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Zambia: Tax measures included in 2020 budget

Zambia: Tax measures included in 2020 budget

The Minister of Finance in late September 2019 presented the 2020 budget. In general, the budget proposes measures that would address the fiscal deficit and reduce the pace of debt accumulation by, in part, the modernization and automation of revenue collection processes.

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Among the tax measures included in the 2020 budget are the following items:

  • Individual taxation—there are no changes proposed to the exempt threshold, the marginal PAYE rate and bands, or the presumptive tax for certain individual taxpayers.
  • Corporate taxation—there are no changes proposed to the corporate income tax rates, to the rules for tax loss carryforwards, or to the deductions for capital allowances.
  • Corporate taxation for mining activities—the mineral royalty rates, withholding tax rates, and tax loss carryforward rules would remain the same; there is a proposed reduction (from 25% to 20%) of the capital allowances deduction with regard to mining equipment and related capital expenditures, and a proposed reduction of the export duty on precious metals and gemstones.
  • Carbon tax for vehicles—the 2020 budget proposes a change with regard to the carbon tax for vehicles entering or leaving Zambia.
  • Transfer pricing—the 2020 budget proposes to allow price premium adjustments; would re-define “actual conditions,” “arm’s length conditions,” and “related or associated persons” terms; and would provide for corresponding transfer pricing adjustment arising from a transaction with both a resident and non-resident related person.
  • Property transfer tax—the 2020 budget proposes to revise the rules relating to share transfers as well as rights that are equivalent to shares.
  • Value added tax (VAT)—the budget proposes a zero-rated (0%) VAT on imported mining-related equipment and machinery, copper cathodes sold locally, gas stoves, other gas cookers, and gas boilers; reduced input VAT claims on diesel and electricity of mining and mineral processing companies; and a standard rate of VAT on ancillary services directly linked to goods in-transit.
  • Customs and excise tax—the 2020 budget proposes to remove the customs duty on liquefied petroleum gas; to introduce customs duty on specified mining-related capital equipment and machinery at 10%; to impose a 5% surtax on the importation of flexible intermediate bulk containers; to increase an excise tax on cigarettes; to streamline the duty-drawback rules; to suspend for three years the customs duty on machinery used for processing solid waste to generate electricity and produce organic fertilizers; and to suspend the customs duty for three years on selected equipment used in aqua culture.


Read a September 2019 report [PDF 1 MB] prepared by the KPMG member firm in Zambia

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