Incentives for Investors

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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)

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