How To Register A Company As A Foreigner In Zambia – A Step By Step Guide

One of the most important considerations for any entrepreneurs is how they can and if there are opportunities to expand their business beyond their current region and home country and it’s important.

If you look at some of the greatest companies in the world, you will notice that they do not only operate in one country; They are global.

To build a great business, you have to think beyond your current country and operating environment.

In this article, we are going to walk you through the process of how you can register your company as a Foreigner in Zambia.

Whether you want to expand your current business to Zambia, or start afresh, this article is for you.

Brief overview of Zambia’s business environment for foreigners

Zambia, located in the heart of Southern Africa, offers promising opportunities for foreign entrepreneurs seeking to establish a presence in the region. The country boasts a stable political environment, favorable economic policies, and abundant natural resources, making it an attractive destination for foreign investment in any sector of the economy.

Zambia’s government actively encourages foreign direct investment (FDI) and has implemented various initiatives to facilitate business activities for foreigners. The country has a liberalized economy, characterized by free-market principles, which ensures a competitive and conducive environment for both local and international businesses.

Foreign entrepreneurs in Zambia can benefit from a range of advantages, including access to a growing consumer market, a skilled labor force, and well-developed infrastructure. The country’s strategic location also offers easy access to neighboring markets within the Southern African Development Community (SADC) region including Zimbabwe, the DRC, Tanzani, Malawi, South Africa and many others.

The Importance of Company Registration for Foreign Entrepreneurs

Company registration is a crucial step for foreign entrepreneurs looking to establish a business in Zambia. It not only provides a legal framework for conducting business activities but also offers numerous benefits and protections. Here are some key reasons why company registration is essential:

1. Legitimacy and Credibility: Registering a company gives foreign entrepreneurs legitimacy and credibility in the eyes of potential partners, customers, and stakeholders. It demonstrates commitment to complying with the laws and regulations of Zambia, enhancing trust and confidence in the business.
2. Limited Liability Protection: Registering a company as a separate legal entity provides limited liability protection to its owners. This means that the personal assets of shareholders or directors are generally shielded from business liabilities, protecting their personal finances.
3. Access to Financing: Registered companies have greater access to financing options, including bank loans, venture capital, and government grants. Financial institutions and investors are more inclined to support registered businesses due to the transparency and accountability associated with formal registration.
4. Legal Safeguards: Company registration ensures that the business operates within the legal framework of Zambia. It provides legal safeguards, such as protection of intellectual property rights, enforceable contracts, and access to legal remedies in case of disputes.
5. Tax Compliance and Incentives: Registering a company enables foreign entrepreneurs to fulfill their tax obligations and take advantage of potential tax incentives and benefits offered by the Zambian government. This can lead to cost savings and improved profitability in the long run.
6. Business Opportunities: Registering a company opens up opportunities to engage in government contracts, participate in tenders, and collaborate with local companies. It allows foreign entrepreneurs to actively contribute to Zambia’s economic growth and benefit from its emerging sectors.

Understanding the Legal Framework

Companies in Zambia are registered through what is called the Patents and Company Registration Agency aka PACRA. This is the agency that is responsible for ensuring that all companies are registered and compliant.

When registering as a foreigner; you have the option to register your company either as a Foreign Subsidiary or a Private Limited company.

There is a difference between registering your company as a Foreign Subsidiary and a Private Limited company in Zambia. Understanding these distinctions is essential to determine the most suitable structure for your business. Let’s compare and contrast the two options:

Foreign Subsidiary:

• A Foreign Subsidiary is a distinct legal entity that is wholly or partially owned by a foreign parent company. It operates as a separate entity from its parent company.
• This option is ideal if you want to establish a subsidiary of your existing foreign company in Zambia, leveraging the expertise, resources, and reputation of your parent company.
• The liability of the foreign parent company is generally limited to the extent of its investment in the subsidiary, providing a level of asset protection.
• A Foreign Subsidiary is subject to compliance with Zambian laws and regulations, including filing annual financial statements, tax returns, and other corporate obligations.
• Registering as a Foreign Subsidiary allows you to benefit from the established reputation and market presence of your parent company, facilitating business operations and attracting potential clients and partners.

Private Limited Company:

• A Private Limited company, also known as a Limited Liability Company (LLC), is an independent legal entity owned by shareholders. The liability of shareholders is limited to their shareholding in the company.
• This option is suitable if you want to establish a new business entity in Zambia, distinct from your existing foreign company, focusing on local market opportunities and operations.
• A Private Limited company provides flexibility in terms of ownership and management structure. It allows for multiple shareholders and directors, enabling effective corporate governance.
• The company’s financial information is generally separate from that of its shareholders, ensuring financial privacy and protection.
• Registering as a Private Limited company requires compliance with Zambian company law, including the filing of annual financial statements, tax returns, and adherence to corporate governance principles.
• For a Private Limited Company, you will also need to have a local director in the company who should be a Zambian Citizen.

In summary, while both Foreign Subsidiaries and Private Limited companies provide legal protection and separate liabilities from their owners, the main difference lies in their ownership structure and purpose. A Foreign Subsidiary allows you to extend the operations of your existing foreign company, while a Private Limited company enables you to establish a new and independent entity. Consider your specific business objectives, operational requirements, and long-term strategies to determine which option aligns best with your needs and aspirations in Zambia.

Permits Required

If you are going to be coming in as an investor, you will also need an Investment License Obtained from the Zambia Development Agency and an Investors Permit. One of the requirements for the Investor’s Payment is demonstration of capacity to invest at least $250 000 in the form of cash or capital equipment in the country.

If you are going to be bringing your employees from your parent country, they will also be required to have employment permits for working in Zambia; These are valid for two years.

A Step-by-step guide to the company registration process

1. Company Name Clearence A name search has to be conducted to confirm if the desired company name is available and not already in use. This is done through PACRA.
2. Fill in the Form 3 Once the name is cleared, the client will be required to fill an Application for Incorporation, which is called the Form 3. The form three comprises of information on the company, the details of the directors and the activities of the company.
3. Get The Certificate and Documents Once everything is approved, you will receive the certificate of incorporation and the certificate.

Additional Steps after Registration:

1. Acquire a Tax Identification Number (TPIN): File a certificate of incorporation and register with the Zambia Revenue Authority (ZRA) to obtain a Tax Identification Number (TPIN).
2. Register with the National Pension Scheme Authority (NPSA): If you are an investor, register with the NPSA by filing a certificate of incorporation.
3. Clear Business Levy: Prior to commencing business operations, clear the business levy with the Lusaka City Council or the local council where your business will be operating from.
4. Register for Value Added Tax (VAT): Register for VAT with the Zambia Revenue Authority if your business involves manufacturing goods and the value of taxable supplies exceeds the specified thresholds.
5. Acquire an Investment Registration Certificate: Investors who have invested at least $250,000 can obtain an investment registration certificate from the Development Agency of Zambia. Inspection of premises is conducted to ensure alignment with business activities.
6. Open a Bank Account: Once a foreign taxpayer registration ID is obtained, investors can open a bank account with any of the banks in Zambia.
7. Obtain Necessary Licenses and Permits: Depending on the nature of the business, acquire relevant licenses and permits. For example, businesses involved in manufacturing and handling consumables may require health clearance, food hygiene licenses, and food handler’s medical certificates.
8. Obtain a Fire Clearance Certificate: All businesses need to obtain a fire clearance certificate, issued by the respective council based on the business location. The certificate is renewable annually.

Additional Clearances:

• Business Operation Permit: Issued by the council upon completion of business premises and payment of applicable fees.
• License to Manufacture Excisable Goods: Obtained from the Revenue Authority of Zambia for businesses involved in manufacturing and importing excisable goods.

Conclusion

Registering your company in Zambia will open your business up to key opportunities for growth of your business.

The best way to go about the process is to work with a local agent who can help you make the process seamless for you.

If you want growth, invest in Zambia.