ZAMBIA Law and Practice Contributed by: Joseph Jalasi, Mailesi Undi, Chama Simbeye and Wana Chinyemba, Dentons Eric Silwamba, Jalasi & Linyama Legal Practitioners
marking under the Zambian law on transfer pricing. Other strategies include setting up holding compa - nies in countries with favourable double-taxation treaties with Zambia. Last but not least, the contribu - tion can be included in existing entities as equity to take advantage of PTT exemptions. Another option is investing in Multi-facility Economic Zones (MFEZ), which now offer concession corporate tax rates for those FDI companies that export 50% of their prod - uct. These rates are as follows: • 0% tax for a period of ten years from the first year of commencement of works in an MFEZ or indus - trial park on dividends declared on profits made on exports by companies operating in these economic zones under the Zambia Development Agency Act No 17 of 2022 (ZDA Act); • 0% tax for a period of ten years from the first year of commencement of works in an MFEZ or indus - trial park on profits made on exports by companies operating in these economic zones under the ZDA Act; for years 11 to 13, only 50% of profits should be taxed; and for years 14 and 15, 75% of profits should be taxed; and • a reduced threshold of USD50,000 for a Zambian citizen to qualify for incentives provided under the ZDA Act. 9.4 Tax on Sale or Other Dispositions of FDI There is no capital gains tax in Zambia. However, PTT is charged on the realisable value of the transferred property. The Property Transfer Tax Act Chapter 340 defines “property” as: • any land in Zambia; • a share issued by a company incorporated in Zambia or a share issued by a company incorpo - rated outside Zambia where the company directly or indirectly owns at least 10% of the shares of a company incorporated in Zambia; and • a mining right issued under the Mines and Minerals Development Act, 2015, or an interest therein.
The rate of tax effective 1 January 2025 is: • 10% of the realised value in respect of a mining right; • 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. PTT at a rate of 5% of the realised value is also payable on the transfer of any shares in a non-resident holding company holding 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. 9.5 Anti-Evasion Regimes In Zambia, there are predominant anti-avoidance pro - visions. That is, if the commissioner-general of the ZRA has reasonable grounds to believe that: • the main purpose or one of the main purposes of any transaction is the avoidance of – or reduction of liability for – tax for any charge year; or • that the main benefit that might have been expect - ed to accrue from the transaction within the three years immediately following the completion thereof was the avoidance of – or reduction of liability for – tax, the commissioner-general may (if this is determined to be just and reasonable) direct that such adjustments be made regarding liability for tax as are considered appropriate to counteract the avoidance or reduction of liability for the tax that the transaction would oth - erwise effect.
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