ZAMBIA Law and Practice Contributed by: Mulenga Chiteba, Constance Namatai Mwango and Diana Chisale, Mulenga Mundashi Legal Practitioners
2.4 Loss Relief Losses that are not of a capital nature are deductible from a business’s gains or profits. For mining operations or businesses involved in the generation of electricity, losses may be carried for - ward from year to year, for a maximum of ten years. For all other businesses, such losses can only be car - ried forward for a maximum period of five years. 2.5 Deduction of Interest The deductibility of gross interest expense is limited to 30% of a company’s tax earnings before interest, tax, depreciation and amortisation (EBITDA) and can be carried forward for any period as there is currently no carry-forward limit. 2.6 Consolidated Tax Grouping Consolidated tax grouping is not permitted under the Income Tax Act. Groups of companies cannot utilise separate company losses. 2.7 Capital Gains There is no capital gains tax in Zambia; however, if a resident or non-resident sells property in Zambia, the provisions of the Property Transfer Tax Act, Chapter 340 of the Laws of Zambia will apply. “Property” is defined as: • any land in Zambia; • a share issued by a company incorporated in Zam - bia or a share issued by a company incorporated outside Zambia that directly or indirectly owns at least 10% of the shares in a company incorporated in Zambia; • a mining right issued under the Minerals Regula - tions Commission Act, 2024; • a mineral processing licence issued under the Min - erals Regulations Commission Act, 2024; and • intellectual property. “Share” is defined to include stock, certificate, warrant or equivalent rights, and an interest in a mining right or an interest in a mineral processing licence. The tax rates are as follows:
• casino games (brick and mortar) – ZMW5,000 per table; and • gaming machines – ZMW500. For the purposes of betting and gaming, “net pro - ceeds” means the gross proceeds minus sums paid out for the prizes, while “gross takings” means the total amount staked by players minus the winnings payable and redemptions by the players.
2. Corporate Tax Regime 2.1 Taxable Profits
Taxable profits are calculated after deducting any losses and expenditure incurred in a charge year wholly and exclusively for the business, other than those of a capital nature, and/or any expense that may be allowable in terms of the Income Tax Act, Chapter 323 of the Laws of Zambia (the “Income Tax Act”). Taxable profits are based on the accounting profits realised after taking into account revenue expenses wholly and exclusively incurred in earning revenue. Capital allowances are deductions that businesses can claim for wear and tear of qualifying fixed assets bought and used in a trade or business. Qualifying fixed assets include: • buildings; • implements; • plants and machinery; • fixtures and fittings; and • motor vehicles and several other capital assets The Income Tax Act permits a “deduction for research” as an incentive. This applies to expenditure, not of a capital nature, that is incurred by a business in a charge year on experiments or research relating to the business. 2.3 Special Incentives used in the production of income. 2.2 Technology Investments There are no other special incentives that apply to particular industries, transactions or businesses.
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