Zambia

Zambia

Lusaka +260 1 228 677 Victor Muhundika vmuhundika@deloitte.co.zm

+260 1 228 677 George Kanyembo gkanyembo@deloitte.co.zm
+260 1 228 677 Cheelo Cletus ccheelo@deloitte.co.zm
Yobe Nthani ynthani@deloitte.co.zm

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 Zambia

Zambia

This information is based on existing tax Income Tax

legislation and the 2013 Budget Address Income tax is divided into Pay-As-You-Earn
delivered by the Minister of Finance, (PAYE), Tax on Self-employed Individuals
Honourable Alexander Bwalya Chikwanda, MP, and Company Tax. A 3% income tax on all
to National Assembly on 12 October 2012. commercial imports was introduced from
1 April 2007. The Minister, however, has the
Notes: authority to determine when this tax will not
1. The amendments to legislation proposed be applicable.
in the Budget Address must be approved
by Parliament and changes may occur to Pay-As-You-Earn (PAYE)
the proposals before they are enacted. PAYE is collected at source from individuals in
Therefore, until legislation has been gainful employment. The employer deducts
enacted, these proposals are provisional the tax from the employee’s salary or wages
in nature. The changes in tax legislation
and is required to remit it to the ZRA by the
and other relevant information, as
14th day of the month following the month
announced in the 2013 Budget Address,
apply for the fiscal year 1 January 2013 of deduction. The Government has again
to 31 December 2013, unless indicated maintained the graduated four-band system for
otherwise. taxing income from employment but the PAYE
exempt threshold has been increased from
Introduction K2 million per month to K2.2 million per
Zambia operates a source-based system of month.
taxation. Every person receiving income from
a source within, or deemed to be within The proposed PAYE regime is as follows:
Zambia, will be liable to income tax in Zambia PAYE Rates for Individuals: From
on that income. The concept of residence is of 1 January 2013*
secondary importance in that it only extends
Annual But does Rate
the tax net to cover interest and dividend Taxable not exceed
income received from a foreign-source by Income as
Zambian residents. exceeds

The tax system is administered by the K K %

Zambian Revenue Authority (ZRA), an agency 0 26 400 000 0%
established in 1994. Where disputes arise
26 400 000 36 000 000 25%
between taxpayers and the ZRA under the
Income Tax Act, Value Added Tax (VAT) Act 36 000 000 70 800 000 30%
and the Customs and Excise Act, the aggrieved
70 800 000 + 35%
party has a right of appeal to the Revenue
Appeals Tribunal (RAT), a statutory body that
hears and determines the settlement of tax
cases. A party dissatisfied with the decision
of the RAT, can appeal to the High Court of
Zambia.

The tax year for both individuals and

companies currently runs from 1 January to
31 December.

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Notes: 8. Local authorities are permitted to add a

1. An individual is resident for tax purposes 2% levy on income of resident individuals,
if he is physically present in Zambia for up to K15 000 annually.
at least 183 days in any tax year, or 9. Gratuity income equivalent to the annual
has entered the country with a view to exempt income under PAYE is exempt
establishing residence. The definition from taxation and the balance is taxed at
of a permanent establishment(PE) has a flat rate of 25%.
been incorporated in the Income Tax 10. Dividend income earned by individuals
Act. Although this definition is in line on shares listed on the Lusaka Stock
with the definition provided in the OECD Exchange (LUSE) is exempt from tax.
Guidelines on international taxation, 11. Social security – Employers must match
it is only applicable to transactions employees’ contributions to the National
involving the deduction of withholding Pensions Scheme Authority (NAPSA).
tax(WHT) from payments to non-resident Employee contributions to NAPSA are
contractors in the construction and capped at the lower of 5% of annual
haulage industries. basic salary and K7 043 815.20 per
2. There are no rebates. However, an annual annum.
tax credit is available for persons with a
disability. This tax credit for “differently- Non-Residents
abled persons” is K3 million per annum. The above rates are also applicable to
3. A company employing persons with
non-residents in respect of employment
disabilities is entitled to an annual
deduction of K1 million per annum for and business income earned in Zambia.
each such person employed. In addition, certain payments made to
4. The annual deductible limit for non-residents are subject to WHT (see
contributions to approved pension funds Withholding Taxes).
for an employee is the lower of 15% of
income and K3 060 000. An employee Tax on Self-employed Individuals
who contributes to an approved pension This tax is levied on business profits of
scheme is allowed a refund of both his individuals running business ventures as sole
contribution and that of the employer’s proprietors, or partners in a partnership, at the
share upon loss of employment. The
graduated PAYE rates. For individuals earning
employer is allowed a deduction of
up to 20% of the employee’s gross both business income and emoluments,
emoluments. business income that has been taxed under
5. In principle, individuals are liable for tax turnover tax is (as from 1 April 2007) no
on all benefits arising from employment. longer added to emoluments that are subject
However, in the case of non-cash fringe to PAYE but remains under the turnover tax
benefits, the employer is denied a tax system. The tax treatment for income that
deduction for the cost of the benefit. The exceeds the annual threshold is not clear.
provision of company cars and residential
accommodation is subject to special rules. Company Tax
6. On retirement, the Income Tax Act
This is levied on business profits of
provides for exemption from tax of the
first K35 million on termination benefits incorporated companies and branches of
paid to retirees. The balance of such foreign companies. Taxpayers are required to
payments is subject to tax at 10%. compute taxable income on an actual basis by
7. The exemption for lump sum termination reference to the charge year.
benefits on retrenchment or redundancy
is also K35 million. Any excess is taxed A company that has an accounting year-end
at 10%. Lump sum benefits on the loss other than 31 December can apply to the
of employment on medical grounds are ZRA to base its tax return on the accounting
exempt. year-end. The final tax returns are due by
30 June following the end of the respective
charge year.

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Income Tax Rates for Companies: Notes:

January 2013 to December 2013* 1. Profits from commercial transactions
carried on by charities are taxable at 15%.
Note Rate of Donations and membership subscriptions
Tax are not taxable.
Basic rate 35% 2. The company income tax rate for
agricultural activities is 10%.
Companies listed on the 2% less 3. There is a “Presumptive Tax” for persons
LUSE – years of listing than carrying on the business of operating
6 the public passenger service vehicles. The tax
sector is a standard annual assessment based
rate on the seating capacity of the passenger
service vehicle.
Banks 5 35% 4. There is a 5% surtax on profits above
K250 million earned by operators in the
Mobile mobile telecommunications sector.
telecommunications 5. The tax rate that applies to profits made
operators 35% by banks is 35%.
– First K250 million 6. The due date for the submission of annual
profit income tax returns is 30 June following
the end of the charge year. The due dates
– Balance of profit 4 40% for provisional tax payments have been
Charitable organisations adjusted as follows:
– Income from 1 15% Instalment Jan 2013 – Dec 2013
commercial activities
1st 31 March
Farmers, exporters
2nd 30 June
of non-traditional
2 10% 3rd 30 September
products, producers of
chemical fertilisers 4th 31 December
Manufacturers and
35%
others 7. New listings on the LUSE attract a 2%
discount on the above income tax rate
Rural enterprises 30% applicable and a further 5% discount
Businesses with where Zambians hold at least 33% of
the shares.
turnover up to K200
8. Micro and small enterprises, under the
million, excluding 3 3%
Zambia Development Agency Act, are
consultancy exempt from income tax for the first
(“Presumptive Tax”) three and five years of operations for
* The tax year currently runs from 1 January to enterprises operating in urban and rural
31 December. areas respectively.

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9. The allowable low-cost housing capital 16. An advance income tax of 6% on

expenditure is K20 million. This measure commercial imports by non-registered
encourages employers to build decent traders, is payable at the port of entry
housing units for their employees, based on the value for duty purposes.
particularly in the agriculture sector. A tax credit against income tax is given
10. Where companies are engaged in the on submission of respective receipt and
assembly of motor vehicles and bicycles, annual tax return and the Commissioner
dividends are exempt for a period of five has discretionary powers as to where and
years from the date of first declaration. when the 6% tax will not apply.
11. **Where companies operate in the 17. Carry forward of losses – Other than for
priority sectors under the Zambia companies holding large-scale mining
Development Agency Act, they are licences and mining base metals, carry
allowed the following: forward of company losses are restricted
• Exemption from income tax for five to five years. The period for carry forward
years from the first year that taxable of losses for companies operating in the
profits are made, 50% in years six to energy sector (i.e. hydro and thermal
eight and then 25% in years nine to 10. power (except wood) is also 10 years for
• Dividends will be exempt from tax for income tax purposes. Holders of large-
a period of five years from date of scale mining licences and carrying out
commencement of operations. the mining of base metals are allowed
• Capital expenditure on the to index the losses and unutilised capital
improvement or upgrading of allowances to be carried forward for
infrastructure will qualify for an income tax purposes.
improvement allowance of 100% of 18. Foreign tax credit – A foreign tax credit
such expenditure. is available in respect of tax suffered on
12. Debt-equity ratio for thin capitalisation foreign income taxable at source and
purposes – The debt-equity ratio in the in Zambia. The credit is limited to the
mining sector is 3:1. attributable tax according to a statutory
13. Transfer pricing – Zambian transfer pricing formula where the denominator is the
rules require that transactions between total of taxable and exempt income.
associated persons be on arm’s length 19. All hedging activities will be treated as
terms. The tax authorities can replace separate business activities for income tax
“actual conditions” with “arm’s length purposes (with effect from 1 April 2012).
conditions” for commercial or financial 20. Provisional tax – Companies are required
transactions between associated persons. to pay provisional tax in quarterly
14. Exchange gains/losses – Exchange gains instalments during the charge year
and losses of a revenue nature are only based on estimated income for that year.
allowed as a deduction when realised. Any balance of tax due for the year is
Exchange gains and losses of a capital payable in the year following the end of
nature are neither taxable nor allowable the charge year. A provisional tax return
as a deduction. However, exchange showing an estimate of income for the
losses of a capital nature incurred on charge year must be filed and a revised
borrowings used to finance the building return should be submitted if the estimate
and construction of an industrial or of taxable income changes substantially.
commercial building, are deductible.
15. Details of the capital allowances are set
out under “Tax Incentives”.

** The effective date for the five year period that

businesses operating in priority sectors (i.e. MFEZ
and Industrial Parks) are subject to a special
income tax rate of zero percent, has been brought
forward to the date when the approved investment
commences operations (as opposed to the date
when such approved business first makes profits),
effective 1 January 2013.

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Mining Tax Regime

21. Penalties – A penalty equal to 25% of the
tax liability underpaid is imposed if less The regime for the taxation of mining
than two-thirds was paid as provisional companies is as follows:
tax. Late payments of provisional tax • A basic rate of 30% (other companies
attract interest at 2% over the Bank of remain at 35%).
Zambia Discount Rates. In addition, all • Variable profit tax of up to 15% on taxable
late payments (provisional or final) are income that is above 8% of gross income.
subject to a penalty of 5% of the tax due • A mineral royalty rate on base metals at 6%
per month. Penalties for the late filing of on gross value.
returns are at K180 000 per month. The
• The Government has proposed to increase
penalties for negligence, willful default
and fraud for businesses under the the WHT rate from 15% to 20% on
turnover tax system, are 1.5%, 3% and payments of management or consultancy
4.5% respectively. fees and royalties to non-resident
22. Concessions for companies with large- contractors with effect from 1 January 2013.
scale mining licences for base metals • WHT on dividends at 0%.
and those operating under the Zambian • Capital expenditure deductions for mining
Development Agency, are detailed under equipment, plant, machinery and other
“Tax Incentives” below. capital expenditure, will be claimed at the
rate of 25% per annum, from the year that
the asset is brought-into-use (previously,
given at 100% of capital expenditure
incurred).
• A reference price is applied for the
purposes of assessing mineral royalties and
any transaction for the sale of base metals,
gemstones or precious metals between
related or associated parties. The reference
price is to be based on the London Metal
Exchange or other commodity exchange
prices.
• Cash accounting basis for VAT.
• Transfer pricing law will be enhanced
to specifically apply to related party
borrowings by mining companies, in
addition to the existing thin capitalisation
rules (effective from 1 January 2012).

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Withholding Taxes (WHTs)

Notes:
Certain payments to residents and non-residents, whether 1. These WHTs are a final tax in respect of
individual or corporate, are subject to WHT. payments to non-residents.
2. Other than commissions paid to
WHT Rates employees or holders of an office.
3. Commission payments made to
non-residents will be deemed to have

Non-Residents
arisen from a source within Zambia and
Residents
Notes

therefore taxable in Zambia irrespective of

the place where the service was physically
rendered. Accordingly, commission for
services that are physically rendered
outside Zambia would suffer WHT on
Commission paid to
2, 3 15% 15% payment from Zambia. The current
non-employees applicable WHT rate is 15%.
Dividends, royalties, 4. WHT on interest earned by individuals on
rental income, savings and deposit accounts has been
6 15% 15% reduced to 0% from 15%.
management and
consulting fees 5. The WHT of 15% on interest paid to
resident companies is not a final tax.
Entertainers and Interest income in the case of companies
- 15%
sportspersons is subject to further assessment regardless
of the source of the interest. WHT already
Interest 4, 5, 6, 7, 8, 9 15% 15% withheld will be treated as a credit
Non-resident against the income tax assessed.
- 15% 6. The WHT rate has been increased from
contractors
zero percent to 20% on payments made
for management or consultant fees,
interest or payments to non-resident
contractors by a person developing or
operating in an MFEZ or Industrial Park.
7. Dividends and interest paid by mining
companies carrying on the mining of
base metals are subject to WHT at the
rate of 15%.
8. Interest earned on government bonds is
subject to a final WHT of 15%.
9. Interest earned by exempt organisations
on treasury bills, corporate and
government bonds is subject to WHT
of 15%.
10. Gross interest earned on savings
accounts, bank deposits, treasury bills
and government bonds is subject to a
medical levy of 1% which is deducted by
the financial institution concerned.
11. These rates may be reduced by an
applicable double taxation agreement
(DTA). Zambia has DTAs with the
countries listed below. Treaties have been
signed with Mauritius and the Seychelles
and are expected to come into force
any time.

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Inheritances and Donations

Maximum WHT Rates Once a DTA is Applied
There is no estate duty or donations tax in
Recipient’s Zambia.
Country of Dividends Interest Royalties
Residence Value Added Tax (VAT)
Canada 15% 15% 15% The VAT registration threshold has been
increased from K200 million to K800 million
Denmark 15% 10% 15% per annum, effective 1 January 2013.
Finland 5%/15%* 15% 15% Therefore, companies and individuals dealing in
taxable supplies, and with a turnover exceeding
France 15% 15% 15%
K800 million per annum, are required to
Germany 5%/15%* 10% 10% register for VAT. Registered suppliers should
submit returns to the ZRA for each calendar
India 5%/15%* 10% 10%
month within 21 days of the end of the month
Ireland – – – and account for the excess of output over
Italy 5%/15%* 10% 10% input VAT.

Japan – 10% 10% Other aspects of VAT are as follows:

Kenya – 15% 15% • The standard rate for VAT is 16%.
• VAT registration is voluntary for businesses
Netherlands 5%/15%* 10% 10% with an annual taxable turnover below
Norway 15% 10% 15% K800 million.
• VAT registered suppliers with an annual
Romania 10% 10% 15% taxable turnover of K1 billion and above
South Africa 15% 15% 15% are required to submit input tax schedules
electronically and in the approved manner.
Sweden 5%/15%* 10% 10%
• Supplies of goods and services are taxable
Switzerland 15% – – at standard rate, zero-rated or exempt.
Input tax paid on purchases to produce
Tanzania – 15% 15%
exempt supplies is not recoverable.
Uganda 15% 15% 15% • VAT exemptions include: infant formula,
United Kingdom 5%/15%* 10% 10% health, education, domestic house rentals,
water, transport, financial and insurance
* The lower rate will be applicable where a minimum level of services, conveyancing services, funeral
shareholding exists.
services, statutory fees and insurance
brokering.
Capital Gains Tax (CGT) • Taxable goods and services become
There is no CGT in Zambia. However, where an asset is zero-rated when exported. In addition,
sold in respect of which capital allowances have been certain tourist activities are zero-rated;
or could have been claimed, the excess of the proceeds namely, boat-cruising, micro-lighting,
from the asset over the tax written-down value is treated helicopter tours and walking safaris. Books
as a balancing charge which is combined with the are also zero-rated. Other zero-rated
entity’s taxable income. In each instance, the balancing supplies include: hotel accommodation in
charge is restricted to the allowances previously claimed. Livingstone, mosquito nets, raw materials
For mining companies, the Government has proposed to and medical supplies. The list of zero-rated
introduce “Property Transfer Tax” at 10% on the transfer supplies in the tourism industry includes
or sale of a mining right granted under the Mines and activities such as elephant-back safaris,
Minerals Development Act, 1994 (effective 1 January steam train excursions, walking (with lions)
2013). safaris, clay pigeon shooting, fixed wing
flights over the Falls, gorge swing/flying fox,

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paint ball shooting and quad biking safaris.

Mineral Royalty Tax Rates
• The period for pre-production input credit
for mineral prospecting companies is five Type of Licence Note Rate
years. Base metals 1 6%
• The VAT Act provides for the application of
VAT to a sole proprietorship. Industrial and energy
1 6%
• The VAT Act excludes from taxation, minerals
services that constitute local supplies in Precious metals and
other VAT jurisdictions. 6%
gemstones
• The VAT Act provides for the taxation of a
service consisting of a lease, hire or loan of
goods that involves the removal of goods Notes:
from Zambia. 1. The mineral royalty rate for base metals,
industrial and energy minerals is 6%.
• VAT at the standard rate is also levied on
2. Mineral royalty returns and payments are
services provided by foreign suppliers to due by the 14th of the month following
clients in Zambia by means of a reverse the month of sale.
charge for such services. The corresponding
input VAT is not reclaimable. This means
Presumptive Tax
that the Zambian client is effectively bearing
Presumptive Tax is levied at 3% on businesses
the foreign company’s VAT. The reverse
with turnover of up to K800 million per
charge only applies in cases where the
annum (previously K200 million per annum)
non-resident supplier has not appointed a
and on operators of buses, mini buses and
local tax agent to act on its behalf. Input
taxis but excluding consultancy businesses.
VAT relating to the commission charged by
The taxes payable for transport operators are
the reverse VAT agents, is non-deductible in
as follows:
the principal’s VAT return.
• The cash accounting basis of accounting for
VAT also applies to mining companies. Presumptive Tax on Transport Operators
• Late payments of VAT attract additional Seating Capacity of Tax per
tax of 0.5% of the amount due per day. Vehicle Vehicle per
Additional tax equal to K180 000 or 0.5% Annum (K)
of the tax payable, whichever is greater,
Below 12 (including taxis) 600 000
is charged per day for failure to file a VAT
return. 12-17 1 200 000
18-21 2 400 000
Proposed changes to take effect from
1 January 2013 include: 22-35 3 600 000
• The VAT registration threshold is increased 36-49 4 800 000
from K200 million to K800 million per
annum. 50-63 7 200 000
• Goods supplied to, or imported by,
businesses operating in an MFEZ, or
Industrial Parks, are to be standard rated.
• Wheat, wheat flour and bread, are to be
zero-rated.
• The validity period for a document to be
used as a basis for claiming input tax credit,
is reduced from 12 months to six months.

Mineral Royalty Tax

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Property Transfer Tax (PTT) zero percent to 15%.

PTT is charged at 5% on the realised value of • Customs duty on flat rolled products of iron
the property being transferred. It is payable by or non-alloy steel, clad, plated or coated
the transferor. excluding those coated with tin and lead,
has been increased from zero percent to
Property includes any land (including any 25%.
buildings, structures, or other improvements • Customs duty on importation of multiple
thereon) and any share issued by a company or cabled yarn (knitting wools) of synthetic
in Zambia that is not listed on the LUSE. staple fibres has been increased from zero
The realised value is the price at which the percent to 15%.
shares or land could, at the time of transfer, • Duty has been removed on a wide range
reasonably have been sold on the open of medical, mechanical and electrical tools,
market. There is a discretionary exemption for plant, machinery and equipment.
transfers of property within the same group
of companies, provided the transferee is a Temporary Imports
company resident in Zambia and the transfer Goods may be temporarily imported into
is for the purposes of effecting internal group Zambia tax-free under a temporary import
reorganisations. permit. In practice, permits are granted
up to a maximum of 12 months. Upon
Effective 1 January 2013, the Government importation, the importer must give security
has proposed to introduce PTT at 10% on for the goods imported on temporary
the transfer or sale of a mining right granted permits. This is refundable upon exporting
under the Mines and Minerals Development the goods within the period of the permit.
Act, 1994.
Carbon Tax on Motor Vehicles
Customs and Excise An annual carbon tax on motor vehicles is
The importation of goods into Zambia is charged at the following rates:
subject to import or customs duty. All goods
are categorised as to whether they are raw Motor Vehicle Licence Fees
materials, intermediate or finished goods, and
taxed at rates in the range 0% to 25% on Motor But does Licence
cost, insurance and freight value (or value for Vehicle not exceed Fee p.a.
duty purposes). Engine (Kwacha)
Capacity as
exceeds
Excise duties are levied on specific classes
of goods manufactured in, or imported 0 1 500cc 50 000
into, the country by reference to value
1 500cc 2 000cc 100 000
using pre-determined rates contained in the
Harmonised Commodity Description and 2 000cc 3 000cc 150 000
Coding System plus the customs duty payable 3 000cc + 200 000
on those goods. From 1 January 2011, a
10% excise duty on plastic bags (HS code
3923.21.91) was introduced.

Proposed changes to take effect from 1

January 2013 include:
• The customs duty rate on flat rolled
products of iron or non-alloy steel not clad,
plated or coated, used in the manufacture
of roofing sheets, has been increased from

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- Non-commercial vehicles – 20% per

annum.
- Initial development allowance (10%)
– growers of tea, coffee and banana
plants, citrus fruit trees, rose bushes and
other similar plants or trees.
- Investment allowance – 10% for capital
expenditure on industrial buildings used
for manufacture.
- Industrial building allowance (10% initial
for first year and 5% annual allowance).
Applies to hotels and buildings used for
manufacturing purposes.
- Commercial buildings – 2% annual
allowance based on the original cost.
• There is an exemption from customs
duties for mining machinery imported by
the holder of a mining right. This is only
available on application to the Minister of
Mines and Minerals. Moreover, customs
duty is suspended on machinery and
General Investment equipment used for the manufacture of
trailers (effective 9 February 2007).
Information • Carry forward of losses for tax purposes
– holders of large-scale mining licences
Investment Incentives are allowed to index their Kwacha-
Tax Incentives denominated losses and capital allowances
• Capital allowances: with a factor based on the movements in
- Capital expenditure deductions for exchange rates.
mining equipment, plant, machinery and
other capital expenditure will be claimed Agriculture
at the rate of 25% per annum. The • Income taxed at a reduced rate of 15%
deductions will only be available from the (10% from 1 April 2012) (except for cotton
year that the asset is brought-into-use. lint – the income tax rate on profits from
- Farmworks and improvements allowance export of cotton lint is 35%).
(100%) – clearing, prevention of soil • Dividends paid out of farming exempt from
erosion, farm dwellings with an original tax for the first five years of the distributing
cost of no more than K10 million and company commencing farming.
other permanent works. • VAT deferment on importation of some
- Improvement allowance under ZDA Act agricultural equipment and machinery.
– 100%. • No import duty on irrigation equipment
- Accelerated capital allowances – 50% and reduced duty rates on imports of other
per annum on machinery, plant and farming equipment.
equipment used exclusively for farming, • Reduced customs duty at 5% on premixes,
manufacturing, and tourism or leasing. being vitamin additives for animal feed.
- Plant, machinery and commercial vehicles • Company income tax rate applicable to the
– 25% per annum based on the original manufacture of organic fertilizer has been
cost. reduced from 35% to 15% (effective
- Leased plant, machinery and implements 1 January 2013).
– 50%.

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Manufacturing Zambia’s exports.

• Refund of Zambian VAT on export of - Introduction of a customs duty of 15%
Zambian products by non-resident on old-rolled coils and 25% on deformed
businesses under the Commercial Exporters bars and galvanised cold-rolled coils to
Scheme. cushion the local steel manufactures from
• Guaranteed input tax claim for two years external competition.
prior to commencement of production. • The Manufacturing will remain a key focus
• Income from chemical manufacturing of area of Government. In 2013, Government
fertilizers is taxed at a reduced rate of 15%. intends to:
• Import duty on certain textile machinery has - Facilitate private sector development.
been reduced 0% and all woven fabrics of - Promote value addition to locally
polyester imported for further processing, available raw materials.
all imported sewing threads and grey fabric - Implement targeted investment
has duty reduced to 0%. incentives for entrepreneurs involved in
• Import duty on PVC lining and eyelets used value addition ventures. To this end the
in the manufacture of shoes has been Government proposes to eliminate the
reduced to 5%. following duties effective 1 January 2013:
• Import duty on semi-refined wax and - Customs duty on engines and cranes of
cerechlor used in the manufacturing of all types, conveyor belts, machines for
paint, and on tapioca starch with dextrose cutting, grinding, polishing, drilling and
powder which is used in the manufacture of welding, vacuum and liquid pumps and
biscuits, has been reduced 15%. sprayers of all types.
• Reduced import duty on the following - Excise duty on carbonated drinks and
inputs used in manufacturing: packed water.
- Crude coconut (copra) oil of subheading - Customs duty on locomotives, carriages
15131100 to 5%. and rail traffic control equipment to
- Plates sheets, film, foil and strip, of reduce transportation costs for bulky
unsaturated polyesters of heading products.
3920.63.10 to 5%. • The Government anticipates that some
• Customs duty removed on some building 90 000 jobs will be generated over the next
and packaging materials. Customs duty on five years as a result of these interventions.
selected packaging material and machinery
parts/or components was suspended
to free implying that no customs duty
should be charged as long as those goods
are imported by any person whilst the
suspension is still in force. The goods which
can be imported duty-free are listed in
statutory Instrument No.08 of 2006.
• Suspension of import duty on machinery,
equipment and capital goods for
assembling of motor vehicles, trailers,
motorcycles and bicycles.
• In 2011, Government implemented
measures to assist growth in the sector, as
follows:
- Investment into inland transportation
networks allowing businesses easier
access inputs and markets regionally,
improving the competitiveness of

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Tourism
• Zero-rate of VAT on tour packages
throughout Zambia.
• Zero-rate of VAT on other tourist services
provided to foreign tourists other than
those included in tour packages.
• Refund of VAT for non-resident tourists and
visitors on selected goods.
• No import VAT on all goods temporarily
imported into the country by foreign
tourists.
• Inadequate infrastructure, service delivery
and limited marketing activities addressed
by the development of Kasaba Bay,
Livingstone and Mfuwe tourist areas and
future refund of certain expenses incurred
in showing movies that promote the
country.
• In order to leverage the maximum benefit
from hosting the 2013 United Nations
World Tourism Organisation Conference,
Government proposes to suspend duty up
to 31 December 2013 on the following
goods: going concern.
- New motor vehicles for tourism • Equal treatment of services for VAT
enterprise that offer transport services irrespective of domicile of supplier (i.e.
- New articles and equipment needed to reverse VAT).
furnish or refurbish accommodation and • Cash accounting for VAT for members
catering facilities for businesses licensed of the Association of Building and Civil
as tourism enterprises. Engineering Contractors.
- Allocation of K21.1 billion (maintained • Guaranteed VAT input tax claim for three
from last year) towards marketing months prior to VAT registration for
activities in the tourism sector and businesses that have already commenced
Government has also allocated to Zambia trading.
Wildlife Authority, K15 billion towards its • Reintroduction of voluntary registration
recapitalisation. for compliant businesses whose turnover
• The Government aims to facilitate creation is below K800 per annum subject to
of 300 000 jobs in the tourism sector over conditions stated above.
the next five years. • Registered businesses allowed to re-claim
20% of input VAT paid on petrol.
General Incentives • Exemption of interest component of finance
• Import VAT relief for VAT registered leases from VAT.
businesses on imports of eligible capital • Reduction of VAT rate for investors in
goods (i.e. VAT Deferment). manufacturing, agriculture, commercial
• Zero rate of VAT on export of taxable banking and insurance operating in tax-free
products. zones.
• Guarantee of VAT refund within 30 days of • VAT relief on input tax paid for purchases
lodgement of adequately supported claims made by registered suppliers.
within 30 days of submission of the claim. • Income from non-traditional exports is
• Relief of VAT on transfer of business as a taxed at a reduced rate of 15%.

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 Zambia

Concessions for Companies Operating

Notes:
under the Zambian Development Agency 1. Developers of Industrial Parks will
(ZDA) Act only qualify for these incentives if
• Profits made in designated zones 100% the layout of the development plan
exempt from income tax for five years from is approved by the relevant planning
the date when the approved investment authority, the park to be developed
commences operations, 50% in years six to is at least 15 acres in size, the Park
eight, 25% in years nine to 10 and then 0% will have paved roads and water and
thereafter. electricity supply within the Park is
provided. Government removed, with
• 0% tax on dividends for five years from
effect from 1 January 2012, section
the date when the approved investment 58 of the Zambia Development Act,
commences operations. that provides for granting of additional
• 0% import duty rate on raw materials, incentives for major investment in the
capital goods and machinery (including economy. Under this section, investors
trucks and specialised motor vehicles) for that pledge to invest in excess of
five years. US$10 million could negotiate
• Deferment of VAT on machinery and for additional incentives with the
equipment (including trucks and specialised Government.
motor vehicles).
Exchange Controls
Further concessions for developers and There are no foreign exchange controls in
investors in the MFEZ and Industrial Parks Zambia.
(introduced last year) include:
• Removal of WHT on management fees, Expatriates and Work Permits
consultancy fees, and interest re-payments A holder of an investment licence who invests
to foreign contractors. at least US$250 000, and employs at least
• Zero-rating of supplies to developers of 10 local people, will be entitled to a self-
MFEZ and Industrial Parks. employment or a residence permit and to
• Foreign suppliers to MFEZ and Industrial assistance in obtaining work permits for up to
Parks exempt from reverse VAT charge. five expatriate employees.
• Exemption from customs duty of
equipment and machinery imported for the Trade Relations
development of MFEZ and Industrial Parks. • Memberships – Cotonou Agreement, SADC,
• 0% import duty rate on raw materials, COMESA.
capital goods and machinery (including • AGOA beneficiary country.
trucks and specialised motor vehicles) for • The China Special Preferential Agreement.
five years.
• Deferment of VAT on machinery and Notes:
equipment (including trucks and specialised 1. In order to strengthen and develop the
motor vehicles). existing China-Africa friendly relations and
cooperation, the Chinese Government
has extended a special preferential trade
arrangement to developing countries.
In respect of this arrangement (which
took effect on 1 January 2005), certain
African countries (including Zambia)
benefit from tariff preferences on
selected goods exported to China.

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 Zambia

Interest and Currency Exchange Rates

Overnight Lending Facility Rate:
11.750% (December 2012)
91-day Treasury Bill Rate:
9.500% (December 2012)
(source: Bank of Zambia)

Currency: Zambian Kwacha (divided into

100 ngwee)
ZAR1 = K607.00 (December 2012)
US$1 = K5 252.24 (December 2012)
US$1 = K5 220.00 (2011 average)
(source: Oanda, Bank of Zambia)

Key Economic Statistics

GDP (approx.):
US$19.917 billion (2012 forecast)
US$18.408 billion (2011 estimate)
(source: IMF)

Market Capitalisation (approx.):

K46.677 billion (December 2012)
(source: Lusaka Stock Exchange)

Rate of Inflation:
6.500% (October 2012)
(source: Bank of Zambia)

8.700% (2011 average)

(source: IMF)

Notes:
1. Annual inflation has been estimated at
6.5% in October 2012, compared to the
8.7% in October 2011. The reduction
is primarily as a result of, among other
factors, a statutory requirement for
all local transactions to be effected in
Zambian Kwacha.

15 Guide to Fiscal Information Previous