There are rules in Zambia requiring companies to disclose information with regard to related parties.
The Zambian income tax law was amended in 2018 to require companies to report certain changes made within a corporate group. Specifically, Section 54 of the income tax law provides that a company, within one month after another company becomes related to it, must report this information (including information identifying the newly related company). Failure to comply with this reporting requirement subjects the company and its officers to a penalty assessment.
Accordingly, when a resident or non-resident company becomes related to a Zambian company, whether by a direct or indirect change in shareholding, details of this transaction must be disclosed to the Zambia Revenue Authority (ZRA) within a month of the change. For these purposes, the following are considered related companies:
*Two persons are connected with each other if: (1) one is an individual and the other is that person’s spouse, a relative of that person or of that person’s spouse, or the spouse of such a relative; or (2) one is a trustee of a settlement and the other is a person who, in relation to that settlement, is a settlor, or a person who is connected with a person defined by (1).
A Zambian company must submit the following information to the tax authority within 30 days of a change in relationship:
The corporate income tax return also includes a section relating to the sale of land, buildings, mining rights, and unlisted shares during the year, and in addition to formally submitting details of change in relationships within a group of companies, a disclosure must be made through the submission of the annual corporate income tax return.
Property transfer tax implications
In addition to the related-party notification requirements, amendments to the Zambian property transfer tax law (also made in 2018) provide that the property transfer tax now arises when non-resident shareholders of a Zambian company, that directly or indirectly hold a minimum shareholding of 10%, transfer or dispose of shares, even when a change in ownership occurs outside of Zambia.
Read a March 2020 report [PDF 426 KB] prepared by the KPMG member firm in South Africa
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