Tax rates in Zambia

Company Tax

Various rates depending on the business activity

Tax Rate For Foreign Companies

A foreign resident enterprise that has a permanent establishment in Zambia will be subject to income tax on its Zambian-source income. If there is no permanent establishment, the Zambian-source income of the non-resident company may still be subject to withholding taxes.
Withholding taxes apply on profits distributed by branches of foreign companies at the rate of 20%.

Capital Gains Taxation

Zambia does not levy any tax on capital gains.

Main Allowable Deductions and Tax Credits

Expenses that are not capital in nature and that are incurred wholly and exclusively for the purposes of a business are generally deductible.
Deduction is allowed for start-up expenses. Interest expenses are also deductible, up to 30% of EBITDA.
A specific bad debt is deductible if it can be proved that it is bad or likely to become uncollectible.
Contributions to charitable organizations which are approved or owned by the Zambian government are deductible. All revenue expenditure on experiments or R&D relating to a business is deductible. Contributions to an approved fund established for the benefit of employees are deductible. A fixed deduction of ZMW 2,000 can be claimed when employing a person with a disability.
Taxes are deductible, except for corporate income tax. Losses can be carried forward for five years, while the carryback of losses is not allowed. In any case, losses can only offset income arising from the same source.

Other Corporate Taxes

A transfer tax applies on several items, including: land and buildings (5% of the realised value or the open market value), shares (5% of the higher of the open market value or nominal value), transfer of a mining right or of a mineral processing licence (10%), IP rights (5%).
The Patents and Companies Registration Agency (PACRA) applies a registration fee of 2.5% to increases in the authorised share capital of Zambian companies.
Employers are required to pay monthly a skill development levy equal to 0.5% of the gross emoluments payable to employees.
Employers must match employees’ contributions to the National Pension Scheme Authority (NAPSA), capped at the lower of 5% of annual basic salary or ZMW 1,221.8 per month (in 2022), whereas contributions to the National Health Insurance Scheme are at 1% of the salary paid.
A mineral royalty tax regime is applied in Zambia.

Other Domestic Resources

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

Though no personal allowances are provided, the first ZMW 54,000 of taxable income is subject to income tax at 0% (2022).
Contributions to charitable organizations which are approved or owned by the Zambian government are deductible (capped at 15% of the taxable amount).
Business expenses are normally deductible if they are not capital in nature and are incurred wholly and exclusively for the purposes of the business.

Special Expatriate Tax Regime

An individual will be treated as Zambian resident unless present in Zambia for a temporary purpose only and not with a view or intent of establishing residence in Zambia. Any individual present in Zambia for 183 days or more in a charge year will be treated as a Zambian resident for that fiscal year.
Zambia adopts a source-based system for the taxation of income and, in principle, the same rates apply to both Zambian and non-Zambian residents. Other Zambian-source income of non-Zambian residents could be subject to withholding tax.