Zambia

Zambia principally operates a source-based system for the taxation of income. Income deemed to be from a Zambian source is generally subject to income tax. However, the residence of a person/entity in Zambia will widen the scope of taxation to include interest and dividend income from non-Zambian sources. Consequently, Zambian residents will also be subject to income tax on interest and dividends from sources outside Zambia on a worldwide basis.

A non-Zambian resident enterprise that has a permanent establishment (PE) in Zambia will be subject to corporate income tax (CIT) on its income attributable to the PE in Zambia. 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 applicable CIT rate on taxable income of corporate entities is 30%.

With effect from 1 January 2023, the two-tier taxation system in the telecommunications sector, which provided for tax at 30% on taxable income of up to ZMW 250,000 and 40% on taxable income exceeding ZMW 250,000, has been abolished and replaced with a single tax rate of 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 traders in markets.

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

The rates applicable for mining operations (for both base metals and industrial minerals) are as follows:

Income earned solely from mineral processing is subject to CIT at a rate of 30% (4).

Notes

1. 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.
2. 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.
3. 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.
4. 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 (MRT)

The MRT regime in Zambia has undergone a number of changes since 2015. However, with effect from 1 January 2023, the following MRT rates apply:

* United States dollars

From 1 January 2022, MRT is 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.