zambian entity transferring its shares
- consideration for the shares being transferred, or
- nominal value of the shares transferred.
PTT is payable by the Zambian entity whose shareholding is indirectly transferred.
PTT is also payable on the transfer of a mining right at the rate of 10%.
PTT also applies on the transfer of intellectual property (IP) at the rate of 5%.
The PTT liability is generally payable by the vendor.
Zambia does not have a stamp tax.
A business with a turnover of ZMW 800,000 or less per annum will be taxed at the flat rate of 4%.
Income that is subject to turnover tax will not be subject to income tax.
The definition of 'turnover' for turnover tax purposes excludes interest, rental income, dividends, or royalties. Furthermore, income earned from the provision of consultancy services or from mining operations does not qualify for turnover tax.
The Patents and Companies Registration Agency (PACRA) applies a registration fee of 2.5% to increases in the authorised share capital of companies incorporated in Zambia.
Employers are required to deduct income tax arising on any emoluments under the ‘Pay As You Earn’ (PAYE) regulations.
Skills development levy (SDL)
Employers are required to pay a monthly levy amounting to 0.5% of the gross emoluments payable to employees.
Social security contributions
Both employers and employees are required to make contributions to the National Pension Scheme Authority (NAPSA). The contribution rate is 5% of the employee’s total earnings (a total 10% contribution from both the employer and employee), subject to a limit as prescribed by the authority. The maximum contribution limit for 2020 is ZMW 1,149.60 per employee per month (i.e. a total of ZMW 2,299.20 from both the employer and employee per month).
National Health Insurance contributions
Both employers and employees are required to make contributions to the National Health Insurance Scheme on a monthly basis. The contribution rate is 1% of the employee’s basic salary, making a total contribution of 2% from both the employer and employee.
Provincial/local taxes other than income taxes
Certain levies may be payable to local councils (e.g. Lusaka City Council).