Zambia principally operates a source-based system for the taxation of income. Income deemed to be from a Zambian source is generally subject to Zambian income tax. However, the residence of a person/entity in Zambia will widen the scope of taxation to include interest and dividend income from abroad. Consequently, Zambian residents will also be subject to income tax on interest and dividends from a source outside Zambia.
A non-Zambian resident enterprise that has a permanent establishment (PE) in Zambia will be subject to corporate income tax (CIT) on its Zambian-source income. If there is no PE, Zambian-source income of the non-Zambian resident may still be subject to WHT, which is generally deducted at source (see the Withholding taxes section).
The standard rate of CIT applicable on taxable income of corporate entities (other than individuals) is 35%.
Small businesses that are not capable of keeping records to enable effective tax assessment are subject to base tax, which is levied at ZMW 365 per annum. This typically applies to small market traders.
The following sources of income are subject to different CIT rates:
|Source of income||CIT rate (%)|
|Electronic communications networks or service licensees (income in excess of ZMW 250,000)||40|
|Export of non-traditional products from farming and agro-processing||10|
|Production of organic fertiliser and chemical manufacture of fertiliser||15|
The rates applicable for mining operations (for both base metals and industrial minerals) are as follows:
|Tax on mining operations* (for both base metals and industrial minerals**)||Rate|
|Additional variable profits||N/A|
Income earned solely from mineral processing is subject to CIT at a rate of 35%***.
* Mining operations means an operation carried out under a mining right, excluding an operation carried out under a mineral processing licence only or an exploration licence.
** Industrial minerals include rocks or minerals other than gemstones, base metals, energy minerals, or precious metals used in their natural state or after physical or chemical transformation, including barites, dolomite, feldspar, fluorspar, graphite, gypsum, ironstone when used as a fluxing agent, kyanite, limestone, phyllite, magnesite, mica, nitrate, phosphate, pyrophyllite, salt, sand, clay, talc, laterite, gravel, potash, potassium minerals, granite, marble, clay, silica, diatomite, kaolin, bentonite, or quartz.
*** Mineral processing means the practice of beneficiating or liberating valuable minerals from their ores, which may combine a number of unit operations, such as crushing, grinding, sizing, screening, classification, washing, froth floatation, gravity concentration, electrostatic separation, magnetic separation, leaching, smelting, refining, calcining, and gasification or any other processes incidental thereto.
Reduced CIT rates apply in some other cases, including for certain companies listed on the Lusaka Securities Exchange.
Mineral royalty tax
The mineral royalty tax regime in Zambia has undergone a number of changes since 2015. However, with effect from 1 January 2019, the following mineral royalty rates apply:
|For a holder of a mining licence:|
|On the norm value of the base metals produced or recoverable under the licence, except when the base metal is copper.||5.0|
|On the norm value of the base metals produced or recoverable under the licence, when the base metal is cobalt.||8.0|
|On the norm value of the base metals produced or recoverable under the licence, when the base is a precious metal.||6.0|
|On the gross value of the energy and industrial minerals produced or recoverable under the licence.||5.0|
|On the gross value of the gemstones produced or recoverable under the licence.||6.0|
|On the norm value of the precious metals produced or recoverable under the licence.||6.0|
|Where the base metal produced or recoverable under the licence is copper:|
|On the norm value when the norm price of copper is less than USD* 4,500 per tonne.||5.5|
|On the norm value, when the norm price of copper is USD 4,500 per tonne or greater, but less than USD 6,000 per tonne.||6.5|
|On the norm value, when the norm price of copper is USD 6,000 per tonne or greater, but less than USD 7,500 per tonne.||7.5|
|On the norm value, when the norm price of copper is USD 7,500 per tonne or greater, but less than USD 9,000 per tonne.||8.5|
|On the norm value, when the norm price of copper is USD 9,000 per tonne or greater.||10.0|
* United States dollars
Mineral royalty tax is not deductible in determining the taxable income of a mining company.
Local income taxes
There are no income taxes imposed by the provincial or local authorities on businesses.