Zambia: Tax measures included in 2021 budget

Zambia: Tax measures included in 2021 budget

The Minister of Finance in late September 2020 presented the 2021 budget that generally aims to stimulate growth of the domestic economy and focuses on socio-economic and other challenges caused by the coronavirus (COVID-19) pandemic.


Among the tax measures included in the 2021 budget are the following items:

  • Individual taxation—There is a proposed increase to the exemption threshold, and a tax credit for “differently abled” persons. There would be no change to the PAYE rate and rate bands or to the presumptive tax for certain individual taxpayers.
  • Corporate taxation—There is a proposed decrease to the tax rates for hotels and lodges on accommodation and food services, and a proposal to make changes regarding certain capital allowances deductions. There would be no changes to the tax loss carryforward rules.
  • 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 5% to 0%) of the import duty on copper and cobalt concentrates, and companies would be allowed to apply for an export duty exemption on copper and cobalt concentrates due to COVID-19.
  • Carbon tax for vehicles—The 2021 budget proposes no changes with regard to the carbon tax for vehicles entering or leaving Zambia.
  • Transfer pricing—The 2021 budget proposes to provide for country-by-country (CbC) reporting for multinationals operating in Zambia, and would increase the transfer pricing documentation threshold to ZMW 50 million (from ZMW 20 million) for local companies.
  • Property transfer tax—The 2021 budget proposes to revise the rules relating to realizable value on indirect transfer of shares, trusts approved as public benefit organisations, exchange rate on foreign currency denominated transactions, and property transfer tax exemption on indirect transfer of shares.
  • Value added tax (VAT)—The budget proposes a zero-rated (0%) VAT for certain agriculture tractors and for equipment used for full body sanitization; the introduction of mandatory electronic payment machine and imposition of a fine for failure to comply; clarifications on “place of supply of goods” and commencement of the two-year period within which a tax assessment could be made due to incorrectness or inadequacy of a return; and increased penalties for false returns, statements, and evasion of tax.
  • Customs and excise tax—The 2021 budget proposes import and export duty changes to the floriculture and horticulture sectors, copper ores and concentrates, crocodile skins, refrigerated trucks, selected trimmings, electric motor vehicles, agro products, reconstituted milk, cigarettes, imported un-denatured ethyl alcohol of an alcoholic volume strength of 80% or higher, plastic flat bags, and cotton and polyester fabric, among other measures.

Read a September 2020 report [PDF 2.97 MB] prepared by the KPMG member firm in Zambia

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