Zambia

Value-added tax (VAT)

The VAT rate is 16% and is applicable to supplies of standard-rated goods and services.

The export of goods and services from Zambia are generally zero-rated. However, exports of services rendered physically from a place of business in Zambia would be considered standard-rated supplies of services and would be subject to a 16% VAT rate, regardless of whether the consumer is a non-Zambian resident.

Standard-rated goods imported to Zambia are subject to import VAT at the rate of 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 Zambian VAT-registered customer is required to account for the output VAT referred to as ‘reverse-charge VAT' on the services procured from the non-resident supplier. However, the Zambian customer cannot claim the input tax resulting from reverse-charge VAT. In order to enable the Zambian customer to claim input tax resulting from reverse-charge VAT accounted on imported services, the non-Zambian supplier can appoint a local tax agent to account for output VAT on their services and issue local tax invoices. The Zambian customer can then claim the input VAT that was paid as shown on the invoice from the local tax agency.

Customs duties

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.

Excise taxes

Certain goods and services, such as alcoholic drinks, tobacco, and mobile communications airtime, are subject to excise duty at the following rates:

* Airtime includes minutes of voice calls, short message services (sms), multi-media services (mms), Internet bandwidth, and other similar services that a subscriber consumes on a mobile cellular telephone or other electronic communication device.

Property taxes

Zambia has a Property Transfer Tax (PTT) regime that charges specific types of property transfers. Additional information on the PTT's operation is provided below.

Property Transfer Tax (PTT)

PTT applies on the transfer of land situated in Zambia; intellectual property (IP) rights; a mining right or an interest in the mining right; mineral processing licences and other mining-related licences; 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.

* Note that the 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 that the value of the company incorporated in Zambia bears to the value of the company whose shares are being transferred multiplied by the value of the transferred shares.

• Proportion that the value of the company incorporated in Zambia bears to the value of the company whose shares are being transferred multiplied by the consideration for the transferred shares.

• Proportion that the value of the company incorporated in Zambia bears to the value of the company whose shares are being transferred multiplied by the nominal value of the transferred shares.

The PTT liability is generally payable by the vendor. However, where the vendor/transferor is not available, a person, other than the transferor of the property, may file a provisional tax return on behalf of the transferor where that person has been allowed to do so by a court order or has been appointed as a proxy for the registrar of court who has been authorised to render the provisional return. This will only apply under the following conditions:

• The transferor is deceased.
• The transferor is absent from Zambia.
• The transferor cannot be located despite all reasonable effort to do so.

Stamp taxes

There is no stamp tax in Zambia. However, the Patents and Companies Registration Agency (PACRA) levies a capital registration fee of 2.5% of the nominal value of each increase in authorised share capital for companies incorporated in Zambia.

Turnover taxes

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, dividends, or royalties. Furthermore, income earned from the provision of consultancy services or from mining operations does not qualify for turnover tax. The exception to this is income earned from artisanal mining or small-scale mining. Effective 1 January 2023, income earned by a holder of a mining licence permitted to carry out artisanal mining or small-scale mining with an annual turnover of ZMW 800,000 or less will be subject to turnover tax at the rate of 4%.

A person working in the gig economy who earns ZMW 12,000 or less per annum (i.e. ZMW 1,000 per month) is not required to pay turnover tax on the money earned, whereas those earning between ZMW 12,000 and ZMW 800,000 per annum (i.e. more than ZMW 1,000 per month) must pay tax at the rate of 4% of the gross income received.

Further, effective 1 January 2023, a person (natural or legal) earning rental income of ZMW 12,000 or less per annum (i.e.ZMW 1,000 per month) is not required to pay taxes on the income earned, while those earning total rental income between ZMW 12,000 and ZMW 800,000 per annum must pay turnover tax at the rate of 4%. Any person earning rental income above ZMW 800,000 per annum (i.e. above ZMW 66,666.67 per month) will pay tax at 12.5% of the gross rental income. 

Corporate entities in Zambia in the business of leasing or renting of properties are required to file monthly rental income tax returns on or before the 14th day of the month following the month in which the rental income is received.

Taxpayers are required to register for rental income tax regardless of the amount of rental income received.

Taxpayers are also required to make payments for the submitted returns on or before the 14th day of every month following the month in which the rental income is received.

Payroll taxes

Employers are required to deduct and remit income tax on behalf of their employees under the 'Pay-As-You-Earn' (PAYE) Regulations using the PIT rates of tax.

Skills development levy (SDL)

Employers are required to pay a monthly levy amounting to 0.5% of the gross emoluments payable to their 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 2023 is ZMW 1,342.00 per employee per month (i.e. a total of ZMW 2,684.00 from both the employer and employee per month).

National Health Insurance contributions

Both employers and employees are required to make monthly contributions to the National Health Insurance Scheme. 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).