Introduction: A Fundamental Shift in Tax Compliance

For years, the relationship between Zambia’s taxpayers and the Zambia Revenue Authority (ZRA) has been defined by fear. Fear of audits. Fear of penalties that multiply faster than the original liability. Fear of prosecution for honest mistakes made years ago. That dynamic has now changed fundamentally. The government has extended a permanent olive branch to every taxpayer who has ever made an error, omission, or miscalculation in their tax filings.

The Voluntary Disclosure Programme (VDP) introduced through the Income Tax (Amendment) (No. 2) Act, 2025, and effective from 1 January 2026, represents one of the most significant shifts in Zambian tax administration in a generation. Unlike temporary amnesty programmes that expire after a fixed window, this VDP has no end date. It is a permanent feature of Zambia’s tax landscape, offering a complete waiver of penalties for taxpayers who voluntarily come forward to correct past mistakes before the ZRA discovers them through an audit or investigation.

This guide explains everything businesses and individuals need to know about the VDP: which taxes it covers, what it excludes, how to apply, and why waiting is a strategic error.     What Is the Voluntary Disclosure Programme?

The VDP is a statutory mechanism that allows taxpayers to disclose previously unreported tax liabilities or correct errors in past filings in exchange for a complete waiver of penalties. The programme is codified in Section 91A of the Income Tax Act, which explicitly waives penalties where a taxpayer voluntarily discloses an omission, error, or mistake before the ZRA discovers the issue through an audit or other means.

The key distinction between the 2026 VDP and previous amnesty efforts is its permanence. Earlier programmes had fixed deadlines, creating a rush of last-minute disclosures followed by a return to opacity. The permanent VDP signals a different philosophy: Zambia is moving toward a trust-based tax administration model where transparency is rewarded consistently, not just during periodic amnesty windows.

What Has Changed: From Discretion to Automatic Relief

The most important change introduced by the 2026 reforms is the removal of discretion from the penalty waiver process. Previously, even when a taxpayer voluntarily disclosed an error, the waiver of penalties remained at the discretion of the ZRA. This created uncertainty. Taxpayers could not be certain whether coming forward would result in relief or continued penalties, so many chose to remain silent.

Under the new VDP, the waiver of penalties is automatic for qualifying disclosures. This is not a policy statement or a guideline. It is a statutory guarantee. Section 91A of the Income Tax Act now mandates the penalty waiver where the taxpayer voluntarily discloses before the ZRA has initiated an audit, investigation, or other enforcement action.

However, the automatic waiver applies only where the disclosure is genuinely voluntary. Disclosures made after receiving a notice of audit or inquiry do not qualify. The timing is everything. Taxpayers who wait until the ZRA has opened an audit file have lost their opportunity for penalty relief.

Taxes Covered by the VDP

The VDP covers a broad range of direct taxes, including Corporate Income Tax (CIT), Transfer Pricing adjustments, Withholding Tax (WHT), Pay-As-You-Earn (PAYE), and Personal Income Tax. This means that virtually any error or omission in income tax filings can be corrected under the programme, regardless of whether the taxpayer is an individual, a small business, or a multinational corporation.

For companies, the inclusion of Transfer Pricing is particularly significant. Transfer Pricing documentation errors and related-party transaction misstatements have been a major focus of ZRA audits in recent years. The VDP allows companies to correct these errors without facing the substantial penalties that would otherwise apply.

For employers, the coverage of PAYE means that historical under-deductions or late remittances can be regularized. For individuals, undisclosed rental income, business profits, or other earnings can be declared without penalty. The programme even extends to previously unreported or underpaid taxes linked to gaming and betting activities, bringing a historically under-declared sector into the formal tax net.

What Is Not Covered: The Critical Exclusions

The VDP has significant limitations that every potential applicant must understand. Value Added Tax (VAT) and Customs duties are not directly covered by the programme. This is not a minor detail. VAT and Customs represent substantial revenue streams for the government, and errors in these areas cannot be corrected through the streamlined VDP process.

However, the ZRA has signaled a willingness to extend favourable treatment under discretionary provisions for VAT and Customs disclosures. This means that while there is no statutory guarantee of penalty relief for VAT and Customs, taxpayers who voluntarily disclose errors in these areas may still receive favourable consideration. The outcome is not guaranteed, but coming forward before discovery is always better than waiting for an audit.

Another critical exclusion is that the VDP does not waive the principal tax liability itself. Taxpayers must still pay the full amount of tax that was originally due. The waiver applies only to penalties and, in some cases, interest. The programme allows taxpayers to regularize their affairs without the punitive surcharges that would otherwise apply, but it is not a forgiveness of the underlying tax obligation.

The Rental Income Campaign: A Pre-VDP Warning

In October 2025, before the permanent VDP took effect, the ZRA launched a targeted campaign urging landlords to voluntarily declare their rental income by December 2025. ZRA Commissioner General Dingani Banda emphasised that the authority has access to multiple government databases, making tax evasion increasingly difficult to hide. The message was clear: voluntary compliance allows taxpayers to regularize their obligations without facing fines or legal action, while waiting for discovery invites enforcement.

This campaign foreshadowed the broader VDP. The government’s strategy is to encourage voluntary compliance through incentives before resorting to enforcement. Taxpayers who ignore these opportunities face not only penalties but also the risk of credit bureau reporting. The ZRA will begin reporting unpaid tax liabilities to Credit Reference Bureaus, potentially affecting credit ratings and access to financing.

How to Apply for the VDP

The application process for the VDP is structured but accessible. Taxpayers must submit a voluntary disclosure to the ZRA before any audit, investigation, or enforcement action has been initiated. The disclosure must be complete and accurate, identifying the specific errors or omissions and calculating the additional tax liability.

Upon receiving a qualifying disclosure, the ZRA will assess the additional tax due. Penalties are automatically waived under Section 91A, and in many cases, interest relief may also be granted. The taxpayer must then pay the principal tax liability in full or enter into a valid Time to Pay Agreement with the ZRA.

It is crucial to understand that defaulting on a Time to Pay Agreement has severe consequences. If the taxpayer fails to meet the payment terms, any waived penalties and interest may be reinstated and become due immediately. The relief is conditional on full compliance with the agreed payment schedule.

Taxpayers uncertain about their historical compliance should conduct an internal review before approaching the ZRA. Engaging a tax professional to review past filings and identify potential issues is strongly advisable. Once the ZRA has opened an audit file, the opportunity for VDP relief is permanently closed.

Strategic Implications for Businesses and Individuals

The introduction of the permanent VDP represents a strategic opportunity for Zambian taxpayers to clean their compliance records at minimal cost. For businesses preparing for a sale, a merger, or a financing round, having a clean tax history is essential. The VDP allows companies to address historical issues before they become due diligence problems.

For businesses operating in sectors with historically low compliance, such as property rental, gaming, and informal trading, the VDP offers a path into the formal economy without the punishment that would otherwise apply. The government’s broader goal is formalization, and the VDP is a key tool in that strategy.

The programme also reduces the value of waiting. In previous amnesty programmes, taxpayers could gamble on whether a future amnesty would offer better terms. With a permanent programme offering automatic penalty relief, there is no advantage to delay. Every day that passes without disclosure is a day when the ZRA might initiate an audit and close the window permanently.

Risks of Non-Compliance: The Enforcement Alternative

For taxpayers who choose not to come forward voluntarily, the alternative is increasingly unattractive. The ZRA has demonstrated its enforcement capacity in recent months, securing convictions and recovering substantial sums. In January 2026, United Chemicals Zambia Limited pleaded guilty to eight counts of furnishing false returns and statements, with the ZRA recovering over K10.7 million in evaded VAT. In March 2026, the ZRA arrested business mogul Shawki Fawaz over alleged tax offences involving more than K100 million.

These enforcement actions sends a clear signal. The ZRA has the data, the legal authority, and the political backing to pursue tax evaders aggressively. The VDP is the safe harbour. Taxpayers who ignore it face prosecution, asset seizure, and reputational damage that can destroy businesses and careers.

 Conclusion: The Olive Branch Will Not Remain Forever

The Voluntary Disclosure Programme is permanent in law, but the opportunity it represents is not unlimited in practice. The automatic penalty waiver applies only to disclosures made before the ZRA initiates an audit or investigation. For taxpayers with historical errors or omissions, the clock is already ticking. Every day increases the risk that the ZRA will select their file for review.

The VDP is a genuine olive branch, but it is extended to those who reach for it voluntarily. Those who wait, hoping that their errors will never be discovered, are gambling against a ZRA that has never been better equipped or more motivated to find them. The penalties for waiting are severe. The benefits of coming forward are clear: a clean record, a clear conscience, and the certainty that past mistakes will not destroy future opportunities.

The permanent olive branch is in your hands. The question is not whether to take it, but when.