Zambia: Business Environment

Accounting Rules

Tax Year: The tax year is the calendar year.
Accounting Standards: The Zambia Institute of Chartered Accountants (ZICA) has adopted different reporting and auditing requirements according to the type of company, divided as follows:
- listed companies, public interest entities and government-owned enterprises must use full IFRSs and must be audited.
- “economically significant companies” that are not in the first tier and have annual turnover equal to or exceeding ZMK 20 billion (approximately USD 4 million) can choose between using the IFRS for SMEs or full IFRS, and they must be audited.
- micro and small enterprises with annual turnover below ZMK 20 billion (approximately USD 4 million) will use the Zambian Financial Reporting Standard for Micro and Small Entities, and auditing is not mandatory.
Accounting Regulation Bodies: Zambia Institute of Chartered Accountants (ZICA)
Zambia Ministry of Finance
Accounting Reports: Financial statements must include:
Statement of financial position
Statement of profit and loss and other comprehensive income
Statement of changes in equity
Statement of cash flows
Notes to financial statements

If a company has one or more subsidiaries, it shall prepare consolidated financial statements within six months after the end of its financial year.
Publication Requirements: All companies are required to submit annual returns to the Registrar of Companies within three months after the end of the financial year or one month after the Annual General Meeting if it is held within three months after the financial year.
Public interest entities (PIEs), listed companies and government-owned companies are required to prepare financial statements in accordance with the Companies Act 2017.
Professional Accountancy Bodies: Zambia Institute of Chartered Accountants (ZICA)
Certification and Auditing: Financial statements, except those of private limited companies meeting certain thresholds (i.e. micro and small enterprises with annual turnover below ZMK 20 billion), are required to be audited annually.
Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: Value Added Tax (VAT)
Tax Rate: 16% (standard rate)
Reduced Tax Rate: Zero-rated items include exports and international transport, books and newspapers, foreign aid donations, petrol and diesel, medical supplies and drugs, bread and wheat, agricultural equipment and accessories, solar charge control units and solar streetlights.
The following goods and services are exempt from VAT: health and educational services, supply of water and sewerage services, most public transport services, real estate transactions, financial services (except fee-based banking services, which are subject to VAT at standard rate), insurance services (except property insurance and casualty insurance, which are subject to VAT at the standard rate), basic foods, agricultural supplies.
Other Consumption Taxes: Goods imported into Zambia are normally subject to customs duties.
Certain goods and services, such as alcoholic drinks, tobacco, hydrocarbons, plastic bags, and mobile communication airtime, are subject to excise duties.

Corporate Taxes

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.

Country Comparison For Corporate Taxation

	Zambia	Sub-Saharan Africa	United States	Germany
Number of Payments of Taxes per Year	11.0	36.6	10.6	9.0
Time Taken For Administrative Formalities (Hours)	158.0	284.8	175.0	218.0
Total Share of Taxes (% of Profit)	15.6	47.3	36.6	48.8

Source: Doing Business - Latest available data.

Individual Taxes

Tax Rate

Personal income tax	Progressive rates from 0 to 37.5% (2022)
First ZMW 54,000	0%
From ZMW 54,000 to 57,600	25%
From ZMW 57,600 to 82,800	30%
Above ZMW 82,800	37.5%

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.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of Tax Conventions signed by Zambia
Withholding Taxes: Dividends: 15% (paid to a resident)/20% (paid to a non-resident); Interest: 15% (paid to a resident)/20% (paid to a non-resident); Royalties: 15% (paid to a resident)/20% (paid to a non-resident)
Dividends and interests paid by a mining company or a company listed on the Lusaka Securities Exchange to individual shareholders are taxed at 0%.
Bilateral Agreement: Zambia and Mauritius concluded a Double Taxation Agreement.

Sources of Fiscal Information

Tax Authorities: Overview of Zambia's tax measures in response to Covid-19
Zambia Revenue Authority
Other Domestic Resources: Ministry of Finance

Intellectual Property

National Organisations: Patents and Companies Registration Agency (PACRA) part of the Ministry of Commerce, Trade and Industry
Regional Organisations: Zambia is a member of the African Regional Intellectual Property Organization (ARIPO) and the World Intellectual Property Organization (WIPO).

Legal Framework

Independence of Justice: The constitution and law provide for an independent judiciary. However, though the government largely respected judicial independence, the judicial system is open to influence by the ruling party in cases in which it has an interest.
Checking National Laws Online: List of Zambia's laws from the Parliament's website
Library of the U.S. Congress

Standards

National Standards Organisations: Zambia Bureau of Standards
Integration in the International Standards Network: The Zambia Bureau of Standards is a correspondent member of the International Organisation for Standardisation (ISO). Furthermore, ZABS is the officially designated WTO's Technical Barriers to Trade (TBT) National Enquiry Point (NEP) for Zambia.
Classification of Standards: There are over 2,000 standards in Zambia, of which around 60 that are compulsory. ZABS is in charge of enforcing compulsory standards.
For a list of compulsory standards, click here.
Certification Organisations: Zambia Bureau of Standards

Business Practices

General Information
Opening Hours and Days: In the governmental and private sector offices the normal working hours are from 8.00–13.00 and 14.00– 17.00 between Monday and Friday. Banks operate from 8.15 –14.30 between Monday and Friday. Most banks are closed for business during weekends except the first and last Saturdays of each month when they open from 8.15–11.00. Supermarkets are open every day until 21.00, except Sundays, when they are open until noon.

Public Holidays

New Year's Day	January 1
Women's Day	March 8
Youth Day	March 12
Good Friday	April 19
Holy Saturday	April 20
Easter Monday	April 22
Labour Day	May 1
African Freedom Day	May 25
Heroes' Day	July 1
Unity Day	July 2
National Prayer Day	October 18
Independence Day	October 24
Christmas Day	December 25

Holiday Compensation: When a public holiday falls on a non-work day, Saturday or Sunday, the following Monday is substituted as a public holiday.

Periods When Companies Usually Close

Closure for Easter	End of March/Early April
Closure for Christmas	End of December

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