Zambia

Corporate - Taxes on corporate income

Last reviewed - 17 May 2024

Zambia's tax system is predominantly source-based, with income generated from Zambian sources being liable for income tax. For Zambian tax residents, the tax scope extends to global interest and dividend income, aligning with a worldwide taxation principle.

Non-resident entities operating through a permanent establishment (PE) in Zambia are subject to corporate income tax (CIT) on the income attributable to their Zambian PE. In the absence of a PE, non-resident income from Zambian sources may incur withholding tax (WHT), typically withheld at the source (see the Withholding Tax section).

The standard CIT rate is 30% on taxable corporate income. However, as of 1 January 2023, the telecommunications sector's dual tax rate system has been streamlined to a uniform rate of 35%, replacing the previous structure of 30% on income up to K 250,000 and 40% on income exceeding this threshold.

For small businesses unable to maintain detailed records for tax assessment, a base tax of ZMW 365 per annum is levied, which is common among market traders. Specific income sources may be taxed at varying CIT rates.

The following sources of income are subject to different CIT rates:

Source of income

CIT rate (%)

Electronic communications networks or service licences 

35

Farming

10

Profits from Public PPP Projects by SPVs for the first five years

15

Agro-processing

10

Income earned by a producer of cotton seed or from ginning of cotton

0 (2024 to 2028)

Income earned from spinning of cotton and weaving of thread

0 (2024 to 2034)

Agro-processing of corn starch in Multi Facility Economic zone or Industrial Park

0 (2023 to 2032)

5% (2033 to 2035)

2.5% (2036 to 2037)

10% (2037 onwards)

Export of non-traditional products from farming and agro-processing

10

Export of non-traditional products other than those relating to farming and agro-processing*

15

Value addition to gemstones through lapidary and jewellery facilities.

25

Hotels Lodges, Accomodation and food services

30 (previously 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

CIT

30%

Additional variable profits

N/A

Income earned solely from mineral processing is subject to CIT at a rate of 30%****.

Notes

* Non-traditional products refer to anything produced or manufactured in the Republic, excluding minerals, electricity, services, or cotton lint exported without an export permit from the Minister of Commerce.

 ** 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 barytes, 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 2023, the following mineral royalty rates apply:

Description

Rate (%)

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* 4,000 per tonne.

4.0

On the norm value, when the norm price of copper is USD 4,000 per tonne or greater, but less than USD 5,000 per tonne.

6.5

On the norm value, when the norm price of copper is USD 5.000 per tonne or greater, but less than USD 7,000 per tonne.

8.5

On the norm value, when the norm price of copper is USD 7000 per tonne or greater

10

* United States dollars

From 1 January 2022 mineral royalty tax is deductible in determining the taxable income of a mining company.

Local authority income taxes

There are no income taxes imposed by the provincial or local authorities on businesses.