ZAMBIA Trends and Developments Contributed by: Mulenga Chiteba, Constance Namatai Mwango and Diana Chisale, Mulenga Mundashi Legal Practitioners
This legislative realignment represents a deliberate policy shift toward separating the treatment of physi - cal and digital wagering platforms. However, it also introduces new compliance considerations for oper - ators, who must now ensure adherence to different statutory charging provisions depending on the mode of operation, as well as satisfy parallel reporting and remittance obligations to the Zambia Revenue Author - ity (ZRA). Voluntary disclosure Definition and scope of voluntary disclosure The Income Tax Act, Chapter 323 of the Laws of Zambia has been amended through the insertion of a new Section 91A, which introduces a formal voluntary disclosure regime for taxpayers generally. Under this provision, a penalty will not be imposed on a person or partnership that voluntarily reports to the Commis - sioner-General any omission, error, or mistake relat- ing to an assessment, provided that the disclosure is made before the irregularity is detected through an audit or by any other investigative means undertaken by the ZRA. This reform represents a significant policy shift toward encouraging self-correction and co-operative compli - ance across the tax system. By removing the threat of penalties in circumstances where taxpayers come forward proactively, the provision creates a strong incentive for businesses operating in all sectors of the economy to regularise their tax affairs and dis - close historical non-compliance without fear of puni - tive sanctions. Impact and enforceability From a practical standpoint, the effectiveness of Sec - tion 91A will depend on how clearly the ZRA articu - lates the procedures governing voluntary disclosures, including the form and content of applications, time - lines for settlement of outstanding tax liabilities, and the treatment of interest accruing on unpaid amounts. Transparent administrative guidance will be essential to ensure that taxpayers can rely on the protection afforded by the provision and to avoid uncertainty as to when a disclosure will be regarded as valid and complete.
The implication is that taxpayers now have a strong reason to conduct regular internal reviews of their financial records and promptly disclose any discrep - ancies. By taking advantage of this opportunity, busi - nesses can avoid costly penalties while demonstrating good faith in meeting their tax obligations. This reform reflects the government’s commitment to creating a fair and co-operative tax environment that prioritises voluntary compliance over punitive measures. Minimum Alternative Tax Definition and scope The Income Tax Amendment Act No 10 of 2025 intro - duces a key reform to Zambia’s corporate tax frame - work by inserting Section 14A into the Income Tax Act. This new provision establishes a Minimum Alternative Tax (MAT), designed to ensure that all companies and partnerships contribute to public revenue, even when reporting minimal profits or tax losses under the nor - mal income tax regime. Under Section 14A, MAT applies to all companies and partnerships, except those that are already subject to presumptive or turnover-based taxation. The tax is calculated on the total turnover of the entity at a fixed rate of 1% per annum, shifting the basis of taxation from profits to total revenue. This ensures a baseline level of contribution from all qualifying entities, regard - A notable feature of the MAT is the credit mecha - nism, which allows amounts paid as MAT to be offset against the normal income tax liability of the entity. This prevents double taxation and ensures fairness for companies that eventually report taxable profits, maintaining alignment with general principles of equity in the tax system. The introduction of MAT addresses a longstanding challenge in corporate taxation: the erosion of the tax base due to companies reporting losses or minimal taxable income. By taxing turnover rather than profit, the government ensures predictable revenue streams, broadens the tax base, and reduces opportunities for aggressive tax planning strategies that may result in negligible tax contributions. less of profitability in a financial year. Credit mechanism and policy rationale
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