ZAMBIA Trends and Developments Contributed by: Mulenga Chiteba, Constance Namatai Mwango and Diana Chisale, Mulenga Mundashi Legal Practitioners
Taxpayers with historic VAT liabilities that fall within these expanded criteria now have a clearer and more accessible pathway to seek remission. The revised framework not only advances equity in tax adminis - tration but also enables businesses to resolve legacy VAT exposures, streamline their financial statements, and refocus on ongoing compliance Withholding tax on government securities The government has revised the tax treatment appli - cable to income earned from treasury bills and gov - ernment bonds. In particular, the withholding tax (WHT) deducted from interest payments on these instruments has been increased from 15% to 20%. This adjustment forms part of broader fiscal meas - ures aimed at enhancing domestic revenue mobili - sation and aligning taxation with the government’s medium‑term financial objectives. Under the revised framework, all interest payments arising from the treasury bills and government bonds are now subject to a 20% withholding tax. The tax is deducted at source, meaning that the ZRA receives the tax directly from the paying agent before the inves - tor receives the net interest. The increase in WHT rate is intended to boost govern - ment revenue, as raising the rate from 15% to 20% broadens the fiscal space required to support public expenditure priorities. Additionally, the revision aligns the tax burden on government securities with the broader withholding tax structure applicable to other forms of investment income. With increasing debt‑ser - vicing obligations and budgetary pressures, this meas - ure contributes to a more sustainable revenue profile. Conclusion The 2025 and 2026 tax reforms represent a deci - sive step in Zambia’s ongoing efforts to modernise its fiscal framework, strengthen domestic revenue mobilisation, and promote a more transparent and compliance-driven tax environment. Across multiple tax heads, the amendments reflect a deliberate recali - bration of policy priorities aimed at broadening the tax base while addressing structural weaknesses that have historically constrained revenue collection.
In the betting and gaming sector, the transition from income-based presumptive taxation for online oper - ators to a transaction-based betting levy, alongside the suspension of the excise duty on betting services, signals a clear policy distinction between digital and land-based operations. While this approach enhances revenue certainty and aligns taxation with cash flows within online platforms, it also introduces heightened compliance and reporting obligations that operators must carefully navigate. The introduction of the voluntary disclosure regime under Section 91A marks a notable shift toward co- operative tax administration, incentivising taxpayers to regularise their affairs without the deterrent of pen - alties. Complementing this, the Minimum Alternative Tax ensures a baseline contribution from companies irrespective of profitability, reinforcing the integrity and predictability of the corporate tax base while preserv - ing fairness through its credit mechanism. Further, the expansion of Property Transfer Tax relief for qualifying group reorganisations facilitates genu - ine corporate restructuring without undue tax fric - tion, while strengthened anti-avoidance safeguards preserve the integrity of the tax system. Similarly, the broadened VAT debt remission framework introduces greater clarity, equity, and administrative efficiency, enabling both taxpayers and the revenue authority to address longstanding and uncollectable VAT liabilities in a structured manner. The increase in withholding tax on government securities underscores the govern - ment’s commitment to enhancing fiscal space amid rising expenditure and debt-servicing pressures. Taken together, these reforms reflect a coherent pol - icy direction that balances revenue mobilisation with investment facilitation and compliance enhancement. Their long-term success will, however, depend on clear administrative guidance, consistent enforce - ment by the Zambia Revenue Authority, and proac - tive engagement by taxpayers. As the tax landscape continues to evolve, businesses and investors must remain vigilant, adaptive, and informed to effectively manage their obligations while contributing to a sus - tainable and equitable tax system in Zambia.
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