Zambia

Payments of the following items of Zambian-source income may be subject to WHT. The relevant rates under domestic legislation are as follows:

Notes

1. 0% if paid by a mining company or a company listed on the Lusaka Securities Exchange to individual shareholders. 
2. Interest payable to local banks and financial institutions licensed under the Banking and Financial Services Act, 2017 is exempt from WHT. In addition, interest paid by a bank or an institution registered under the Banking and Financial Services Act, 2017 in respect of interest earning accounts held by individuals is exempt from WHT.

The WHT liability arises by reference to the date of payment, the date of accrual (i.e. the date the recipient has a legal right to claim the payment), or the time when income is in any way due to a person or held to that person’s order.

With respect to rental income, WHT may be deductible on the rental income received where the Commissioner-General appoints a tenant as a WHT agent to withhold tax before making any payments for the supply of leased property.

WHT is due to be paid within 14 days following the end of the month to which the payment or accrual relates.

Zambia has DTTs in force with the following territories, which generally provide reduced rates of WHT on dividends, interest, and royalties paid to non-residents as follows:

Notes

1. The non-resident recipient must own at least 25% of the share capital of the capital of the Zambian company.
2. The rate of 5% shall apply where the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends, or if the beneficial owner is a pension fund.
3. These old treaties do not follow the OECD model, and, accordingly, their application to particular circumstances must be confirmed.
4. The rate of 8% shall apply in the case of payment of royalties in respect of any copyright of scientific work, patent, trademark, design or model, plan, secret formula or process, or information concerning industrial, commercial, or scientific experience.
5. This rate applies where the dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 of the treaty.
6. The rate of 5% shall apply where the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the capital of the company paying the dividends or if the beneficial owner is a pension fund.
7. Income will be taxable in the source state and exempt from tax in the state of residence of the recipient. However, the income may be subject to tax in the resident state if it is not subject to tax in the source state.

In all cases, advance clearance must be obtained to obtain the treaty benefit and take advantage of any reduced rate of WHT or tax exemption.

It may be possible to obtain confirmation that management and consultancy fees can be paid without deduction of WHT by reference to the provisions of the relevant treaty. For treaties following the OECD model, the article concerning ‘Business Profits’ is generally taken to be relevant.