Incentives for Mining
Mining companies have additional incentives in addition to general ones as follows:
Period of carry forward of mining losses has been extended from 5 to 10 years
Withholding tax on interest, rent, consultancy, royalties and dividends is only 15 percent
The restriction of offsetting losses against profits which is limited to 20 percent for mines with a common owner have been removed so that 100 percent of the losses can be offset
Duty free importation of capital equipment and utility vehicles, capital allowance increased to 100 percent
Input tax claim for five years on pre-production expenditure for exploration companies in the mining sector
Zero rate on mining products for export
Please note that there is also a 30 percent corporate tax for mining.
Incentives for Agriculture
Agriculture companies have the following specific incentives:
Dividends payable to farmers are tax exempt for the first 5 years of operation
Fifteen (15) percent income tax on farming profits
Capital expenditure on farm improvements qualifies for an allowance of 20 percent per annum for each of the first five years
Substantial rate of depreciation allowing farm machinery to be written off against tax
Special development allowances for growing certain crops: tea, coffee, bananas, citrus, and other similar trees
Input tax claim tax claim for three months prior to VAT registration for businesses that have already commenced trading
Reduction of VAT rate for in tax free zones
Selected agricultural equipment and accessories – zero rated for VAT: two wheel tractor and accessories; tractors up to 60 horse power; ploughs; harrows; disc harrows; planters; seeders; rippers; sub-soilers; cultivators; pump sets; treadle pumps; hip pumps; hand pumps; knap sack sprayers; and suction, delivery and lay flat hoses. other: hammer mills
Incentives for Manufacturing
Manufacturing companies have additional incentives as follows:
Refund of Zambian VAT on purchase and export of Zambian products by non-resident businesses under the commercial exporters scheme
Input tax claim for three months prior to registration for businesses that have already commenced trading
Input tax claim for two years prior to commencement of production
Duty on a number of raw materials has been reduced from 15 to 5 percent
Five-Fifteen percent duty on some categories of industrial machinery (e.g. industrial furnaces and ovens, printing machinery and machinery used in food production)
Custom duty rate on selected items used on manufacturing process has been reduced
Incentives for Tourism
Tourism companies have additional incentives as follows:
Zero rate – tour packages
Zero rate – other tourist services
Refund to non-resident tourists and visitors
No import VAT on all goods temporarily imported into the country by foreign tourists
Export Incentives
Incentives for exporting companies include:
Fifteen percent corporate tax instead of the normal tax bands
Special exemption from duty and VAT on imports and machinery is offered to exporters of non-traditional products
Multi-Facility Economic Zones (MFEZ) and Industrial Parks
No withholding tax on management of fees, consultancy, and interest repayments to foreign contractors
Supplies to developers of MFEZ and industrial parks- zero rated
Foreign supplies to the MFEZ and industrial parks exempt from reverse VAT charge
Raw materials, equipment and machinery imported for the development of MFEZ and industrial parks exempt for from customs duty
Zero percent tax rate on dividends for companies operating in MFEZ for a period of 5 years
Zero percent tax rate on profits for companies operating in MFEZ for a period of 5 years; year 6-8 (50 percent of profits taxed); year 9-10 (75 percent of profits taxed)
Taxation
The tax rates in Zambia are as follows:
Standard: 35 percent
Mining: 30 percent
Farming: 15 percent
Non Traditional Exports: 15 percent
Personal Income Tax: 25 to 35 percent
VAT: 16 percent
Withholding Tax: 15 percent on rental income, consultancy, dividends and royalties for non-residents