ZAMBIA Law and Practice Contributed by: Joseph Jalasi, Mailesi Undi, Chama Simbeye and Wana Chinyemba, Dentons Eric Silwamba, Jalasi & Linyama Legal Practitioners
9. Tax 9.1 Taxation of Business Activities
referred to as the Minimum Alternative Tax (MAT), in cases where the normal corporate income tax liability is less than this threshold. In effect, the higher of the normal income tax or the alternative minimum tax will apply, ensuring that all entities contribute a fair share to national revenue. The AIT does not apply to entities already subject to the turnover tax regime or specific presumptive tax schemes. Exemptions may also extend to sectors or businesses that operate under approved tax incen - tive frameworks, such as those registered under the Zambia Development Agency (ZDA) or Multi-Facility Economic Zones (MFEZs), where special investment incentives prevail. 9.2 Withholding Taxes on Dividends, Interest, Etc All dividend income from non-Zambian sources of a Zambian resident company is subject to corporate income tax as a separate source. Where the dividend income received is from another Zambian resident company, the withholding tax deducted on the divi - dend payment should represent the “final tax”, and the Zambian resident company receiving the dividend is not subject to an additional corporate income tax liability. Non-resident shareholders are subject to a 20% with - holding tax on the payment of dividends in Zambia unless otherwise determined by a relevant double- taxation treaty. Dividends are payable at the board of directors’ dis - cretion as long as the company is solvent. There is no compulsory dividend payment and no capital tax pay - able on the minimum share capital of the company. There is no investment tax on minimum share capital. The only statutory fee payable on minimum capital is when a company’s share capital is increased; this carries a fee of 2.5% of the increased share capital plus ZMW175. Dividend payments are not tax-deductible. 9.3 Tax Mitigation Strategies Tax planning methods include using related third-party entities, subject to arm’s length transaction bench -
The ZRA is the corporate body responsible for imple - menting tax laws. The principal taxes that a business must pay include: • income tax; • value-added tax; An entity that derives its income from Zambia or a source deemed to be income from Zambia is required to file income tax returns. These take two forms: pro - visional and annual income tax returns. Companies are generally taxed at a corporate rate of 30% on profits. However, companies operating in certain sectors have different corporate tax rates. The agricultural sector and non-traditional exports are taxed at 15%. Telecommunications companies are taxed at 35%. Turnover tax and rental income tax of K12,000 per annum will be taxed at 0%. Income from value addition to gemstones through lapidary and jew - ellery facilities will be taxed at 25%. Companies listed on the LuSE also pay the incentive tax rate of 33% on profits. There are no differences in the manner in which a local subsidiary and a local branch of a non- resident may be taxed. However, profit repatriated to the foreign parent company is subject to a 20% with - holding tax. If the foreign parent company is located in a country with which Zambia has a double-taxation treaty, the relevant provisions of the treaty regulating profit attribution will apply. • withholding tax; and • property transfer tax. The government of Zambia, through the Income Tax (Amendment) Act No 10 of 2025, introduced an Alter - native Income Tax (AIT) regime aimed at broadening the tax base and ensuring equitable contribution from all business entities. The measure responds to per - sistent trends where some companies, despite gen - erating substantial revenue, consistently declare little or no taxable profit due to various deductions and allowances. Under the new regime, companies and partnerships are required to pay a minimum tax of 1% on turnover,
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