Zambia’s tax system mainly follows a source-based model. Income generated within the country is subject to various taxes levied and administered by the Zambia Revenue Authority (ZRA). For both businesses and individuals, understanding these tax obligations is critical for compliance and effective financial planning.
Below is a detailed look at the different types of taxes in Zambia as of 2025, their rates, and important compliance requirements.
Introduction to the Zambia Revenue Authority (ZRA)
The Zambia Revenue Authority (ZRA) was formed on April 1, 1994, under the Zambia Revenue Authority Act, Chapter 321 of the Laws of Zambia. Its establishment unified the former Departments of Income Tax and Customs and Excise into one agency. The ZRA’s core functions include:
- Assessing and collecting taxes and duties
- Enforcing relevant legal provisions
- Facilitating international trade
- Providing tax policy advisory services
The Commissioner General, appointed by the President, leads the ZRA under the oversight of a Governing Board. Key representatives on the Board include the Secretary to the Treasury and the Governor of the Bank of Zambia.
Direct Taxes in Zambia
1. Corporate Income Tax (CIT)
Corporate Income Tax applies to profits earned by incorporated businesses. In Zambia, the standard CIT rate is 30%. Certain sectors follow different tax rates, as shown below:
| Sector/Business Type | CIT Rate (%) |
|---|---|
| Standard corporate rate | 30% |
| Telecommunications sector | 35% |
| Manufacturing of fertilizers | 15% |
| Farming and agro-processing | 10% |
| Mining operations | 30% + variable tax (0–15%) |
| Banking sector | 35% |
| Export of non-traditional farming goods | 10% |
| Export of other non-traditional products | 20% |
| Value addition to gemstones | 25% |
Mining companies pay a base rate of 30% plus a variable profit tax that can go up to 15%.
2. Personal Income Tax
Personal Income Tax in Zambia follows a progressive rate structure. As of 2025, the annual tax bands are:
| Annual Taxable Income (ZMW) | Tax Rate (%) |
|---|---|
| Up to 61,200 | 0% |
| 61,201 to 85,200 | 20% |
| 85,201 to 110,400 | 30% |
| Above 110,400 | 37% |
Residents are taxed on both Zambian-source income and specified foreign income (e.g., interest, dividends). Non-residents are usually taxed only on income from Zambian sources.
3. Withholding Tax (WHT)
Withholding Tax (WHT) is deducted at the point of payment. Common rates include:
| Payment Type | WHT Rate (%) |
|---|---|
| Dividends (non-mining companies) | 15% |
| Branch profit distributions (foreign firms) | 20% |
| Royalties (non-residents) | 20% |
| Interest (individuals from banks/societies) | 0% |
| Management & consultancy fees (residents) | 15% |
| Management & consultancy fees (non-residents) | 20% |
| Rent | 10% |
| Gaming/lottery/betting winnings | 20% |
In many instances, WHT is a final tax—no further tax filing is required once it has been withheld and remitted.
Turnover Tax vs. Regular Income Tax
Turnover Tax
Turnover Tax is a simplified regime for small businesses. In the 2025 budget, the threshold rose from ZMW 800,000 to ZMW 5 million. The rate increased from 4% to 5%. It applies to gross sales, making it straightforward to calculate because it doesn’t require detailed expense tracking. Turnover Tax is often ideal for small enterprises with limited accounting resources or those with high margins that benefit from a tax on gross revenue rather than net income.
Income Tax (Standard)
Income Tax (the standard system) applies to net profits, requiring more detailed bookkeeping but allowing for deductions of operating costs. It generally favors larger businesses with significant expenses or those exceeding the ZMW 5 million turnover threshold.
Who Should Opt for Which?
- Turnover Tax: Suited for businesses under ZMW 5 million annual turnover, especially if profit margins are high and administrative resources are limited.
- Income Tax: Favors larger enterprises or those with high expenses that need deductions.
Pay As You Earn (PAYE)
PAYE is a method of collecting personal income tax directly from employee salaries. Employers deduct the appropriate tax and remit it to the ZRA monthly. The 2025 PAYE bands are:
| Monthly Income (ZMW) | Tax Rate (%) |
|---|---|
| 0 – 5,100 | 0% |
| 5,101 – 7,100 | 20% |
| 7,101 – 9,200 | 30% |
| Above 9,200 | 37% |
Cash allowances such as housing and utilities form part of PAYE calculations. However, certain benefits (like labor day awards) are exempt.
Value Added Tax (VAT) and Excise Duties
Value Added Tax (VAT)
VAT is a consumption tax charged at each stage of a product’s supply chain. In Zambia, the standard VAT rate is 16%. Key features include:
- Registration Threshold: Businesses with annual taxable turnover above ZMW 800,000 must register.
- Zero-Rating and Exemptions: Some goods and services may be zero-rated or exempt.
- Filing: Typically done monthly, with returns due by the 18th of the following month.
Excise Duties
Excise duties apply to specific goods, whether domestically produced or imported. Examples include:
- Petroleum products: 7%–36%
- Alcoholic beverages: Various rates up to 125%
- Tobacco products
- Carbon Emission Surtax for motor vehicles
Sector-Specific Taxes
Mining Sector
Zambia’s mining sector has specialized taxes:
- Mineral Royalty Tax: 4%–10% for copper, depending on price levels.
- Export Duty on Copper/Cobalt Concentrates: 10%.
- Property Transfer Tax on Mining Rights: 10%.
Telecommunications Sector
As of January 2023, the telecommunications sector moved to a single tax rate of 35%, instead of the previous dual-tiered system.
Agricultural Sector
Tax incentives aim to boost farming activities:
- Reduced CIT Rate: 10% for farming and agro-processing.
- Zero-Rated VAT: On many agricultural inputs and equipment.
- Tax Exemptions: Income from cotton seed production or ginning is exempt (2024–2028).
Other Taxes
Property Transfer Tax (PTT)
Property Transfer Tax applies to land, shares, intellectual property, and mining rights. From 2025, rates are:
- Land: 8%
- Shares: 8%
- Mining Rights: 10%
- Intellectual Property: 8%
Presumptive Taxes
Presumptive taxes help ZRA collect revenue from sectors with less formal accounting:
- Public Service Vehicle Operators: Fixed amounts based on seating capacity (ZMW 1,296 to ZMW 15,552 annually).
- Base Tax: A lump sum for small traders in local markets.
Key Compliance Measures
1. Registration
All businesses must register with the ZRA within 30 days of starting operations. Turnover Tax filings are due by the 14th day of each subsequent month.
2. Record-Keeping
Accurate financial records must be maintained for at least six years. These records are vital for determining tax liabilities and for any potential ZRA audits.
3. Filing and Payment Deadlines
- PAYE: Monthly, by the 10th of the following month.
- VAT: Monthly, by the 18th of the following month.
- Turnover Tax: Monthly, by the 14th of the following month.
- Corporate Income Tax: Annual returns due by September 30 (for a tax year ending on March 31).
Conclusion
Being knowledgeable about the types of taxes in Zambia enables businesses and individuals to remain compliant while optimizing their financial strategies. As the ZRA adopts more electronic systems for filings and payments, tax administration continues to evolve. However, tax laws can change frequently, so consulting with tax experts or contacting the ZRA is advisable for the latest details and personalized guidance.
