ZAMBIA Law and Practice Contributed by: Mulenga Chiteba, Constance Namatai Mwango and Diana Chisale, Mulenga Mundashi Legal Practitioners
• 10% of the realised value in respect of a mining right for a mining licence; • 8% of the realised value in respect of a mining right for an exploration licence; • 10% of the realised value in respect of a mineral processing licence; • 8% of the realised value in respect of land; • 8% of the realised value in respect of shares; and • 8% of the realised value in respect of intellectual property. Property Transfer Tax at a rate of 8% of the realised value is also payable on the transfer of any shares in a non-resident holding company that holds at least 10% of the issued shares in a company incorporated in Zambia. The realised value for the transfer of shares in a non-resident company is limited to the value of the effective shareholding in the Zambian entity. “Effective shareholding” is defined as the extent of control or ownership in a company incorporated in Zambia by a company incorporated outside Zambia, expressed as a percentage. 2.8 Other Taxes on Transactions An insurance premium levy is imposed on all insur - ance premiums for all classes of insurance business, excluding reinsurance, at the rate of 5%. The Income Tax Act provides for the following maxi - mum tax rates for turnover received by a person or partnership from the letting of property: • 0% per annum on turnover that does not exceed ZMW12,000; • 4% per annum on turnover between ZMW12,000 and ZMW800,000; and • 16% per annum on turnover that exceeds ZMW800,000. This applies to a landlord or a person or partnership appointed by the Commissioner-General as withhold - ing agent. 2.9 Other Notable Taxes Mining companies are required to pay a mineral roy - alty, which varies depending on the type of mineral, as follows:
• 5% of the norm value for base metals (other than copper, cobalt and vanadium); • 5% of the gross value for energy and industrial minerals; • 6% of the gross value for gemstones; • 6% of the norm value for precious metals; and • 8% of the norm value for cobalt and vanadium. The current mineral royalty regime with respect to copper is as follows: • 4% of the norm value when the norm price of cop - per is less than USD4,000 per tonne; • 6.5% of the norm value when the norm price of copper is USD4,000 or higher per tonne but less than USD5,000 per tonne; • 8.5% of the norm value when the norm price of copper is USD5,000 or higher per tonne but less than USD7,000 per tonne; and • 10% of the norm value when the norm price of copper is USD7,000 or higher per tonne. The mineral royalty is deductible for corporate income tax purposes. 3. Corporations and Non-Corporate Businesses 3.1 Form of Closely Held Local Businesses Closely held businesses mostly operate in corporate form. 3.2 Individual and Corporate Rates The legislation and rules that govern professionals in Zambia do not permit them to practise as corporate entities to the extent that they are separate and dis - tinct entities from their practice. 3.3 Restrictions on Retention of Earnings by Closely Held Corporations There are no rules that prevent closely held corpo - rations from accumulating earnings for investment purposes.
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