ZAMBIA REVENUE AUTHORITY

UNOFFICIAL CONSOLIDATION OF THE

INCOME TAX ACT

2022 EDITION
(Includes amendments up to 31st December 2021)

FOR INTERNAL USE ONLY

PREFACE

This is not an authoritative publication and accordingly cannot be quoted as authority in

any legal proceedings. The italic explanations in parenthesis which follow amended
sections will enable the reader to follow the course of the various amendments which
have been introduced by the amending Acts. This consolidation has been produced by
the Zambia Revenue Authority for the use of its employees

Besides incorporating some of the latest amended enactments and penalties covered
under the Fees and Fines Act of 1994, the Consolidated Act is designed to show
simultaneously the provisions which were repealed, amended or newly inserted and
their period of validity. It should be noted that certain new provisions were inserted and
came into operation at certain dates, not particularly relevant to certain year’s
assessment, but applicable generally and such provisions are described as having come
into operation on a specified date.

Where no effective date is mentioned, the date is 1st April, 1966, the date of
commencement of the Act or deemed to have come into operation on 1st April, 1966, by
the subsequent amended Acts. The revised arrangement of sections and schedules is in
accordance with the Revised Edition of the Laws of the Republic of Zambia which
came into force in 1995.

This edition of the consolidation of the Act includes statute law in force for the charge
year -2022.

LUSAKA Dingani Banda

January 2022 Commissioner – General.

i
 THE INCOME TAX ACT
Chapter 323

ARRANGEMENT OF SECTIONS

PART I

PRELIMINARY AND INTERPRETATION

Section
1. Short Title
2. Interpretation
3. Repealed by Act No. 7 of 1996
4. Resident
5. Receipt of Income

PART II

ADMINISTRATION
6. Commissioner – General’s Functions
7. Officers and delegation of functions
8. Secrecy
9. Regulations
10. Records of assessment
11. Forms and notices
12. Notice and service
13. Repealed by Act No. 7 of 1996

PART III

CHARGE OF TAX
14. Charge of tax
15. Exemptions from tax
15A. Suspension and rebate of Income tax
16. Chargeability of income that cannot be remitted on accrual
17. Classification of income
18. Income deemed within the Republic
19. Income deemed received
20. Repealed by Act No. 7 of 1996
21. Apportionment of gratuities and compensation for loss of
office
22. Apportionment of income
23. Provisions relating to income from business
24. Provisions relating to income after cessation of business
25. Insurance business
26. Income of partner
27. Special provisions relating to deceased’s estates and trusts
28. Income of non-resident air, sea or land transport business

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 Arrangement of clauses

PART IV

DEDUCTIONS
29. Deductions generally
29A. Foreign currency exchange gains and losses
30. Losses
30A. Indexation of losses
31. Transfer of losses
32. Loses prior to bankruptcy, etc.
33. Capital allowances
34. Investment allowances
34A Development allowance
34B Local content allowance
35. Preliminary business expenses
36. Amount paid after cessation of business
37. Approved fund deductions
37A. Deduction for share option scheme
38. Technical education
39. Subscriptions
40. Repealed by Act No. 3 of 1997
41. Public Benefit organisations
42. Repealed by Act No. 3 of 1997
43. Deduction for research
43A Deduction for bad and doubtful debts
43B Deduction of mineral royalty
43C Repealed by Act No. 49 of 2010
43D Deduction for employing a person with disability
43E Deduction for skills development levy
44. Case of no deduction

PART V

RETURNS AND ASSESSMENTS

45. Notice to Commissioner-General
45A Duty to provide taxpayer identification number
45B Taxpayer identification number required for certain
transactions
46. Returns generally
46A Provisional Income
46B. Estimated provisional tax returns
47. Further provisions as to returns
48. Furnishing of Information
49. Statement of bank accounts, assets, etc.
50. Return of lodgers and inmates
51. Information as to business matters
52. Repealed by Act No. 3 of 1997
53. Public documents
54. Information as to companies
55. Accounts and records
56. Documents in support of returns

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 Arrangement of clauses

57. Examination by Commissioner-General

58. Production and preservation of books and documents
59. Repealed by Act No. 7 of 1996
60. Amount of dividends, interest or royalties to be included in
income
61. Partnership returns
62. Business accounts
62A Averaging of farming and fishing income
63. Commissioner-General’s power to assess
64. Estimated assessments
64A. Standard Assessment
64B. Repealed by Act No. 1 of 2009
65. Assessment rules
66. Taxpaying agents
67. Assessment of taxpaying agent
68. Right of taxpaying agent
69. Company’s taxpaying agent
70. Errors in form

PART VI

PAY AS YOU EARN

71. Assessment, charge, collection and recovery
72. Assessment not always necessary
73. Priority on insolvency

PART VII
DOUBLE TAXATION RELIEF
74. Double taxation agreements and Mutual assistance in tax
matters
75. Double taxation relief
76. Unilateral double taxation relief

PART VIII

COLLECTION, RECOVERY, REFUND AND RELIEFS

77. When tax due and payable
78. Penalty for non-payment of tax
78A Interest on overdue payments
79. Recovery and proceedings
79A Recovery by distress
79B Recovery through court
79C Charge on land
79D Recovery of partner’s tax from partnership
80. Repealed by Act No. 9 of 1998
81. Deduction of tax from dividends
81A Deduction of tax from payment made to non-resident
contractor
81AA Definition of permanent establishment
81B Tax clearance certificates
81C. Advance tax on income in respect of imported goods

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 Arrangement of clauses

82. Deduction of tax from lump sum payments

82A Deduction of tax from certain payments
82B Definition of property
83. Property not in possession
84. Agent for payment of tax
85. Repealed by Act No. 7 of 1996
86. Liability where property alienated
87. Refunds in general
88. Refunds in cases of accumulated income
89. Refund or set-off of tax chargeable on a beneficiary
90. Refund or set-off of tax deducted from dividends, etc
90A. Job credits
90B Repealed by Act No. 9 of 1977
91. Error or mistake relief
92. Remission of tax
92A Repealed by Act No. 16 of 2017
93. Tax less than one hundred thousand Kwacha not payable

PART IX

AVOIDANCE
94. No set-off or refund where that is the object of change of
ownership of shares in company
95. Transactions designed to avoid tax liability
95A Repealed by Act No. 12 of 1982
95B Inter-company shareholdings
95C Repealed by Act No. 7 of 1996
95D Loans to effective shareholders
96. Incurred loss not deductible in certain cases
97. Commissioner-General may avoid trust
97A. Transfer pricing
97AA Repealed by Act No. 17 of 2018
97B. Non application of section 97A
97C. Provisions supplementary to section 97A
97D. Objections and appeals involving transfer pricing

PART X

OFFENCES AND PENALTIES

98. General penalty
99. Penalty for failure to comply with notice, etc.
100. Penalty for incorrect returns, etc.
101. Time limit
102. Penalty for fraudulent returns, etc
103. Bodies corporate
104. Power to search and seize
105. Documents in evidence

PART XI

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 OBJECTIONS AND APPEALS
106. Assessments good until disproved
107 Repealed by Revenue Appeals Act No 11 of 1998
108 Objection to assessment
109 Appeal against assessment
110 Determination of appeals
111 Appeal to High Court and Supreme Court
112 Privacy of proceedings
113 Adjustment on successful objection or appeal
114 Appeals from Commissioner-General’s discretion and
determinations
115 Repealed by Act No. 9 of 1998
115A Repealed by Act No. 7 of 1996

PART XII

REPEALS AND TRANSITIONAL PROVISIONS

116 Repeals

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 Arrangement of Schedules

FIRST SCHEDULE - FURTHER CLASSIFICATION OF INCOME

Paragraph
1. Maintenance
2. Improvements
3. Commencement and cessation of employment
4. Lump sum payments
5. Capital recoveries
6. Exotic timber
7. Farm stock
8. Share Options

SECOND SCHEDULE – EXEMPTIONS

PART I: EXEMPT OFFICE HOLDERS

PART II FOREIGN EXEMPTIONS
PART PART III:
EXEMPT ORGANISATIONS
Various organisations
Public Benefit Organisations
PART IV: EXEMPT INCOME
Various Exemptions
Passages
Interest
Annuities

THIRD SCHEDULE – INSURANCE BUSINESS

1. Insurance other than life

2. Life insurance
3. Insurance and other business
4. Mutual and proprietary companies

FOURTH SCHEDULE – APPROVED FUNDS

1. Definition of “trustees”
2. Approval of pension funds
3. Procedural provisions relating to approval of funds and withdrawal of
approval
4. Approval of annuity contracts and withdrawal of approval
5. Approval of foreign fund or scheme established by law
6. Appeals
7. Remoteness

FIFTH SCHEDULE – CAPITAL ALLOWANCES FOR BUILDINGS,

IMPLEMENTS, MACHINERY AND PLANT, AND PREMIUMS

PART I: BUILDINGS
1. Definition of industrial building
2. Definition of commercial building

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 Arrangement of Schedules

3. Initial allowance for industrial building

4. Wear and tear allowance for buildings
5. Balancing allowance for buildings
5A. Improvement Allowance
6. Divided use

PART II: IMPLEMENTS, MACHINERY AND PLANT

7. Business to include employment in this Part
8. Frequently replaceable articles not within this Part
9. Repealed by Act No. 11 of 1974
10. Wear and tear allowance for implements, machinery and plant
11. Capital recoveries for implements, machinery and plant
12. Divided use
13. Valuation in exceptional circumstances

PART III: PREMIUM ALLOWANCE

14. Deduction of premium allowance

PART IV: GENERAL PROVISIONS

15. Successions
16. Subsidies
17. Controlled sales

PART V: RATES OF INITIAL AND WEAR AND TEAR ALLOWANCES

18. Rates of initial and wear and tear allowances

PART VI: MINING DEDUCTIONS

19. Interpretation of terms
20. Capital expenditure deductions
21. Prospecting expenditure deductions
22. Mining expenditure deductions
22A Repealed by Act No. 17 of 2018
23. Deductions for mining expenditure on non-producing and non-
contiguous mine
24. Deduction on cessation of mining operations
25. Change of ownership of mine
26. Controlled sales
27. Petroleum operations

SIXTH SCHEDULE – FARMING – IMPROVEMENT AND WORKS

ALLOWANCES AND LIVESTOCK VALUATION PART I: FARM
IMPROVEMENT ALLOWANCE
1. Definitions
2. Farm improvement allowance
3. Divided use
4. Repealed by Act No. 3 of 1997.

PART II: FARM WORKS ALLOWANCE

5. Nature of farm works
6. Farm works allowance

PART III: VALUATION OF LIVESTOCK

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 7. Standard value
8. Repealed by Act No. 14 of 1987
9. Repealed by Act No. 11 of 1987

PART IV: GENERAL PROVISIONS

10. Subsidies

SEVENTH SCHEDULE - Repealed by Act No. 2 of 1995

EIGHTH SCHEDULE – Approved Share Option Schemes

NINTH SCHEDULE – Presumptive Tax

Part I: Tax on Motor Vehicles for the Carriage of Persons
Part II: Tax on Turnover

TENTH SCHEDULE – Public Benefit Activities

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 Arrangement of Schedules

CHARGING SCHEDULE
(Amended by Act No. 6 of 1999 )

PART I
TAX CREDIT

1. Individual tax credit and persons with disability tax credit

PART II
RATES OF TAX

2. Individuals
3. Companies, etc.
4. Trusts, etc.
5. Special cases
6. Withholding tax
7. Rate of tax to be deducted
8. Interpretation

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 Arrangement of Schedules

SCHEDULE OF AMENDING ACTS

i. 32 of 1967 xli. 6 of 1999

ii. 23 of 1968 xlii. 4 of 2000
iii. 11 of 1969 xliii. 1 of 2001
iv. 26 of 1970 xliv. 8 of 2001
v. 17 of 1971 xlv. 3 of 2002
vi. 16 of 1972 xlvi. 3 of 2003
vii. 11 of 1973 Xlvii 1 of 2004
viii. 14 of 1973 Xlviii 1 of 2005
ix. 46 of 1973 Xlix 7 of 2006
x. 11 of 1974 L 4 of 2007
xi. 11 of 1975 Li 1 of 2008
xii. 14 of 1976 Lii 1 of 2009
xiii. 9 of 1977 Liii 27 of 2009
xiv. 9 of 1978 Liv 49 of 2010
xv. 10 of 1979 Lv 27 of 2011
xvi. 19 of 1979 Lvi 10 of 2012
xvii. 6 of 1980 Lvii 18 of 2013
xviii. 10 of 1981 Lviii 7 of 2014
xix. 13 of 1981 Lix 6 of 2015
xx. 12 of 1982 Lx 19 of 2015
xxi. 21 of 1982 Lxi 11 of 2016
xxii. 11 of 1984 Lxii 45 of 2016
xxiii. 11 of 1985 Lxii 16 of 2017
xxiv. 8 of 1986 Lxiii 17 of 2018
xxv. 14 of 1987 Lxiv 15 of 2019
xxvi. 17 of 1988 Lxv 20 of 2020
xxvii. 28 of 1988 Lxvi 43 of 2021
xxviii. 33 of 1989
xxix. 15 of 1990
xxx. 29 of 1990
xxxi. 12 of 1991
xxxii. 11 of 1992
xxxiii. 4 of 1993
xxxiv. 13 of 1994
xxxv. 14 of 1994
xxxvi. 2 of 1995
xxxvii. 27 of 1995
xxxviii. 7 of 1996
xxxix. 3 of 1997
xl. 9 of 1998

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 Income Tax Act Part I

INCOME TAX

Chapter 323

An Act to provide for the taxation of incomes and matters connected therewith.

PART I: PRELIMINARY AND INTERPRETATION

Short Title

1. This Act may be cited as the Income Tax Act

Interpretation

2. (1) In this Act, unless the context otherwise requires:-

“agro-processing” means subjecting any farming produce produced in Zambia to any

process which materially changes the farming produce in substance, character or
appearance thereby making it a food product, but does not include-

(a) processing of that farming produce into alcoholic and non-alcoholic

beverages, sugar crystals, flour or maize meal; or

(b) further or additional processing of the farming produce by a third party.

(inserted by Act No. 10 of 2012)

"approved annuity contract" means a contract providing for the payment to an individual
of a life annuity which has been approved by the Commissioner-General under the
Fourth Schedule;
(Inserted by Act No. 23 of 1968)

"approved fund" means:-

(a) an approved pension fund;

(b) an approved annuity contract;

(c) any superannuation, pension, provident, widow's or orphan's fund

established by law in the Republic; and

(d) a pension fund approved before the enactment of this Act under sub-section
either (1) or (2) of section 11 of the former Act;
(As amended by Acts No. 23 of 1968 and 26 of 1970.)

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 Part I Income Tax Act

“approved collective investment scheme” means a collective investment scheme

approved under the Securities Act, 2016.
(Inserted by Act No. 15 of 2019)

"approved pension fund" means a pension fund or scheme which has been approved by
the Commissioner-General under the Fourth Schedule;
(Inserted by Act No. 23 of 1968).

“approved share option scheme” means a scheme that has been approved, by the
Commissioner-General , under the Eighth Schedule;
(Inserted by Act No. 3 of 2002)

"assessable income" means the amount of a person's income liable to tax which may be
included in an assessment and which remains after allowing the deductions, to which that
person is entitled under the provisions of this Act;

"assessment" means the determination of an amount of tax which a person shall be liable to
pay under the provisions of this Act;
(As amended by Acts No. 26 of 1970 and 27 of 1995).

“Authority” means the Zambia Revenue Authority established under the Zambia Revenue
Authority Act (Cap 321);
(Inserted by Act No. 7 of 1996,)

“bank” means a company that holds a banking licence granted under section four of the
Banking and Financial Services Act (Cap 387);
(Inserted by Act No 6 of 1999).

“bank subsidiary” means a company where more than fifty per centum of the voting shares
of the company (except any qualifying director’s shares) are owned directly or indirectly
by a bank;
(Inserted by Act No. 4 0f 2000)

"bankrupt's estate ” means the property of a bankrupt vested by law in and under the
control of the trustee in bankruptcy;
(Inserted by Act No. 23 of 1968).

“base metal” means a non-precious metal that is either common or more chemically active,
or both common and chemically active and includes iron, copper, nickel, aluminium, lead,
zinc, tin, magnesium, cobalt, manganese, titanium, scandium, vanadium and chromium;
(Inserted by Act No. 7 of 2006)

“basic salary” means the gross amount payable to an employee without any allowances;

13
 Income Tax Act Part I

“beneficiary”, in relation to a terminal benefit, means the individual to whom such benefit
is payable;

“branch profits” means the profits of a foreign company derived from the operation of its
business within the Republic which are not re-invested in the Republic.
(Amended by Act no. 18 of 2013)

"business" includes:

(a) any profession, vocation or trade;

(b) any adventure or concern in the nature of trade whether singular or
otherwise;
(c) manufacturing;
(d) farming;
(e) agro-processing; and
(f) hedging;

(As amended by Acts No. 12 of 1982, 1 of 2008, 1 of 2009, 27 of 2011, and 10 of 2012)

"charge year" means the year for which tax is charged, that is, the period of twelve months
ending on the 31st December, and each succeeding such year;”

Provided that for the year commencing on 1st April, 2012, and ending 31st December, 2012,
the charge year shall be for a period of nine months.
(As amended by Act No. 27 of 2011)

“Charging Schedule" means the last Schedule to this Act, by which tax credits and rates of
tax are fixed;
(As amended by Acts No. 6 of 1999 and 27 of 2011)

"child" includes a step-child, a lawfully adopted child, an illegitimate child or any child to
whom an individual stands in the place of a parent;

“collective investment scheme” means a collective investment scheme registered under the
Securities Act;
(Inserted by Act No. 10 of 2012)

“Commissioner-General ” means the Commissioner-General appointed under the Zambia

Revenue Authority Act (Cap 321);
(Inserted by Act No. 7 of 1996)

“commodity royalty” means an amount paid under royalty financing or a general

agreement to a person or partnership, by a person or partnership resident in the Republic
that is computed by reference to the production, profit, or to the value of production from a

14
14
 mineral deposit or other natural resource in the Republic, but does not include the
repayment of the purchase price for the commodity royalty;
(Inserted by Act No. 20 of 2020 and Amended by Act No. 43 of 2021)

"company" means any company incorporated or registered under any law in force in the
Republic or elsewhere;

"date of enactment of this Act" means 20th May, 1967 and "enactment of the Act" shall be
construed accordingly;
(Inserted by Act No. 23 of 1968).

"deceased's estate" means the estate of a deceased individual;

(Inserted by Act No. 23 of 1968).

"dividend" means any amount distributed or credited as construed in sub-section (3) by a

company to its shareholders;
(As amended by Acts No. 10 of 1979, 12 of 1982 and 4 of 2007).

"effective shareholder", in relation to a company, means a person who is the beneficial owner
of, or able to control either alone or with the nominees of that person, five per centum or
more of the issued share capital of or voting powers in such a company;
(As amended by Acts No. 16 of 1972, 9 of 1998, 6 of 1999 and 4 of 2007).

“electricity generation” means the production of electrical energy using physical and non-
physical sources of energy such as water, wind, solar, petroleum, coal, biomass and any
other source of energy except wood.
(Inserted by Act No. 19 of 2015)

“electronic communications network” has the meaning assigned to it in the Information

and Communication Technologies Act, 2009;
(Inserted by Act No. 49 of 2010)

“electronic communications service” has the meaning assigned to it in the Information and
Communication Technologies Act, 2009;
(Inserted by Act No. 49 of 2010)

"emolument" means any salary, wage, overtime or leave pay, commission, fee, bonus,
gratuity, benefit, advantage (whether or not that advantage is capable of being turned into
money or money's worth), allowance, including inducement allowance, pension or annuity
paid, given, or granted in respect of any employment or office, wherever engaged in or
held;
(As amended by Act No. 26 of 1970).

"employee", in relation to an employer, means any individual who is paid, given or granted
any emolument by that employer;

15
 Part I Income Tax Act

"employer", in relation to an employee, means any person who or any partnership which
pays, gives or grants any emoluments to that employee;
(As amended by Act No. 26 of 1970)

"farming" means the cultivation of crops and plants, raising of livestock or poultry,
beekeeping and rearing fish but excludes the letting of any property or provision of a
service ancillary to farming.
(As amended by Acts No. 10 of 1981, 11 of 1984, 4 of 2000 and 15 of 2019)

“finance lease” means a lease of implements, machinery, or plant where –

(i) the term of the lease, including any period under an option to renew, is equal to or
exceeds seventy-five per centum of the effective life of the leased implements,
plants or machinery;

(ii) the lessee has an option to purchase the implements, plants or machinery at the
expiration of the lease for a fixed or determinable price;

(iii) the estimated residual value of the implements, plant or machinery at the expiration
of the lease term is less than twenty-five per centum of its fair market value at the
commencement of the lease; or

(iv) the lessor does not retain the risks and rewards of ownership

(As inserted by Act No.4 of 2007 and as amended by Act No.1 of 2008)

“financial institution ” means a person that holds a financial institution’s licence granted
under section ten of the Banking and Financial Services Act;
(Inserted by Act No. 4 of 2000).

“former Zambia Consolidated Copper Mining Company” means any division or metal
treatment operation of Zambia Consolidated Copper Mines Limited sold under the
Privatisation Act, and includes any of its successors in title or assigns;
(Inserted by Acts No. 9 of 1998, 6 of 1999, 4 of 2000 and …. of 2005)

“incapacitated person” means a child or a person who has a mental disability that inhibits
that person from exercising independent legal capacity;
(Inserted by Act No. 23 of 1968 and amended by Act No. 16 of 2017)

“income generating real estate” means real estate properties that generate a consistent
recurring revenue in the form of dividends, interest or cash distribution;
( Inserted by Act No. 43 of 2021)

“income real estate investment trust” means a collective investment scheme that invests
primarily in income generating real estate;
16
 (Inserted by Act No. 43 of 2021)

"individual" means natural person;

“industrial minerals” has the meaning assigned to it in the Mines and Minerals
Development Act, 2008;
(Inserted by Act No. 7 of 2014)

“industrial park” has the meaning assigned to it in the Zambia Development Agency Act,
2006.
(Inserted by Act no. 18 of 2013)

“licensee” has the meaning assigned to it in the Information and Communication

Technologies Act, 2009;
(Inserted by Act No. 49 of 2010)

“ livestock ” has the meaning assigned to the word under the Animal Health Act, 2010.
(Inserted by Act No. 15 of 2019)

"local authority" means a City Council, District Council, Municipal Council or any other
authority recognised as such under the Local Government Act (Cap 281);
(Inserted by Act No. 26 of 1968)

"loss", in relation to gains or profits, means the loss computed in like manner as gains or
profits;

"lumpsum payment" means:-

(a) in relation to a beneficiary who was employed within the Republic throughout
the period during which contributions were made, an amount equal to the terminal
benefit received by him;

(b) in relation to a beneficiary who was not so employed, an amount that bears the
same proportion to the terminal benefit received by him as the period of his
employment within the Republic for which contributions were made bears to the total
period of his employment for which contributions were made; and

(c) in relation to a beneficiary who is employed on pensionable terms, any amount

received or accrued which is paid or payable by an employer upon cessation of
employment, by way of compensation for leave due but not taken;
(As amended by Act No. 11 of 1992)
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 Income Tax Act Part I

“management or consultancy fee” means payment in any form, other than an emolument,
for or in respect of any-
(a) administrative, consultative, managerial, technical or other service of a like nature;
or
(b) creation, design, development, installation or maintenance of any information
technology solution, programme, system, or their combination.
(Amended by Acts No. 9 of 1978, 4 of 2007, and 16 of 2017)

"manufacturer" means a person carrying on the business of manufacturing;

(Inserted by Act No. 12 of 1982).

"manufacturing" means subjecting any physical matter to any process which materially
changes such matter in substance, character or appearance thereby making it an article
after such process, and includes the assembly of motor vehicles and such other process
as the Commissioner-General may determine to be of a similar nature;
(Amended by Act No. 12 of 1982).

"mineral" has the meaning assigned to it in the Mines and Minerals Development Act, 2008;
(As amended by Act no. 7 of 2014)

“Mineral Processing” has the meaning assigned to it in the Mines and Minerals
Development Act, 2015;
(Amended by Act no 6 of 2015)

“Mining Operations” means an operation carried out under a mining right, excluding an
operation carried out under a mineral processing licence only or an exploration licence;
(Amended by Act no 6 of 2015)

and "mine" whether used as a noun or a verb, is construed accordingly;

“minister” means the Minister responsible for financial matters;

“multi-facility economic zone” has the meaning assigned to it in the Zambia Development
Agency Act, 2006.
(Amended by Act no. 18 of 2013)

"nominee", in relation to an individual, means -

(a) the spouse of the individual; or

(b) the child of the individual; or

(c) a person who holds shares in a company directly or indirectly on behalf of the
individual; or
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 Part I Income Tax Act

(d) a person who can be required to exercise or a person who can require the exercise
of voting powers in the affairs of a company in accordance with directions of the
individual;

unless the Commissioner-General determines that the spouse, child or other person is a
person who can at all times exercise or require the exercise of voting powers in the
affairs of the company otherwise than in accordance with the directions of the individual;
(Inserted by Act No. 16 of 1972).

"non-traditional product" means anything produced or manufactured in the republic,

excluding –

(a) Minerals;
(b) electricity;
(c) services; or
(d) cotton lint exported without an export permit from the Minister responsible for
Commerce, trade and industry;
(Amended by Acts No. 11 of 1985, 14 of 1994, 4 of 2000 and 1 of 2009).

“open cast mining operations” has the meaning assigned to it in the Mines and Minerals
Development Act, 2008;
(Inserted by Act No. 7 of 2014)

“operating lease” means any lease of implements, machinery or plant, other than a finance
lease.
(Inserted by Act No. 1 of 2008).

"pensionable terms" means terms and conditions of employment under which an employee
belongs to any approved pension fund operated by an employer for the benefit of his
employees;
(Inserted by Act No. 12 of 1982).

"person" includes any body of persons, corporate or otherwise, a corporation sole, a local or
like authority, a deceased's estate, a bankrupt's estate and a trust but does not include a
partnership;
(Inserted by Act No. 23 of 1968).

“person with disability” has the meaning assigned to it in the Persons with Disabilities Act,
2012.
(Amended by Act No. 10 of 2012).

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“property loan stock company” means a company listed on the Lusaka Securities
Exchange which is involved in real estate investment and development and has a capital
structure that consists of property linked units;
(Amended by Act No. 15 of 2019).

“property linked unit” means a unit comprising a share and a debenture in a company,
where the share and debenture are linked together and cannot be disposed of
independently of each other.
(Amended by Act no. 18 of 2013)

“prospecting and exploration operations ” means -

(a) any operations for the purpose of searching for mineral deposits; or

(b) any operations for the purpose of defining the extent and determining the value
of a mineral deposit;
(Inserted by Act No. 26 of 1970).

“public benefit activity” means an activity listed in the Tenth Schedule to this Act and any
other activity determined by the Minister, by notice in the Gazette, to be of a benevolent
nature having regard to the needs, interest and well being of the general public;

“public benefit organisation” means an organisation which is-

(a) a company limited by guarantee incorporated in the Republic under the Companies
Act;
(b) a trust incorporated under the Land (Perpetual Succession) Act;
(c) an association registered under the Societies Act;
(d) an educational institution registered under the Education Act;
(e) a health institution registered under the Medical and Allied Professions Act;
(f) an amateur sporting association registered under the Sports Council of Zambia Act;
or
(g) any association or organisation registered under the laws of Zambia;

exclusively established for the purpose of providing a public benefit activity.

(Inserted by Act No. 1 of 2009)

“public entertainment fee ” means a payment in any form other than an emolument to, on
behalf of, or in respect of, any person or persons in partnership, including theatre, motion
picture, radio or television artists, musicians, athletes or sports persons, in respect of those
persons’ personal activities in any entertainment, competition or similar activity within the
Republic;
(Repealed by Act No 3 of 1997 and re-inserted, with amendment, by Act No. 4 of
2000)

“purchase price” is the amount paid by a non-resident to a person resident in the Republic
in return for future payments of commodity royalty;
20
 Income Tax Act Part I

(Inserted by Act No. 20 of 2020)

“registered insurer” means an insurer registered under part II of the Insurance Act (Cap
392);
(Inserted by Act No. 26 of 1970).

“retirement age” means the age specified in the rules of an approved fund as the age of
retirement, or if no age is specified in the rules, sixty years of age;

“royalty” means a payment in any form received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work (including cinematograph
films and films and tapes for radio or television broadcasting), any patent, trade mark,
design or model, plan, secret formula or process, or for the use of, or the right to use
industrial, commercial or scientific equipment, or for information concerning industrial,
commercial or scientific experience;
(Inserted by Act No. 16 of 1972).

“royalty financing” means a financing agreement or arrangement where a purchase price is

made and includes an arrangement of a similar nature;
(Inserted by Act No. 20 of 2020)

“rural area” means any area which is not an area declared or deemed to have been
declared an area of any city or municipal ity under the Local Government Act (Cap 281)
but excluding the area declared to be the area of the Kafue township under the said Act;
(Inserted by Act No. 14 of 1976)

“rural enterprises ” means -

(a) a manufacturing business which commenced on or after the 1 st April, 1976;
(b) a hotel, motel or lodge which commences on or after the 1 st April, 1981;
and which is located in a rural area.
(Inserted by Act No. 10 of 1981).

“Securities and Exchange Commission” means the Securities and Exchange Commission
established under the Securities Act, 2016;
(Inserted by Act No. 43 of 2021)

“share option scheme” means a scheme that provides an option to an employee to acquire
shares in the company that employs that employee or otherwise.
(Inserted by Act No. 3 of 2002).

"tax" means the income tax charged by this Act;

“taxpayer identification number” means a number designated and issued by the

Commissioner-General-
(a) to any corporate person or unincorporated body of persons; and
(b) to an individual who has attained the age of 18 years.
21
 (Inserted by Act No. 11 of 1992 and amended by Acts No. 3 of 2002 and 16 of
2017)

“terminal benefit” means the amount payable from a fund or scheme, approved as an
approved fund or as a benefit fund or pension fund at any time under the law relating to the
taxation of income in the Republic prior to enactment of this Act to an individual who is or
was a member of that fund or scheme on cessation of employment, withdrawal from or
winding up of the fund or scheme, but does not include an amount received:-

(a) by way of annuity;

(b) in respect of services; or

(c) on account of sickness or disability.

“underground mining operations” has the meaning assigned to it in the Mines and
Minerals Development Act, 2008;
(Inserted by Act No. 7 of 2014)

“whole time service director” means a director of a company who is required to devote
substantially the whole of his time to the service of such company in a managerial or
technical capacity and is not the beneficial owner of or able to control alone or with his
nominees, five per centum or more of the issued share capital or voting powers in such
company.
(amended by Act No. 16 of 1972 and 11 of 1975)

“Zambia Agency for Persons with Disabilities” means the Zambia Agency for Persons
with Disabilities established under the Persons with Disabilities Act, 2012; and
(Inserted by Act No. 43 of 2021)

“Zambia Development Agency” means the Zambia Development Agency established under
the Zambia Development Agency Act, 2006.
(Inserted by Act No. 43 of 2021)

(1A) Subject to subsection (1B) where a provision of this Act refers, expressly or by
implication, to a payment of a specified amount which is denominated in Kwacha and the
payment is made in another currency the amount of the payment, for purposes of that
provision, shall be converted into Kwacha at the appropriate rate published by the Bank
of Zambia as at the end of the day on which the payment is due, irrespective of when the
payment is actually made.

(1B) Where the payment referred to in subsection (1A) is a payment of interest and the
borrower has borrowed the principal in the course of a business carried on by the

22
 Part I Income Tax Act

borrower, the conversion required by subsection (1A), shall, subject to any direction by
the Commissioner-General, be calculated as at the end of each day on which the interest
accrues, irrespective of when payment of the interest is due.
(Inserted by Act No. 6 of 1999).

(2) For the purpose of this Act, a beneficiary who was employed outside the Republic by the
Government, or the Government of the former Federation, or a local authority or
statutory corporation, during any period in which ordinary contributions were made, is, if
he was resident outside the Republic only for the purpose of that employment, deemed to
have been employed within the Republic during that period.

(3) The reference in the definition of "dividend" to “amount distributed or credited" shall be
read and construed -

(a) so as to include -

(i) in relation to a company that is being wound up or liquidated, any profits

distributed, whether in cash or otherwise, other than those of a capital nature,
earned before or during the winding up or liquidation;

(ii) in relation to a company that is not being wound up or liquidated, any profits
distributed whether in cash or otherwise, other than those of a capital nature,
including the value of that element of any shares awarded to its shareholders
which is redeemable or capable of redemption by conversion and any
debentures or securities awarded to its shareholders by a company;

(iii)in the event of the partial reduction of the capital of a company, any cash or the
value of any asset which is given to the shareholder in excess of the cash
equivalent of the nominal value by which the shares of that shareholder are
reduced; and

(iv) in the event of the reconstruction of a company, any cash or the value of any
asset which is given to the shareholder in excess of the nominal value of the
shares held by him before reconstruction;

(b) so as not to include any cash or the value of any asset given to a shareholder, to the
extent to which the cash or the value of the said asset represents a reduction of the
share premium account of the company.

(4) Any reference in this Act to bankruptcy shall be construed in accordance with provisions
of the Bankruptcy Act (Cap 82) and "bankruptcy" shall be construed accordingly.
(Inserted by Act No. 23 of 1968).

3. Repealed by Act No. 7 of 1996.

Resident
23
4.(1) An individual is, for the purposes of this Act, not treated as resident in the Republic who
is in the Republic for some temporary purpose only and not with any view or intent of
establishing his residence therein, and who has not actually resided in the Republic at one
time or several times for a period equal in the whole to one hundred and eighty-three
days in any charge year, but if any such individual resides in the Republic for the
aforesaid period he shall be treated as resident for that year.

(2) Repealed by act No 4 of 2000

(3) In this Act, a person other than an individual is resident in the Republic for any charge
year if-

(a) the person is incorporated or formed under the laws of the Republic; or
(b) the place of effective management of the person’s business or affairs is in the
Republic for that year.
(As Amended by Acts No. 11 of 1969, 4 of 2000 and 16 of 2017)

Receipt of Income

5.(1) In this Act, income is received by a person when, in money or money's worth, or in the
form of any advantage, whether or not that advantage is capable of being turned into
money or money's worth, it is paid, given or granted to him, or it accrues to him or in
his favour, or it is in any way due to him or held to his order or on his behalf, or it is in
any way disposed of according to his order or in his favour, and the word "recipient" is
construed accordingly.

(2) For the purposes of this Act -

(a) a dividend shall be deemed to accrue to share or stock holders, in the case of a
dividend paid by a company which is being wound up or liquidated, on the day
the dividend is received as provided in subsection (1), and in the case of a
dividend paid by a company which is not being wound up or liquidated, on the
day of the resolution declaring the dividend;

Provided that where the resolution states that the dividend is to be paid
to share or stock holders registered on a day in the future, the dividend
shall be deemed to accrue to the share or stock holders on that day in
the future; and

(b) a dividend accruing to a person which is deemed by virtue of any provision of

this Act to be income of some other person shall be deemed to accrue to that
other person on the day the dividend is by virtue of the provisions of paragraph
(a) deemed to accrue.
(As amended by Acts No. 23 of 1968, 11 of 1973, 10 of 1979 and 6 of
1999).
24
 Part II Income Tax Act

PART II

ADMINISTRATION

Commissioner-General’s Functions

6.(1)The Commissioner-General shall be responsible for carrying out the provisions of this
Act.

(Amended by Act No. 43 of 2021)

(2) Deleted by Act No. 20 of 2020

Officers and delegation of functions

7.(1) The Commissioner-General may delegate to any officer in the Authority any power or
duty by this Act conferred or imposed upon him, other than those conferred on him by
section one hundred and four and this power of delegation, and, save as especially
provided by this Act, any decision made or any notice or communication issued or
signed by any such officer may be amended or withdrawn by the Commissioner-
General, or by the officer concerned, and shall, for the purposes of this Act, until it
has been so withdrawn, be treated as having been made, issued or signed by the
Commissioner-General.

(2) Every officer appointed for the purpose of carrying out the provisions of this Act is
under the Commissioner-General’s direction and control, and shall perform such
duties as may be required by the Commissioner-General.

(3) The Commissioner-General may appoint a person to collect base tax, presumptive
tax, turnover tax or tax on rental income assessed or payable under the provisions of
this Act on such terms and conditions as the Minister may, by statutory instrument,
prescribe.

(4) The Commissioner-General may confer any of the functions of the Commissioner-
General under this Act upon any person if that person consents; and that person shall
perform those functions under the direction of the Commissioner-General.
(As amended by Acts No. 2 of 1995, 2 of 1995, 7 of 1996, 4 of 2000, 1 of
2001, 49 of 2010 and 16 of 2017).

25
 Income Tax Act Part II

Secrecy

8.(1) Any individual who -

(a) is, or at any time has been, an officer appointed for the purpose of carrying out
the provisions of this Act; or

(b) has at any time been given official access to documents or matters arising
under this Act; or

(c) Repealed by Act No. 7 of 1996

(d) is, or at any time has been, the Chairman, Deputy Chairman, Special
Chairman or an employee of the Tax Appeal Court or its successor,

shall preserve and aid in preserving secrecy concerning the affairs of any person
under this Act, save as the duty under this Act of that individual requires:

Provided that -

(i) the Commissioner-General may disclose any information, record

or document to the Minister or to any public officer authorized by
the Minister in writing and to the Director of Public Prosecutions
when acting in exercise of his powers under the Corrupt Practices
Act (Cap 91);

(ii) any individual appointed for carrying out the provisions of this
Act may disclose any information, record or document to the
Auditor-General and any officer authorized by the Auditor-
General;

(iii) no individual who is, or at any time has been an officer

appointed for the purpose of carrying out the provisions of this
Act shall be required to produce in any court any document or
to communicate to any court any information which has come
into his possession or to his knowledge in the performance of
his duties under this Act, except as may be necessary for the
purpose of carrying out the provisions of this Act.

(2) Any individual who is in contravention of subsection (1) or who uses or reveals any
information, record or document disclosed to him in accordance with the proviso to
subsection (1) save as his official duties require shall be guilty of an offence

26
 Part II Income Tax Act
punishable with imprisonment for a term not exceeding two years or with a fine not
exceeding two hundred penalty units, or to both.
(As amended by Acts No.17 of 1971, 14 of 1973, 14 of 1976, 8 of 1986, 13 of
1994, 14 of 1994, 7 of 1996 and 4 of 2000 )

Regulations

9 The Minister may make regulations by statutory instrument in furtherance of and

incidental to the provisions of this Act.

Records of Assessment

10. The Commissioner-General shall cause a record to be kept of every assessment made
under this Act.

Forms and Notices

11.(1) All forms required for the administration of this Act shall be as prescribed by the
Commissioner-General from time to time.
(2) Notices, forms, demands or other documents issued or given by the Commissioner-
General under this Act may be signed by any officer authorized by the Commissioner-
General in that behalf and any such notice, form, demand or other document
purporting to be signed by order of the Commissioner-General shall be as valid as if
signed by the Commissioner-General.

(3) Repealed by Act No. 7 of 1996

(As amended by Acts No. 26 of 1970 and 7 of 1996 ).

Notices and Service

12.(1) References in this section to the giving of notice include any service of process
under this Act.

(2) Notice to any individual under this Act is given to him—

(a) at the time it is served on him personally or electronically; or

(b) at the time it is left with some adult individual apparently living or occupying
or employed at his last known abode, office or place of business; or

(c) unless the addressee proves to the contrary, ten days after it has been sent by
post to his last known abode, or office, or to his postal address as notified by
him to the Commissioner-General, or in care of his last known employer.

27
 Income Tax Act Part II

(3) Notice is given to any company at the time it is given to that company's taxpaying
agent (as determined in section sixty-six) in the manner provided by subsection (2),
or at the time it is sent, in the case of a company incorporated in the Republic, to
the registered office of the company, and in the case of a company incorporated
outside the Republic, either to the individual authorized to accept service of
process under the Companies Act (Cap 388) at the address filed with Registrar of
Companies, or to the registered office of the company wherever it may be situated,
or, in either case, to any premises in the Republic where the company is carrying
on business.

(4) Notice is given to any body corporate, other than a company, at the time it is given
to the principal officer, secretary, accountant or manager in the Republic of such
body corporate in a manner provided by subsection (2), or at the time it is sent to the
registered address, if any, of the said body corporate, or to any premises in the
Republic where the said body corporate exercises any of its functions or powers.

(5) Notice to the Commissioner-General under this Act is given to him -

(a) at the time it is served upon him personally, electronically or upon any officer
of the Authority duly authorized by the Commissioner-General to receive such
notice; or

(b) unless the Commissioner-General proves to the contrary, ten days after it
has
been sent by post addressed to the Commissioner-General, or any officer of
the Authority duly authorized by the Commissioner-General to receive such
notice.
(as amended by Acts No. 11 of 1975, 7 of 1996 and 49 of 2010)

(6) In this section, the term “post” means registered or unregistered post.

(7) Notice of any change in the place of abode or the postal address of any person
receiving income assessable to tax shall be delivered in writing by that person to
the Commissioner-General within thirty days of such change.
(As amended by Acts No. 26 of 1970, 11 of 1975, 7 of 1996 and 1 of 2004).

13. Repealed by Act No. 7 of 1996.

28
 Income Tax Act
PART III

CHARGE OF TAX
Charge of tax

14.(1) Subject to the provisions of this Act, tax shall be charged at the rates set out in the
Charging Schedule for each charge year on the income received in that charge year-

(a) by every person from a source within or deemed to be within the Republic;
and

(b) by any individual who is ordinarily resident in the Republic, or by every

person, not being an individual, who is resident in the Republic, by way of
interest and dividends from a source outside the Republic;

(2) Subject to the other provisions of the Act, in the case of an individual, the amount of
tax which, apart from this subsection, would be charged in respect of any income
received by that person in that charge year shall be reduced by the amount of the tax
credit appropriate to such person for that charge year as specified in the Charging
Schedule and that person shall be liable to pay tax for that charge year an amount equal
to that reduced amount:

Provided that any assessment of that income to tax shall -

(a) be for the whole amount of tax due before any tax credit; and

(b) show the amount due and payable after the reduction by the amount of any tax
credit due.

(3) Any amount of tax payable before the application of a tax credit shall not be reduced
below zero by the tax credit and the tax credit shall not give rise to a repayment of tax

(4) The amount of a tax credit to which a person is entitled for any charge year shall not be
allowed more than once against that person’s income for that year.

(5) An individual shall not be entitled to a tax credit except -

(a) against income provided for under section seventy-one and if the tax credit is
allowed in accordance with Regulations made under that section; or

(b) against income declared in a return under section forty-six;

29
 Income Tax Act Part III
(6) The provisions of this Part, and of the First Schedule, relating to particular forms of
income, are without prejudice to the generality of the charge of subsection (1).
(As amended by Acts No. 11 of 1969, 17 of 197, 12 of 1982, 11 of 1992, 4 of 1993, 9
of 1998 and 6 of 1999).

Exemptions from tax

15. (1) There shall be exempt from tax the persons, funds, public benefit organisations and
income declared to be exempt in the Second Schedule to the extent specified therein.
(Amended by Act No. 43 of 2021)

(2) The Minister may, by statutory order, approve, for the purpose of exemption from tax,
any person, agency, organization or foundation, which may be so approved by him by
order in the Gazette pursuant to the Second Schedule, and may, by like order, exempt
from tax the income or emoluments of any person, agency, organization or foundation
which may be so exempted by him by order in the Gazette pursuant to the said Schedule,
and may, at any time, by like order, revoke any such order:

Provided that the Minister shall have the power to make or revoke such orders
retrospectively.
(As amended by Acts No. 11 of 1969 and 11 of 1973).

Suspension and Rebate of Income Tax

15A (1) The Minister may by regulation -

(a) suspend or provide for the suspension of the whole or part of any income tax
due and payable under this Act;

(b) grant or provide for the grant of a refund of the whole or any part of income tax
payable under this Act;

in such circumstances, subject to such conditions and to such extent, as may be

provided by or determined under the regulation.

(2) Regulations under this section suspending any payment of income tax or granting a
rebate or refund may, if the Minister considers it expedient, be made with
retrospective effect.
(As amended by Act No. 12 of 1991)

30
 Income Tax Act Part III

Chargeability of income that cannot be remitted on accrual

16. Where the Commissioner-General is satisfied that any income cannot be remitted to the
Republic in the charge year in which it accrues, then he may, if the person chargeable
to tax in respect of that income so requests, determine that that income shall not be
chargeable to tax in the charge year in which it accrues but that it shall be chargeable
to tax in the charge year in which it may first be remitted to the Republic:

Provided that the tax chargeable on such income shall not exceed the tax that would
have been charged on the income if it had been charged to tax in the charge year or
years in which it accrued.
(As amended by Act No. 26 of 1970)

Classification of income

17. For the purposes of this Act, income includes, for any charge year -

(a) gains or profits from any business for whatever period of time carried on;

(b) emoluments;

(c) annuities;

(d) dividends;

(e) interest, charges and discounts;

(f) royalties, premiums or any like consideration for the use or occupation of any
property;

(g) income from the letting of property; and

(h) the income as further classified in the First Schedule.

(As amended by Acts No. 23 of 1968, 12 of 1982 and 14 of 1987)

31
 Income Tax Act Part III

Income deemed within the Republic

18. (1) Income is deemed to be from a source within the Republic if that income -

(a) arises under any agreement made in the Republic for the sale of goods,
irrespective of whether those goods have been or are to be delivered in the
Republic;

(b) is remuneration from employment exercised or office held in the Republic or

if it is received by virtue of any service rendered or work or labour done by a
person or partnership in the carrying on in the Republic of any business,
irrespective of whether payment is made outside the Republic, or by a person
resident outside the Republic;

(c) is remuneration for services rendered outside the Republic to the Government
or any statutory corporation if that person rendering the services is resident
outside the Republic solely for the purpose;

(d) is a pension granted by a person wherever resident, irrespective of where the

funds from which it is paid are situate, or where payment is made, except
where the employment or office for which the pension is granted was wholly
outside the Republic, and the emoluments were never charged to tax in the
Republic;

(e) arises from interest incurred in the production of income or in the carrying on
of a business in the Republic or paid direct or indirectly out of funds derived
from within the Republic;

(f) arises from a royalty incurred in the production of income or in the carrying
on of a business in the Republic or paid directly or indirectly out of funds
derived from within the Republic;

(g) arises from the carriage, by a person who is not resident in the Republic, of
passengers, mails, livestock or goods embarked, shipped or loaded in the
Republic other than passengers embarking in transit through the Republic or
mails, livestock or goods shipped or loaded on transhipment through the
Republic;

(h) arises from a management or consultant fee incurred in the production of

income or in carrying on of a business in the Republic and is received by a
person or persons in partnership for a service other than such part thereof as

32
 is rendered by the person or persons in partnership in the carrying on of a
business in the Republic; or

(i) arises from commission incurred in the production of income or in the

carrying on of a business in the Republic, or paid directly or indirectly out of
funds derived from within the Republic.
(As amended by Act No. 27 of 2011)

(j) income earned by a person resident in Zambia from the carriage of persons,
mail, livestock or any other goods shipped or loaded outside Zambia to other
destinations outside Zambia.
(Inserted by Act No. 7 of 2014)

(2) Where a business is carried on partly within and partly outside the Republic by a
person to whom this subsection applies or where such a person receives a share of the
profits of a business carried on in partnership partly within and partly outside the
Republic, the whole of the person's share of the profits of the business or partnership is
deemed to have been received from a source within the Republic.

(3) Subsection (2) shall apply to -

(a) any individual who is ordinarily resident in the Republic; and

(b) to any person, not being an individual, who is resident in the

Republic;
(As amended by Acts No. 23 of 1968, 26 of 1970, 17 of 1971, 16 of 1972, 3 of 1997,
9 of 1998 and 6 of 1999).

Income deemed received

19.(1) Where under the terms of any settlement and during the life of the settlor any
income, or assets representing it, will or may become payable or applicable to or for the
benefit of any child of the settlor and at the commencement of the charge year the
child is unmarried and has not attained the age of twenty-one years, the income or
assets representing it shall be deemed to be income of the settlor and not income of
any other person.
(As amended by act No. 9 of 1998)

(2) If and so long as the terms of any settlement are such that -

(a) any person has or may have power, whether immediately or in the future, and
whether with or without the consent of any other person, to revoke or
otherwise determine the settlement or any provision thereof; and

33
 (b) in the event of the exercise of the power, the settlor or wife or husband of the
settlor will or may become beneficially entitled to the whole or any part of the
property then comprised in the settlement, or of the income arising from the
whole or any part of the property so comprised;

all income arising under the settlement from the property comprised in the settlement
shall be deemed to be income of the settlor and, subject to the provisions of subsection
(1), not income of any other person:

Provided that this subsection shall not apply by reason only that the settlor or the
wife or husband of the settlor will or may become beneficially entitled to any
income or property relating to the interest of any beneficiary under the settlement
in the event that such beneficiary should pre-decease him.

(3) Where in any charge year the settlor or any relative of the settlor or any person under
the direct or indirect control of the settlor or any of his relatives, whether by borrowing
or otherwise, makes use of any income arising or of any accumulated income which has
arisen under a settlement to which he is not entitled thereunder, then the amount of such
income or accumulated income so made use of shall be deemed to be income of the
settlor for the charge year and not income of any other person.

(4) Where under the terms of any settlement to which this section applies any tax is charged
on and paid by the person by whom the settlement is made, that person shall be entitled
to recover from any trustee or other person to whom income is paid under the
settlement the amount of the tax so paid, and for that purpose to require the
Commissioner-General to furnish a certificate specifying the amount of tax so paid, and
any certificate so furnished shall be conclusive evidence of the facts appearing therein.

(5) If any question arises as to the amount of any payment of income or as to any
apportionment of income under this section that question shall be decided by the
Commissioner-General, whose direction thereon shall be final.

(6) This section applies to every settlement where so ever it was made or entered into and
whether it was made or entered into before or after the commencement of this Act and
shall (where there is more than one settlor or more than one person who made the
settlement) have effect in relation to each settlor as if he were the only settlor.

(7) In this section -

"settlement" includes any disposition, trust, covenant, agreement, whether

reciprocal or collateral, arrangement or transfer of assets or income, but does
not include -

34
 Income Tax Act Part III
(i) a settlement which in the opinion of Commissioner-General is made
for valuable and adequate consideration;

(ii) a settlement resulting from an order of a court;

(iii) any agreement made by an employer to pay an employee or to the

widow or any relative or dependant of such employee after his death
such remuneration or pension or lump sum as the Commissioner-
General may determine

"settlor", in relation to a settlement, includes any person by whom the settlement

was made or entered into directly or indirectly, and any person who has provided
or undertaken to provide funds or credit directly or indirectly for the purposes of
the settlement, or has made with any other person a reciprocal arrangement for
that other person to make or enter into the settlement.
(As amended by Acts No. 11 of 1969 , 7 of 1996 and 9 of 1998).

20. Repealed by Act No. 7 of 1996.

Apportionment of gratuities and compensation for loss of office

21.(1) Where, upon the termination of a written contract of employment after a minimum
period of two years completed service thereunder or such lesser period as the
Commissioner-General may, in his discretion, deem reasonable, income is received
under the terms of the contract by an individual by way of gratuity, then such income
shall be charged in the charge year in which it is received at the appropriate rates
applicable thereto pursuant to the Charging Schedule:

Provided however that -

(i) any income received by way of gratuity in excess of twenty-five per

centum of the basic salary earned during the period of employment to
which such gratuity is related, shall, to the extent of such excess, be
regarded and dealt with, for the purposes of this Act, as income
received other than by way of gratuity;

(ii) any emoluments paid by way of gratuity by any company to an

individual who is, or was at any time during the period of
employment to which such gratuity is related, an effective
shareholder of such company or who is, or was at any time a
director of such company during the period of employment to which
such gratuity is related, other than a whole time service director
35
35
Part III Income Tax Act
thereof, shall, for the purposes of this Act, be regarded and dealt
with as income received by such individual other than by way of
gratuity;

(iii) any emoluments paid by way of gratuity by an employer to an

individual where the spouse of the individual, either alone or in
partnership, is the employer of the individual shall, for the purposes
of this Act, be regarded and dealt with as income received other
than by way of gratuity;

(iv) any emoluments paid by way of a gratuity by a company to an

individual who or whose spouse is carrying on a business alone or in
partnership and the services of the individual are provided to such a
business by such company, shall for the purpose of this Act, be
regarded and dealt with as income received other than by way of
gratuity; and

(v) where the conditions of this sub-section are not complied with in
respect of any emoluments paid to an individual by way of gratuity,
such emoluments shall for the purposes of this Act, be regarded and
dealt with as income received by such individual other than by way
of gratuity.

(2) Where, upon the termination of a contract of employment, income is received by an

individual by way of compensation for leave due but not taken, such income, if the
individual irrevocably so elects, shall be regarded as accruing, and as being paid,
proportionately on the last day of each month over the period during which the
leave would have been taken, commencing with the first day after the date of
termination of the contract.

(3) Where, during the continuance of any employment, income by way of payment in
advance for a leave period, is received by an individual proceeding on leave with
the intentions of resuming his employment at the termination of such leave period,
such income shall be regarded as accruing and being paid proportionately on the
last day of each month during the continuance of the period of leave.

(4) Where, as the result of any law, any judicial order or judgment or the acceptance by
an employer of any independent award or of representations by recognized
association of employees, income is received by an individual by way of arrears of
income in respect of present or past employment, such income shall be regarded as
having accrued and as having been paid during the years to which such arrears
relate, whether charge years under this Act or years of assessment under any
previous law.

36
 Income Tax Act Part III

(5) Where, upon the termination of the services of an individual in an office or

employment, income is received by way of-

a) compensation for loss of office or employment; or

b) repatriation allowance or severance pay, on termination by reason of
redundancy, early retirement, normal retirement, late retirement or death;
(Amended by Act No. 19 of 2015)

the first thirty-five thousand kwacha of the total or aggregate income received, as
applicable, shall be exempt from income tax
(As amended by Acts No. 11 of 1969, 16 of 1972, 11 of 1974, 14 of 1976, 14
of 1987, 29 of 1990, 11 of 1992, 4 of 1993, 14 of 1994, 7 of 1996, 6 of
1999, 3 of 2002, 1 of 2005, 1 of 2009, 49 of 2010, and 18 of 2013)

Apportionment of income

22. Where in the case of any business it is necessary in order to arrive at the income of
the business for any charge year or other period to divide and apportion to specific
periods the income for any period for which accounts have been made up or to
aggregate such income or any apportioned parts thereof, it shall be lawful to make
such a division and apportionment or aggregation, and any apportionment under this
section shall be made in proportion to the number of days in the respective period,
unless the Commissioner-General, having regard to any special circumstances,
otherwise determines.

Assessable Income

22A.The Commissioner-General may, for the purposes of determining assessable

income relating to mineral processing and mining operations for the charge year
2015, determine the appropriate apportionment basis

Provisions relating to income from business

23. (1) Where in computing gains or profits for any charge year any expenditure or loss
has been deducted or a deduction in respect of any reserve or provision to meet any
liability has been made, and in a later charge year the whole or part of the
expenditure or loss is recovered, or the whole or part of the liability is released, or
the retention in whole or part of the reserve or provisions has become unnecessary,
then any amount so recovered or released or no longer required as a reserve or
provision shall be deemed to be gains or profits of the charge year in which it is
recovered or released or no longer required.

37
Part III Income Tax Act
(2) Any amount received under any insurance against loss of profits, or received by way
of damages or compensation for loss of profits, shall be deemed to be gains or
profits of the charge year in which it is received.
(As amended by Acts No. 27 of 1970 and 9 of 1998).

Provisions relating to income after cessation of business

24. Where any amount is received by any person after the cessation of his business
which, if it had been received prior to the cessation, would have been included in
the gains or profits from the business, then, to the extent to which that amount has
not already been included in the gains or profits, that amount shall be income of
such person for the charge year in which it is received.

Insurance business

25. The gains or profits of an insurance business are ascertained in accordance with the
provisions of the Third Schedule.

Income of partner

26. Where a business is carried on by two or more persons in partnership, the income
of any partner from the partnership for any period is the share to which he was
entitled in that period, such income being ascertained in accordance with the
provisions of this Act and that share shall be assessed and charged on him
accordingly.

Special provisions relating to deceased's estate and trusts

27. (1) This section applies to the income of a trust or of a deceased's estate.

(2) For the purposes of this Act, an amount received or forming part of the assets
of a deceased's estate which became due and payable before the death of the
deceased person and which the deceased person had a right to claim in his
lifetime shall be treated as income received by the deceased person on the date
the amount became due and payable if the amount would have been income of
the deceased person had it been received by him in his lifetime.

(3) An amount received by a deceased's estate which did not become payable
before the death of the deceased person shall be income of the deceased’s
estate for the purposes of this Act if the amount would have been income of
the deceased person had it been received or been deemed to have been
received by him in his lifetime:

38
 Provided that any income received by way of emoluments earned by the
Deceased person during his lifetime shall be deemed to be income received by
the deceased person on the date of his death.

(4) Where a beneficiary is entitled to the whole or part of the income of a trust or
deceased's estate, the Commissioner-General may, instead of assessing and
charging the whole or part of the income on the trustee or executor or
administrator, determine that the income of the trust or deceased's estate
attributable to the beneficiary's interest for any charge year or any amount paid
out of the income of the trust or deceased's estate on behalf of the beneficiary
in any charge year shall, for the purposes of this Act, be assessed and charged
on the beneficiary as if it were his income.
(As amended by Acts No. 23 of 1968 and 14 of 1976).

Income of non-resident air, sea or land transport business

28.(1) The income that is deemed under paragraph (g) of subsection (1) of section
eighteen to be from a source within the Republic for any period shall be an amount
bearing the same proportion to the amounts received in respect of the carriage of
passengers, mails, livestock or goods embarked, shipped or loaded in the Republic
as the total gains or profits of such business for the period bear to the total amount
received for the period for the carriage of passengers, mails, livestock or goods.

(2) The Commissioner-General may accept as evidence of the total gains or profits and
total amount mentioned in subsection (1), a certificate of such gains or profits and
amount issued by or on behalf of any income tax authority which the
Commissioner-General is satisfied computes the gains or profits of the business on
a basis not materially different from that provided in this Act.

(3) Where at the time of assessment, the provisions of subsection (1) cannot for any
reason be satisfactorily applied, the income from the Republic may be computed at
such percentage of the full amount received which is attributable to the carriage of
passengers, mails, livestock or goods embarked, shipped or loaded in the Republic
as the Commissioner-General may determine.

(4) Any person assessed under the terms of subsection (3) in respect of any charge year
may claim at any time within six years after the end of the charge year that his
liability to tax be recomputed on the basis provided by subsection (1).
(As amended by Acts No. 11 of 1975, 14 of 1976, 9 of 1977, 10 of 1981, and 11
of 1994)

39
 Income Tax Act Part IV

PART IV

DEDUCTIONS

Deductions generally

29. (1) Subject to the other provisions of this Part in ascertaining—

(a) business gains or profits in a charge year, there shall be deducted the
losses and expenditures, other than of a capital nature, incurred in that year
wholly and exclusively for the purposes of the business; and
(As amended by Acts No. 17 of 2018 and No. 20 of 2020)

(b) income from a source other than business, only such expenditure, other
than expenditure of a capital nature, is allowed as a deduction for any
charge year as was incurred wholly and exclusively in the production of
the income from that source.
(As amended by Act No. 20 of 2020)

(1A) Despite sub-section (1) a deduction shall be allowed on the amount payable by
way of interest on money borrowed by any person where the Commissioner-
General is satisfied that the loan or advance was obtained for capital employed
wholly and exclusively for business purposes or in the production of income.
(Inserted by Act No. 20 of 2020)

(1B) Despite any other provisions of this Act in ascertaining business gains or
profits in a charge year a deduction shall not be allowed on gross interest
expense that exceeds thirty percent of the tax earnings before interest, tax,
depreciation and amortization.
(Inserted by Act No. 20 of 2020)

(2) Only one deduction is allowed under this Act in respect of the same matter in
any charge year:
(As amended by Acts No. 26 of 1970, 3 of 2003 and No. 17 of 2018).

(3) Despite subsection (1) (a), interest, including disallowed interest, is subject to the
deduction of withholding tax in accordance with section 82A.

(4) Interest on which a deduction is not allowed under this section may be treated as
incurred during the next charge year and carried forward for five years, except
that interest may be carried forward for ten years by a person carrying on a
mining operation or generating electricity;
(Amended by Act No. 43 of 2021)
40
 (4A) The interest referred to in subsection (4) shall not exceed thirty percent of
the tax earnings before interest, tax, depreciation and amortisation.
(Inserted by Act No. 43 of 2021)

(5) Section 97A applies to interest which is allowable as a deduction under this
section or which would, but for this section, be allowable as a deduction.

(6) This section does not apply to an institution registered under the Banking and
Financial Services Act, 2017, the Pension Scheme Regulation Act, or the
Insurance Act, 1997

(7) For the purposes of this section -

“ gross interest expense’’ means the interest paid or accrued by a

business in a charge year;

“ interest” includes interest on all forms of debt, payments that are

economically equivalent to interest and expenses incurred in
connection with the raising of finance to the extent that the
incidental costs of raising finance are not covered by section 44(n);
and

“ tax earnings before interest, tax, depreciation and amortisation”

means the sum of taxable income , gross interest expense,
depreciation and amortisation.
(Inserted by Act No. 17 of 2018)

Foreign currency exchange gains and losses

29A. (1) Notwithstanding the provisions of section twenty-nine or any other provisions
of this Act, any foreign currency exchange gains or losses, other than those of a
capital nature, shall be assessable or deductible, as the case may be, in the charge
year in which such gains or losses are realized, that is to say, in the charge year in
which the person or partnership concerned is required to pay the additional kwacha
or is allowed a rebate or a reduction in settlement of a foreign debt or liability:

Provided that foreign exchange losses of a capital nature incurred on borrowings

used for the building and construction of an industrial or commercial building
shall be deductible.

(2) Subsection (1) shall not apply in the case of a bank.

Provided that any foreign currency exchange gains or losses of a bank of a capital
nature shall not be assessable or deductible as the case may be in the charge year
in which they are translated.

41
Part IV Income Tax Act

(3) Where the accounts of a bank made up for the bank’s accounting period ending in
the charge year ending 31st March, 1999 recognise any foreign currency exchange
gain or loss but that gain or loss is not realised within the meaning of subsection
(1) in that charge year, then the amount of that gain or loss of the business carried
on by the bank assessable or deductible, as the case may be, in the charge year
ending 31st March, 2000.

(4) In this section “industrial building” and “commercial building” have the meaning
assigned to them, in the Fifth Schedule.
(As amended by Acts No. 14 of 1987, 6 of 1999, 4 of 2000, 3 of 2002 and 3 of
2003)

Losses

30. (1) A loss incurred by a person in a charge year from –

(a) a source other than a mining operation, shall be deducted from that person’s
income from the same source on which the loss was incurred; and

(b) a mining operation, shall be deducted from fifty percent of the income of the
person from the mining operation.

(2) Where a loss referred to in –

(a) paragraph (a) of subsection (1) exceeds the income of a person for a charge
year, the excess shall, as far as possible, be deducted from that person’s
income from the same source on which the loss was incurred in the
following charge year; and

(b) paragraph (b) of subsection (1) exceeds fifty percent of the income from a
mining operation for a charge year, the excess shall, as far as possible, be
deducted from fifty percent of that person’s income from the mining
operation in the following charge year.

(3) Subject to subsection (1) and (2), a loss incurred by a person –

(a) carrying on a mining operation or electricity generation, shall not be carried

forward beyond ten subsequent charge years after the charge year in which
the loss is incurred; and

(b) in any other case shall not be carried forward beyond five subsequent years
after the charge year in which the loss was incurred.

(4) Losses brought forward as at 31st March, 1997, shall be deemed to have been
incurred in the charge year ending 31st March, 1997.
42
 Income Tax Act Part IV

(5) Where on the death of an individual, interest in a business passes to that

individual’s spouse, any undeducted loss attributable to that interest shall be deducted
from the spouse’s income from that business in accordance with subsection (2).
(As amended by Acts No. 6 of 2015 and 19 of 2015)

Indexation of losses

30A. (1) The losses to be deducted by a person carrying out any mining operations and
keeping books of accounts in United States dollars under subsection (3) of
section fifty-five shall be indexed losses.
(As amended by Act No. 27 of 2011)

(2) For the purposes of this section indexed losses shall be computed as follows:

[ 1 + (R2 – R1)/R1] x loss brought forward

Where: R1 is the Kwacha against the United States dollar at the average
exchange rate for the accounting year preceding the accounting year in which
the loss is being claimed.

R2 is the Kwacha against the United States dollar at the average exchange rate
for the accounting year in which the loss is being claimed.
(As Inserted by Act No. 7 of 2006 and amended by Act No. 17 of 2018)

(3) The Kwacha against the United States dollar exchange rate to be used for the
purpose of subsection (2) is the average Bank of Zambia mid-rate for the relevant
accounting years.
(Inserted by Act No. 17 of 2018)

Transfer of losses

31. If a company has incurred a loss on a source for the purposes of this Act and that
company (in this section called the old company) -

(a) was incorporated outside the Republic; and

(b) carried on its principal business within the Republic; and

(c) is about to be wound up voluntarily in its country of incorporation for the

purposes of transferring the whole of its business and property, wherever
situate, to a company which has been or will be incorporated in the
Republic (in this section called the new company) for the purposes of
acquiring that trade and property and the only consideration for the
transfer will be the issue to the members of the old company of shares in
the new company in proportion to their shareholdings in the old company,
43
 the new company after the transfer referred to in paragraph (c) shall be
allowed the old company's loss as a deduction from income from the same
source as that in which the old company's loss was incurred to the extent that
the loss has not been allowed as a deduction under this Act for any charge
year and such loss shall be allowed in accordance with the provisions of
section thirty.

Provided that the combined period of loss carried forward for both the old and
new companies shall not exceed five years.
(As amended by Acts No. 14 of 1976, 14 of 1987 and 3 of 1997).

Losses prior to bankruptcy, etc.

32.(1) Subject to the provisions of subsection (2), no person may carry forward any
loss incurred before he had been adjudged bankrupt.

(2) Where any person has made a conveyance or assignment of his property for
the benefit of his creditors, or has made an arrangement with them, or has
entered into a composition with them which has been approved by the High
Court pursuant to any Bankruptcy Act in force in the Republic, whereby the
said person is released from his debts or from any proportion or part thereof,
any loss incurred by him prior to his making of such conveyance, or
assignment, or arrangement, or his entering into such composition, may be
carried forward, reduced, however, pro tanto by the amount of the debts
released by or under the said conveyance, assignment, arrangement, or
composition, as the case may be, and such loss shall be allowed in accordance
with the provisions of section thirty.
(As amended by Acts No. 11 of 1969 and 14 of 1976)

Capital Allowances

33. (1) Capital allowances are deducted in ascertaining the gains or profits of a
business and the emoluments of any employment or office for each charge year
-

(a) for buildings, implements, machinery and plant, and premiums, according
to the provisions of Parts I to V inclusive of the Fifth Schedule;

(b) for capital expenditure in relation to mining operations, according to the

provisions of Parts I to VI inclusive of the Fifth Schedule;

(c) for farm improvements and works, according to the provisions of the
Sixth Schedule.

44
Part IV Income Tax Act

(2) The capital allowances to be claimed by a person carrying out mining operations
and keeping books of accounts in United States dollars under subsection (3)
shall be indexed capital allowances.
(As amended by Act No. 27 of 2011)

(3) For the purposes of this section indexed capital allowances shall be
computed as follows:

[1 + (R2 – R1)/R1] x capital allowance]

Where: R1 is the Kwacha against the United States dollar at the average
exchange rate for the accounting year preceding the accounting year in which
the capital allowance is being claimed; and

R2 is the Kwacha against the United States dollar at the average exchange rate
for the accounting year in which the capital allowance is being claimed.
(As amended by Act No. 11 of 1969, 26 of 1970, 46 of 1973, 11 of 1975, 3 of
1997 , 7 of 2006, 27 of 2011, 45 of 2016 and 17 of 2018)

(4) The Kwacha against the United States dollar exchange rate to be used for
the purpose of subsection (3) is the average Bank of Zambia mid-rate for the
relevant accounting years.
(Inserted by Act No. 17 of 2018)

(5) Despite the other provisions of this Act, a capital allowance granted under this
section shall be granted for a charge year irrespective of the period covered by the
accounts being assessed.
(Inserted by Act No. 17 of 2018)

Investment allowances

34.(1) Where a person incurs capital expenditure on the construction of, addition to, or
alteration of any industrial building, as defined in paragraph (1) of the Fifth
Schedule, to be used by him for the purposes of his business as a manufacturer, an
investment allowance of ten per centum of such expenditure shall be deducted in
ascertaining the gains or profits of that business for the year in which the said
building, addition or alteration is first used for the said purposes.
(As amended by Acts No. 11 of 1969, 26 of 1970, 12 of 1982, 11 of 1985, 14 of
1987 and 4 of 1993).

Development allowance

34A(1) Where a person incurs expenditure on the growing of, rose flowers, tea, coffee,
or banana plant or citrus fruit trees or other similar plants or trees an allowance
(in this Act referred to as a development allowance) of ten per centum of such

45
 expenditure shall be deducted in ascertaining the gains or profits of that
business for the charge year.

(2) The development allowance referred to in subsection (1) may, in the case of a
person growing for first time plants or trees referred to therein, be carried
forward to the following charge years up to the first year of production, but in
no case shall the development allowance in respect of more than five
consecutive years be carried forward.
(As amended by Acts No. 10 of 1981, No. 3 of 2002, No.3 of
2003 and No. 20 of 2020)

Local content allowance

34B. (1) Despite section 29, where a person carrying on agro-processing or

manufacturing incurs in a charge year, expenditure, other than expenditure of a
capital nature on the growing or purchase of a prescribed agricultural product,
a local content allowance of two percent of the expenditure shall be deducted
in ascertaining the gains or profits of that business for the charge year.
(Inserted by Act No. 20 of 2020)

(2) The prescribed agricultural product referred to under subsection (1) shall be
grown within the Republic.
(Inserted by Act No. 20 of 2020)

(3) For purposes of this section, the local content allowance shall be claimed in
each year that the expenditure is incurred but not exceeding three charge years.
(Inserted by Act No. 20 of 2020)

Preliminary business expenses

35. A deduction is allowed in ascertaining the gains or profits of a business for the
charge year in which that business commences, in respect of any expenditure that -

(a) was incurred within eighteen months before the commencement of the
business; and

(b) would have been allowed as a deduction in ascertaining the gains or

profits of the business after its commencement.

Amount paid after cessation of business

36. Where any amount is paid by any person after the cessation of his business which,
if it had been paid prior to the cessation, would have been deductible in computing
his gains or profits from the business, then, to the extent to which that amount has
not already been deducted in computing the gains or profits, it shall be deducted
from his income for the charge year in which it is paid or, if he has no income in
46
 that charge year, from his income for the charge year in which the business
ceased, and such deductions shall be made before deductions under sections thirty,
thirty-one, and thirty-two.
(As amended Acts No. 26 of 1970 and 4 of 2000)

Approved fund deductions

37. (1) A deduction shall be allowed in ascertaining the gains or profits of an employer
for a charge year of any amount paid during that charge year by the employer by way of
contribution to an approved fund established for the benefit of employees, including an
approved fund within the meaning of paragraph (c) of the definition of “approved fund”
and a fund approved under paragraph 5 of the Fourth Schedule, if the fund to which the
contribution is made continues to be an approved fund for that charge year.

(2) A deduction shall not be allowed under subsection (1) in respect of any contribution
other than a contribution –

(a) which is not a contribution in arrear; or

(b) which is a special lump sum contribution which is allowed to be deducted under
and in accordance with subsection (3).

(3) A contribution paid by an employer shall be a special lump sum contribution and
shall be treated as a current contribution for a charge year or as current contributions for
the charge years in such amount as the Commissioner-General may direct if paid-

(a) in respect of a service rendered to the employer by an employee prior

to the date of the employee becoming a member of the approved
fund to which the contribution is paid in order that the employee
may qualify for benefits under the approved fund in respect of that
prior service; or
(b) for any other reason approved by the Commissioner-General.

(3) The deduction to be allowed for a charge year in respect of current contributions to
an approved fund other than a fund approved under section 11 (1) of the former Act
shall not exceed twenty per centum of the emoluments liable to tax received from the
employer in that charge year by each employee in respect of whom the contributions
are paid.
(As amended by Acts No. 23 of 1968, 11 of 1969, 26 of 1970, 29 of 1970, 12 of 1982, 11
of 1984, 14 of 1987, 11 of 1992, 4 of 1993, 14 of 1994, 2 of 1995,7 of 1996, 6 of 1999, I
of 2001, 1 of 2009, 10 of 2012 and 16 of 2017)

Deduction for share option scheme

37A. A deduction shall be allowed in ascertaining the gains or profits of an employer

for a charge year of any amount incurred by the employer in the establishment or
in the administration of an approved share option scheme for that charge year.
47
 Part IV Income Tax Act

(Inserted by Act No. 3 of 2002)

Technical education

38. A deduction shall be allowed in ascertaining the gains or profits of a business for
any payment made for the purposes of technical education relating to that business
or for the purposes of obtaining further experience, training or qualifications
relating to that business:

Provided that no deduction shall be allowed under this section in respect of any
payment made –

(a) on behalf of an individual who is related by blood or marriage to the

person making the payment, or to a person who is able to control
directly or indirectly the person making the payment;

(b) in pursuance of an agreement or undertaking to the effect that the

person making the payment will receive any reciprocal benefit for
such payment where made on behalf of an individual who is related
by blood or marriage to any other party to that agreement or
undertaking.
(as amended by Act No. 26 of 1970)

Subscriptions

39. A deduction is allowed in ascertaining the gains or profits of a business or the

emoluments of any employment or office for any subscription paid by a person in
respect of his membership of a trade, technical or professional association which is
related to his business, employment or office.

40. Repealed by Act No. 3 of 1997.

Public Benefit Organisations

41. (1) Subject to the other provisions of this section, an amount paid by a person during a
charge year to a public benefit organisation, shall be deducted from the income of that
person for that charge year if –

(a) the payment is in money or money’s worth;

(b) the payment is made for no consideration;

(c) subject to subsections (2) and (3), the Minister approves the public benefit organisation
to which the payment is made:
48
 Provided that an approval by the Minister may be given retrospectively; or

(d) the payment is made to a public benefit organisation that is owned by the Government

(2) Where a public benefit organisation is owned by the Government, the organisation
shall not
require the Minister’s approval.

(3) The Minister may withdraw an approval given under paragraph (c) of
subsection (1), if the public benefit organisation –

(a) is not exclusively providing a public benefit activity;

(b) submits false information in the organisation’s application to the Minister for
approval as a public benefit organisation; or

(c) uses resources for a purpose other than that provided for in the organisation’s
objectives .

(4) A deduction in the charge year under this section shall be allowed before a
deduction under sections thirty, thirty-one, thirty-two, and thirty six and shall not
exceed fifteen per centum of the assessable income of a person for that charge year.
(As amended by Act No. 26 of 1970, 11 of 1973, 6 of 1980, 12 of 1982, 14 of 1987, 11
of 1992, 7 of 1996, 1 of 2009 and 27 of 2009).

42. Repealed by Act No. 3 of 1997.

Deduction for research

43.(1) A deduction is allowed in ascertaining the gains or profits of a business of any

expenditure, not being expenditure of a capital nature, incurred by the business
during a charge year on experiments or research relating to the business.

(2) A deduction is allowed in ascertaining the gains or profits of a business for any
contribution to a scientific or educational society or institution or other like
body of a public character approved by the Commissioner-General where a
condition of the contribution is that it must be utilised by the society, institution
or body, as the case may be, solely for the purposes of industrial research or
scientific experimental work connected with the business.

Deduction for bad and doubtful debts

43A. (1) A deduction shall be allowed in ascertaining the income from any source for
debts to the extent that the debts have been included in the income from that
49
 Income Tax Act Part IV

source and to the extent that they are proved to the satisfaction of the
Commissioner-General to be bad or likely to become bad and, where there is no
income from that source for the charge year for which such deduction is due that
deduction shall be deemed to be a loss under section thirty.

(2) Where a deduction has been allowed under subsection (I) in respect of any debt,
and in the subsequent charge year part of all of the debt is recovered, or the
amount of the recovery or, where less, the total deductions allowed in one or
more charge years in respect of that debt, shall be assessable in the charge year in
which the recovery is received:

Provided that where recoveries are effected in more than one charge year, the
total amount assessable in each charge year after the first such charge year
shall not exceed the amount of the recovery in that later year or, where less,
the total of the deductions previously allowed less any recoveries assessable in
previous charge years.
(Inserted by Act No. 6 of 1999)

(3) Where a claim for a deduction is made under subsection (1) by a bank, bank
subsidiary or financial institution, subsection (1) shall apply subject to the
following:

(a) the words “to the extent that the debts have been included in the income
from that source” in that subsection shall not apply; and

(b) the maximum deduction for any debt falling within the classifications set
out under the Banking and Financial Services Act shall not exceed the
prescribed level of provisioning for the debt required by the Bank of
Zambia under the Banking and Financial Services Act, less the value of
security or collateral pledged against the debt.
(Inserted by Act No. 4 of 2000 and amended by Act No. 7 of 2014)

Deduction for mineral royalty

43B. A deduction shall be allowed in ascertaining the gains or profits of a business of

any mineral royalty payable and paid for a charge year in pursuance of the Mines
and Minerals Development Act, 2015

(Repealed by Act No. 17 of 1988, Inserted by Act No.6 of 1999, amended by Act
No. 19 of 2015 and repealed by Act No. 17 of 2018, Inserted by Act No. 43 of
2021)

Deduction for mortgage interest

43C. Repealed by Act No. 49 of 2010

50
50
Part IV Income Tax Act

Deduction for employing a person with disability

43D.(1) A deduction shall be allowed in ascertaining the gains or profits of a business

in respect of each person with disability who has been employed full time by such
business for the whole or substantial part of the charge year for which the
deduction is claimed.

(2) The amount of the deduction referred to in subsection (1) shall be two thousand
Kwacha.
(As amended by Acts No. 11 of 1985, No. 4 of 1993, No. 7 of 1996, No.3 of 2002
and No. 20 of 2020).

Deduction for Skills development levy

43E A deduction shall be allowed in ascertaining the gains or profits of a business,

of any levy payable and paid for a charge year, in accordance with the
provisions of the Skills Development Levy Act, 2016.

(As repealed by Act No. 7 of 1996 and introduced by Act No. 45 of 2016)

Case of no deduction

44. No deduction is made in respect of any of the following matters:

(a) the cost incurred by an individual in the maintenance of himself, his family
or establishment, or which is a domestic or personal expense;

(b) any loss or expense which is recoverable under any insurance contract or
indemnity;
(c) capital expenditure or loss of capital, other than loss of stock in trade, unless
specifically permitted under this Act;

(d) any payment to a pension or superannuation fund or scheme or premium

payable under any annuity contract, except such payments as are allowed
under section thirty seven;

(e) any tax or penalty chargeable under this Act;

(f) Repealed by Act No. 9 of 1998.

(g) any amount which would be deductible in ascertaining the income from a
source or from income which the Commissioner-General is prohibited from
including in any assessment under the provisos to subsection (1) of section
sixty three;

51
 Income Tax Act Part IV

(h) any expenditure incurred or capital asset employed, whether directly or

indirectly, in the provision of entertainment, hospitality or gifts of any kind:
Provided that this paragraph shall not apply to -

(i) any expenditure incurred or capital asset employed in the provision

of anything which it is the purpose of a person's business to provide
and which is provided in the ordinary course of that business for
payment or for the purpose of advertising to the public generally
without payment;

(ii) Repealed by Act No. 11 of 1992

(iii) any expenditure incurred in the provision of a gift to any person

consisting of an article incorporating a conspicuous advertisement
for the donor the cost of which to the donor, taken together with the
cost to him of any other such articles given by him to that person in
the same charge year, does not exceed one hundred Kwacha ;

(i) any amount incurred by the employer in the establishment or administration of a

share option scheme, except such amounts as are allowed under section thirty-
seven A.
(Repealed by Act No. 3 of 1997 and inserted by Act No. 3 of 2002)

(j ) Repealed by Act No. 3 of 1997.

(k) Repealed by Act No. 4 of 1993.

(l) tthe cost of any benefit or advantage not capable of being turned into
money or money's worth that is provided to employees, subject to such
directions as shall be issued by the Commissioner-General;

(m) any copper price participation payment or any cobalt price participation
payment;

Provided that a deduction shall be allowed to Konkola Copper Mines

PLC and Mopani Mines Plc in respect of any payments made
pursuant to cobalt price participation and copper price participation
agreements between Konkola Copper Mines Plc or Mopani Plc and
Zambia Consolidated Copper Mines Limited;
(Inserted by Act No. 4 of 2000, substituted by No 1 of 2005)

(n) incidental costs of obtaining finance such as commitment and guarantee

fees, commissions and any other incidental costs of a similar nature; and
(Inserted by Act No. 3 of 2003)

(o) provision for a contigent employee cost that is not paid out to the employee
52
Part V

in the charge year ; and

(Inserted by Act No. 3 of 2003, Repealed by Act No 17 of 2018 and
Inserted by Act No. 17 of 2018)

(p) (Inserted by Act No. 17 of 2018, Deleted by Act No. 43 of 2021)

PART V

RETURNS AND ASSESSMENTS

Notice to Commissioner-General

45. Every person within thirty days from first receiving income liable to tax under this
Act shall give written notice accordingly to the Commissioner-General.
(As amended by Act No. 26 of 1970).

Duty to provide taxpayer identification number

45A (1) Every person shall provide his Taxpayer Identification Number with all forms,
notices, certificates, documents, and other communications submitted to the
Commissioner-General under this Act.

(2) Any person carrying on any business in partnership shall provide taxpayer
identification number of every partner with all documents, forms, notices,
certificates, and other communications submitted to the Commissioner-General
under this Act.

(3) Every person making payments for which it is required to submit to the
Commissioner-General a return, notice, form, certificate, or other such document
under sections fifty, fifty-two, seventy-one, eighty, eighty one A, eighty-two or ninety
five D of this Act shall furnish to the Commissioner-General on or along with that
document the taxpayer identification numbers for all persons to whom the payments
have been made.

(4) This section shall have effect irrespective of the charge year to which the forms,
notices, certificates, documents and other communications referred to in subsection
(1) to (3) pertain.

(5) For the purposes of subsection (1), “person” includes partnership.

(As amended by Act No. 11 of 1992)

Taxpayer identification number required for certain transactions

53
45B.(1) The institutions listed in column 1 of this subsection shall require a taxpayer
identification number from any person, applying for anything listed, or engaged in
the types of transactions listed, whichever is applicable, in column 2 of this section:

54
 Income Tax Act Part V

COLUMN 1 COLUMN 2

INSTITUTION TYPE OF TRANSACTION

Commissioner of lands Registration of titles

Registrar of motor vehicles Registration and transfer of motor vehicles

Registration authority Company, business name or other legal entity

Zambia Electricity Supply Payment of deposit for power connection

Corporation Limited

Bank or financial institution Account opening and holding

Regulatory bodies registration, renewal or issuance of a licence,

practicing certificate, permit or similar
document

(As amended by Acts No. 27 of 2011, 45 of 2016, 16 of 2017 and 20 of 2020)

(1A) The requirement for a taxpayer identification number by a regulatory body under
subsection (1) shall come into operation on a date that the Minister may appoint
by statutory instrument.
(Inserted by Act No. 20 of 2020)

(2) Each institution listed in column 1 of subsection (1) shall avail the
Commissioner-General or his authorised agent access to the documents, forms,
notices, certificates and other communications in which a taxpayer identification
number is required to be used under subsection (1):

Provided that such access shall be as is necessary to assist in the enforcement of

the tax laws.

(3) Any person, including a person carrying on any business in partnership, who is
required under subsection (1) to furnish a taxpayer identification number and who
furnishes a false number shall be guilty of an offence under this Act.
(As amended by Acts No. 11 of 1992, 4 of 1993 and 9 of 1998).

Returns generally

46.(1) Every person liable to tax for any charge year, other than an individual whose
income consists entirely of emoluments within the provisions of Part VI (which
relates to Pay As You Earn) shall furnish to the Commissioner-General a return
of income and such particulars as may be required for the purposes of
ascertaining the income chargeable, if any, and the tax liability due, if any
under this Act.
55
(2) The return required under this section shall -

(a) contain a statement of the person's income liable to tax including

income deemed under this Act to be the income of the person in
respect of whom the return is submitted but excluding any income
which cannot be assessed by virtue of the proviso to subsection (1)
of section sixty three;

(b) contain a computation, by or on behalf of the person liable to tax, of

the amount of tax due based on rates of tax applicable for such
charge year and, in the case of an individual, any deductions and tax
credit to which he is entitled;

(c) include a declaration by such person, or by the person in whose

name he is assessable, that such return includes a full statement of
income liable to tax and a proper computation of tax due for such
charge year; and

(d) be designated in kwacha.

(3) The return referred to in subsection (1) shall be furnished to the

Commissioner-General -

(a) in the case of an electronic return, not later than 21st June following
the end of any charge year; and

(b) in the case of a manual return, not later than 5th June following the
end of any charge year;

(4)Where a person fails to submit a return on or before the date provided for under
subsection (3), there shall be charged a penalty of:-

(a) in the case of an individual, one thousand penalty units per month or
part thereof;

(b) in the case of a company, two thousand penalty units per month or
part thereof; or

(c) in the case of a turnover tax return, two hundred and fifty penalty
units per month or part thereof.

Provided that the Commissioner-General may in his discretion remit the

whole or part of any such penalty.
(As amended by Acts No. 11 of 1992, 13 of 1994, 2 of 1995, 3 of 1997,
9 of 1998, 3 of 2002, 1 of 2005, 1 of 2008, 1 of 2009, 27 of 2011, 19 of
2015, 45 of 2016 and 16 of 2017)
56
Part V Income Tax Act

Provisional income

46A.(1) Without prejudice to the requirement under section forty-six, every person,
excluding an individual whose income consists entirely of emoluments within the
provisions of Part VI which relates to (Pay As You Earn), shall submit in
accordance with this section a return of provisional income and tax for any charge
year:

Provided that an individual who does not expect to receive assessable income (other
than emoluments within the provisions of Part VI) in excess of the amount
specified in subparagraph (c) of paragraph 2 of the Charging Schedule for such
charge year need not submit such return.

(2) The return of provisional income required under this section shall -

(a) contain an estimate (based on information reasonably believed to be true)

of the person's income liable to tax, including income deemed under this
Act to be the income of the person in respect of whom the return is
submitted; but excluding any Income which cannot be assessed by virtue
of the proviso to sub section (1) of section sixty-three

(b) contain a computation of tax based on rates of tax applicable for such
charge year and, in the case of an individual, deducting any tax credit to
which the individual is entitled, and any such computation shall exclude
tax on income falling within Part VI (Pay As You Earn) and any tax
deducted from any other income.

(c) include a declaration by such person or by the person in whose name he is

assessable, that such provisional return includes a full and reasonable
estimate of his income for such charge year; and

(d) be designated in kwacha.

(3) The return of provisional income referred to in subsection (2) shall be furnished -

(a) in any charge year –

(i) in the case of an electronic return, not later than 31st March of the
charge year to which the return relates;

(ii) in the case of a manual return, not later than 5th March of the charge
year to which the return relates; and

57
 Income Tax Act Part V

(iii) in case where a person registers for income tax after the due date as
specified under this subparagraph (i) and (ii), the return shall be due
within 90 days of that registration.

(b) in the charge year ending 31st December 2012, not later than 30th June,
2012:

Provided that where during the course of the charge year, any person
discovers that the return of provisional income furnished under this section is
likely to be substantially incorrect because of changed circumstances, such
person shall furnish a revised return of revised provisional income and in such
a case, any alteration in the amount of estimated tax payable shall be taken
into account in the next instalment, pursuant to section seventy-seven,
immediately following the date of such revised return.
(As amended by Act No. 16 of 2017)

(4) Where an individual is not required to make a return of provisional income and
tax-

(a) for any charge year; and

(b) for the charge year ending 31st December 2012;

by virtue of the proviso to subsection (1), but at a time subsequent to 31st

March in that year, and in the case of paragraph (b) at a time subsequent
to 30th June, 2012 that proviso ceases to apply to the individual, that
individual shall make a return in accordance with subsections (1) and (2)
within fourteen days of the proviso ceasing to apply to that individual.

(5) Where upon receipt of a return of income pursuant to section forty-six, it is

discovered that income has been so understated that the tax on the return has been
underpaid by at least one-third, then such person shall be liable to a penalty under
this section calculated at the rate of twenty-five per cent of the tax which has been
underpaid.

(6) In this Act any reference to a person's provisional income for any charge year is a
reference to the estimate calculated in accordance with paragraph (a) of subsection
(2) of that person's income for that charge year.

(7) In this Act any reference to any provisional tax which a person is liable to pay
during any charge year is a reference to the estimate calculated in accordance with
paragraph (b) of subsection (2) of that person's tax liability for that charge year.

(8) Where a person fails to submit a return or a revised return in accordance this
section, there shall be charged a penalty of-

58
 (a) in the case of an individual, one thousand penalty units per month or part
thereof during which such failure continues; or

(b) in the case of a company, two thousand penalty units per month or part
thereof during which such failure continues:

Provided that the Commissioner-General may remit the whole or part of any
such penalty.

(9) Any reference to tax in subsection (7) of section seventy-eight, and in sections
seventyeight A, seventy-nine, seventy-nine A, seventy-nine B, seventy-nine C,
seventy- nine D, eighty-three, eighty -four, eighty-six, eight-seven, and ninety-two
includes a reference to provisional tax.
(As amended by Acts No. 12 of 1982, 17 of 1988, 11 of 1992, 2 of 1995, 7 of 1996, 9
of 1998, 6 of 1999, 4 of 2000, 1 of 2001, 3 of 2002,1 of 2005, 27 of 2011, 18 of 2013
and 19 of 2015).

Estimated provisional tax return

46B. (1) Where any person has, for any year, failed to submit a return or revised return
under section forty-six A the Commissioner-General may -

(a) estimate such person’s income chargeable to tax, in accordance with

paragraph (a) of subsection (2) of section forty-six A; and

(b) compute the provisional liability to tax of that person on that estimated
income in accordance with paragraph (b) of subsection (2) of section
forty-six A; and shall serve notice on that person specifying the amount of
income so estimated and the provisional tax liability so computed

(2) Subject to subsections (1) and (3) of section forty-six A, a notice served on any
person under subsection (1) shall, for the purposes of this Act, be deemed to
be a return of provisional income and tax made by that person, and a person is
not relieved of any obligation to make any return of provisional income or tax
or from any penalties for failure to make such a return under section forty-six
A.

(3) Where a person who has been served with a notice under this section makes a
return under section forty-six A which, apart from the date on which the return
is made, complies with the requirements of that section, the notice under this
section shall cease to have effect.

Further provisions as to returns

47. (1) The Commissioner-General may, by notice in writing require any person to

59
Part V Income Tax Act

furnish him, within a reasonable time specified in the notice, with further returns
or particulars in relation to any matter contained in a return made under this
Act or in relation to any transactions or matters appearing to the
Commissioner-General to be relevant to the ascertainment of the income of
that person.

(2) The Commissioner-General may determine that any person shall make a return
on another person's behalf, and any such return is the return of that other
person for the purposes of this Act, save that the operation of this subsection
shall not relieve that other person of any liability under this Act.

(3) Any person preparing, signing or rendering any return or statement for the
purposes of this Act is deemed to be aware of the contents of that return or
statement.
(As Amended by Act No. 6 of 1999)

Furnishing of Information

48. (1) The Commissioner-General may request a person to furnish to the

Commissioner-General information, whether relating to the affairs of that
person or any other person that the Commissioner-General determines is
necessary for the purposes of this Act.

(2) A record requested under this section shall be provided despite the record being
outside the Republic or held by a person who is not a resident of the Republic.

(3) A person who fails to provide records requested by the Commissioner-General

under subsection (1), including records requested pursuant to Part IX, shall be
barred from using that record to challenge an assessment or determination, in a
court or tribunal.
(As Amended by Act No. 20 of 2020)

48A. (1) Subject to subsection (2), the provisions of this Act shall have effect
notwithstanding any obligation as to secrecy or other restriction on the
disclosure of information imposed under the Banking and Financial Services
Act, the Evidence (Bankers Books) Act, the Accountants Act, 2008 and the
Legal Practitioners Act in respect of information required by the Commissioner-
General for the purposes of this Act.

(2) Subsection (1) shall not apply to information received from, or obtained on,
a client by a legal practitioner-

(a) in the course of ascertaining or receiving instructions from a client; or

(b) in defending or representing a client, or concerning judicial, administrative,

arbitration or mediation proceedings, including advice on instituting or
60
 Income Tax Act Part V

avoiding proceedings, whether such information is received or obtained

before, during or after such proceedings.
(Amended by Act No. 18 of 2013)

Statement of bank accounts, assets, etc.

49. The Commissioner-General may give notice in writing to any person requiring him
to furnish within the time limited by such notice, not being less than thirty days
from the date of service of such notice, a statement in writing containing
particulars of -

(a) all banking accounts, whether current or deposit, business or private, in his
own name or in the name or names of his wife or wives, or in any other
name, in which he is or has been interested, or on which he has or has had
power to operate, jointly or solely, and which are in existence or which
have existed at any time during the period stated in the notice;

(b) all savings and loan accounts, deposits, building society, and co-operative
society accounts, in regard to which he has, or has held, any interest or
power to operate jointly or solely during the period aforesaid;

(c) all assets, other than those referred to in paragraph (a) or (b) which he and
his wife or wives possess, or have possessed, during the period aforesaid;

(d) all sources of income not referred to in paragraph (a), (b) or (c) and the
income derived there from, and

(e) all facts bearing upon his liability to income tax to which he is or has been
liable.

Return of lodgers and inmates

50. The Commissioner-General may by notice in writing require any person whose
business is to provide living accommodation to deliver a list of all persons he has
so accommodated.

Information as to business matters

51. Whenever so required by the Commissioner-General, and in the prescribed form,

everyone carrying on business shall deliver returns showing:-

(a) particulars of all payments in respect of any share or interest in the business;

(b) particulars of all moneys received by him on deposit;

61
 (c) particulars of any interest received or paid by him; and

(d) such other information as may be in his possession relating to the income
received by any other person.

52. Repealed by Act No. 3 of 1997

Public documents

53. Notwithstanding anything to the contrary in any written law, any officer in the
service of the Government, a local authority or public body who has charge of
documents or electronically stored data which might aid the carrying out of the
provisions of this Act shall permit the Commissioner-General or the
Commissioner-General's authorised officer to inspect and copy those documents or
electronically stored data and have custody of such of them as are necessary for
production in proceedings.
(As Amended by Act No. 3 of 2002)

Information as to companies

54. (1) A resident company shall deliver to the Commissioner-General a copy of its
memorandum and articles of association, and copies of all amendments thereto, and, if
the Commissioner-General so determines, all the particulars relating to the company’s
affairs and shareholders that the Commissioner-General may in writing require.

(2) A company shall, within one month after another company has become related to it,
lodge with the Commissioner-General a notice of that fact together with the particulars
identifying the body corporate.

(3) If a company fails to comply with this section, the company, and each officer in
default, commits an offence, and is liable, on conviction, to a penalty not exceeding ten
thousand penalty units for each day that the failure continues.
(Amended by Act No. 16 of 2017)

Accounts and records

55. (1) Every person carrying on a business shall keep, in the English language, books,
accounts, documents, records and other information of all his transactions, and,
unless otherwise authorised by the Commissioner-General, shall retain for six
years from the date of the last entry all documents relating to any business carried
on by him, or otherwise recording the details from which his returns for the
purposes of this Act were prepared.
(Amended by Act No. 17 of 2018)

(1A) The books, accounts documents, records and other information referred to in
subsection (1) shall be kept in Zambian Kwacha.
62
 (Inserted by Act No. 20 of 2020)

(2) Despite subsection (1), businesses covered by Part IX shall retain books,
accounts, documents, records and other information relating to the business for
ten years from the date of the last entry in those books, accounts, documents,
records and that other information;
(Inserted by Act No. 17 of 2018)

(3) A person who retains, in accordance with conditions specified by the

Commissioner-General, photographic reproductions of the documents referred
to in subsection (1) is deemed to retain those documents for the purposes of
that subsection.
(Renumbered by Act No. 17 of 2018)

(4) Despite subsection (1A), a person carrying out any mining operations may
elect to keep books of account in United States Dollars of all transactions
relating to, connected with, or incidental to, such operations if the
Commissioner-General is satisfied that not less than 75 per centum of that
person's gross income from mining operations is earned in the form of foreign
exchange from outside the Republic.

Provided that such election shall not be reversed without the consent of the
Commissioner-General.
(Renumbered by Act No. 17 of 2018 and amended by Act No. 20 of 2020)

(5) The Kwacha against the United States Dollar exchange rate to be used for
purposes of translating the books of account referred to in subsection (4) is
the average Bank of Zambia mid rate for the accounting period.

(As amended by Act No. 14 of 1994,45 of 2016 and Act No. 17 of 2018)

Documents in support of returns

56.(1) Notwithstanding subsection (4) of section fifty-five, a return furnished under

subsection (1) of section forty-six by a person may be supported by such
accounts in Kwacha and other documents as are necessary to support the
return and shall be signed by the person furnishing the return.
(As amended by Act No. 3 of 2002 and Act No. 7 of 2014)

(2) Where such accounts were audited by a person in a professional capacity or

where such accounts were not so audited but were prepared by a person in a
professional capacity, that auditor or person shall furnish a certificate signed by
him stating-
63
 (a) the nature of the books of account and other documents from which such
accounts were prepared;

(b) the extent of his verification of the books of account and other documents
produced to him;

(c) whether and to what extent, if any, there are included any estimated
amounts or balancing adjustments;

(d) whether and subject to what reservations, if any, he considers that such
accounts present a true and fair view of the gains or profits from such
business for the period and the state of the business at the end of the
period; and

(e) the capacity in which he signs the certificate; and such certificate shall
accompany the return.

(3) Where any person furnishes a return supported by accounts and such accounts
were not audited or prepared by a person referred to in subsection (2) then he
shall furnish a certificate signed by himself stating -

(a) the nature of the books from which such accounts were prepared;

(b) whether and to what extent, if any, there are included any estimated
amounts or balancing adjustments;

(c) whether such accounts include all the transactions of his business and
present a true and fair view of the gains or profits from such business
for such period.

(6) In this section, "accounts" means a balance sheet or statement of assets and
liabilities together with a trading account, profit and loss account or an
income and expenditure account or other similar statement, however named.

(7) For the purposes of this section "person in a professional capacity" shall mean
an individual carrying on the profession of accountant or auditor or one who
prepares accounts for reward or in the course of his business either on his own
or in partnership or as an employee.
(As amended Acts No. 16 of 1972 and 49 of 2010).

Examination by Commissioner-General

57. Where the Commissioner-General determines that any person is able to impart
information necessary for the purposes of this Act, the Commissioner-General

64
 Income Tax Act Part V

may, on reasonable notice to that person, require him to attend to be examined at

the time and place specified in the notice.

Production and preservation of books and documents

58. For the purpose of obtaining full information in respect of the income of any
person or class of persons, the Commissioner-General may, by notice in writing,
require, in the case of the income of any person, that person or any other person,
and in the case of any class of persons, any person -

(a) to produce for examination by the Commissioner-General, at such time

and place as may be specified in such notice, any accounts, books of
account and other documents or electronically stored data which the
Commissioner-General may consider necessary;

(b) to produce forthwith for retention by the Commissioner-General for such

period as may be reasonable for their examination any accounts, books of
account and other documents or electronically stored data which the
Commissioner-General may specify in such notice;

(c) not to destroy, damage or deface, on or after service of such notice, any
of the accounts, books of account and other documents or electronically
stored data so specified without permission of the Commissioner-General
in writing.
(As amended by Act No. 3 of 2002)

59. Repealed by Act No. 7 of 1996.

Amount of dividends, interest or royalties to be included in income

60. (1) The amount of income received from which tax is deductible under sections
eightyone, eighty-one A, eighty-two or eighty-two A or on which tax is payable
under section eighty-one shall be the gross amount before deduction or payment:

Provided that the amount of income received by way of dividends from which tax
has been deducted in accordance with the direction of the Commissioner-General
made pursuant to the provision of paragraph (a) of subsection (1) of section
eighty-one shall be the amount that would have been received if tax had been
deducted at the rate that would have been deductible but for the direction.

(2) The amount of income received from a source outside the Republic (in this section
called foreign income) shall be the gross amount of that income before the
deduction of the amount of the foreign tax.

(3) The amount of the income received by a beneficiary from a trust or deceased's
estate on which tax has been paid or is payable by the trust or deceased's estate
65
Part V Income Tax Act

shall be the gross amount of that income before the deduction of tax at the rate
paid or payable on that income by the trust or deceased's estate.

(4) In this section, "foreign tax" has the same meaning as in section seventy-five or
seventy six, as the case may require.
(As amended by Acts No. 16 of 1972, 11 of 1973, 11 of 1974, 9 of 1977, 9 of 1978
and 4 of 2000)

Partnership returns

61. Persons carrying on any business in partnership shall furnish a joint return of
income of the partnership for a charge year declaring therein the names and
addresses of all the partners and the amount of the share of the income to which
each partner is entitled for that year, together with such other particulars as the
Commissioner-General may, in writing, require.

Business accounts

62. (1) Where the accounts of the business of any person or partnership are made up
for a period of twelve months ending on some date other than the last day of the
charge year, the Commissioner-General may in his discretion accept such accounts
for the purposes of determining the gains or profits of the business in respect of the
charge year ending either before or after the closing date of such accounts, and the
Commissioner-General may for the purposes of this subsection accept accounts
for a period of less than twelve months as though the accounts had been made for
a period of twelve months.

(2) Where the Commissioner-General accepts the accounts of the business of a person
or partnership pursuant to subsection (1), the accounts of that business shall for the
purposes of this Act be made up subject to subsection (3) for all subsequent charge
years to the date corresponding in subsequent charge years to the date so accepted.

(3) Where the accounts of the business of a person or partnership are not made up in
respect of a subsequent charge year to the date in that year corresponding to the
date so accepted, then the income of the business for that subsequent charge year
and the preceding year may be computed or adjusted, as the Commissioner-
General, in his discretion, may decide.

(3A) Where a company makes up the accounts of its business for a period, in this
section referred to as “the accounting period”, ending on a date other than 31st
December and such accounts are or will be accepted by the Commissioner-
General for the purpose of determining the gains or profits of the business in
respect of a charge year, in accordance with the provisions of this section and that
company is required by any provision of this Act to submit a return of income,
including a return of provisional income and tax, for that charge year, that return

66
 Income Tax Act Part V

shall be of income, or provisional income, for the accounting period for which
relevant accounts are or will be made up.
(As amended by Act No. 27 of 2011)

(3B) For purposes of subsection (3A) “ relevant accounts” in relation to any charge
year means the accounts which are or will be submitted to the Commissioner-
General for the purposes of determining the gains or profits of the business in
question in respect of that charge year.
(Inserted by Act No. 6 of 1999)

(4) Where the Commissioner-General has accepted the accounts of the business of a
person or partnership pursuant to subsection (1), and the business ceases, that
person or partnership shall return for assessment accounts to include all income of
the business in the period between the closing date of the last accounts so accepted
for the immediately preceding charge year and the date when the business ceased.

(5) Where the period referred to in subsection (4) exceeds twelve months, separate
accounts shall be delivered for the period of twelve months ending on the date
accepted under sub-section (1) as the closing date of the accounts of the business,
and for the balance of the period in excess of twelve months.

(6) The income determined on the basis of the accounts referred to in subsection (4)
and (5) is charged to tax as follows:

(a) where the period is in excess of twelve months, the income determined on
the basis of the accounts delivered for twelve months, as required under
subsection (5), is deemed to be the income for the charge year succeeding
that in which the income based on the accounts for the immediately
preceding charge year was assessed, and the income for the remaining
period is deemed to be income of the following charge year;

(b) where the period is one of less than twelve months, the income based on
the accounts delivered under subsection (4) is deemed to be the income
of the charge year succeeding that in which the income based on the
accounts for the immediately preceding year was assessed.

(7) Notwithstanding subsection (6), where a person or partnership has delivered

accounts for the assessment of his business, and the whole or part of the income
determined on those accounts has been charged to tax in more than one charge
year, then when the business ceases the income for the last charge year is reduced
by an estimate determined by the Commissioner-General of the income which has
been so charged to tax in more than one charge year, and if that estimate exceeds
the income for the last charge year, then the income for the penultimate charge
year shall be reduced by the amount of such excess.

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Part V Income Tax Act

(8) For the purposes of this section, a person may be assessed in respect of his income
notwithstanding that he may not have been in existence during any part of the
relevant charge year.
(As amended by Acts No. 4 of 1976 and 6 of 1999)

Averaging of farming and fishing income

62A. Where a person or partnership carries on in two consecutive charge years a

business of fishing or farming, excluding the letting of property for such purpose,
and irrevocably so elects by notice in writing to the Commissioner-General before
the end of the charge year immediately following the end of the second such
consecutive charge year, the income received from, or loss incurred in, such
business in each of the two charge years shall be averaged, and the average
income or loss shall be deemed to have been received or incurred in each of the
two said charge years:

Provided that there shall be no right of election under this section where an
election has already been made under this section in respect of one or two
consecutive charge years in respect of the same income or loss.
(As amended by Acts No. 17 of 1971 and 14 of 1987).

Commissioner-General's power to assess

63.(1) Subject to the provisions of subsection (1A) and sections seventy-two and
ninetythree, the Commissioner-General shall assess every person who is liable to
tax under this Act or who claims, or is entitled to, a deduction under sections
thirty, thirty-one, thirtytwo or thirty six:

Provided that the Commissioner-General shall take into account the provisions of
any agreement made under section 74, if applicable, and shall not include in any
such assessment for any charge year:-

(i) dividends from which tax in respect of that charge year has been deducted
under section eighty one;

(ii) a lump sum payment from which tax in respect of that charge year has been
deducted under section eighty two;

(iii)Repealed by Entertainment Act No.3 of 1996.

(iv) in the case of a person who is not a resident in the Republic for any charge
year, interest, public entertainment fee royalties, any management or
consultancy fee or commission from which tax, in respect of that charge
year has been deducted under section eighty-two A; or
(As amended by Act No. 27 of 2011)
68
 (v) in the case of a resident individual, interest from which tax in respect of
that charge year has been deducted under section eighty-two A.

(v) interest on Government Bonds from which tax in respect of that charge year
has been deducted under section eighty-two A..

(vi) income from an individual from which tax in respect of that charge year
has been paid under section sixty four A; and

(vii) in case of a person exempted under subparagraph (1) of paragraph 5 and

subparagraph (1) of paragraph 6 of the second schedule, interest from
which tax in respect of that charge year has been deducted under section
82A.

(viii) income from gaming, lotteries and betting from which tax in respect of
that charge year has been deducted under section eighty-two A; and

(ix) income from letting of property from which tax in respect of that charge
year has been deducted under section eighty-two A.
(Amended by Act No. 18 of 2013)

(x) distributed income of an income real estate investment trust from which tax
in respect of that charge year is deducted under section 82A.
(Inserted by Act No. 43 of 2021)

(1A) In any case where a person has made payments of tax or provisional tax in
respect of any charge year under section forty-six or forty-six A if the
Commissioner-General is satisfied that the person has no outstanding tax liability
for that year, the Commissioner-General need not assess that person under this
section, unless the person makes a request in writing for an assessment.

(IB) Where a person has made a return of tax under section forty-six but is assessed
under this section for any amount, the assessment shall not relieve that person of
any liability under section seventy-eight in respect of any failure to make any
payment of tax.

(IC) Where a person has made payments of tax or provisional tax for a charge year but
subsection (IA) does not apply, the Commissioner-General shall make an
assessment in respect of that year and that person only for the amount by which
the payments made differ from the amount of tax due for that year.

(2) Subject to the provisions of subsection (1) to (1C), an assessment shall be made in
respect of every person for each charge year, and as many amended assessments
may be made in respect of such person for any such charge year as are necessary

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 Income Tax Act Part V

to give effect to the provisions of this Act, and whereby his liability to tax may be
increased, reduced or cancelled, as the circumstances require.

(3) Wherever for the purposes of this Act income is chargeable to tax in any charge
year following the charge year in which it is received, the Commissioner-General
may assess any person in respect of such income at any time and may make such
assessment at the current rate of tax

(4) The liability of any person to render a return or other information required under
this Act for any charge year is not relieved because he is assessed for that charge
year before such return or information is rendered.
(As amended by Acts No. 23 of 1968, 26 of 1970, 17 of 1971, 16 of 1972, 11 of
1973, 11 of 1974, 11 of 1975, 14 of 1976, 10 of 1979, 11 of 1984, 11 of 1985,
4 of 1993, 9 of 1998, 6 of
99, and 3 of 2002).

Estimated assessments

64. (1) An assessment may be made by the Commissioner-General in any amount

according to the best of the Commissioner-General’s judgement in respect of any
person -
(a) who has not delivered a return as required by this Act, or on whose behalf a
return has not been so delivered;
(b) whose return does not satisfy the Commissioner-General;
(c) who the Commissioner-General has reasons to believe is about to leave the
Republic;
(d) where the Commissioner-General has reason to believe that the company is
to be wound up or liquidated.

(2) Where the Commissioner-General does not have sufficient information on which
to estimate an assessment under subsection (1), the Commissioner-General may when
establishing the amount of tax which is due and payable resulting from any
subsequent assessment which the Commissioner-General may determine for the same
charge year –
(a) assess a base tax of three hundred and sixty-five Kwacha in any charge
year; and
(b) allow a credit for the amount of any base tax which has been paid in a
charge year.
(As amended by Acts No .14 of 1994, 3 of 1997, 6 of 1999, 3 of 2002 and 16 of
2017)

Standard Assessment

64A (1) The Commissioner-General may make a standard assessment requiring any
individual or partnership carrying on the business of operating a public service

70
 vehicle for the carriage of persons to pay a presumptive tax as set out in Part I of
the Ninth schedule.

(2) The Commissioner General may make a standard assessment requiring any
person carrying on any business, other than the business referred to in
subsection(1), with an annual turnover of eight hundred thousand Kwacha or less,
to pay tax on turnover at the rate set out in Part II of the Ninth Schedule:

Provided that the provisions of this subsection shall not apply to income earned
from the provision of consultancy services or from mining operations or to income
earned from a business that qualifies for voluntary registration under the Value
Added Tax Act and is issued with a value added tax registration certificate.

(3) The Commissioner-General may make a standard assessement requiring a person

carrying on the business of betting and gaming to pay a presumptive tax as set out
in Part III of the Ninth Schedule.
(Inserted by Act No. 17 of 2018)

(3A) The Commissioner-General may make a standard assessment requiring a person

or partnership letting out property to pay tax on turnover at the rate set out in the
Charging Schedule.
(Inserted by Act No. 43 of 2021)

(4) The Commissioner-General may appoint a person as an agent to withhold

turnover tax before making any payments for the supply of goods or services.
(Inserted by Act No. 17 of 2018)

(5) The Minister may, by statutory instrument, make regulations for the
administration of this section.
(Inserted by Act No.3 of 2003, amended by No 1 of 2004, amended by Act No. 4 of
2007, Act No. 1 of 2008, Act No. 10 of 2012, Act No. 17 of 2018 and renumbered by
Act No 17 of 2018)

64B Repealed by Act No. 1 of 2009

Assessment rules

65. (1) Notice of assessment shall be given to the person charged.

(2) Subject to subsection (3), an assessment shall not be made for a charge year
after six years from the end of that charge year.
(As Amended by Act No. 17 of 2018)

(3) Despite subsection (2), an assessment may be made for a charge year after six
years from the end of that charge year –

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Part V Income Tax Act

(a) in case of fraud or willful default; or

(b) for the purposes of –

(i) sections 21, 88, 91, 97A, 97B, 97C, 97D or 113, except that
an assessment for the purposes of sections 97A, 97B, 97C and
97D shall not be made after ten years from the end of that
charge year;

(ii) part VII;

(iii) paragraph 25 of the Fifth Schedule; or

(iv) granting tax credits as provided in the Charging Schedule.

(Inserted by Act No. 17 of 2018)

(4) No assessment shall be made in respect of the income of any deceased person after
the expiry of three years after the end of the charge year in which such deceased
person died.
(Renumbered by Act No. 17 of 2018)

(5) An assessment made in accordance with generally prevailing practice is not affected
by any change in that practice after the time for objection to the assessment has
expired.
(As amended by Acts No. 26 of 1970, 14 of 1976, 7 of 1996, Act 10 of 2012, Act No. 17
of 2018 and Renumbered by Act No. 17 of 2018)

Taxpaying agents

66.(1) For the purposes of this Act, a taxpaying agent is, in relation to income -

(a) of a company, any of the individuals mentioned in subsection (1) of

section sixty nine;

(b) managed by an agent, the agent;

(c) remitted by a person or partnership in the Republic to a person who or

partnership which is outside the Republic, the person or partnership
remitting the income;

(d) of a trust, a trustee of the trust;

(e) of a person who has died, his executor or administrator;

72
 Income Tax Act Part V

(f) of a deceased’s estate, the executor or administrator of the deceased

person's estate;

(g) of a bankrupt's estate, the trustee in bankruptcy;

(h) of an incapacitated person, his trustee, guardian, curator, committee or

receiver appointed by a court, as the circumstances of the case may
require;

(i) of a company which is being wound up or is under judicial, management,

the liquidator or judicial manager.

(2) No provision concerning a taxpaying agent shall relieve any other person of any
liability under this Act.

(3) Every reference in this Act to a taxpaying agent is to him only as such, save where
otherwise provided.
(As amended by Acts No.23 of 1968 and 14 of 1976).

Assessment of taxpaying agent

67.(1) Every taxpaying agent, in respect of income which he receives as an agent, shall
be subject in all respects to the same duties, responsibilities and liabilities as if that
income were received by him beneficially and is assessed and charged in his own
name in respect of that income, but any such assessment is deemed to be made
upon him as an agent.

(2) Any tax credit or deduction which might have been claimed by a person is
allowed in the assessment made upon his taxpaying agent as such an agent.
(As amended by Acts No. 23 of 1968 and 7 of 1996).

Right of taxpaying agent

68. Every taxpaying agent who pays tax in respect of income assessed on him is
entitled to recover the amount or that tax from the person on whose behalf the tax
is paid or retain out of any moneys that are or may come into his possession on
behalf of that person so much as is necessary to indemnify him for the payment.

Company’s taxpaying Agent

69.(1) Where a company carries on business or has a place of business in the Republic,
a director, the secretary or any individual concerned or appearing to be
concerned in the management of the company's business, is that company's
taxpaying agent (and where a company is being wound up or liquidated, the

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Part VI Income Tax Act

liquidator, receiver or manager of the company, is that company's taxpaying

agent) and with necessary modifications the provisions of this Part relating to
taxpaying agents apply accordingly.

(2) The Commissioner-General may require a company's taxpaying agent to answer

for all such acts and matters as the company might be required to answer for
under this Act, and if the company's taxpaying agent defaults in this requirement,
he is liable to such penalties as are provided for by this Act in the case of like
default by an individual.
(As amended by Act No. 11 of 1973).

Errors in form

70. No assessment, document or proceeding under this Act is invalid -

(a) for any error in a person's name, if the erroneous name is or may be
understood to be that person's name, or the person has at any time been
known by the erroneous name, or one like it; or

(b) for any other error or defect, if the assessment, document or proceeding is
in substance in accordance with this Act.

PART VI
PAY AS YOU EARN
Assessment, charge, collection and recovery

71.(1) On the making of any payment of, or on account of, any emolument, tax shall,
subject to and in accordance with regulations made by the Minister, be deducted
or repaid by the person or partnership making the payment, notwithstanding that
when the payment is made no assessment has been made in respect of the
emoluments, and notwithstanding that the emoluments are in whole or in part
emoluments for some charge year other than the year during which the payment is
made, and, for the purposes of this subsection, payment shall be deemed to be
made when the emolument is received as provided in section five:

Provided that with reference to paragraph (1) of section forty four the
requirements of this subsection shall not apply to emoluments provided to
employees in the form of non-money fringe benefits or to income, for an

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 Income Tax Act Part VI

individual, on which turnover tax has been assessed in accordance with subsection
(2) of section sixty-four A.
(As inserted by section 12 of Act No. 11 of 1992 with efect from 1st April,
1992, inserted by Act No. of 2007).

(2) Tax deducted, as reduced by any tax refunded, under subsection (1), shall be
payable to the Commissioner-General on the dates prescribed by the regulations
made in accordance with subsection (6).

(3) Where the tax payable in accordance with subsection (2) is not paid by the
prescribed date, a penalty equal to five per centum of the amount of tax payable
but not paid shall be chargeable thereto for each calendar month or part thereof for
which, and to the extent that, such tax remains unpaid, and for the purpose of any
regulations relating to collection and recovery of tax deducted under subsection
(1), such penalty shall be deemed to be tax deducted.

(4) Repealed by Act No. 9 of 1998.

(5) The Commissioner-General may, in his discretion, remit the whole or any part of
the penalty due under subsection (3) of this section.

(6)The Minister shall make regulations for the administration of this Part, and for the
assessment, charge, collection and recovery of tax in respect of emoluments
accordingly, and such regulations shall have effect notwithstanding anything in
this Act.

(6A) Regulations under this section may create offences punishable with a fine not
exceeding ten thousand penalty units for any failure to comply with the provisions
of the regulations, other than a failure to which subsection (3) applies.
(Inserted by Act No. 6 of 1999)

(7) The Commissioner-General shall devise tax tables to ensure so far as possible, that -

(a) the total tax payable in respect of any emoluments for any charge year is
deducted from the emoluments paid during the year; and

(b) the tax deductible or repayable on the occasion of any payment of, or on
account of, emoluments in such that the total net tax deducted since the
beginning of the charge year bears to the total tax payable for the year the
same proportion that the part of the year which ends with the date of the
payment bears to the whole year.

(8) In subsection (6), the references to the total tax payable for the year shall be
construed as references to the total tax estimated to be payable for the year in
respect of the emoluments, subject to a provisional allowance for deductions and
tax credit and subject also, if necessary, to an adjustment for amounts overpaid or
75
 remaining unpaid on account of tax in respect of emoluments to which this section
applies for any previous year.

(9) In estimating the total tax payable, it may be assumed, in relation to any payment
of, or on account of, emoluments, that the emoluments paid in the part of the
charge year which ends with the making of the payment will bear to the
emoluments for the whole of that year the same proportion that part of the year
bears to the whole year.

(10) For the purposes of this section emoluments shall include any annuity or part
thereof as is not exempt from tax under paragraph 10 of the Second Schedule.
(As amended by Acts No. 26 of 1970, 11 of 1974, 11 of 1975 , 11 of 1992 and 9
of 1998).

Assessments not always necessary

72.(1) Subject to the provisions of this section, no assessment need be made on an

individual in respect of his emoluments for any charge year if the total net tax
deducted in the year in question from his emoluments is the same as it would have
been if all the relevant circumstances had been known to all parties throughout the
year, and deductions and repayments had, throughout the year, been made
accordingly, and had been so made by reference to cumulative tax tables.

(2) In subsection (1) -

(a) “cumulative tax tables” means tax tables devised under the last
preceding section so as to require the tax to be deducted or repaid on each
payment in the year to be ascertained by reference to a total of
emoluments paid in the year up to the time of making that payment; and

(b) references to the total net tax deducted shall be construed as references
to the total tax deducted during the year by virtue of regulations made
under the last preceding section, less any tax repaid by virtue of any such
regulations.

(3) Nothing in this section shall be construed as preventing an assessment being made
on an individual in respect of his emoluments and, without prejudice to this
generality, an assessment shall be made in respect of an individual's emoluments
for any charge year if-

(a) the individual assessable, by notice in writing given to the Commissioner-

General within five years from the end of the charge year, so demands; or

(b) the Commissioner-General so elects.

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Part VI Income Tax Act

(4) In any proceedings in regard to an assessment made under the subsection (3), that
assessment shall be treated as having been made in accordance with the practice
generally prevailing at the end of the year to which the assessment relates.

Priority on insolvency

73. In the distribution of the property of a bankrupt and in the distribution of the assets
of any company being wound up, any sums due on account of tax deducted under
this Part shall be paid as if such sums were tax within the meaning of section three
(d) of the Preferential Claims in Bankruptcy Act (Cap 83), or the corresponding
provisions of any Act replacing that Act.

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 Income Tax Act Part VII

PART VII

DOUBLE TAXATION RELIEF

Double taxation agreements and mutual assistance in tax matters

74.(1). The President may enter into an agreement, which may have retrospective effect,
with the Government of any other country or territory-

(a) to prevent, mitigate or discontinue the levying, under the laws of the
Republic and of such other country or territory, of taxes in respect of the
same income; or

(b) for the exchange of information on tax matters or for mutual assistance
in tax matters with the objective of rendering reciprocal assistance-

(i) in the determination of credits and exemptions in respect of

Zambian tax and foreign tax;

(ii) in the provision of data on fraud, civil and criminal tax offences;

(iii) in the administration and collection of taxes under the tax laws
of the Republic and such other country or territory;

(iv) in the carrying out of tax examinations in Zambia or abroad;

and

(v) in the carrying out of simultaneous or joint tax examinations.

(2) Any information received by a country or territory under an agreement entered

into under subsection (1) shall be treated as secret in the same manner as
information obtained under the domestic laws of that country or territory and shall
be disclosed only to persons or authorities involved in the assessment, collection
enforcement, prosecution or determination of appeals in relation to, the taxes under
this Act.

(3) Subsection (2) shall not be construed so as to impose on a country or territory

the obligation to-

(a) carry out administrative measures at variance with the laws and
administrative practices of that country or territory;

(b) supply information which is not obtainable under the laws of that
country or territory or under the laws of Zambia; or
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Part VII Income Tax Act

(c) supply information which would disclose any trade, business,

industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public
policy.

(4) The Minister shall lay a copy of an agreement referred to in subsection (1)
before Cabinet for approval.

(5) The President shall, as soon as practicable after the conclusion and approval of
any agreement under this section, notify the public of the terms of the agreement
by statutory instrument, and the agreement shall, from the date of commencement
of the statutory instrument, have effect as if enacted under this Act as long as the
agreement has the effect of law in the other country or territory.
(As amended by Acts No. 26 of 1970 and 10 of 2012).

Double taxation relief

75.(1) This section applies where, by virtue of any agreement under this Part, tax (in
this section called foreign tax) payable to another country in respect of any income
(in this section called foreign income) is to be allowed as a credit against Zambian
tax in respect of that foreign income.

(2) The Zambian tax for any charge year in respect of foreign income is reduced by the
amount allowed as a credit in respect of that foreign income under any agreement
under this Part, but that reduction shall not exceed the amount of that foreign
income included in the income liable to tax under this Act, multiplied by the
Zambian tax before the reduction, divided by the sum of the income assessable
under this Act and the income which the Commissioner-General is prohibited from
including in an assessment under provisos to subsection (1) of section sixty-three.

(3) In this section, "Zambian tax" means income tax chargeable under this
Act. (As amended by Act No. 16 of 1972).

Unilateral double taxation relief

76.(1) Where a person is liable to pay Zambian tax for any charge year in respect of
income received from a source within a country which has not entered into an
agreement under this Part (in this section called foreign income) and he has paid
tax on that income in the country from which it was received (in this section called
foreign tax) then the Zambian tax for that charge year in respect of the foreign
income is reduced by the amount of foreign tax, but that reduction shall not exceed
the amount of that foreign income included in the income liable to tax under this
Act, multiplied by the Zambian tax before the reduction, divided by the sum of the
income assessable under this Act and the income which the Commissioner-General

79
 is prohibited from including in an assessment under the provisos to subsection (1)
of section sixty three.

(2) In this section, "Zambian tax" means income tax chargeable under this Act.

(3) This section shall not apply to income which the Commissioner-General is
prohibited from including in an assessment under the provisos to subsection (1) of
section sixtythree.
(As amended by Act No. 16 of 1972)

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 Income Tax Act Part VIII

PART VIII

COLLECTION, RECOVERY, REFUNDS AND RELIEFS

When tax due is payable

77.(1) Subject to the provisions of this Act, tax for any charge year payable by any
person required to submit a return under section .forty-six in respect of any income
shall be due and payable on 21st June immediately following the end of the charge
year.

(1A) Any person who is liable to pay any tax in accordance with subsection (I) for any
charge year may deduct from the amount due-

(a) the amount of any payment of provisional tax which the person has made
for that charge year; and

(b) any amount of tax or provisional tax agreed by the Commissioner-General

to have been overpaid and which has not been refunded to that person or
otherwise taken into account

(1B) Any person who is required by section forty-six A to submit a return of provisional
income and tax any charge year shall make payments of provisional tax to the
Commissioner-General in accordance with subsections (1C) to (3).

(1C) Provisional tax for any charge year required to be paid under subsection (1B) shall
be paid during the charge year in four instalments, each one of which shall be equal
to one quarter of the amount of provisional tax shown in the return and shall be paid
after:

(a) 1st instalment on 31st March;

(b) 2nd instalment on 30th June;

(c) 3rd instalment on 30th September; and

(d) 4th instalment on 31st December

of the charge year to which such return of provisional income relates.

81
81
(1D) Notwithstanding subsection (1C), provisional tax required for the charge year
ending 31st December 2012, liable to be paid under subsection (1B), shall be paid
during the charge year in three instalments, each one of which shall be equal to one
third of the amount of provisional tax shown in the return and shall be paid as
follows:

(a) 1st instalment on 30th June, 2012;

(b) 2nd instalment on 30th September, 2012; and

(c) 3rd instalment on 31st December, 2012.

(2) Any person who is liable to pay any provisional tax in accordance with subsection
(IB) for any charge year may deduct from the amount due any amount of tax or
provisional tax agreed by the Commissioner-General to have been overpaid and
which has not been refunded to that person or otherwise taken into account.

(2A) A person who reduces an instalment of tax or provisional tax under this section
shall-

(a) certify in writing to the Commissioner-General the amount of tax or

provisional tax overpaid and the charge year to which it relates; and

(b) attach to that certificate a copy of the Commissioner-General’s agreement

that the tax or provisional tax has been overpaid

(2B) Where a revised return is required to be made under subsection (4) or (6) of section
forty-six A by any date, the payments of tax required to be made in accordance with
subsection (1B) shall -
(a) in any charge year –
(i) be made in instalments on the dates specified in subsection (1C);
and
(ii) be equal in amount to the amount of provisional tax shown in the
return divided by four; and

(c) in charge year ending 31st December, 2012-

(i) be made in instalments on the dates specified in subsection (1D);

and
(ii) be equal in amount to the amount of provisional tax shown in the
return divided by three:

Provided that where an instalment payment has been made before an

instalment of a revised amount is due under this subsection, the
amount of that revised instalment shall be increased or reduced, as
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Part VIII Income Tax Act

the case may require, to take into account the excess or shortfall in
the earlier payment or payments.

(3) Any payment required by this section shall be made in such form as the
Commissioner-General may determine.

(4) Any tax payable by any person under an assessment made under subsection (3) of
section sixty-three section sixty-four or section sixty-four A shall be due and payable
on the date notice of the assessment is given to the person under section sixty-five.

(4A) Any tax payable by a person on the income received from letting property is due
and payable within fourteen days after the end of the month in which the income is
received as provided in section five.

(5) The Commissioner-General, may extend the time limited by subsections (1), (IC),
(1D) and (4) and where a time limit has been extended under this subsection, any
reference elsewhere in this Act or any regulations made under it to the time when
any payment of tax or provisional tax is due shall be construed as a reference to the
time as so extended.

(6) Subsection (4) shall have effect notwithstanding that the person assessed objects to
or appeals against that assessment.

(As Amended by Acts No. 11 of 1992, 6 of 1999, 27 of 2011, 19 of 2015, 45 of 2016

and 15 of 2019)

Penalty for non-payment of tax

78.(1) a person who fails to pay tax in accordance with sections seventy-seven, eighty-
one, eighty-one A, eighty-two and eighty-two A

(a) on or before the date on which the tax is due;

(b) within the period of the notice of assessment during which the tax assessed is
due;

(c) in the case of provisional tax, within ten days of the date on which that
payment is due;

is liable to the penalty specified in subsection (2).

(2) Any person who fails to pay tax or provisional tax in accordance with sections
seventy-seven, eighty-one, eighty-one A, eighty-two and eighty-two A shall be
liable to pay, in respect of each month or part thereof during which that amount or
any part of it remains unpaid, an amount equal to five per centum of that amount or
so much of it as remains unpaid during the month in question.

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 Income Tax Act Part VIII

(3) Where any person contravenes more than one provision of this Act in respect of tax
or provisional tax on the same income in respect of the same period of time that
person shall, under this section, be liable to pay only one penalty in respect of that
contravention.

(4) Any penalties imposed under this section shall, for the purposes of this Act relating
to collection and recovery, be deemed to be tax.

(5) The penalty prescribed in subsection (1) and subsection (2) shall become due and
payable on the date of issue by the Commissioner-General of a notice to that effect.

(6) For the purposes of claiming relief under any of the provisions of this Act, any
penalties imposed under this section shall not be deemed to be part of the tax paid

(7) The Commissioner-General may, in his discretion, remit the whole or part of any
penalties due under this section.

(8) In the event of any refund of tax or any part thereof, the penalties imposed under
this section shall be reduced to the extent that the tax to which the penalties relate is
set off or refunded and the amount of such reduction shall be deemed to be tax paid
in excess to which the provisions of section eighty-seven shall apply.
(As amended by Acts No. 26 of 1970, 16 of 1972, 11 of 1973, 11 of 1975, 14
of 1976, 9 of 1977, 12 of 1982, 11 of 1992, 3 of 1997, 9 of 1998, 6 of 1999, 1
of 2001, 1 of 2008, 1 of 2009, 10 of 2012, 18 of 2013,45 of 2016 and 15 of
2019).

Interest on overdue payments

78A.(1) Subject to subsection (3), any payment of tax which is overdue as specified in
regulations made under sections seventy-one or under section seventy-eight
shall attract interest at the rate prescribed in subsection (2) and shall continue to
attract such interest until such time as the payment of the tax has been remitted.

(2) The rate of interest prescribed for the purpose of sub-section (1) shall be the
discount rate published from time to time by the Bank of Zambia plus two per
centum per annum.

(3) The Commissioner-General may remit the whole or part of any interest due
under this section.

(4) Any interest imposed under this section shall, for the purposes of this Act
relating to collection and recovery, be deemed to be tax.
(As amended by Acts No.14 of 1994, 9 of 1998 and 6 of 1999)

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Part VIII Income Tax Act

Recovery and Proceedings

79. (1) Tax is a debt to the Government and may be recovered by the Commissioner-
General either by distress or by suit in any court of competent jurisdiction.

(2) Notwithstanding the other provisions of this Act where tax is found to be owing
to the Republic under this Act, the Commissioner General may, by notice in
writing issued to any individual or person, fix a date for the payment of such
tax.

Provided that where payment of the tax referred to in this section is to be made
by instalments, the Commissioner General may set different dates for the
payment of such tax.
(As amended by Act No. 17 of 1971.)

Recovery by distress

79A.(1) Any officer appointed for the purpose of carrying out the provisions of this Act
may, under warrant by the Commissioner-General, levy distress upon the goods and
chattels of the person or partnership from whom tax is recoverable.

(2) For the purposes of levying any such distress, the officer authorised under warrant
by the Commissioner-General, together with such servants or agents as the officer
may consider necessary, may break open at any time between sunrise and sunset, any
premises; and the officer so authorised may require any police officer to be present
while such distress in being levied and any police officer so required shall comply
with such requirement.

(3) A distress levied under this section shall be kept for ten days either at the premises
at which such distress is levied or at such other place as the person authorised
under warrant may consider appropriate at the cost of the person or partnership
from whom such tax is recoverable.

(4) If the person or partnership from whom such tax is recoverable does not pay the tax
due together with costs incurred in levying the distress and all other costs
incidental thereto within the period of ten days mentioned in subsection (3), the
goods and chattels upon which distress has been levied shall be sold by public
auction, sealed tender or bids and the proceeds realized from such sale shall be
applied towards the payment of the said costs and all further costs incurred in
completing such sale and, the surplus, if any, shall be applied in the payment of the
tax and, the balance, if any, shall be paid to such person or partnership after
deducting any further tax liable to be paid by such person or partnership.

(5) Where the full amount of the tax due and all the costs, mentioned in subsection (4)
are not recovered, the Commissioner-General may recover the deficiency either in
accordance with section 79B or any other provision contained in this Act.
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 Income Tax Act Part VIII

(6) No civil or criminal proceedings shall be instituted against any officer for any act
or omission arising out of the levying of distress.

(7) If the person or partnership upon whose goods or chattels distress is to be levied, or
has been levied, fraudulently removes and conveys away such goods or chattel to
prevent the Commissioner-General from distraining them or completing the distress
so levied, or if any person or partnership wilfully and knowingly aids or assists
such person or partnership in such fraudulent conveying away or carrying off any
part of such goods or chattels or in concealing the same, every person or
partnership so offending:

(a) shall forfeit to the Commissioner-General a sum equal to double the value
of the goods or chattels carried off or concealed as aforesaid, to be
recovered by action; and

(b) shall be guilty of an offence and liable on conviction to a fine not

exceeding ten thousand penalty units or to imprisonment for a term not
exceeding twelve months, or to both.
(As amended by Acts No. 17 of 1971, 14 of 1976, 9 of 1977, 6 of 1999 and 1
of 2009 )

Recovery through court

79B.(1) Notwithstanding anything to the contrary contained in any law, the

Commissioner- General may institute proceedings in any subordinate court of
the first or second class for the recovery of any tax or other amount recoverable
under this Act.

(2) Any officer appointed for the purposes of carrying out the provisions of this
Act may represent the Commissioner-General in the proceedings referred to in
subsection (1) and for that purpose may conduct any such proceedings and shall
have a right of audience in subordinate courts of the first or second class,
notwithstanding any law to the contrary.

(3) Proceedings in any court for the recovery of any tax or other amount are
deemed to be proceedings for the recovery of a debt validly acknowledged in
writing by the debtor.

(4) In any proceedings for the recovery of tax -

(a) it is not competent to question any assessment whether or not an objection

or appeal has been made against such assessment; and

(b) the mere production of an assessment or any document under the

Commissioner'-Generals hand or the hand of any officer duly authorised by
86
 him is conclusive evidence as to the contents of the assessment or
document.
(As amended by Act No. 17 of 1971).

Charge on land

79C.(1) Notwithstanding anything to the contrary contained in any other law, where a
person or partnership from whom tax is due is the owner of land situated in the
Republic, the Commissioner-General may give notice to the person or
partnership in writing that the amount of tax due shall be a charge on such land
and such charge shall, , be effective from the date of service of the notice for so
long as such land remains in the ownership of such person or partnership or
until the notice is withdrawn.
(Amended by Act No. 18 of 2013)

(2) For the purposes of this section, “land” includes any vacant piece or parcel of
land and also any buildings or improvements on any piece or parcel of land.
(As amended by Acts No. 17 of 1971 and 14 of 1976).

Recovery of partner's tax from partnership

79D. Where the tax due by a person relates in whole or in part to tax charged on income
derived from a partnership, the tax charged on such income shall, where notice in
writing to this effect is given by the Commissioner-General to the partnership, be
due from such partnership and the provisions of this Act relating to collection and
recovery shall apply as if such tax had been charged on the partnership.
(As amended by Act No. 14 of 1976)

80. Repealed by Act No. 9 of 1998.

Deduction of tax from dividends

81.(1) Subject to the provisions of this section, every company incorporated in the
Republic shall deduct from every payment of dividend, other than a dividend paid
to the Government, tax at the rate specified in the Charging Schedule or as the
Commissioner-General directs to -

(a) give effect to the provisions of any agreement made under section seventy -
four; or

(b) give effect to the provisions of the Second Schedule;

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 Part VIII Income Tax Act

and shall account for such tax as prescribed in sub-section (1A); and for the purposes of
this subsection payment shall be deemed to be made on the day the dividend accrues to
the share or stockholders as provided in subsection (2) of section five.

(1A) A person to whom subsection (1) applies, shall submit a return and make a
payment of tax within fourteen days of the end of the month in which the payment is
due.

(1B) A person who fails to submit a return in accordance with subsection (1A) is liable
to pay a penalty of three hundred and forty penalty units for each month or part thereof
during which that failure continues.

(2) Subject to the provisions of this section, where, in a charge year a company has
received dividends from which tax has been deducted under subsection (1), the total
amount which the company is liable to account for under subsection (1) on
dividends paid in the charge year shall, as far as possible, be reduced by the amount
of tax so deducted, and
the company shall be liable to account only for the balance remaining after such
reduction.

(3) Subject to the provisions of this section, where the total amount of tax deducted
from dividends in a charge year as referred to in subsection (2) exceeds the amount
which a company is liable to account for on dividends paid in the charge year before
the operation of subsection (2), the excess shall, as far as possible, be deducted from
the total amount which the company is liable to account for on dividends paid, after
the operation of subsection (2), in the following charge year and so on from year to
year until the excess is extinguished.

(4) Where in any charge year after the operation of subsections (2) and (3) there is an
excess available to be deducted in accordance with subsection (3) from the amount
which a company is liable to account for in the following or a subsequent charge
year and the company was directed by the Commissioner-General to deduct tax
from dividends paid in the charge year in accordance with paragraph (a) or (b) of
subsection (1), then the difference between what the company would have been
liable to account for but for the said direction and the amount the company is liable
to account for before the operation of subsections (2) and (3) (not exceeding the
amount of excess available), shall be deemed to be tax paid in excess to which the
provisions of section eighty seven shall apply and the excess available to be
deducted in the following or a subsequent charge year shall be reduced by the
amount so treated as tax paid in excess.

(5) Every company, upon payment of a dividend as provided in subsection (1), shall
furnish the share or stockholder to whom the dividend is paid with a certificate
stating in relation to the dividend -

(a) the share or stock or stockholder’s name and address;

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 Income Tax Act Part VIII

(b) the date of payment;

(c) the amount of dividend payable before deduction of tax;

(d) the amount of tax deducted;

(e) the net amount paid; and

(f) such other particulars as the Commissioner-General may by notice in

writing require;

and shall send a copy of the certificate to the Commissioner-General.

(6) The certificate furnished under subsection (5) shall be treated as if it were an
assessment for the purposes of Part XI only, and the date of service shall be deemed
to be ten days after the date of payment shown thereon.

(7) Repealed by Act No. 9 of 1998.

(As amended by Acts No.11 of 1974, 11 of 1975, 14 of 1976, 10 of 1979, 9 of 1998,
16 of 2017 and 15 of 2019)

Deduction of tax from payments to non-resident contractors

81A (1) Every person or partnership on making any payment on or after 1st April, 1998,
to or on behalf of a non-resident contractor in respect of construction or haulage
operations, irrespective of whether such payment is made outside the Republic or
not, shall, before making any other deductions whatsoever, deduct tax from such
payment at the rate specified in the Charging Schedule and that person or
partnership shall account for such tax as prescribed in sub-section (1A).

(1A) A person or partnership to whom subsection (1) applies shall submit a return and
make a payment of the tax, within fourteen days of the end of the month in which the
payment is due.

(1B) A person or partnership that fails to submit a return under subsection (1A) is liable
to pay a penalty of three hundred and forty penalty units for each month or part thereof
during which that failure continues.

(2) For the purposes of this section -

(a) “non-resident contractor” means -

(i) an individual, who is neither resident nor ordinarily resident in

the republic; or

89
 (ii) any other person or partnership who is not resident in the
republic and who does not have a permanent establishment in the
Republic;

(b) a partnership shall be resident in the Republic-

(i) if the partners are resident or ordinarily resident in the Republic; or

(ii) if they are not all resident or ordinarily resident in the Republic,
where the majority of the partners are resident or ordinarily
resident in the Republic;

(c) “construction operations” include -

(i) the erection, alteration, maintenance, repair, extension or

demolition of any building or structure, whether permanent or not;

(ii) the installation in any building or structure of heating, elevators,

air conditioning, ventilation, power, drainage, sanitation, water or
fire protection, or like supplies or services;

(iii)the painting or decorating of the internal or external surfaces of

any building or structure;

(iv) any operations which are an integral part of, or prior to, or which
render complete, the operations described in paragraphs (i) to
(iii) of this subsection; and

(d) “haulage operations” includes transportation by land, water or air of

persons, livestock or any goods whatsoever including farm produce, or
produce of a like nature, or ores and minerals, food stuffs and
merchandise.

(Ammended by Act No 9 of 1998, 16 of 2017 and 15 of 2019)

Definition of permanent establishment

81AA. (1) In this Act, “permanent establishment” means a fixed place of business
through which the business of an enterprise is wholly or partly carried on,
and includes-

(a) a place of management;

(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;

90
 (f) a mine, an oil or gas well, a quarry or any other place of
extraction or exploitation of natural resources;
(g) a building site, a construction, assembly or installation
project or any supervisory activity in connection with the
site, project or activity, but only where that site, project or
activity continues for a period of more than one hundred
and eighty-three days;
(h) a place where an enterprise provides services, including
consultancy services, through employees or other
personnel engaged by the enterprise for that purpose
within the Republic for a period or periods exceeding in
the aggregate ninety days in any twelve-month period
commencing or ending in the fiscal year concerned;
(i) in relation to an individual, a place where the individual
performs services in the Republic for a period or periods
aggregating more than ninety days within any twelve
month period commencing or ending in the fiscal year
concerned; and
(j) an installation or structure continuously used for the
exploration for natural resources for a period of not less
than one hundred and eighty-three days.

(2) Notwithstanding subsection (1), “permanent establishment” does

not include -

(a) the use of facilities solely for storage, display or delivery

of goods or merchandise belonging to an enterprise;
(b) the maintenance of a stock of goods or merchandise
belonging to an enterprise solely for the purpose of
storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise
belonging to an enterprise solely for the purpose of
processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise, or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character; or
(f) the maintenance of a fixed place of business solely for any
combination of activities referred to in paragraphs (a) to
(e), if the overall activity of the fixed place of business
resulting from the combination is of a preparatory or
auxiliary character.

(3) Notwithstanding sub-sections (1) and (2), a person, other than an

agent of an independent status to whom sub-section (4) applies,
acting on behalf of an enterprise and habitually exercising in the
Republic an authority to conclude contracts on behalf of the
enterprise, shall be deemed to have a permanent establishment in
the Republic in respect of any activities which that person
undertakes for the enterprise, unless the activities of that person

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Part VIII Income Tax Act

are limited to those mentioned in sub-section 2 which, if exercised

through a fixed place of business, would not make the fixed place
of business a permanent establishment under the provisions of
that sub-section.

(4) An enterprise of another country shall not be considered to have a

permanent establishment in the Republic merely because it carries
on business in the Republic through a broker, general commission
agent or any other agent of an independent status, if the persons
are acting in the ordinary course of their business.

(5) Where the activities of an agent referred to in sub-section (4) are

devoted wholly or almost wholly on behalf of that enterprise, and
conditions are made or imposed between that enterprise and the
agent in their commercial and financial relations which differ
from those which should have been made between independent
enterprises, the agent shall not be considered an agent of an
independent status within the meaning of this sub-section

(6) Notwithstanding sub-sections (1), (2), (3), (4) and (5) an

insurance enterprise of another country shall, except in regard to
re-insurance, be deemed to have a permanent establishment in the
Republic if it collects premiums within the Republic or insures
risks situated in the Republic through a person other than an agent
of an independent status to whom sub-section (4) applies.

(7) The fact that a company which is a resident of the Republic

controls or is controlled by a company which is a resident of
another country, or which carries on business in the other country,
whether through a permanent establishment or otherwise, shall
not of itself constitute either company a permanent establishment
of either country.

(Inserted by Act No. 7 of 2006 and amended by Act No. 7 of 2014)

Tax Clearance Certificate

81B. (1) Where any person, institution or authority is empowered by any written law or
otherwise to register the transfer of any property, that person, institution or
authority shall not register the transfer unless the person or partnership transferring
the property produces a tax clearance certificate issued to them for the purpose of
the transfer.

(2) A person, institution or authority empowered to issue a trading licence under any
written law shall not issue the trading licence to an applicant unless the applicant
produces a tax clearance certificate.

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 (2A) A person, institution or authority empowered to register the ownership of a
motor vehicle under any written law shall not register the motor vehicle unless
the applicant produces a tax clearance certificate.

(3) A person, institution or authority empowered to issue an exploration licence,

mining licence, mineral processing licence, gold panning certificate, mineral
trading permit or mineral import or export permit under the Mines and Minerals
Development Act, 2015, shall not issue the licence, certificate or permit to the
applicant unless the applicant produces a tax clearance certificate.

(4) A person, partnership, institution, organisation or association shall not transact with
a supplier of goods or services unless the supplier produces a tax clearance
certificate:

provided that the Minister may by regulations determine the threshold at which
goods or services may be supplied by a person or partnership without the
requirement of a tax clearance certificate.

(4A) A person, institution or authority empowered by an Act of Parliament to regulate

its members shall not register or renew membership or issue a licence, practicing
certificate, permit or similar document unless the applicant produces a tax clearance
certificate.
(Inserted by Act No. 20 of 2020)

(4B) Despite subsection (4A), a person, institution or authority under subsection (4A)
shall not require a tax clearance certificate from an applicant that falls under the
category of a student or an applicant that is not carrying on business relating to the
profession.
(Inserted by Act No. 20 of 2020)

(4C) Despite subsection (4A), the Minister may exempt a member from the requirement
under subsection (4A) as prescribed.
(Inserted by Act No. 20 of 2020)

(5) The Commissioner General may by notice in writing cancel a tax clearance
certificate and the cancellation shall have effect from the date of service of the
notice on the holder of the tax clearance certificate.

(6) The holder of a tax clearance certificate shall, within thirty days after the date of
service and of the notice of cancellation of the certificate, return the certificate to
the Commissioner General.

(7) For purposes of this section-

"property” has the meaning assigned to it in the Property Transfer Tax Act; and

93
 “tax clearance certificate” means a certificate issued by the Commissioner-
General,valid for such period as may be specified in it, stating that the person
or partnership to whom or to which it is issued fulfilled all obligations
imposed upon them or it by this Act and by any other Act for which the
Commissioner-General is responsible or has made arrangements satisfactory
to the Commissioner-General for doing so.
(As Amended by Acts No. 28 of 1988, 7 of 1996, 1 of 2001, 3 of 2003, substituted
by No 1 of 2005 and amended by Acts No. 27 of 2009, 27 of 2011, 19 of 2015 and
45 of 2016).

Advance tax on income in respect of imported goods

81C (1) Subject to subsection (3), every person or partnership importing goods for
commercial purposes shall pay advance tax on income in respect of those goods
at the port of entry at the rate specified in the Charging Schedule:

Provided that the provisions of this subsection shall not apply to goods which
are imported for personal use.

(2) At the end of each charge year, any person who or partnership that has paid the
advance tax referred to in subsection (1) shall submit the receipt issued in
respect of payment with the returns made under section forty-six.

(3) The Minister may, in consultation with the Commissioner-General, by statutory

instrument, prescribe –

(a) the circumstances under which the provisions of this section shall not apply
to any person or partnership; or
(b) the extent to which and the period for which the provisions of this section
shall not apply to any person or partnership, as the case may be.

Deduction of tax from lump sum payments.

82. (1) Every person or partnership on making payment from an approved fund of a lump
sum payment shall, before making any other deductions, deduct tax from such
part of the payment as is liable to tax at the rate specified in the Charging
Schedule and that person or partnership shall account for such tax as if the
payment were subject to Part V1(which relates to Pay As You Earn) and for the
purposes of this subsection payment shall be deemed to be made when the
income is received by the recipient as provided in section five.

(2) Every person or partnership on making a payment referred to in subsection(1)

shall furnish the person or partnership to, or on behalf of whom it is made with a
certificate stating, in relation to the payment-

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 Income Tax Act Part VIII

(a) the title of the approved fund;

(b) the date of approval of the fund;
(c) the date of the payee’s admission to the fund;
(d) the date of change in contribution rates if increased since 30th June,
1960;
(e) the payee’s name and address;
(f) the date of payment;
(g) the gross amount of the payment;
(h) the amount of tax deducted under subsection (1);
(i) the net amount of the payment; and
(j) such other particulars as the Commissioner-General may, by notice in
writing require;
and shall send a copy to the Commissioner-General.
(As amended by Acts No. 26 of 1970, 11 of 1974, 14 of 1976 and 6 of 1999)

Deduction of tax from certain payments

82A(1) Subject to the provisions of this section, a person or partnership making the
following payments, irrespective of whether the payment is made outside the
Republic, shall, before making any other deduction, deduct tax from the following
payments at the rates specified in the Charging Schedule or as the Commissioner-
General may direct to give effect to the provisions of any agreement made under
section 74 or the provisions of the Second Schedule:

(a) a management or consultant fee from a source within or deemed under

section 18 to be from a source within the Republic;
(b) interest and royalties from a source within or deemed under section 18 to
be within the Republic other than interest payable to a bank or financial
institution licensed under the Banking and Financial Services Act, 2017;
(c) rent from a source within the Republic;
(d) commissions, other than commissions received by an individual whose
income is from employment or office;
(e) a public entertainment fee to, or on behalf of, a person or persons in
partnership not resident in the Republic;
(f) commission deemed under section 18 to be from a source within the
Republic;
(g) winnings from gaming, lotteries and betting other than winnings received
by an individual by virtue of employment or office;
(h) branch profits;
(i) a commodity royalty;
(j) reinsurance premium to a recipient not registered in the Republic; and
(k) distributed income of an income real estate investment trust.;
(As amended by Act No. 43 of 2021)

(1A) The Commissioner-General may determine the commodity royalty under

subsection (1)(i) where the financing agreement or arrangement does not state
what constitutes the repayment of the purchase price.
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 Part VIII Income Tax Act

(Inserted by Act No. 20 of 2020)

(1B) Subsection (1)(c) shall apply to a person or partnership appointed by the Commissioner-
General as a withholding agent.
(Inserted by Act No. 43 of 2021)

(1C) Subsection (1)(g) shall not apply to a payment of winnings from a brick and mortar
casino.
(Inserted by Act No. 43 of 2021)

(1D) The distributed income of an income real estate investment trust referred to under
subsection (1)(k) shall be the gross rent collected by that income real estate
investment trust minus twenty-five percent of gross collections.
(Inserted by Act No. 43 of 2021)

(1E) The Commissioner-General may determine that the provisions of subsection (1) (a),
(b), (c) or (d) do not apply in a particular case and shall, in writing, notify the person
or partnership concerned that the provisions of subsection (1)(a), (b), (c), or (d) as
applicable, do not apply to that person or partnership to the extent and for the period
specified in the notification, except that in the case of subsection (1) (b), the direction
to be issued under this subsection shall only be for interest arising from a property
linked unit of a property loan stock company.
(Inserted by Act No. 43 of 2021)

(2) A person or partnership to whom subsection (1) applies is deemed to

have made a payment at the earliest of the following:
(a) the time when payment is made;
(b) the time when income accrues to a person; or
(c) the time when income is in any way due to a person or held
to that person’s order or on that person’s behalf.
(Amended by Act No. 43 of 2021)

(2A) Deleted by Act No. 43 of 2021

(3) A person or partnership making a payment shall, within fourteen days of the end of
the month in which the payment is made and from which tax is required to be
deducted under subsection (1) submit a return, as prescribed by the Commissioner-
General, declaring in the return the amount of the payment, the amount of tax
deducted and other particulars that the Commissioner-General may require;
(As amended by Act No. 43 of 2021)

(4) Within fourteen days of the end of the month in which any payment under
subsection (1) is made, the person or partnership making the payment shall furnish
each person or partnership to or on behalf of whom a payment has been made with
a certificate stating the amount of the payment made to or on behalf of such person

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 Income Tax Act Part VIII

or partnership, the amount of tax deducted there from, the date of issue of the
certificate and such other particulars as the Commissioner-General may require.
(Renumbered by Act No. 43 of 2021)

(5) The certificate issued under subsection (4) shall be treated as if it were an
assessment for the purposes of Part XI only and the date of service shall be deemed
to be fourteen days after the end of the charge year in which the payment to which
the certificate relates was made.
(Renumbered by Act No. 43 of 2021)

(6) For the purposes of this section "rent" means a payment in any form, including a
fine, premium or any like amount, made as a consideration for the use or
occupation of or the right to use or occupy any real property including personal
property directly connected with the use or occupation of, or the right to use or
occupy such real property.
(Renumbered by Act No. 43 of 2021)

(7) Any person who, or partnership which, receives from the Commissioner-General a
receipt showing that such person or partnership has deducted tax under this section
from any payment of rent shall, within fourteen days from the day of receiving
such a receipt furnish that receipt to the payee of the rent.
(Renumbered by Act No. 43 of 2021)

(8) Where a person fails to furnish the Commissioner-General or any other person
authorised by the Commissioner-General with any document in accordance with the
requirements of this section, there shall be charged a penalty of –

(a) in the case of an individual one hundred and seventy penalty units per
month or part there of during which such failure continues; or

(b) in the case of a company, three hundred and forty penalty units per month
or part thereof during which such failure continues:

provided that the Commissioner-General may remit the whole or part units per
month or part there of during which such failure continues of any such penalty.
(As amended by Acts No. 11 of 1973, 11 of 1974, 11 of 1975, 9 of 1977, 11 of
1984, 11 of 1985, 8 of 1986, 14 of 1987, 4 of 1993, 11 of 1992, 4 of 1993, 4 of
1994, 9 of 1995, 6 of 1999, 4 of 2000, 1 of 2001,1 of 2004, 18 of 2013,19 of
2015, 16 of 2017,15 of 2019 and renumbered by Act No. 43 of 2021)

(9) Where a person or partnership fails to deduct or withhold tax as

required by this section, section 81 and section 81A, on a payment to a
non-resident, that person or partnership shall be liable to pay the
amount of tax which has not been deducted or withheld.
(Inserted by Act No. 20 of 2020 and renumbered by Act No. 43 of 2021)

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(10) This section does not apply to interest payable on a bill of exchange
drawn for one hundred and eighty days or less.
(Inserted by Act No. 43 of 2021)
(11) The payment of an amount in excess of the original issue price for a
treasury bill sold at a discount from face value shall be deemed for the
purposes of this section to be a payment of interest when the treasury bill
is presented for redemption or re-discount.
(Inserted by Act No. 43 of 2021)
(12) For the purposes of this section “winnings” means anything won—
(a) for lotteries, whether in money or in money’s worth; or
(b) from gaming or betting in money or money’s worth less the total amount staked
by the person;
(Inserted by Act No. 43 of 2021)

Definition of property

82B. For the purposes of sections eighty-three, eighty -four and eighty six "property"
shall include moneys, cheques, promissory notes and all other kinds of bills of
exchange, and movable and immovable property of whatsoever nature and kind.
(As amended by Act No. 17 of 1971).

Property not in possession

83. Any person or partnership who holds or is in possession of any kind of property
whatsoever on behalf or on account of another person or partnership shall give the
Commissioner-General all such information in relation to that property as the
Commissioner-General may require, and, in relation to any tax due by that other
person or partnership, the Commissioner-General’s rights in regard to any such
property are the same and may be exercised in as full and ample a manner as if the
property were held or in the possession of that other person or partnership.

(As amended by Act No. 14 of 1976).

Agent for payment of tax

84.(1) Any person or partnership may be declared by the Commissioner-General to be

an agent for the payment of tax due by another person or partnership.

(2) Any person or partnership declared to be an agent in pursuance of subsection (1)

shall apply to the payment of the tax due so much of any kind of property
whatsoever held by him or coming into his hands on behalf of the person or
partnership from whom the tax is due as is sufficient to pay such tax, and any such
agent is hereby indemnified against any person or partnership whatsoever in
respect of all payments so made by him.
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Part VIII Income Tax Act

(3) Where the Commissioner-General has reasonable ground to believe that a person
or partnership has disposed of any kind of property whatsoever without full
consideration in money or money’s worth to another person or partnership with the
intention of avoiding payment of tax that is or may become due, he may declare
such other person or partnership an agent for the payment of tax due from the
person or partnership which has disposed of the said property and such property
shall, for the purposes of subsection (2), be deemed to be property held by such
other person or partnership on behalf of the person or partnership which has
disposed of the said property to the extent that the open market value of the said
property at the time of the disposal exceeds the consideration given.

(4)Any person or partnership declared by the Commissioner-General to be an agent for

the payment of tax due by another person or partnership under the provisions of
any previous enactment shall be deemed to have been declared an agent under the
provisions of subsection (1).

(5)Notwithstanding the other provisions of this section, where a shareholder of a

company is absent from Zambia the company shall be deemed to have been
declared an agent for the payment of tax due by the shareholder under subsection
(1):

Provided that this subsection shall not apply to a company the ordinary share
capital of which may be bought or sold on a stock exchange or which is
controlled by any such company or any company controlled directly or
indirectly by Government.

(6) Any person who wilfully obstructs or wilfully attempts to obstruct an agent in the
execution of the duties imposed upon him by this section shall be guilty of an
offence and shall, upon conviction, be liable to a fine not exceeding thirty thousand
penalty units or to imprisonment for a term not exceeding three years, or to both.
(As amended by Acts No. 17 of 1971, 11 of 1974, 14 of 1976, 9 of 1977, 11 of 1992
and 13 of 1994).

85. Repealed by Act No. 7 of 1996.

Liability where property alienated

86. Every person who or partnership which is an agent in accordance with the
provisions of section sixty-six or declared to be an agent in accordance with the
provisions of section eighty -four and who or which alienates or charges any kind of
property whatsoever from which tax ought to have been paid by such person or
partnership shall be liable for such tax as if it were tax charged on that person or
partnership.
(As amended by Act No. 14 of 1976).

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 Income Tax Act Part VIII

Refunds in general

87.(1) Where for any charge year any person or partnership claims that tax has been
paid or is deemed to have been paid by deduction or otherwise in excess of the
amount-

(a) liable to be paid by the person or partnership in accordance with the

provisions of this Act;

(b) deductible by the person or partnership in accordance with the provisions

of this Act;

(c) liable to be paid by the person or partnership because relief is due in

accordance with the provisions of sections seventy-six, eighty-eight, eighty-
nine, ninety, ninety A, ninety-one, ninety-five, ninety-five D, or one
hundred and thirteen;

the Commissioner-General shall make such assessment or adjustments as are

necessary to determine the amount of such excess and shall give written notice to
the person or partnership of the amount so determined as paid or deemed to have
been paid in excess.

(2) A claim under subsection (1) shall be made in accordance with the provisions of the
section or Schedule under which it is made, or if none, the claim shall be made in
writing to the Commissioner-General not later that six years after the end of the
charge year to which the claim relates, or if later, six years after the date of service
of the notice of assessment
or of the notification of an amount of tax deductible under the provisions of this
Act in the charge year, to which the claim relates.

(3) Where any tax is due and payable to the Commissioner-General for any charge year
under this or any other Act, the amount of the excess shall first be applied towards
the satisfaction of the tax so due and payable to the extent of such tax, and the
Commissioner-General shall give written notice to the person or partnership of the
amount so applied:

Provided that-

(i) such part of the excess which relates to tax paid by deduction shall be
deemed to be available for application on the last day of the charge year to
which the excess relates; and

(ii) subject to the provisions of section ninety-five D, such part of the excess
which relates to tax paid or deemed to have been paid other than by

100
 deduction shall be available for application on the day such part was paid
or deemed to have been paid.

(4) Where any person or partnership claims a refund of the amount of the excess
adjusted in accordance with the provisions of subsection (3), the Commissioner-
General shall refund such adjusted excess.

(5) A claim under subsection (4) shall be made in writing to the Commissioner-
General not later than six years after the end of the charge year to which the excess
relates or, if later, six years after the date of service of a written notice of the
amount of the excess given in accordance with the provisions of subsection (1).

(6) Not withstanding subsection (1) to (5), where a person, pursuant to subsection (1),
claims that the pay-as-you-earn tax for any charge year has been paid or is deemed to
have been paid in excess by deduction or otherwise, that person shall make the claim, in
writing, or by way of return to the Commissioner-General, not later than six years after
the end of the charge year to which the claim relates.
(As amended by Acts No. 11 of 1975 , 14 of 1996, 10 of 1979, 9 of 1998 and 10 of
2012).

Refunds in cases of accumulated income

88.(1) Where under any will or settlement, other than a settlement to which section
nineteen or ninety-seven applies, any income (in this section referred to as the trust
income) arising from any fund is accumulated for the benefit of any individual
contingently on his attaining some specified age or marrying, then, if such
individual claims and the Commissioner-General determines that such contingency
has happened, the sum equal to the amount by which the total amount of tax paid on
the trust income during the period of accumulation exceeds the total amount of
additional tax which would have been paid by him during such period if such trust
income and the income from any other fund subject to the like trust for
accumulation has been included in his income shall be deemed to be tax paid in
excess to which the provisions of section eighty-seven apply; but in calculating
such sum a deduction shall be made in respect of any tax paid by the trust and
already repaid to him.

(2) Every claim under this section shall be made in writing to the Commissioner-General
within six years after the expiry of the charge year in which the contingency happened.
(As amended by Act No. 14 of 1976).

Refund or set-off of tax chargeable on a beneficiary

89. Where a beneficiary entitled to the whole or part of the income of a trust or
deceased's estate is assessed and chargeable to tax for any charge year in respect of
that income, any

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Part VIII Income Tax Act

tax paid by a trust or deceased's estate and attributable to the income so assessed
and charged on the beneficiary shall be set off against the tax chargeable for that
charge year on the beneficiary and the provisions of section eighty-seven shall
apply to any amount so paid in excess of such tax chargeable.
(As amended by Act No. 14 of 1976).

Refund or set-off of tax deducted from dividends, etc.

90. The amount of tax deducted from or paid under sections eighty, eighty-one, eighty-
one A, eighty-two or eighty-two A on income received by a person for any charge
year shall be set-off against the tax chargeable on his income for that charge year
and the provisions of section eighty-seven shall apply to any tax so deducted or paid
in excess of the tax so chargeable:

Provided that-

(i) subject to paragraph (ii), where the amount of tax which a company is
required by subsection (1) of section eighty-one to account for in any
charge year is reduced by an amount of tax which has been deducted from
dividends received by the company in that year, the amount of tax on
income from dividends received by the company in that year which may
be set off under this section against the tax chargeable on the company’s
income for that year shall be the balance of that tax after any such
reduction;

(ii) in the case of a person who is not resident in the Republic for a charge
year and who receives dividends in such charge year, subject to the
provisions of any agreement under section seventy -four, the tax deducted
under section eighty one shall not be set-off or refunded;

(iii) in the case of a person who receives a lump sum payment, the tax
deducted under section eighty two shall not be set-off or refunded; and

(iv)in the case of a person who is not resident in the Republic for a charge year
and who receives interest, royalties management or consultant fees, or
public entertainment fees in such charge year, subject to the provisions of
any agreement made under section seventy -four the tax deducted under
section eighty two A shall not be set-off or refunded.
(As amended by Acts 16 of 1972, 11 of 1973, 11 of 1974, 11 of 1975, 4 of
1976, 9 of 1978 and 10 of 1979).

Job credits

90A. The Minister may, by statutory order, provide for the granting of job credits in
such amounts, for such periods and for such employees of such businesses as may
be prescribed therein:
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 Income Tax Act Part VIII

Provided that any such order may be made with retrospective

effect.
(As amended by Act No. 6 of 1980).

90B. Repealed by Act No. 9 of 1977.

Error or mistake relief

91.(1) If any person alleges that an assessment is excessive by reason of some error or
mistake in the return or statement made by him for the purposes of the assessment,
he may, at any time, not later than six years after the end of the charge year in
respect of which the assessment was made, make an application in writing to the
Commissioner-General for relief.

(2) On receiving any such application, the Commissioner-General shall inquire into
and determine the matter and shall, subject to the provisions of this section make
any assessment or adjustments necessary to give effect to such determination and
the provisions of section eighty-seven shall apply to any tax paid in excess as a result
of such determination.

(3) In determining any application under this section, the Commissioner-General shall
have regard to all the relevant circumstances of the case, and in particular shall
consider whether the granting of relief would result in exclusion from the charge to
tax of income of the applicant, and for this purpose the Commissioner-General may
take into consideration the liability of the applicant and assessments made upon
him in respect of the other years.
(As amended by Acts No. 26 of 1970 and 14 of 1976).

Remission of Tax

92.(1) The Commissioner-General may remit tax if he is satisfied that it is not

recoverable; and where the person to be charged with tax is also subject to equity
levy under the Equity levy Act, 1982 (Cap 338), and the amount of the equity levy
is greater than the amount of tax payable under this Act, the Commissioner-
General shall remit such tax.

(2) On the Commissioner-General’s recommendation the Minister may remit tax if he

is satisfied that it is just to do so.

(3) This section shall not give rise to any appeal or other
proceedings.
(As amended by Acts No. 23 of 1968 and 12 of 1982)

Reduction in tax for tax free zones

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Part IX Income Tax Act

92A. Repealed by Act No. 16 of 2017.

Tax less than one hundred Kwacha not payable.

93. Notwithstanding anything contained in this Act, no tax in respect of a Charge year
shall be payable by a person if the tax with which the person is chargeable in
respect of that year is less than one hundred Kwacha.
(As amended by Acts No. 11 of 1992, 2 of 1995, 7 of 1996 and 4 of 2000).

PART IX AVOIDANCE

No set-off or refund where that is the object of change of ownership of shares in

company

94. The Commissioner-General shall not allow any set-off or refund of tax deducted
under section eighty-one where he determines that the object, or one of the objects
of a change in ownership of shares in a company, whether direct or indirect, was to
obtain such setoff or refund.

Transaction designed to avoid tax liability

95.(1) Where the Commissioner-General has reasonable grounds to believe that the
main purpose or one of the main purposes for which any transaction was effected
(whether before or after the commencement of this Act) was the avoidance or
reduction of liability to tax for any charge year, or that the main benefit which
might have been expected to accrue from the transaction within the three years
immediately following the completion thereof, was the avoidance or reduction of
liability to tax, he may, if he determines it to be just and reasonable, direct that
such adjustments shall be made as respects liability to tax as he considers
appropriate to counteract the avoidance or reduction of liability to tax which would
otherwise be effected by the transaction.

(2) Without prejudice to the generality of the powers conferred by subsection (1), the
powers conferred thereby extend to –

(a) the charging with tax the income of persons who, but for the adjustments,
would not be chargeable with any tax or would not be chargeable to the
same extent;

(b) the charging of a greater amount of tax than would be chargeable but for
the adjustments; and

(c) repealed 1999

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 Income Tax Act Part IX

(3) Any direction of the Commissioner-General under this section shall specify the
transaction giving rise to the direction and the adjustments as respects liability to
tax which the Commissioner-General considers appropriate.

(4) For the purposes of determining liability to tax under subsection (1), the
Commissioner-General may-
(a) re-characterise a transaction or an element of a transaction that was
entered into as a tax avoidance scheme; and
(b) re-characterise a transaction the form of which does not reflect the
substance.
(As amended by Acts No. 26 of 1970, 16 of 1972, 11 of 1973, 14 of 1979, 6 of 1980,
6 of 1981, 12 of 1982, 6 of 1999 and 18 of 2013).

95A. Repealed by Act No. 12 of 1982.

Inter-company shareholdings

95B.(1) Where shares in any company are held by-

(a) another company or other companies, some or all of whose shares are held
by the first mentioned company; or

(b) a company which is not incorporated in the Republic some or all of whose
shares are held by-
(i) an individual who is resident in the Republic; or(ii) a nominee on behalf of
the individual mentioned in sub-paragraph(i);

whether by direct holding or through an interest in some other company or

companies, the Commissioner-General may, by notice in writing to the
companies concerned, direct that, for the purposes of this Act, the shares of all
or any such companies shall be deemed to be held in such manner as he shall
determine (notwithstanding the actual share-holdings in such companies) and
any distribution of dividends by those companies shall be deemed to have been
received by the shareholders so determined in such companies in accordance
with such determination.
(As amended by Act s No. 16 of 1972 and 11 of 1984).

95C. Repealed by Act No. 7 of 1996.

Loans to effective shareholders

95D.(1) For the purposes of this section-

"amount of a loan" means the amount of money advanced, the extent of credit
facilities provided, the difference between the cost of providing any benefit or
advantage and the amount paid for such benefit or advantage when provided or the
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Part IX Income Tax Act

difference between the open market value, as determined by the Commissioner-

General, of an asset transferred and the amount paid for this at the date of transfer,
as the case may be;

"grossed up equivalent of a loan" means such an amount as after deduction of tax at

the highest rate specified in the Charging Schedule in respect of the income of an
individual for the charge year in which the loan is made, is equal to the amount of
the loan;

"loan" includes any advance of money, the provision of credit facilities, the
provision of any benefit or advantage (whether or not such benefit or advantage is
capable of being turned into money or money's worth) and the transfer of an asset.

(2) Subject to the other provisions of this section, where in any charge year a company
makes, directly or indirectly, any loan to any person who at the time the loan is
made is an effective shareholder of the company or a nominee of the effective
shareholder, the company shall pay, without assessment, such an amount as is
equal to the difference between the amount of the grossed up equivalent of the loan
and the amount of the loan, as if the amount were tax charged on the company.

(2A) Subsection (2) shall not apply where the ordinary business of the lender includes
the making of loans and the loan is a normal commercial loan made in the ordinary
course of that business,

(3) Subject to the other provisions of this section, the amount which a company is liable
to pay under this section shall be due and payable to the Commissioner-General
within fourteen days after the end of the income tax month in which the loan is made
and for the purposes of this section a loan shall be deemed to be made by when the
loan would have been received, as provided by section five, by the effective
shareholder or the nominee, if the loan had been income of the effective shareholder
or of the nominee.

(4) On making payment of any amount due under this section, the company shall
furnish the Commissioner-General with a certificate stating in relation to the loan
in respect of which the amount is being paid-

(a) the name and address of the person to whom the loan has been made;

(b) the date the loan was made;

(c) the grossed up equivalent of the amount of the loan;

(d) the amount of the payment;

(e) the amount of the loan; and

106
 (f) such other particulars as the Commissioner-General may, by notice in
writing, require;

and shall send a copy of the certificate to the person to whom the loan was made.

(5) The Commissioner-General may, in his discretion, extend the time limited by
subsection (3) within which the amount payable under this section shall be paid.

(6) Where any part of the amount payable under this section is not paid within the time
limited by subsection (3), or as extended under subsection (5), penalties shall be
chargeable in accordance with subsections (1) and (2) of section seventy-eight as
if the amount payable were tax and the remaining subsections except subsection (7)
of that section shall apply to such penalties as if they were penalties charged in
relation to tax.

(7) Where a company has paid any amount payable under this section in any charge
year in respect of any loan made and the Commissioner-General determines that
the loan or part thereof has been repaid by the person to whom the loan was made
or, in the event of the death of such person by his executor or administrator, the
amount paid relating to the loan or part thereof so repaid, shall at the end of the
charge year in which the loan or part thereof was repaid, be deemed to be tax paid
in excess to which the provisions of section eight-seven shall apply.

(8) Where any amount is payable under this section in any charge year in respect any
loan made, or where such an amount would have been payable but for the
provisions of subsection (12), and the loan or part thereof is released or written off,
the grossed up equivalent of the amount so released or written off shall be deemed
to be income of the person to whom the loan was made or, in the event of the death
of such person before the date on which the loan or part thereof is released or
written off, of his estate, received on the day on which the loan or part thereof is
released or written off:

Provided that-

(i) where the loan relates to the provision of a benefit or advantage or to

the transfer of an asset, that loan shall be deemed to have been
released or written off on the last day of the accounts period of the
company in which the loan was made to the extent that the loan is not
included in the debtors as shown in the balance sheet of the company
on that day;

(ii) where the person to whom a loan is made is not an individual, this
subsection shall not apply if at the time the loan is released or written
off such person is not in existence.

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 Income Tax Act Part IX

(9) Where a company releases or writes off a loan or part thereof and subsection (8)
applies, the company shall, within thirty days after releasing or writing off such
loan or part thereof, furnish the Commissioner-General with a certificate stating in
relation to such loan or part thereof-

(a) the name and address of the person to whom the loan was made;

(b) the date the loan was made;

(c) the amount of the loan released or written off;

(d) the date the amount of the loan was released or written off; and

(e) such other particulars as the Commissioner-General may, by notice in

writing, require;

and shall send a copy of the certificate to the person to whom the loan was made.

(10) Where a company releases or writes off a loan or part thereof and subsection (8)
applies, the amount paid by the company under this section in respect of the loan or
part thereof so released or written off, shall be applied firstly towards the
satisfaction of any tax payable by the person deemed to have received income in
respect of the loan or part thereof released or written off to the extent of such tax
and the excess shall be deemed to be tax paid in excess by the company to which
the provisions of section eighty-seven shall apply.

(11) Where any amount paid by a company is applied towards the satisfaction of the tax
payable by any person in accordance with subsection (10), the company shall be
entitled to recover the amount so applied from the person on whose behalf the
amount was so applied or to retain out of any moneys that are or may come into his
possession on behalf of that person so much as is necessary to indemnify him for
the payment.

(12) This section shall not apply to a loan made to an effective shareholder or to his
nominees where the joint total of all loans made to the effective shareholder and his
nominees by all companies to which this section applies and of which the effective
shareholder is an effective shareholder, does not exceed ten thousand Kwacha:

Provided that where the said joint total exceeds ten thousand Kwacha this
section shall only apply to the excess.

(13) Where the Commissioner-General is of the opinion that a company is liable to pay
an amount under this section but has failed to do so, he may forthwith make an
assessment on such company specifying the particulars required in the certificate to

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Part IX Income Tax Act

be furnished by the company under subsection (4) and the date such amount was
due to be paid in accordance with subsection (3).

(14) Any amount assessed by the Commissioner-General in accordance with subsection

(13) shall be deemed to be tax due and payable on the date such amount was due to
be paid as stated in the assessment and the provisions of Part VIII, relating to the
collection, recovery and charging of penalties shall apply thereto:

Provided that where an assessment is made on a company under subsection (12) by

reason that while the joint total of the loans made by such company did not exceed
ten thousand Kwacha, but the joint total of the loans made by such company and
other companies did exceed that sum and the Commissioner-General determines
that company had taken all reasonable steps before making the loan to ascertain
whether or not this section applied to the loan or part thereof, the amount payable
shall be due and payable within thirty days of the date of service of the notice of
assessment.

(15)The provisions of Part V, relating to the making of assessments, and the provisions
of Part XI, relating to objections and appeals against assessments, shall apply to an
assessment made under this section.
(As amended by Acts No. 11 of 1975, 14 of 1976, 13 of 1994, 7 of 1996 and 6 of
1999)

Incurred loss not deductible in certain cases

96.(1) No deduction shall be made in respect of any loss arising from any business
which, having regard to the nature of the business, to the principal occupation of
the owner, partners, shareholders or other persons having a beneficial interest
therein, to the relationship of the business to the domestic establishment of any
such person or to any other relevant factor, the Commissioner-General considers it
reasonable to regard as not being carried on mainly with a view to the realization of
profits; and ,without prejudice to the generality of the foregoing, a business shall be
deemed not to be carried on for any charge year with a view to the realization of
profits where more than one-quarter of the amount of the revenue expenditure
incurred in such business in such year relates to goods, services, amenities or
benefits, or to the production of goods, services, amenities or benefits, which are of
a personal or domestic nature enjoyed by the owner, partners, shareholders or other
persons having a beneficial interest in the business or a member of the family or
the domestic establishment of any such person.

(2) Where the Commissioner-General is of the opinion that any change in the
shareholding in any company, as a direct or indirect result of which income has
been received by or has accrued to that company during any charge year, has been
effected by any person solely or mainly for the purpose of utilising any loss
incurred by the company in order to avoid liability or the part of that company or
any other person for the payment of tax or to reduce the amount thereof any loss
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 incurred in any charge year prior to the charge year in which the change in
shareholding took place and not deducted from income and the loss incurred for the
period from the commencement of the charge year in which the change of
shareholding took place to the date of the change in shareholding shall not be
deducted from any income received by the company after the date of the change in
shareholding.
(As amended by Act No. 26 of 1970).

Commissioner-General may avoid trust

97.(1) Where because of the existence of a trust the incidence of tax for any charge year
in relation to a person beneficially interested in that trust is less than would be the
case if that trust (apart from the ascertainment of the nature and amount of the
beneficiary's interest for the purposes of this subsection) did not exist, the
Commissioner-General may determine that the income of the trust attributable to
that beneficiary's interest for any charge year shall for the purposes of this Act be
assessed as if it were his income, and it shall be assessed and charged accordingly.

(2) This section applies, with necessary modifications, to the administration of the
estate of a deceased person as from a year after his death.

Transfer Pricing

97A (1) In this section-

“actual conditions" means conditions which are made or imposed between any two or
more associated persons on their commercial or financial relations;

“arm’s length conditions” means conditions or no conditions which would have been
made or imposed if persons were not associated with each other;

“equity holder” means a person who –

(a) holds ordinary shares in the company; or

(b) is a loan creditor of the company in respect of a loan other than a
normal commercial loan.

“fixed rate preference shares” for the purpose of this Act and despite the Companies
Act,2017, means shares which-

(a) do not carry any conversion right or rights to acquire any additional
shares or securities;
(b) do not carry any right to dividends other than dividends which-

(i) are of a fixed amount or at a fixed rate per centum of the

nominal value of the shares; and

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 (ii) represent no more than reasonable commercial return on the
consideration received by the company in respect of the issue
of shares; and

(c) on payment, do not carry any rights to an amount exceeding the

consideration;

“loan creditor” in relation to a company, means a creditor in respect of any debt

incurred by the company-

(a) for any money borrowed or capital assets acquired by the company; or

(b) in respect of any redeemable loan capital issued by the company;

except that a person carrying on the business of banking is not for the purposes of this
Part, a loan creditor in respect of any loan capital or debt issued or incurred by the
company for money lent by that person in the ordinary course of that business;

“normal commercial loan” means a loan-

(a) which does not carry any conversion rights or rights to acquire any
additional shares or securities;

(b) which does not entitle the loan creditor to any amount by way of interest
which depends to any extent on the results of the company’s business or
which exceeds a reasonable commercial return on the loan; and

(c) in respect of which the loan creditor is entitled, on repayment, to an amount

which does not exceed the loan;

“ordinary share” means a share other than a fixed rate preference share;

“reference price” means—

(a) the monthly average London Metal Exchange cash price;

(b) the monthly average Fast markets MB cash price to the extent that the base
metal or precious metal price is not quoted on the London Metal Exchange;
or
(c) the monthly average cash price of any other metal exchange market as
approved by the Commissioner- General to the extent that the base metal
price or precious metal price is not quoted on the London Metal Exchange or
Fast markets MB;
(Inserted by Act No. 20 of 2020)

“related or associated persons” include–

(a) parties connected directly or indirectly through shareholding, equity or

partnerships;

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 (b) any joint venture owned or operated jointly with an unrelated person;

(c) connected persons;

(d) parties connected through direct or indirect management control and capital;
or

(e) Any existing arrangements, whether in writing or not, that benefit two or
more entities whose conditions are deemed not to be at arm’s length;

“relative” has the meaning assigned to the word in the Anti-Corruption Act,2012;

“security” includes securities not creating or evidencing a charge on assets, and any-

(a) Interest paid or payable by a company on money advanced without the issue
of a security for the advance; or

(b) other consideration given by a company for the use of money so advanced;

which is treated as if paid or payable or given in respect of a security issued for the
advance by the company; and

“subsidiary” has the meaning assigned to the word in the Companies Act, 2017;

(2) This section shall apply where a taxpayer engages in one or more commercial or
financial transactions with an associated person and the actual conditions made or
imposed in that transaction or transactions are different from the arm’s length conditions
and there is, except for this section, a reduction in amount of income taken into account
in computing the income of one of the associated persons referred to in subsection (1), in
this section referred to as “the first taxpayer” chargeable to tax for a charge year, in this
section referred to as “the income year”.

(3) The income of the first taxpayer chargeable to tax in the income year shall be
computed for tax purposes on the basis that the arms’ s length conditions had been made
or imposed, as between the first taxpayer and the other associated persons referred to in
subsection (2) instead of the actual conditions; and a computation on that basis is
referred to as a computation on the arm’s length basis.

(4) If-

(a) in the income year and by reason of the actual conditions, an amount of
income received by that other person associated with the first taxpayer, in
this section referred to as, the second taxpayer, is increased;

(b) that increase in income corresponds to the reduction in income of the first
taxpayer referred to in subsection (2); and

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Part IX Income Tax Act

(c) a claim under this subsection has been made in writing by the second
taxpayer to the Commissioner-General ;

the second taxpayer's income chargeable to tax in the income year shall be
computed on the arm’s length basis for all tax purposes except for the purposes of
section forty-six A.

(5) For the purposes of this section -

(a) references to a reduction in an amount of income include references to a

reduction to nil or to the accrual of a loss or an increased loss; and

(b) references to an increase in income include references to the reduction in a

loss whether to a smaller amount or to nil.

(6) Subsection (4) shall not apply unless the amount of income mentioned in paragraph
(a) of that subsection would be taken into account in computing the amount of the
second taxpayer’s income chargeable to tax for the income year.

(7) For the purposes of subsection (6) in a case where no loss accrues or a smaller loss
accrues, as mentioned in paragraph (a) of subsection (4) and in subsection (5), a
profit shall instead be deemed to have accrued.

(8) Where an assessment or an amended assessment is made on the first taxpayer and
the computation of income on which it is based takes into account a different
amount of income from that on which earlier computations were based, the second
taxpayer may amend a claim under subsection (4) accordingly.

(9) A claim by the second taxpayer under subsection (4) shall not be made in relation to
an income year unless-

(a) the first taxpayer has made a return on the arm’s length basis under section
forty-six or forty-six A for the income year or an assessment on the arm's
length basis is made on that first tax payer for that year; and

(b) it is made within three years of the date on which that return or, if earlier,
that assessment is made, or such longer period as the Commissioner-
General may allow.

(10) A claim may not be amended under subsection (8) by reason of an assessment or
amended assessment unless the amended claim is made within one year of date on
which the assessment or amended assessment is made.

(11) Where a claim or credit is given by virtue of any agreement made under section
seventy-four for foreign tax, within the meaning of section seventy-five, in
computing the amount of that credit-
113
 (a) the foreign tax to be taken into account as having been paid or as being
payable by the claimant shall exclude any amount of foreign tax which would
not have been paid or payable if the computation of the income on which the
foreign tax is chargeable had, so far as it includes income to which the claim or
amended claim relates, been made on arm’s length conditions; and

(b) the amount of income to be taken into account as having been received by the
claimant and in respect of which the claimant is or may be given credit for
foreign tax shall be determined, so far as it includes income to which the claim or
amended claim relates, on arm’s length conditions.

(11A) For the purposes of subsection (11), a claim shall be made no later than twelve
months from the date of the assessment;

(12) Any adjustment required to be made by virtue of this section shall be made by way
of discharge or repayment of tax, by an amended assessment or otherwise and may
be made notwithstanding that the adjustment relates to a charge year which ended
more than six years earlier; and subsections (3), (4) and (5) of section eighty-seven
shall apply to any excess tax due to the taxpayer under this section as they apply to
an excess determined under subsection (1) of section eighty-seven.

(13) Despite any other provisions in this Act, for any transaction for the sale or purchase
of base metals or any substance containing base metals or precious metals, directly or
indirectly, between related or associated persons, the applicable sale or purchase price of
those metals or recoverable metals shall be the reference price.

(14) The reference price may be adjusted to take into account any premiums or
discounts on account of quality or grade of the base or precious metals sold or
purchased.

(15) Where the base or precious metal is sold by a resident or a non-resident person to a
related or associated person who sells that base or precious metal to an unrelated
person—

(a) the resident person or non-resident person shall, provide to the

Commissioner-General on the Commissioner-General’s request, all third
party sale agreements and all third party invoices relating to that sale; or

(b) if the sale by the resident person or non-resident person to an unrelated

person involves no further milling, blending, treatment, or refinement or
transformation to the base or precious metals and the subsequent agreed price
is higher than the reference price as at the month the base or precious metal is
sold by the resident or the non-resident person to a related or associated
person, the agreed price in that case shall be the sale price for the purpose of
computing the seller’s taxable income in the Republic.

(16) For the purposes of determination of a related or associated person, two persons are
connected with each other if-

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Part IX Income Tax Act

(a) one of them is an individual and the other is that persons spouse, a relative of
that person or of that person’s spouse, or the spouse of that relative; or

(b) one of them is a trustee of a settlement and the other is-

(i) a person who, in relation to that settle-ment, is a settlor ;or

(ii) a person who is connected with a person falling within
subparagraph (i).

(Amended by Act No. 6 of 1999, 1 of 2001, 1 of 2008 and 15 of 2019)

Special provisions where actual conditions include issuing security

97AA Inserted by Act No. 1 of 2001. Amended by Act No.3 of 2002 and
Repealed by Act No. 17 of 2018

Non-Application of section 97A

97B (1) Section ninety-seven A (2) shall not apply in relation to the computation of
income of any person who carries on a business in so far as that income is
determined by reference to the accounts for that business for a period beginning
before 1 st April, 1999.

(2) Nothing in section ninety-seven A shall apply for the computation of any
allowance which may, in accordance with sections thirty-three, thirty -four or
thirty -four A of this Act, be deducted in ascertaining the profits or gains of a
business or the emoluments of any employment or office.
(Inserted by Act No. 6 of 1999 and amended by Act No. 10 of 2012)

Provisions supplementary to section

97C. (1) For the purposes of sections ninety-seven A and ninety-seven B-

(a) any reference to a computation on the arm’s length basis shall be

construed in accordance with subsection (3) of section ninety-seven A;

(b) a return by a person or an assessment on a person is made on the arm's

length basis if the computation of income on which it is based is made by
virtue of subsection (3) of section ninety-seven A;

(c) any reference to arrangements or agreements means any arrangement or

agreement whether legally enforceable or not, and includes a reference to
understandings or mutual practices;
and
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 (d) “ person” includes a partnership.

(2) Section ninety-seven A applies whenever the conditions in question were made
or imposed, whether before, on or after 1st April, 1999.

(3) For the purposes of sections ninety-seven A and ninety-seven B conditions may
be taken to have been made or imposed between associated persons in their
commercial or financial relations-

(a) whether they are made or imposed in one arrangement or agreements or in

a series of arrangements or agreements; and

(b) where conditions are made or imposed in a series of arrangements or

agreements, notwithstanding that-

(i) conditions made or imposed in one arrangement or agreement

differ from those made or imposed in another; or

(ii) the parties to one arrangement or agreement differ from those to

another; or

(iii) any party to an arrangement or agreement is not associated with

any other party to that or any other arrangement or agreement.

(4) For the purposes of section ninety seven A and ninety-seven B, a person is
associated with another if-

(a) the person participates directly or indirectly in the management,

control or capital of the other; or
(b) the persons participate directly or indirectly in the management,
control or capital of both of them.

(5) For the purposes of section ninety seven A and ninety seven B, where
conditions are made or imposed between associated persons in their commercial
or financial relations-

(a) it shall be assumed, unless the contrary is shown to the

satisfaction of the Commissioner-General, that different
conditions or no conditions would have been imposed if those
persons were not associated; and

(b) where a claim is made under subsection (4) of section ninety

seven A, it shall be for the claimant to prove that the claim
satisfies that subsection.

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 Income Tax Act Part IX

(6) The Minister may, by statutory instrument, prescribe-

(a) the direct and indirect participation in the management, control or

capital of a person and different provision that may be made in
relation to different cases or different classes of each case;

(b) the determination of whether the conditions of a controlled

transaction under subsection (3) of section ninety-seven A are
consistent with the arm’s length conditions and the quantum of
any adjustment made to the income of the first person or the
second person in relation to subsections (3) and (4) of section
ninety seven A; and

(c) documentation rules in relation to section ninety seven A that

specify the information and documents required to be kept by a
person in relation to section ninety-seven A and penalties for
noncompliance of the Regulations.

(7) Regulations under this section may create offences punishable with a fine not
exceeding eighty million penalty units for a failure to comply with the provisions
of the Regulations.
(Amended by Acts No. 6 of 1999,18 of 2013 and 17 of 2018)

Objections and appeals involving transfer pricing

97D. (1) The Minister shall make regulations enabling a person, in such cases as may be
prescribed in the regulations, to be joined as a party to an appeal to the Tax Appeals
Tribunal under section one hundred and nine or to make representations to the
Commissioner-General on an objection assessment under section one hundred and
eight.

(2) Regulations under subsection (1) shall apply only in cases where one of the grounds
of the appeal or the objection relates to the question whether section ninety -seven A
applies in relation to any computation relevant to the assessment or whether any
computation has been made in accordance with that section.

(Inserted by Act No. 6 of 1999 and amended by Act No. 1 of 2015)

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Part X Income Tax Act

PART X

OFFENCES AND PENALTIES

General Penalty

98. Any person guilty of an offence against this Act shall, unless any other penalty is
specifically provided therefor, be liable on conviction therefor to a fine not
exceeding one hundred thousand penalty units or to imprisonment for a term not
exceeding twelve months, or to both.
(As amended by Acts No. 11 of 1992, 13 of 1994, 14 of 1994 and 2 of 1995 and 45
of 2016).

Summary imposition of penalties

98A (1) The Commissioner-General may, where satisfied that a person has committed
an offence for which the penalty does not exceed two hundred thousand
penalty units or where a person has admitted the commission of an offence
under this Act for which the penalty does not exceed two hundred thousand
penalty units, summarily demand from the person the payment of a fine not
exceeding one hundred thousand penalty units in respect of the offence.

(2) The Commissioner-General shall, where the Commissioner-General demands

a payment under subsection (1), inform the person against whom the demand
is made of the right to admit or dispute the liability.

(3) A person from whom payment of a fine has been demanded under subsection
(1) may elect to admit liability and pay the fine, or dispute liability.

(4) The payment of a fine shall operate as a bar to any further criminal
proceedings against the person making the payment in respect of the offence
concerned.

(5) The Commissioner-General on payment of a fine shall give a receipt to the

person making the payment in such form as maybe be prescribed.

(As introduced by Act No. 45 of 2016)

Penalty for failure to comply with notice, etc.

99. Every person who-

(a) without just cause shown by him fails to furnish a full and true return in
accordance with the requirements of any notice served upon him under this

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 Income Tax Act Part X

Act or of section forty-six or forty-six A or fails to give notice to the

Commissioner-General as required by section forty-five;

(b) without just cause shown by him fails to furnish within the required time to
the Commissioner-General or to any other person any document which
under this Act or under any notice served on him under this Act he is
required so to furnish; or

(c) fails to keep any records, books, accounts or documents that he is required
to keep under this Act; or

(d) fails to produce any document for the examination or inspection of the
Commissioner-General or other person in accordance with requirements of
this Act; or

(e) without just cause shown by him fails to attend at a time and place in
accordance with the requirements of any notice served on him under this
Act; or

(f) without just cause shown by him fails to answer any question lawfully put to
him or to supply or furnish any information lawfully required from him
under this Act; or

(g) otherwise contravenes or fails to comply with any of the provisions of this
Act or of any regulations made there under, or fails to comply with any
requirements of the Commissioner-General lawfully made under this Act
or under any of the Schedules thereto; or

(h) obstructs or hinders any officer acting in the discharge or his duty under
this Act;

shall be guilty of an offence against this Act.

(As amended by Act No. 6 of 1999)

Penalty for incorrect returns, etc.

100.(1) A person who negligently, fraudulently or through wilful default-

(a) fails to furnish a return of income in accordance with the requirements of

subsection (2) of section forty-six;

(b) fails to furnish a provisional return of income and tax in accordance with
the requirements of section forty-six A;

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(c) makes an incorrect return by omitting or understating any income of which
the person is required by this Act to make a return;

(d) gives any incorrect information in relation to any matter affecting the
person’s own liability to tax or the liability to tax of any other person; or

(e) submits any incorrect balance sheet, account, or other document;

shall pay a penalty equal to:-

(i) in relation to a person liable to pay mineral royalty under the Mines
and Minerals Development Act, 2008 –

(A) in the case of negligence, one point five percent of the

gross value or norm value;

(B) in the case of fraud, four point five percent of the gross
value or norm value; and

(C) in the case of wilful default, three percent of the gross value
or norm value;

omitted or understated, in consequence of such failure, incorrect

return, information or submission;

(ii) in relation to a person liable to pay turnover tax -

(A) in the case of negligence, one point five percent of the
amount;

(B) in the case of wilful default, three percent of the amount;

and

(C) in the case of fraud, four point five percent of the amount;

of any income omitted or understated, in consequence of such

failure, incorrect return, information or submission;
(As amended by Act No. 27 of 2011)

(iii) in relation to a person liable to pay skills development levy in

accordance with the Skills Development Levy Act, 2016 –

(A) in the case of negligence, zero point two five percent of the
amount;
(B) in the case of wilful default, zero point five percent of the
amount; and
(C) in the case of fraud, zero point seven five percent of the
amount;
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 of any income omitted or understated, in consequence of such
failure, incorrect return, information or submission.;
(Inserted by Act No. 17 of 2018)

(iv) in any other case-

(A) in case of negligence, seventeen point five percent of the

amount;

(B) in the case of fraud, fifty-two point five percent of the

amount; and

(C) in the case of wilful default thirty-five percent of the

amount;

of any income omitted or understated, or any expenses

overstated, in consequence of such failure, incorrect
return, information or submission.
(Amended by Act No. 49 of 2010 and renumbered by Act No. 17 of 2018)

(2) Except for paragraph (a), any reference in subsection (1) to tax or income includes a
reference to provisional tax and provisional income respectively.

(3) The penalties provided by this section are a debt due to the Government and shall be
treated as if they were tax for the purpose of recovery and shall be recoverable
accordingly whether or not any proceedings are commenced for any offence
against this Act arising out of the same facts.

(4) The Commissioner-General may accept a pecuniary settlement instead of taking

proceedings for the recovery of a penalty under this section and may, in his
discretion, mitigate or remit any penalty or stay or compound any proceedings for
recovery thereof and may also after judgment in any proceedings under this Act
further mitigate or entirely remit the penalty.

(5) Notwithstanding anything contained in Part XI, where, in any appeal against an
assessment which includes penalty, one of the grounds of appeal relates to the
charge of such penalty, then the decision of the Tax Appeals Tribunal in relation to
such ground of appeal shall be confined to the question as to whether or not the
failure, claim, understatement or omission which gave rise to the penalty under
subsection (1) was due to any neglect, wilful default or fraud.
(As amended by Acts No. 11 of 1973, 14 of 1973, 10 of 1979, 11 of 1992, 4 of
1993, 6 of 1999 and 1 of 2015)

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Part X Income Tax Act

Time limit

101. No complaint charging any offence under section ninety-eight or ninety-nine shall
be made at any time subsequent to six years after the date of the commission of the
offence.

Penalty for fraudulent returns, etc.

102.(1) Any person who wilfully with intent to evade or to assist another person to
evade tax-

(a)`omits from a return made under this Act any income which should under
this Act be included therein; or

(b) makes any false statement or entry in any return under this Act; or

(c) gives any false answer, whether verbally or in writing, to any question or
request for information asked or made in accordance with the provisions
of this Act; or

(d) prepares or maintains or authorizes the preparation or maintenance of any

false books of account or other records, or falsifies or authorizes the
falsification of any books of account or records; or

(e) makes use of any fraud, art or contrivance whatsoever or authorizes the use
of any such fraud, art or contrivance; or

(f) makes any fraudulent claim for the refund of any tax;

shall be guilty of an offence and on conviction shall be liable to a fine not

exceeding three hundred thousand penalty units or to imprisonment for a term not
exceeding three years, or to both.

(2) Whenever in any proceedings under this section it is proved that any false
statement or entry is made in any return furnished under this Act by or on behalf of
any person or partnership or in any books of account or other records maintained
by or on behalf of any person or partnership, that person or the partners shall be
presumed ,until the contrary is proved, to have made that false statement or entry
with intent to evade tax.

(3) Any reference in this section to income or tax includes a reference to provisional
income and provisional tax, respectively.
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 Income Tax Act Part X

(As amended by Acts No. 17 of 1971, 11 of 1992, 13 of 1994, 2 of 1995, 9 of

1998 and 45 of 2016).

Bodies corporate

103. Where any offence under this Act has been committed by a body corporate, every
person who, at the time of the commission of the offence was a director, general
manager, secretary or other similar officer of such body corporate or who was
acting or purporting to act in any such capacity, shall also be guilty of that offence,
unless he proves that the offence was committed without his knowledge or consent,
and that he exercised all such diligence to prevent the commission of the offence, as
he ought to have exercised, having regard to the nature of his function in such
capacity and all the circumstances.

Power to search and seize

104. If an officer authorized by the Commissioner-General to inquire into the affairs

under this Act of any person satisfies a magistrate that in fact or according to
reasonable suspicion that person has committed an offence under this Act, the
magistrate may, by warrant, authorize the officer to exercise all or any of the
following powers:

(a) between sunrise and sunset to enter any premises to search for money or
documents or electronically stored data;

(b) to open, or remove from the premises and open, any article in which money
or documents or electronically stored data may be contained;

(c) to seize any documents or electronically stored data which may be

necessary for assessment or any criminal or other proceedings and retain
them for so long as they are required for such purposes.
(As amended by Act No. 3 of 2002)

Documents in evidence

105.(1) In any civil or criminal proceedings under this Act any relevant document in the
Commissioner-General's possession shall be received in evidence on mere
production as such and shall be prima facie evidence of its contents, but the
person affected by such production shall be given not less than four days’ notice
of intention to produce a document under this section, and he shall be given an
opportunity to inspect and copy that document.

(2) Statements made or documents produced by or on behalf of any person shall not
be inadmissible in any proceedings to which this section applies by reason only
that it has been brought to his attention that -
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Part XI Income Tax Act

(a) in relation to tax the Commissioner-General may accept pecuniary

settlements instead of instituting proceedings; and

(b) though no undertaking can be given as to whether or not the Commissioner-

General will accept such a settlement in the case of any particular person,
it is the practice of the Commissioner-General to be influenced by the fact
that a person has made a full confession of any fraud or default to which he
has been a party and has given full facilities for investigation;

and that he was or may have been induced thereby to make the statements or
produce the documents.
(As amended by Act No. 17 of 1971.)

PART XI

OBJECTIONS AND APPEALS

Assessments good until disproved

106. Subject to the Commissioner-General's powers relating to assessment, every

assessment under this Act shall stand good unless proved otherwise by the person
assessed upon objection or appeal under this Part.

107. Repealed by Act No 11 of 1998

Objection to assessment

108. Within thirty days of the date of service of notice of assessment, the person
assessed may make to the Commissioner-General a written statement of objection
to the assessment setting out the grounds of objection, and the Commissioner-
General shall give that person written notice of his decision concerning that
objection:

Provided that-

(i) the Commissioner-General may determine that an objection may be made

within a longer period than thirty days but where he does not so determine
he shall give the person written notice of his determination and the person
may appeal against the determination under section one hundred and nine
without making an objection;

(ii) the right of objection to an amended assessment which is not made as a

result of an objection shall be restricted to the items in that assessment
which differ from, or are additional to, the items in the assessment for the
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 Income Tax Act Part XI

same charge year made immediately prior to that assessment and only to
the extent of such difference or addition;

(iii) the right of objection to an amended assessment which is made as a result

of an objection shall be the same right of objection as existed to the
assessment objected to; and

(iv) an amended assessment issued as a result of an objection shall, unless

objected to, be the Commissioner-General's written decision concerning
the objection.
(As amended by Act No. 11 of 1975).

Appeal against assessment

109.(1) If a person assessed is dissatisfied with the Commissioner-General's decision

concerning his objection to the assessment, that person may, by written notice to
the Chairperson, within thirty days of the date of service of the written notice of the
Commissioner-General's decision, appeal against the assessment to the Tribunal
and shall send a copy of the notice to the Commissioner-General.
(As amended by Acts 14 of 1973, 11 of 1975 and 4 of 2000)

Determination of Appeals

110 Upon the hearing of an appeal under the Tax Appeals Tribunal Act, 2015, the
Tribunal may make such order in relation to the assessment under appeal as is in
accordance with this Act.
(Amended by Acts No. 26 of 1970, 14 of 1973, 4 of 2000 and 1 of 2015)

Appeals from Tax Appeals Tribunal

111. A person dissatisfied with a decision of the Tribunal may appeal against the
decision in accordance with the Tax Appeals Tribunal Act, 2015.
(As amended by Act No. 19 of 2015)

Privacy of proceedings

112.(1) Where a person assessed so requests, all proceedings concerning him under this
Part shall be in private, or in camera, as the case may be.

(2) Nothing in subsection (1) shall prevent the printing or publishing of the judgement or
order made on the determination of an objection or appeal if the Supreme Court
does not prohibit publication, but any such publication shall not disclose the identity
of the taxpayer concerned.
(As amended by Acts No. 14 of 1973, 11 of 1974 and 19 of 2015).
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Part XI Income Tax Act

Adjustment on successful objection or appeal

113. On the final determination of an objection or appeal against an assessment, the

Commissioner-General shall make all assessments and adjustments as are necessary
to give effect to the determination and the provisions of section eighty-seven shall
apply to any tax paid in excess as a result of such determination.
(As amended by Acts No.26 of 1970 and 14 of 1976).

Appeals from Commissioner-General's discretions and determinations

114.(1) Where it is provided by this Act that any matter is subject or according to-

(a) the Commissioner-General's discretion, such discretion shall not be

questioned in any proceedings;

(b) the Commissioner-General's determination, such determination shall only

be questioned in any proceedings on the ground that it is unreasonable.

(2) If a person is dissatisfied with a determination of the Commissioner-General, that

person may object to or appeal against that determination as if the determination
were an assessment and the provisions of this Part relating to objections and appeals
against assessment shall apply mutatis mutandis.

(3) Where the Commissioner-General’s determination as provided for in this Act is in

relation to any assessment, any appeal against that determination shall be heard as a
preliminary point upon an appeal against that assessment, and in any other case
such appeal shall be heard as if the determination were an assessment.

115. Repealed by Act No. 9 of 1998.

115A. Repealed by Act No. 7 of 1996.

PART XII

REPEALS AND TRANSITIONAL PROVISIONS

Repeals

116. Subject to the Seventh Schedule, the Income Tax Act, Chapter A.L. 31 of the 1965
Edition of the Applied Laws, the Income Tax (Employments) Act, 1966, and the
Taxes Charging Act, 1966, are repealed.

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 Income Tax Act Sch 1

FIRST SCHEDULE

(Section 17) FURTHER CLASSIFICATION OF INCOME

Maintenance.

1. Income includes amounts received by way of maintenance or allowance under any

judicial order or decree in connection with matrimonial proceedings, or, under a
written separation agreement.
(amended by Act No. 3 of 1997)

Improvements

2.(1) Income includes, in the case of any person to whom, under any agreement relating
to or derived from the grant to any other person of the use or occupation of land or
buildings, there accrues the right to have improvements effected on the land or to
the buildings by any other person:-

(a) the amount stipulated in the agreement as the value of, or the amount to be
spent on, the improvements; or

(b) if no amount is stipulated, an amount representing the value of the

improvements;

and in either case the amount is deemed for the purposes of this Act to have been
received by the first-mentioned person in equal monthly instalments from the date
the improvements were effected over the un-expired period of the agreement or
over twentyfive years, whichever period is the less.

(2) All the instalments deemed under sub-paragraph (1) to have been received by a
person that have not been included in his income before any of the following events
are treated as having been received by him immediately before the happening of any
such event:

(a) the cancellation of the agreement;

(b) the sale or other disposal of the land or buildings as improved; or

(c) his death or bankruptcy, or, in the case of a company, its

liquidation.

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Commencement and cessation of employment

3. Income includes any amount received in connection with the taking up of

employment or by reason of the cessation of any agreement for employment
including compensation for loss of office or employment.

Lump sum payments

4. Income includes lump sum payments.

Capital recoveries

5. (1) Income of a person includes any amount paid by which recoveries from capital
expenditure exceed:

(a) in the case of a building, such residue of the expenditure ranking for
capital allowances incurred in respect of the building on which capital
recovery has been made as remains after the deduction of any initial, wear
and tear or other capital allowance or similar deduction whether allowed
under this Act or under any provisions of the previous law for any charge
year in respect of the building; but in no case shall the amount to be
included in the income exceed the total of the deductions so allowed to
him in respect of the building;

(b) in the case of implements, machinery or plant, such residue of the

expenditure ranking for capital allowances incurred in respect of
implements, machinery or plant on which capital recovery has been made
as remains after the deduction of wear and tear or other capital allowance
or similar deduction whether allowed under this Act or under any
provisions of the previous Law for any charge year; but in no case shall
the amount to be included in the income exceed the total of the deductions
so allowed to that person in respect of those implements, machinery or
plant;
(Amended by Act No. 4 of 2000)

(c) in relation to a mine in respect of assets on which an allowance has not

been claimed under Part I or Part II of the Fifth Schedule, the balance of
unredeemed capital expenditure; provided that this paragraph shall not
apply to recoveries from expenditure incurred on farm improvements and
farm works to which Part I or Part II of the Sixth Schedule applies.

(2) For the purposes of items (a) and (b) of sub-paragraph (1):

(a) a recovery from capital expenditure shall be deemed to have taken place
when:

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 Income Tax Act Sch 1

(i) a building ceases to belong to such person without being sold, or

permanently ceases to be used by such person for the purposes of
any business;

(ii) any implement, machinery or plant ceases to belong to such

person without being sold, or permanently ceases to be used by
such person for the purposes of his business.

(b) the amount of the recovery from capital expenditure shall be the amount
which, according to the Commissioner-General’s determination, the asset
would have realized in the open market at the time the event giving rise to
the recovery occurred.

(3) For the purposes of this paragraph the expression "capital allowances" shall not
include any investment allowance deducted pursuant to section thirty -four, or
pursuant to paragraph (w) of subsection (2) of section thirteen of the former
Act.
(As amended by Acts No. 11 of 1974 and 11 of 1969).

Exotic timber

6. Where land is disposed of for valuable consideration, and there is on that land
exotic timber which has been grown for sale, the market value of that timber at the
time the land is disposed of is included in income.

Farm stock

7. Any stock owned by a farmer at the beginning and end of each period for which he
makes up the accounts of his farming business shall, in computing the gains or
profits from such business, be taken into account:

Provided that where livestock bought by a farmer for stud has been included in
stock at the end of a period for which accounts are made up such livestock shall be
included in stock at the beginning of the next period for which accounts are made
up.

For the purposes of this paragraph "stock" includes all livestock, produce, and crops
which have been harvested.
(As amended by Acts No. 11 of 1974 and 6 of 1999 ).

Share Options

8.Income includes the difference between the market value of the shares at the date of
exercise of the share options and the option price or the gross sale proceeds or
proceeds from sale of options in respect of shares allotted, reserved, vested or
acquired by an individual in terms of a share option scheme net of any amount paid
129
 for the acquisition or exercise of the shares or options by the individual concerned,
and shares or options sold shall be deemed to be the shares or options longest held,
except that the relief afforded by subsection (5) of section twenty-one shall extend to
such income to the extent not absorbed by compensation received for loss of office
or employment where the gross sale proceeds are receivable within one year of
termination of services.
(Amended by Acts No. of 2002 and 18 of 2013)

9. Amounts refunded to any person carrying on mining operations pursuant to

paragraph (a) of subsection 4 of section eighty-six of the Mines and Minerals
Development Act, 2015, shall be deemed to be income in the year that the refund is
made.
(As amended by Act No. 19 of 2015).

(10) Income includes benefits arising from gaming, betting and lottery winnings.
(Inserted by Act No. 7 of 2006 and amended by Act No. 27 of 2009 and 18 of 2013)

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SECOND SCHEDULE

(Section 15) EXEMPTIONS

PART I

EXEMPT OFFICE HOLDERS

1. The emoluments of the President are exempt from tax.

2. The income of the Litunga of Western Province as Litunga and the income of any
Chief received as a Chief from the Government, are exempt from tax.
(As amended by Act No. 33 of 1989)

PART II

FOREIGN EXEMPTIONS

3. There shall be exempt from tax:

(a) the emoluments of any individual payable in respect of any office which he
holds in the Republic as an official of any foreign government, if such
individual is resident in the Republic solely for the purpose of carrying
out the duties of his said office;

(b) the emoluments of any domestic or private servant of any individual

referred to in sub-paragraph (a) payable in respect of domestic or private
services rendered or to be rendered by such servant to such individual, if
such servant is not a Zambian citizen and is resident in the Republic
solely for the purpose of rendering the said services;

(c) the emoluments payable to any individual who is not a Zambian citizen
and who is temporarily employed in the Republic in connection with any
technical assistance scheme provided by any foreign country, any
international organization or agency, any foreign foundation or any
foreign organization, if the exemption of such emoluments or such part of
the emoluments as may be specified is authorized under the terms of an
agreement entered into by the Government of such foreign country,
international organization or agency, foreign foundation or foreign
organization with the Government of the Republic;

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 Income Tax Act Sch 2

(d) the emoluments of any individual in respect of service with any

international organization or any agency of a foreign government or any
foreign foundation or organization which organization agency or
foundation is approved by the Minister by order in the Gazette and such
individual is not a Zambian citizen and is resident in the Republic solely
for the purpose of rendering the said service or secondment to any
Zambian organization, agency, or foundation.
(As amended by Acts No. 26 of 1970, 16 of 1972 and 12 of 1982)

4. There shall be exempt from tax such income of:

(a) any international organization;

(b) any agency of a foreign government;

(c) any foreign foundation or organization;

as is approved by the Minister by order in the Gazette.

(As amended by Acts No. 11 of 1969 and 26 of 1970).

PART III

EXEMPT ORGANIZATIONS

Various organizations

5.(1)The income is exempt from tax of any:

(a) local authority;

(with effect from 1st April, 1966).

(b) Repealed by Act No 11 of 1992.

(c) registered trade unions;

(with effect from 1st April, 1968).

(d) agricultural society, mining society or commercial society, whether

corporate or unincorporate, or any other society having similar objects,
not operating for the private pecuniary gain or profits of its members;

(e) club, society or association organized and operated only for social
welfare, civil improvements, pleasure, recreation or like purposes, if

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its income, whether current or accumulated, may not in any way be

received by any member or shareholder;

(Amended with effect from 1st April, 1966).

(f) approved fund or medical aid society or approved share option

scheme;

(with effect from 1 st April, 1966 and as Amended by Act No. 3 of

2002).

(g) Repealed by Act No 7 of 1996.

(h) employee's savings scheme or fund, if approved by the Commissioner-

General;

(with effect from 1st April, 1966).

(i) repealed by Act No 11 of 1992.

(j) political party registered as a statutory society under the Societies

Act
(Cap. 119);

(k) Statutory body; and

(l) Approved collective investment scheme to the extent to which the

income is distributed to participants in the collective investment
scheme.

(m) income real estate investment trust approved by the Securities and
Exchange Commission
(Inserted by Act No. 43 of 2021)

(2) The income of the following shall be exempt from tax:

(a) the Commonwealth Development Corporation; (with efect from 1st

April, 1968).

(b) the Economic Co-operation Administration and Mutual Security

Agency, or successor agencies of the Government of the United States
of America;

(with efect from 1st April, 1968).

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 (c) Millennium Challenge Account Zambia (MCA-Zambia) and any
person eligible for income tax exemption as provided in the
Millennium Challenge Compact Act, 2013

(Amended by Act no. 18 of 2013 and Act No. 7 of 2014)

(d) repealed by Act No. 11 of 1992;

(e) repealed by Act No. 7 of 1996.

(As amended by Acts No. 10 of 1981, 14 of 1987, 17 of 1988, 11

of 1992 and 7 of 1996.)

(3) The income of a co-operative society registered under the Co-operative

Societies Act (Cap. 397) shall be exempt from tax if the gross income, before
deduction of any expenditure, of such co-operative society when divided by the
number of its members (that is to say, the number of individuals who are
members together with, where another co-operative society so registered is a
member, the number of individuals who are members of that other co-operative
society) on the last day of any accounting period of twelve months does not
exceed the amount taxable at the rate of zero per centum per annum as set out
in clause (c) of subparagraph (1) of paragraph 2 of the Charging Schedule or, if
such accounting period is more or less than twelve months, such figure as bears
the same relation to the amount taxable at the rate of zero per centum per
annum as set out in clause (c) of subparagraph (1) of paragraph 2 of the
Charging Schedule as the number of months in such accounting period bears
two to twelve.

(with efect from 1st April, 1970 and as amended by section 14 of Act No. 12
of 1982 with efect from 1 st April, 1982 and Act No 3 of 2002 ).

(4) The income of a non-resident person derived from the carrying on of the
business of ship owner, charterer or air transport operator shall be exempt from
tax where the country in which such non-resident person is resident extends a
similar exemption to ship owners, charterers, and air transport operators who
are not resident in such country but who are resident in the Republic.

(with efect from 1st April, 1968).

(5) The income of any organization, partnership or body corporate, or such part of
the income as is specified, shall be exempt from tax where the objects and
activities within the Republic of such organization, partnership or body
corporate are to assist in the development of the Republic and such exemption
of the income, or such part thereof as is specified, is approved by the Minister
by statutory order.

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 Income Tax Act Sch 2

(with efect from 1st April, 1968, as amended by Acts No. 11 of 1969, 26 of
1970, 17 of 1971 and 16 of 1972, 10 of 1981, 16 of 1988 , 11 of 1992, 1
of 2009, 10 of 2012 and 15 of 2019).

Public Benefit Organisations

6. (1) There is exempt from tax the income of a public benefit organisation established
for the promotion of religion or education, or for the relief of poverty or other
distress, if –

(a) in relation to the people of the Republic, the income may not be expended for
any other purpose; and

(b) the Minister has approved the exemption from tax the income of that public
benefit organisation.

(As Amended by Act No. 17 of 2018)

(2) If the income referred to in sub-paragraph (1) is the profit of a business carried on
by a public benefit organisation receiving it, that income is not exempt from tax
and shall be taxed at the rate specified in the charging schedule.

(Amended by Act No. 27 of 2009 and Act No. 17 of 2018)

Interest on Treasury Bills etc received by public benefit organisation, body,

person or trust subject to withholding tax.

6A (1) Notwithstanding the provisions of sub-paragraph (1) of paragraph 5 and sub-

paragraph (1) of paragraph (6), or any other provisions of this Act, any interest on
treasury bills, government bonds, corporate bonds or any financial instrument or
securities received by any public benefit organisation, body, person or trust
referred to in those paragraphs, shall be subject to withholding tax under section
eighty-two A.

(2) In this paragraph “securities” has the meaning assigned to it by section two of
the Securities Act.
(As Amended by Acts No. 3 of 2003, 1 of 2004 and 7 of 2014).

Rent received by statutory body subject to tax

6B. Despite paragraph 5 (1) or any other provision of this Act, any rent
received by a statutory body referred to in that paragraph is subject
to tax at the rates set out in the Charging Schedule.
( Amended by Act No. 43 of 2021)

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PART IV

EXEMPT INCOME

Various exemptions

7. There is exempt from tax income received:

(a) by way of lump sum payments withdrawn from a fund at retirement age or
death or on the beneficiary becoming permanently incapable of engaging
in an occupation or such sums withdrawn from a fund which the
Commissioner-General determines cannot be enjoyed by the member until
he attains retirement age;
(As amended by Act No. 43 of 2021)

(b) as a war disability pension, or as a war widow's pension or as an old age

pension, paid out of public funds, or as a benefit paid under any written
law in respect of injury or disease suffered in employment;

(c) in conjunction with the award of military, police, and fire brigade
decorations for distinguished or good conduct or long service;

(d) by an individual or his dependants or heirs being on account of his injury

or sickness from a fund or registered trade union or medical aid society or
under any policy of insurance;
(As amended by Act No. 43 of 2021)

(e) as a local overseas allowance by any member of the Defence Force of the
Republic while on service officially declared to be active service;

(f) as an allowance paid for service outside the Republic by the Government or
a statutory corporation in respect of an excess of living expenses due to
such service;

(g) in respect of a scholarship or bursary, for the purposes of education and

maintenance during such education;

(h) by way of alimony, maintenance or allowance under any judicial order or

decree in connection with matrimonial proceeds, or under any separation
agreement, to the extent of the amount of alimony, maintenance or
allowance that has not been allowed as a deduction to another individual
under this Act;

(i) Repealed by Act No 9 of 1998.

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 Income Tax Act Sch 2

(j) by any individual, the amount of which is prescribed by the Ministerial

and Parliamentary Office (Emoluments) Act, (Cap 262), and which
pursuant to the provisions of the Act, is exempt from tax;

(k) by way of grant as compensation for loss of office or disturbance by an

officer admitted to the permanent and pensionable establishment of the
Government;

(l) by way of any passage value payable to a public officer or payable in

respect of his wife or children subject to the provisions of paragraph 8(3);

Amended by Act No 3 of 2002

(m) repealed by Act No. 4 of 1993

(n) repealed by Act No.3 of 2003

(o) repealed by Act No. 9 of 1998.

(Amended by Act no. 18 of 2013)

(q) by way of pension received by an individual from a fund; (Effective 1st

April, 1989 and amended by Act No. 43 of 2021).

(r) by way of a dividend declared from farming income for the first five years
the distributing company commences farming;

(s) by an individual by way of sitting allowance for attending a council

meeting. (As amended by section 3 of 2nd Act of 1995)

(t) ex-gratia payments made to a spouse, child or dependant on the death of

an employee.
(As amended by Act No 3 of 1997)

(u) Deleted by Act no. 18 of 2013

(v) by way of a lump sum payment paid to an employee on loss of office or

employment on medical grounds;
(Inserted by Act No. 1 of 2001)

(w) by way of allotment or acquisition of shares in terms of an approved share

option scheme;
(Inserted by Act No.3 of 2002).

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 (x) as emoluments by a former President of the Republic.
(Inserted by Act No. of 2003)

(y) by way of a dividend declared by a company listed on the Lusaka

Securities Exchange to an individual;
(Amended by Act No. 15 of 2019).

(z) by way of dividends for a period of five years from the date of first
declaration by a company engaged in the assembly of motor vehicles,
motor cycles and bicycles; and
(aa) Deleted by Amendment Act No. 18 of 2013.
Deletion of Small Enterprises Act and subsitution therefor with Zambia
Development Agency Act, 2006 – Amendment Act No. 1 2009.

Passages

8.(1) For the purposes of this paragraph:

"child" means a child of an individual who at the commencement of the charge

year in which a passage is made is under nineteen years of age and is, at
the time the passage is made, unmarried and wholly dependant on such
individual;

"commencement passage" means the first passage under the terms of written
contract granting such passage to the Republic from the home country of an
individual;

"home country" means the country in which an individual is resident for the
purposes of income tax or the equivalent tax, immediately before coming to
the Republic, or the country of which the individual is a citizen;

"leave passage" means a return passage taken for leave purposes between the
Republic and the home country of an individual or, in the case of a child of the
individual;

"passage" means a journey by air by the cheapest available fare as an economy

class passenger on a scheduled airline the cost of which is granted to an
individual under the terms of a written contract for his employment in the
Republic;

"terminal leave" means leave due to an individual under the terms of a written
contract for his employment in the Republic, taken after the last day of service
of the individual in the Republic under such contract;

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Sch 2 Income Tax Act

"terminal passage" means the last passage under the terms of the written
contract granting the passage from the Republic to the home country of an
individual.
(As amended by Acts No. 11 of 1975 and 3 of 2002 ).

(2) This paragraph shall not apply to the value of a passage made:

(a) by an individual, his wife or child referred to in sub-paragraph (l) of

paragraph 7, subject, however, to the provisions of sub-paragraph (3);

(b) by an individual or by the spouse or child of such individual where the

individual is an effective shareholder or a director, other than the whole-
time service director, of the company granting the passage;

(c) by the spouse or child of an individual who alone or in partnership as

employer grants the passage;

(d) by an employee of a company granting a passage or the spouse or child of

such employee, where the employee or his spouse is carrying on a business
alone or in partnership and the services of the employee are provided to
such business by such company; or

(e) by the wife or child of an individual where the passage is granted under the
terms of a written contract for the employment of the wife in the Republic
if at the time such passage is made the wife is living with the individual
and subparagraph (9) does not apply.

(3) The right of an individual to exemption from tax in respect of the value of a passage
under this paragraph shall be available under the terms of only one written contract
for employment in any one period of employment in the Republic.

(4) Subject to the other provisions of this paragraph, the value of a commencement and
terminal passage made by an individual shall be exempt from tax.

(5) Subject to the other provisions of this paragraph the value of a commencement and
terminal passage made by the wife or child of an individual shall be exempt from tax:

Provided that:

(i) the written contract which grants the cost of the passage specifies that the
individual is to be employed in the Republic for a period of not less than
one year, excluding terminal leave;

(ii) the individual is so employed under the contract for the specified period or
for a lesser period, where the Commissioner-General determines that the

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individual was prevented from being so employed for the specified period
due to circumstances beyond the control of such individual;

(iii)for each contract the value of not more than one commencement and one
terminal passage in respect of a wife shall be exempt from tax; and

(iv) Repealed by Act No 3 of 2002.

(6) Subject to the provisions of this paragraph, the value of a leave passage made by an
individual, his wife or his child, shall be exempt from tax:

Provided that:

(i) the written contract which grants the cost of the passage specifies that
the individual is to be employed in the Republic for a period of not
less than three years, excluding terminal leave;

(ii) the individual is so employed under the contract for the specified
period;

(iii) the passage is made during the period of which the individual is so
employed under the contract;

(iv) subject to proviso (v), for each contract the value of not more than one
such leave passage shall be exempt from tax;

(v) for each contract the value of one further such leave passage shall be
exempt from tax for each period of not less than two years, excluding
terminal leave, for which the individual is so employed, in addition to
the first three years; and

(vi) where the Commissioner-General determines that the individual was

prevented from being so employed under the contract for the
specified period due to circumstances beyond the control of the
individual the value of the passage shall be exempt from tax.

(7) Repealed by Act No 3 of 2002.

(8) Where a passage is made the value of which would be exempt from tax under this
paragraph if it were made by air or from, or to, a place provided by this paragraph
but is not so made, the value of such passage shall, subject to a limit of the value of
a passage which would be exempt from tax if made by air and from, or to, a place
so provided, be exempt from tax.

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(9) Where an individual is permanently incapable of engaging in an occupation and his

wife is employed in the Republic then the wife shall, for the purposes of this
paragraph, be deemed to be the individual and the individual the wife.
(As amended by Acts No. 26 of 1970, 16 of 1972, 11 of 1974, 11 of 1975, 14
of 1976 and 3 of 2002).

Interest

9.(1)Deleted by Act No 2 of 1995.

(2) The following interest is exempt from tax:

(a) interest on any public loan raised by the Government or a statutory

corporation, where the terms of the loan provide that the interest thereon
shall be exempt from tax;

(b) interest on any bond issued under or in respect of a loan of the kind
described in clause (a);

(c) Repealed by Act No. 3 of 2003

(3) Repealed by Act No. 11 of 1973

(4) (As amended by Acts No. 23 of 1968, 14 of 1976, 12 of 1982, 11 of 1985, 14 of

1987, 11 of 1992, 4 of 1993, 7 of 1996, 6 of 1999, 1 of 2004 and deleted by Act
No. 1 of 2009).

(5) (As amended and inserted by Acts No. 23 of 1968, 11 of 1969, 11 of 1974, 14 of
1976, 12 of 1982, 11 of 1985, 11 of 1992, 14 of 1994, 7 of 1996 and deleted by
Act No. 1 of 2009)

(6) Inserted by Act No. 17 of 1988 and deleted by Act No of 1996.

Annuities

10.(1) An annuity shall be exempt from tax where such annuity is bought by an
annuitant out of a lump sum payment withdrawn from an approved fund at
retirement age, or death, or the beneficiary being permanently incapable of
engaging in an occupation and which is exempt from tax under paragraph 7(a).

(2) An annuity, other than an annuity payable out of an approved fund, shall be exempt
from tax to the extent that it represents a return of the purchase price.
(As amended Act No. 11 of 1975).

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11. This Schedule shall not apply to income comprising Fees paid or payable in respect
of the management of a pension Fund of any class or description, including any
approved fund, and such fees are not exempt from tax by virtue of this Schedule.

(Inserted by Act No. 4 of 2000)

12. Repealed by Act No. 11 of 1992.

13. Repealed by Act No. 11 of 1992.

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THIRD SCHEDULE

(Section 25) INSURANCE BUSINESS

Insurance other than life

1.(1)The profits of carrying on insurance business, other than life insurance business,
by a resident company are ascertained for a financial year of the company by -

(a) taking the gross premiums, interest, and other income, less premiums
refunded or paid on reinsurance; and

(b) adding any reserves for unearned premiums and outstanding claims made
at the beginning of the financial year;

(c) deducting any such reserves made at the end of the financial year;

(d) deducting the actual losses (less the amounts received under reinsurance),
and other expenses, including deductions under Part II of the Fifth
Schedule, allowable as a deduction in calculating business profits.

(2) The profits of carrying on insurance business, other than life insurance business,
by a company that is not resident are ascertained for a financial year of the
company by:

(a) taking the gross premiums, interest and other income received in the
Republic, less premiums refunded or paid on reinsurance; and

(b) adding any reserves for unearned premiums and outstanding claims made
at the beginning of the financial year; and

(c) deducting any such reserves made at the end of the financial year; and

(d) deducting the actual losses (less the amounts received under re-
insurance), agency expenses and deductions allowed under Part II of the Fifth
Schedule incurred in the Republic, and such proportion of the company’s head
office expenses as the Commissioner-General determines.
(Amended by Acts No.4 of 2000 and 1 of 2001)

(3) For the purposes of this paragraph—

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 (a) a “reserve for unearned premiums” means a reserve calculated by
reference to the net premiums income:

provided that a reserve for unearned premiums or for outstanding

claim does not include an equalisation reserve, that is to say, an
amount set aside out of past or current underwriting profits to meet
future underwriting losses;

(b) the amount which may be deducted as a reserve for unearned premiums is
the amount which would constitute that reserve if its amount were
computed on the one twenty-fourth or more accurate basis where the one
twenty-fourth figure is computed on the basis that the contracts coming
into force in a given month commence in the middle of that month and
spread evenly in half monthly periods

(c) the amount which may be deducted as a reserve for outstanding claims
shall not exceed such amount as is reasonable having regard to relevant
historical or actuarial data and other factors, and shall not in any event
exceed the amount of the reserve actually made.

(Amended by Act No. 4 of 2000)

Life insurance

2. (1) The profits from the life insurance business of a resident insurance company for a
financial year shall be the excess of the total investment income from that business
for that year over the aggregate of –

(a) the amount disbursed during the year as expenses of management wholly
and exclusively attributable to that business; and

(b) any amount allowable under Part II of the Fifth Schedule as a deduction in
calculating business profits.

(2) the profits from the life insurance business of a non-resident insurance company for
a financial year shall be—

P = (A/B)I-E

where-

P is the profit to be found

A is the mean actuarial liabilities of the company for the year in question in
respect of local life policies;
B is the mean of the company’s total actuarial liabilities for the year in
question; I is the total investment income of the company for that year; and
E is the aggregate of –

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 Income Tax Act Sch 3

(a) the amount disbursed by the company during that year as expenses of
management wholly and exclusively attributable to the life insurance
business of the company carried on in Zambia (including such
proportion of the Company’s head office expenses as the
Commissioner-General may determine); and

(b) any amount allowable under Part II of the Fifth Schedule as a

deduction in calculating business profits.

(2A) Any expenses of management which are not set against a life insurance
company’s investment income for a financial year in accordance with sub-
paragraph(1) or (2) due to an insufficiency of investment income shall, for the
purposes of this Act, be treated as losses accruing to the company for that year.

(2) For the purposes of this paragraph –

(3) “actuarial liabilities” means the actuarial liabilities determined on the basis used by
the company for making returns of actuarial liabilities in terms of the insurance
legislation of the Republic;

“local life policy” has the meaning assigned to “life policy” by section two of the
Insurance Act, 1997, and is a policy issued in accordance with section seventy-eight
of that Act, in Zambia, by a licensed insurer but does not include a policy which
constitutes part of an approved fund (as defined in this Act) and an annuity policy
under which an annuity is paid.

“mean actuarial liabilities” means one half of the sum of the actuarial liabilities
calculated at the beginning and end of the company’s financial year for which the
Commissioner-General has, in respect of the charge year concerned, accepted the
accounts of the company under subsection (1) of section sixty-two.
(As amended by Acts No. 4 of 2000 and 1 of 2001)

Insurance and other business

3. Repealed by Act No. 17 of 2018

Mutual and proprietary companies

4. This Schedule applies as well to a mutual insurance company as to a proprietary

insurance company.

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FOURTH SCHEDULE

(section 37) (Inserted by Act No. 23 of 1968)

APPROVED FUNDS

Definition of “trustees”

1. In this Schedule, “trustees" means the persons, by whatsoever name called, having
the management or control of a fund which either is or was an approved fund within
the meaning of approved fund as defined in this Act, or which is a fund or scheme in
relation to which an application is made under paragraph 2 for the approval of the
Commissioner-General.

Approval of pension funds

2.(1)Where any fund or scheme is established by or on behalf of an employer for the

payment, under the rules relating thereto, of pensions and other benefits to his
employees in respect of service with him on the retirement of his employees from
such services or to dependants of his employees from such services or to
dependants of his employees on the death of his employees, then application under
paragraph 3 may be made for such fund or scheme to be approved, by the
Commissioner-General; and where any fund or scheme is so approved it shall be
known as an approved pension fund.

(2) The Commissioner-General shall not approve any fund or scheme unless he
considers that the rules relating thereto have as their main object the provision of
pensions to employees on their retirement from the service of the employer on or
after attaining a specified age and unless the Commissioner-General is satisfied:

(a) that the fund or scheme is established in the Republic in connection with
any business carried on wholly or partly within the Republic by the
employer; and

(b) that the rules do not:-

(i) provide for the payment to any employee during the employee’s life of
any sum except a pension, which may, subject to this paragraph, be
commuted, or, in the event of the employee leaving the service of the
employee’s employer in circumstances in which no pension is payable to
the employee, any contributions to-

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 Income Tax Act Sch 4

(a) a defined contributory fund or scheme made by the employee

and the employee’s employer together with reasonable
interest or;

(b) a defined benefit scheme fund or scheme made by the

employee and the employee’s employer together with
reasonable interest
(Amended by Act No 1 of 2004).

(ii) provide for the payment of the pension otherwise than on the
retirement of the employee from the service of his employer on or after
attaining the age of 60 years or on earlier retirement on account of any
infirmity of mind or body;

(iii) provide for the payment of any other sums on the death of the
employee except a lump sum, or sums payable by way of annuity to the
widow or widower or dependants of the employee;

(iv) provide for the payment of the pension otherwise than during the life
of the employee or for the payment to the widow or widower of the
employee of an annuity otherwise than for a term certain or during the life
of the widow or widower or during the minority of any dependant of the
employee;

(v) provide for the annuity, if any, payable to the widow or widower of the
employee to be of a greater annual amount than the pension payable to the
employee; and
(As amended by Act No. 19 of 2015).

(c) that the rules do:-

(i) provide that all annual contributions of a recurrent nature to the fund or
the scheme shall be in accordance with specified scales and clearly
specify the benefits payable to members and their dependants from
the fund or under the scheme;

(ii) provide the membership of the fund or scheme shall be open to all
employees of the group or class of groups or classes specified in the
rules;

(iii) provide that no pension, annuity or other sum payable out of the fund
or under the scheme shall be capable of surrender or assignment
except as provided for in sub-paragraph (2)(c)(vii);

(iv) provide that no contribution made to the fund or scheme by the

employer shall be returnable to him;
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Sch 4 Income Tax Act

(v) provide, in any case where the employer is a company the directors
whereof have a controlling interest therein, that no director or the
widow or widower or any dependant of a director, of the company
shall be entitled to any payment out of the fund or under the scheme
in respect of his service while he is such a director and that no
contributions shall be made to the fund or scheme in respect of the
service of such a director; and for the purposes of this sub-paragraph
director does not include a whole time service director;

(vi) provide that, if the fund or scheme is wound up, the assets thereof
shall be applied in the purchase of annuities for its members or, if a
member so elects ,shall be transferred to another approved fund;

(vii) provide that, where any pensions payable out of the fund or under the
scheme to an employee may be commuted, the amount of the pension
that may be commuted shall not exceed five thousand Kwacha or
onehalf of the pension, whichever may be the greater.
(As amended by Acts No.14 of 1994 and 3 of 2002)

(3) The Commissioner-General may, in his discretion and subject to any conditions he
thinks proper to impose:-

(a) approve a fund or scheme the rules relating to which otherwise satisfy
sub-paragraph (2), notwithstanding that the fund or scheme:-

(i) is established outside the Republic in connection with any

business carried on wholly or partly within the Republic by the
employer;

(ii) is established in connection with a function exercised in the

Republic by the employer which is not a business;

(iii)provides for a pension to be paid to an employee before he attains

the age of 60 years, but not before he attains the age of 45 years,
if the Commissioner-General is satisfied that the nature of the
service of the employee is one in which persons customarily
retire before attaining the age of 60 years;

(iv) provides, in the event of the death of an employee after he has

commenced to draw a pension from the fund or under the scheme,
for the payment of such a sum as together with the total amount
paid to him by way of a pension does not exceed the contribution
made to the scheme in respect of him together with reasonable
interest thereon;

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 (v) provides for the employer to recover out of the amount standing
to the credit of any employees any sum due by the employee
under this Act and paid on his behalf and on his authority by the
employer;
(As amended by Act No. 19 of 2015).

(b) approve a fund or scheme notwithstanding that the rules relating thereto do
not satisfy the other provisions of this paragraph if, in his opinion, such rules
satisfy substantially those provisions;

(c) approve part of a fund or scheme where the rules relating to that part satisfy
substantially the other provisions of this paragraph; and in any such case the
part so approved shall be the approved pension fund.
(As amended by Act No. 26 of 1970)

Procedural provisions relating to approval of fund and withdrawal of approval

3.(1)Where application is made for approval of any fund or scheme under paragraph 2,
then the trustees of the fund or scheme shall make the application in writing to the
Commissioner-General; and the application shall be accompanied by two copies of
any instrument under which the fund or scheme is established and of the rules
relating to the fund or scheme.

(2) After consideration of any application referred to in sub-paragraph (1), the

Commissioner-General shall inform the trustees of the fund or scheme, in writing
of his decision and, if the decision is an approval of the fund or scheme, of the
charge year in relation to which it is approved, whether the fund or scheme is
approved in whole or in part and of any conditions to which the approval is subject;
and, where any fund or scheme or part thereof has been approved by the
Commissioner-General for any charge year, the fund or scheme or part thereof shall,
subject to sub-paragraph (3), be deemed to be approved for each subsequent charge
year unless the Commissioner-General withdraws approval under sub-paragraph
(4).

(3) Where there is any alteration to the instrument establishing any approved pension
fund or to any rules relating to any such fund, then the trustees of the fund in
question shall immediately inform the Commissioner-General in writing of the
alteration; and if the

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Commissioner-General is not so informed ,the approval of the fund in question

shall be deemed to have been withdrawn as from the date of the alteration.

(4) The Commissioner-General may at any time by notice in writing withdraw his
approval of any approved pension fund, if in his opinion-

(a) the conditions on which the approval of the fund in question was granted
have not been complied with; or

(b) there has been any alteration to the instrument establishing the fund in
question or to any rules relating to it.

(5) Where any approved pension fund ceases to be an approved fund, the provisions of
section eighty two shall nevertheless continue to apply in respect of the return of
any contributions made while it was an approved fund.

(6) The accounts of an approved pension fund shall be maintained in such form and for
such periods as the Commissioner-General may determine.

(7) References in sub-paragraphs (3) to (6), both inclusive, to approved pension fund
within the meaning of paragraph (d) of the definition of approved fund; and fund
shall be construed accordingly.

Approval of annuity contracts and withdrawal of approval

4.(1)Where an individual in any charge year pays a premium under a contract providing
for the payment to him of a life annuity (hereinafter referred to as an annuity
contract) then he may apply for the contract to be approved by the Commissioner-
General.

(2) Subject to sub-paragraph (3), the Commissioner-General shall not approve an

annuity contract unless he considers that the main object of such contract is the
provision for the individual applying for its approval, of a life annuity in old age
and unless the Commissioner-General is satisfied:-

(a) that the annuity contract is made in the Republic with an insurance
company or body of persons lawfully carrying on in the Republic the
business of granting annuities on human life;

(b) that the annuity contract provides for annual contributions by the individual
throughout the currency of the contract; and

(c) that the annuity contract does not:-

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(i) provide for the payment during the life of the individual of any
sum except sums payable to the individual by way of annuity,
which may, subject to this paragraph, be commuted; or

(ii) provide for the annuity payable to the individual to commence

before he attains the age of 55 years or after he attains the age of
65 years; or

(iii) provide for the payment of any other sums except sums payable
by way of annuity to the individual's widow or widower and any
sums which, in the event of no annuity becoming payable to the
individual, are payable to the executors or administrators of the
individual by way of return of premiums by way of reasonable
interest on premiums or by way of bonuses out of profits; or

(iv) provide for annuity, if any, payable to the individual's widow or

widower to be of a greater annual amount than that paid or payable
to the individual; or

(v) provide for the payment of an annuity otherwise than for the life
of the annuitant.

(d) that the annuity contract does:-

(i) provide that no annuity payable under it shall be capable in whole

or in part of surrender or assignment except as provided for in
subparagraph (2) (d) (ii);

(ii) provide that not more than one-third of any annuity payable under
it to the individual may be commuted;

(iii)provide that no annuity payable under it to the individual's widow

or widower may be commuted;

Provided that, save under such conditions as the Commissioner-General thinks proper
to impose, no annuity contract shall be approved by the Commissioner-General if the
individual is contributing to any approved pension fund or an approved fund within the
meaning of paragraph (c) of the definition of approved fund.

(3) The Commissioner-General may, in his discretion and subject to any conditions he
thinks proper to impose, approve an annuity contract otherwise satisfying sub-
paragraph (2) notwithstanding that such annuity contract was made by an
individual resident in the Republic in a country other than the Republic with an
insurance company or body of persons lawfully carrying on the business of

151
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 Income Tax Act Sch 4

granting annuities on human life before he became resident or that the annuity
contract provides:

(a) for the payment after the death of the individual of an annuity to a
dependant not the widow or widower of the individual;

(b) for the payment to the individual of an annuity commencing before he

attains the age of 60 years, if the annuity is payable on his becoming
incapable through infirmity of mind or body of carrying on his own
occupation or any occupation of a similar nature for which he is trained or
fitted;

(c) if the individual's occupation is one in which persons customarily retire

before attaining the age of 60 years, for the annuity to commence before
he attains that age (but not before he attains the age of 55 years);

(d) for the annuity payable to any individual to continue for a term certain
(not exceeding 10 years) notwithstanding his death within that term or for
the annuity payable to any individual to terminate or be suspended on
marriage (or re-marriage) or in other circumstances;

(e) in the case of an annuity which is to continue for a term certain, for the
annuity to be assignable by will and, in the event of any individual dying
entitled to it, for it to be assignable by his executors or administrators in
the distribution of the estate so as to give effect to a testamentary
disposition, or to the rights of those entitled on intestacy, or to an
appropriation of it to a legacy or to an appropriation of it to a legacy or to
a share or interest in the estate.
(As amended by Act No. 19 of 2015).

(4) The Commissioner-General may at any time, by notice in writing given to the
persons by and to whom premiums are payable under any approved annuity
contract, withdraw that approval on such grounds and from such date as may be
specified in the notice.

Approval of foreign fund or scheme established by law

5.(1) On receiving a claim for approval, the Commissioner-General may, in his

discretion, and subject to any conditions he thinks proper to impose, approve a
fund or scheme established by law in any other country, the main object of which is
to provide for the payment under the rules relating thereto of pensions to its
members on retirement from employment and ,where any such fund or scheme is
so approved, it shall be known as an approved pension fund.

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(2) The Commissioner-General may at any time withdraw approval of a fund approved
under this paragraph.
(As amended by Act No.26 of 1970 )

Appeals

6. Where under this Schedule the Commissioner-General may approve any pension
fund or annuity contract (but not where he may approve thereof subject to any
conditions) or may withdraw approval from any approved fund, then any person
aggrieved by the refusal of the Commissioner-General to grant his approval or by
the withdrawal of any approval already granted, may appeal therefrom as if the
refusal or withdrawal of approval were a determination and such an appeal shall be
heard accordingly.

Remoteness

7. The Commissioner-General’s approval, for the purposes of this Schedule, is not

subject to any rule of law against remoteness, and in any case is without prejudice
to any such rule.

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FIFTH SCHEDULE
(Section 33)

CAPITAL ALLOWANCES FOR BUILDINGS, IMPLEMENTS, MACHINERY

AND PLANT, AND PREMIUMS

PART 1 BUILDINGS

Definition of an industrial building

1.(1) In this Part an industrial building means a building or structure in use for the
purposes of any electricity, gas, water, inland navigation, transport, hydraulic
power, bridge or tunnel undertaking, or any like undertaking of public utility, or is
in use for the purpose of any trade which –

(a) is carried on in a mill, factory or like premises;

(b) consists of the manufacture of goods or materials, or their subjection to any

process;

(c) consists of the storage of goods or materials to be used in the manufacture

or processing of other goods;

(d) consists of the storage of goods on import or for export; or

(e) consists in working of a mine or well for the extraction of natural

deposits.
(As amended by Acts No .26 of 1970 and 11 of 1975)

(2) For the purposes of this Part, the expression “industrial building” does not, save as
provided in subparagraphs (3) and (4), include any building or structure in use as,
or as part of, or ancillary to the purposes of, a dwelling-house, retail shop,
showroom, hotel or office or in use for the purposes of any retail, repair or
servicing trade or a trade of a like nature.
(As amended by Act No.11 of 1973)

(3) Any building which on first construction after the commencement of this Act is an
hotel, or which is an extension made after the commencement of this Act to a
building first constructed as an hotel and which is certified by that body of the
Government for the time being responsible for the hotel industry as conforming to
such standards as it may from time to time prescribe, is an industrial building for
the purposes of this Part.

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 Income Tax Act Sch 5

(4) Any building constructed or acquired by a person to provide housing for the
purposes of that person’s business is an industrial building for the purposes of this
Part:

Provided that -

(i) the cost of each housing unit does not exceed twenty thousand
Kwacha (in this paragraph referred to as low cost housing);

(ii) this sub-paragraph shall have effect in relation to expenditure incurred

on or after 1 st April, 1997;

(As amended by Acts No. 26 of 1970, 11 of 1973, 11 of 1994, 11 of 1975, 3 of 1997 and
9 of 1998 and by SI No 302 of 1967,).

(5) Any building in use for the welfare of employees engaged in the undertakings and
trades referred to in subparagraph (1) is an industrial building for the purposes of
this Part.

(6) This paragraph applies to a part of an undertaking or trade as it applies to an

undertaking or trade.

(7) Where a part of a building is an industrial building, and a part is not, and the
capital expenditure incurred on the latter part is not more than ten per centum of
such expenditure incurred on the whole building, the whole building is an
industrial building for the purposes of this Part.
(As amended by Acts No 26 of 1970, 11 of 1973, 11 of 1974, 11 of 1975, and
9 of 1998)

Definition of commercial building

2 In this Part a commercial building means a building or structure, or part thereof,

which is not an industrial building as defined in paragraph 1, or farm improvement
or farm works as defined in the Sixth Schedule, and which is in use for the
purposes of any business:

Provided that the construction of such building or structure is completed for first use
on or after 1 st April, 1969.
(Definition of commercial building inserted by Act No.11 of 1969).

Initial allowance for industrial building

3.(1) In ascertaining the business profits of a person who, for the purposes of his business,
has incurred capital expenditure on the construction of a building intended to be
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Sch 5 Income Tax Act

used as an industrial building, or on an addition to or an alteration of an industrial

building, a deduction (called an initial allowance) of the percentage of the
expenditure incurred, as set out in Part V, is allowed in the charge year in which
the said building, addition to or alteration is brought into use as an industrial
building.

(2) Capital expenditure amounting to the cost of acquisition is incurred by a person for
the purposes of subparagraph (1) where he -

(a) acquires the building from another person who constructed it in the course
of his trade; and
(b) is the first user of that building.

Wear and tear allowance for buildings

4.(1) In ascertaining for any charge year the business profits of any person who in that
year uses for the purposes of his business an industrial or commercial building
which he has acquired, constructed, added to or altered, a deduction shall be
allowed (called a wear and tear allowance) for each charge year of such use
according to the case and at the percentage, as set out in Part V, of the original cost
to such person:

Provided that in no case shall the total of all deductions allowed to such person
under this Part exceed the cost to such person of such acquisition, construction,
addition or alteration, as the case may be.

(2) Where a building is used by a person as an industrial building for part of a charge
year and as a commercial building for another part of the same charge year, that
building shall be regarded as used by that person solely as an industrial building for
that charge year.

(3) No allowance shall be deductible under this paragraph in ascertaining the business
profits of any person for any charge year in respect of any building if at any time
during the said charge year that building is used as his usual dwelling place by -

(a) any individual who uses such building for the purposes of the business, or
by any individual partner in such business;

(b) any individual who, by reason of his shareholdings, or of his control of

shareholdings, in any company or by reason of any partnership interest, is
in a
position to exercise control, directly or indirectly, over the person or
persons
using the building for the purposes of the business;

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 (c) a director of a company using the building for the purposes of its business,
who is not a whole time service director thereof.
(As amended by Act No. 11 of 1969)

Deduction of improvement allowance

4A. In ascertaining for any charge year the business profits of any person operating in
a priority sector or in respect of a priority product in a multi-facility economic
zone or industrial park declared under the Zambia Development Agency Act, 2006
which in that year uses for the business an industrial or commercial building which
the person has constructed, or altered, a deduction shall be allowed (called
improvement allowance) for that charge year at a per centum of the original cost to
such person as set out in Part V.
(Inserted by Acts No. 4 of 2007, 10 of 2012 and 18 of 2013)

Balancing allowance for buildings

5.(1) Where any building, in respect of which an initial or wear and tear allowance has
been or could have been deducted in ascertaining the profits of a person carrying
on a business, ceases to belong to that person or permanently ceases to be used by
him for the purposes of any business whatsoever, a deduction (called a balancing
allowance) shall be allowed in ascertaining the profits of the business for the
purposes of which the said building was last used for the charge year of such
cessation.

(2) The balancing allowance deductible under subparagraph (1) in respect of a building
shall be equal to the amount by which any recovery of capital expenditure on that
building together with any initial or wear and tear allowance deducted under this
Part in respect of that building falls short of the original cost of that building to the
person referred to in that sub-paragraph:

Provided that where wear and tear allowance has been deducted for part only of the
entire period of ownership or possession of the building by the person who has
been allowed the deduction of the said wear and tear allowance, the allowance
deductible shall be determined by multiplying the balancing allowance as above
calculated by the number of years in respect of which wear and tear allowance has
been deducted and dividing the result by the number of years of the said ownership
or possession.

(3) In calculating the balancing allowance in respect of any building upon any
cessation referred to in sub-paragraph (1), the recovery from capital expenditure on
the building shall be the amount which, according to the Commissioner-General's
determination, it would have realized in the open market at the time of the
cessation.
(As amended by Act No. 11 of 1969)

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 Income Tax Act Sch 5

Divided use

6. If any building is used by a person both for the purpose of his business and for other
purposes, the amount of any allowance provided by this Part shall be reduced
according to the Commissioner-General's determination.
(As amended by Act No. 11 of 1969).

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 PART II

IMPLEMENTS, MACHINERY AND PLANT

Business to include employment in this Part

7. Notwithstanding the definition of "business" as contained in section two, for the

purposes of this Part "business" includes employment and the letting of property.

Frequently replaceable articles not within this Part

8. This Part does not apply to implements requiring frequent replacement.

9. Repealed by Act No. 11 of 1974.

Wear and tear allowance for implements machinery and plant

10.(1) Where a person has used any implements, machinery or plant belonging to him
for the purposes of his business a deduction (called a wear and tear allowance)
shall be allowed in ascertaining the profits of the business for each charge year.

(2) Where a person holds any implements, machinery or plant under a hire-purchase
agreement as defined in the Hire-Purchase Act or a finance lease, then the
implement, machinery or plant shall be deemed to belong to that person for the
purposes of this paragraph.

(3) The wear and tear allowance for any charge year shall be at the percentage and in
the cases set out in Part V:

Provided that in a charge year in which the business ceases the allowance shall be
the amount of the residue of the original cost referred to in sub-paragraph (4).

(4) The wear and tear allowance for any charge year shall be calculated on a straight-
line basis of the original cost of the implements, machinery and plant:

Provided that in the case of any implements, machinery or plant which were
acquired by a person other than for the purpose of a business, the original cost
shall be the current market value of such implements, machinery or plant as
determined by the Commissioner-General in the charge year that they are first
used for the purpose of a business.
(As amended by Acts No. 11 of 1974, 14 of 1976 and Act 29 of 1990 ).

159
(5) Notwithstanding any other provisions of this Act to the contrary the wear and tear
allowance on any implements, machinery or plant which is proved to the
satisfaction of the Commissioner-General to be exclusively and directly used in
electricity generation, mineral processing, manufacturing, tourism or leased out
under an operating lease for any charge year, shall be calculated on a straightline
basis at the rate of fifty per centum of the cost.
(As amended by Acts no. 10 of 1981, 11 of 1984, 4 of 1993, 1 of 2001 ,10 of
2012, 7 of 2014, 19 of 2015 and 45 of 2016)

(5A)Despite any other provisions of this Act to the contrary, the wear and tear allowance
on any implement, machinery or plant which is exclusively and directly used in
farming or agro-processing for any charge year, shall be calculated on a straight-
line basis at the rate of one hundred per centum of the cost.
(As introduced by Act No. 45 of 2016)

(6) Despite the other provisions of this Act, a person operating a business in a priority
sector declared under the Zambia Development Agency Act, 2006 may claim on a
straight-line basis, wear and tear at an accelerated rate, not exceeding 100 percent in
respect of any new implement, plant or machinery acquired and used by the business
for the purposes of that business.
(As amended by Acts No. 14 of 1976, 12 of 1982 and 16 of 2017)

(7) Where a business under paragraph (6) uses an accelerated rate, that business shall
not use another rate without the consent of the Commissioner-General.
(As inserted by Act No. 16 of 2017)

Capital recoveries from implements, machinery and plant

11. For the purpose of paragraph 10 -

(a) a recovery from capital expenditure on implements, machinery or plant

shall be deemed to have taken place when the implements, machinery or
plant -

(i) permanently cease to be used for purposes of a business; or

(ii) cease to belong to the person carrying on a business;

(b) the amount of recovery from capital expenditure shall be the amount
which, according to the Commissioner-General's determination, the
implements, machinery or plant would have realized in the open market at
the time the event giving rise to the recovery occurred.
(As amended by Act No. 11 of 1974).

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Divided use

12. If any implement, machinery or plant is used by a person both for the purposes of
his business and for other purposes, the amount of any allowance provided for by
this Part shall be reduced to the Commissioner-General's determination.

Valuation in exceptional circumstances

13.(1) In the calculation of any allowance under this Part, the original cost to any
person of any implement, machinery or plant that has been -

(a) used outside the Republic by him, and brought by him to the Republic for
the purposes of his business;

(b) used by him for a purpose other than the purposes of his business, and is
then used for the purposes of his business; or

(c) acquired by him for no valuable consideration; is according to the

Commissioner-General’s determination.

(2) For the purposes of this part, the original cost to any person of a road vehicle used
for the purposes of his business and the vehicle was acquired by the person after
the commencement of this Act, whether the vehicle is a commercial vehicle or
otherwise shall be used in the calculation of the allowance.

(3) In this paragraph, "commercial vehicle" means a road vehicle of a type not
commonly used as a private vehicle and unsuitable to be used as such but includes
all types of road vehicles used solely for hire or carriage of the public for reward.
(As amended by Acts 11 of 1974, 6 of 1980, 10 of 1981, 8 of 1986 and 29 of
1990).

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 Income Tax Act Sch 5

PART III

PREMIUM ALLOWANCE

Deduction of premium allowance

14.(1) A deduction is allowed (called a premium allowance) in ascertaining the profits

of a person's business equal to the amount of any premium or like consideration
paid by him for the right of use of machinery or plant, or for the use of any patent,
design, trade mark or copyright, or for the use of other property which the
Commissioner-General determines is of a like nature, where such right is used by
that person for the purposes of his business.

(2) The amount of any deduction allowed for any charge year under sub-paragraph (1)
shall not exceed the amount of the premium or like consideration divided by the
number of years for which the right of the use is granted.

(3)Where a person acquires any interest in the ownership of property for payment of a
premium or like consideration for the right of use of which he has been allowed a
deduction under sub-paragraph (1), he ceases to be allowed that deduction as from
the date of such acquisition.

PART IV
GENERAL PROVISIONS
Successions

15.(1) Where a person succeeds to another person's business or there is a change in any
partnership engaged in the business, any property which immediately before the
succession or change was in use for the purposes of the business, and, without
being sold, is in such use immediately afterwards, is, for the purposes of this
Schedule, treated as if it had been sold for an open market price as determined by
the Commissioner-General at the time of the succession or change to the person
carrying on the business immediately afterwards; but no initial allowance under
this Schedule shall be deducted by virtue of this paragraph.

(2) Where there is a succession or change in terms of subparagraph (1), and

notwithstanding that sub-paragraph, the Commissioner-General may, upon written
application of the parties concerned, make such adjustments in relation to the
allowances which may be deducted under this Schedule as will provide for the
continuity of those allowances in relation to the business the subject of the

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Sch 5 Income Tax Act

succession or change, but in any event any such adjustment is subject and according
to the Commissioner-General's discretion.

Subsidies

16. For the purposes of this Schedule, the amount of any capital expenditure is reduced
by the amount of any subsidy or grant from public funds towards or in aid or in
recognition of the object of such expenditure.

Controlled sales

17.(1) This paragraph has effect in relation to the transfer by sale or otherwise of any
property in respect of which any deductions have been allowed under Parts I, II
and III, where either –

the transferee has control of the transferor, or the transferor has control of the
transferee, or some other person has control of both; or

(a) the Commissioner-General determines by reference to the consideration

given for the property that the transfer was not at arm's length.

(2) Where any property as is mentioned in sub-paragraph (1) is transferred other than at
a price that it would have fetched if sold in the open market, then, subject to sub-
paragraph (3), the like consequences shall ensue as would have ensued if the
property had been sold for the price which it would have fetched if sold in the open
market.

(3) Where the transfer is one to which sub-paragraph (1) (a) applies and the transferee
uses the property transferred for the purposes of a business, then, subject to the
parties to the transfer by notice in writing to the Commissioner-General so electing,
sub-paragraph (2) shall not have effect, but the like consequences shall ensue as
would have ensued if the property had been transferred for a sum equal to the
residue of capital expenditure on the property still undeducted immediately before
the transfer, and, in the case of such an election -

(a) no initial allowance shall be deducted in respect of the transferee; and

(b) in respect of a subsequent sale or cessation of use of the property for the
purposes of the business by the transferee, the amount included in his
income as a capital recovery shall be such an amount as would have been
included in the transferor's income in a like case but for the transfer, and as
if the transferor had been allowed all such deductions in respect of the
property as were, in fact, allowed to the transferee.

(As amended by Act No. 26 of 1970).

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 PART V

RATES OF INITIAL AND WEAR AND TEAR ALLOWANCES

18. Under paragraph 3 -

Initial allowance for industrial buildings…………..ten per centum

Under paragraph 4 –

Wear and tear allowance for industrial

building, in the case of low cost housing…………ten per centum

And for other industrial buildings … … … … … ... five per centum

And for commercial buildings….…… … …..… two per centum

Under paragraph 4A -

Improvement allowance for commercial

and industrial buildings … … … … … … one hundred per centum

Under paragraph 10 –

Wear and tear for implements machinery

and plant including commercial vehicles … … … Twenty five per centum

Wear and tear for vehicles other than

commercial vehicles… … … … … … … … ..Twenty per centum

(As amended Acts No. 11 of 1974, 14 of 1976, 29 of 1990 and 4 of 2007)

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PART VI

MINING DEDUCTIONS

Interpretation of terms

19. In this part unless the context otherwise requires -

“capital expenditure” means expenditure, in relation to mining or prospecting

operations –

(a) on buildings, works, railway lines or equipment;

(b) on shaft sinking, including expenditure on pumps, pumps chambers,

stations and ore bins accessory to a shaft;

(c) on the purchase of or on the payment of a premium for the use of any
patent, design, trademark, process or other expenditure of a similar
nature;

(d) incurred prior to the commencement of production or during any

period of a non-production on preliminary surveys, boreholes,
development or management, or;

(e) by way of interest payable on any loan for mining or prospecting

purposes;

“deemed loss” means a deduction allowable in accordance with paragraph 21

“equity” means in relation to a company limited by shares -

(a) issued ordinary share capital or stock, but only to the extent that such
share capital or stock is paid up;

(b) issued, deferred, preferred, preference or other priority share capital or

stock, but only to the extent that such share capital or stock is paid up
and provided that such share capital or stock carries no rights of early
repayment on demand;

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(c) capital reserves in so far as they are not capable of distribution except
either by way of diminution of capital or by addition to issued capital;
and

(d) revenue reserves to the extent that they have remained constant
throughout the previous twelve months; but does not include -

(i) loan stock or debentures whether carrying conversion rights or

not;
(ii) bank overdrafts or other drawing facilities;

“estimate of life” means the number of years not exceeding in relation to a

mine –
(a) in the case of a mine operated for the purpose of producing lead or
zinc, ten years; and

(b) in the case of any other mine, twenty years, during which mining
operations at the mine may be expected to continue after the
beginning of the charge year;

“existing mine” means –

(a) any mine that has a production commencement date before 1st
April, 2008;
(b) any mine that is not in regular production but whose development
commenced before 1st April 2008; or
(c) a combination of (a) and (b);

“expenditure” means net expenditure after taking into account any rebates,
returns or recoveries from expenditure;

“non-contiguous” means not one despite touching or sharing a common

border;
(Inserted by Act No. 17 of 2018)

“pre-production expenditure” means capital expenditure incurred in charge

years prior to the production charge year;

“production commencement date”, means in relation to a mine, the latest of

any of the following dates:

(a) the date on which the mine first commenced regular production;

(b) where the mine, having previously been in production, was

closed down and then re-opened, the date on which it first
recommenced regular production; or

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(c) where the mine has changed ownership and has been reorganised
with substantially new development and new plant, the date on
which it first commenced regular production after such re-
organisation;

“production charge year” means a charge year in which a mine first

commences regular production;

“prospecting expenditure” means expenditure incurred in relation to

prospecting operations, including, any capital expenditure incurred in
connection with such operations, and such expenditure as the
Commissioner-General determines to be ancillary to expenditure on
prospecting operations;
(As amended by Acts No 7 of 1996, and 1 of 2008)

Capital expenditure deductions

20. There shall be no capital expenditure deduction allowed except under the provisions
of this Part.
(As amended by Act No. 7 of 1996)

Prospecting expenditure deduction

21.(1) Subject to the other provisions of this paragraph, the amount of prospecting
expenditure incurred by a person in a charge year in respect of an area in Zambia
over which a mining right has been granted shall be allowed as a deduction to that
person.

(2) A company that is entitled may, by notice in writing given to the Commissioner-
General within twelve months after the end of the charge year in which the
expenditure is incurred, irrevocably elect to forego the deduction in favour of its
shareholders; whereupon the deductions shall be allowed, not to the company but to
its shareholders instead, in proportion to the calls on shares paid by them during the
relevant accounting period or in such other proportions as the Commissioner-
General having regard to any special circumstances, may determine:

Provided that this sub-paragraph shall not apply to a company carrying on

mining operations in Zambia.

(3) Where -

(a) a company (in this sub-paragraph called “the parent company”) is entitled
and under this paragraph to a deduction; and

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Sch 5 Income Tax Act

(b) subsequent to the date the expenditure is incurred, a new company, of

which the parent company is a shareholder, is incorporated for the purpose
of -

(i) continuing the prospecting operations of the parent company; or

(ii) carrying on mining operations in the Republic; and

the parent company may, by notice in writing given to the Commissioner-

General within twelve months after the incorporation of the new company,
irrevocably elect to forego the deduction in favour of the new company but
to the new company instead:

Provided that this sub-paragraph shall not apply -

(i) to a company carrying on mining operations in Zambia; or

(ii) in respect of expenditure incurred after the new company

takes over the prospecting operations of the parent company
or commences to carry on mining operations.

(4) A deduction allowable under this paragraph shall be deemed to be a loss and
shall be allowed, in accordance with section 30 of the Income Tax Act as a loss
incurred -

(a) in the case of sub-paragraphs (1) and (2), in the charge year in which the
expenditure is incurred; and

(b) in the case of sub-paragraph (3), in the charge year in which the new
company takes over the prospecting or exploration operations or
commences to carry on mining operations:

(5) In computing a loss incurred by the operator of a mine in any charge year,
prospecting expenditure incurred in relation to the mine and allowable as a
deduction shall be deemed to be deducted last.
(As amended by Act No 7 of 1996)

Mining expenditure deductions

22.(1) Subject to the other provisions of this paragraph and the provisions of paragraph
(5), a deduction shall be allowed in determining the gains or profits from carrying
on of mining operations by any person in a charge year in respect of the capital
expenditure incurred by the person on a mine which is in regular production in
the charge year.

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 (2) The deduction to be allowed for a charge year for a mine shall be twenty percent
of the original expenditure to the extent that equipment, plant, machinery or
anything related to capital expenditure as defined under paragraph 19 of this Part
is brought into use in the carrying out of mining operations and the expenditure
has not already been allowed as a deduction..

(3) Where separate and distinct mining operations are carried on by a person in mines
which are not contiguous, the deduction allowable under subparagraph (2) shall
be calculated separately according to the respective mines:

Provided that this subparagraph shall not apply to any existing mine.

(4) A deduction shall be allowed in ascertaining gains or profits of a person involved in

mining operations in respect of actual costs incurred by way of restoration and
rehabilitation works or amounts paid into the Environmental Protection Fund
pursuant to section eighty-six of the Mines and Minerals Development Act, 2015.

(Amended by Act No. 3 of 2006, 1 of 2009, 49 of 2010, 10 of 2012 and 19 of 2015)

Disallowance of interest in certain areas

22A. Repealed by Act No 17 of 2018

Deductions for mining expenditure on a non-producing and non-contiguous mine

23. (1) Where a person is carrying on mining operations in a mine which is in regular
production and is also the owner of, or has a right to work a mine which is
non-contiguous with the producing mine and from which the person has a loss
in the charge year, the amount of such loss shall not be deducted in ascertaining
the gains or profits from the mining operations:

Provided that the loss incurred may be allowed as a deduction in ascertaining

the gains or profits arising from the same mine when it commences regular
production.

(2) The provisions of subparagraph (1) shall not apply to any existing mine.
(As amended by Acts No. 7 of 1996, 9 of 1998, 4 of 2000, 4 of 2007, 1 of 2008 and Act
No. 17 of 2018)

Deductions on cessation of mining production

24. Where a mine ceases regular production due to the expiration of the life of the mine, or
where the mining right has ended, or for any other reason acceptable to the
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Sch 5 Income Tax Act

Commissioner-General, and the person who was carrying on the mining operations
irrevocably so elects, by notice in writing to the Commissioner-General, within twelve
months after the end of the charge year in which the mine ceased regular production, the
deduction allowable in ascertaining the gains or profits from the carrying on of the
mining operations in respect of the capital expenditure on the mine for each of the last
six charge years in which the mine was in regular production shall be an amount arrived
at by taking the sum of -

(a) the unredeemed capital expenditure on the mine at the commencement of

the six charge years; and
(b) the capital expenditure on the mine incurred in the six charge years; and
dividing the sum so obtained by six.
(As amended by Act No. 7 of 1996)

Change of ownership of mine

25. Subject to the provisions of paragraph 26, when change in the ownership of a mine
takes place, the consideration for the assets which qualify, for the purposes of this
Part, as capital expenditure shall, for income tax purposes -

(a) be allowable as capital expenditure incurred by the new owner; and

(b) be deemed to be a capital recovery by the previous owner in the charge

year in which the change takes place.

Controlled sales

26.(1) Whenever there is a change in the ownership of a mine, this paragraph shall have
effect in relation to the sale of any property in respect of which any deductions have
been allowed under this Schedule in any case where either -

(a) the buyer has control of the seller, or the seller has control of the buyer, or
some other person has control of both; or

(b) the Commissioner-General determines, by reference to the consideration

given for the property, that the same was not at arm’s length.

(2) Where the property is sold at a price other than what it would have fetched if sold in
the open market, then, subject to the provisions of sub-paragraph (3), the same
consequences shall ensue as would have ensued if the property had been sold for
the price which it would have fetched if sold in the open market.

(3) Where the sale is one to which clause (a) of sub-paragraph (1) applies and the
parties to the sale irrevocably so elect, by notice in writing to the Commissioner-
General, then subparagraph (2) shall not have effect but, instead, the same
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 Income Tax Act Sch 5

consequences shall ensue as would have ensued if the property had been sold for a
sum equal to the residue of capital expenditure on the property still unredeemed
immediately before the sale.

(As amended by Acts No. 9 of 1977, 14 of 1995 and 7 of 1996)

Petroleum operations

27.(1) Nothing in this Part shall apply to petroleum operations.

(2) The Minister may, by statutory instrument, make provisions regulating

deductions in connection with petroleum operations.

(As amended by Acts No. 11 of 1985 and 7 of 1996)

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Sch 6 Income Tax Act

SIXTH SCHEDULE
(Section 33)

FARMING:- FARM IMPROVEMENT AND WORKS ALLOWANCES AND

LIVESTOCK VALUATION

PART I

FARM IMPROVEMENT ALLOWANCE

Definitions

1. In this Part:-

"farm dwelling" means a permanent building, used as a dwelling (the original

cost of which is taken for the purposes of this Part as not in excess of twenty
thousand kwacha), which is not used by the farmer claiming the allowance under
this Part as the homestead of himself and his family; and

"farm improvement" means any permanent work, including a farm dwelling and
fencing appropriate to farming and any building constructed for and used for the
welfare of, employees, and in relation to farming land owned or occupied by the
farmer claiming the allowance under this Part for ascertainment of his profit.
(As amended by Acts No. 6 of 1980, 14 of 1987, 3 of 2000, 1 of 2004 and 1
of 2008).

NOTE: Restriction of cost under the definition of “farm dwelling” has been
as follows: - ZMW
with effect from 1st April, 1966 6
st
with effect from 1 Apil, 1980 8
st
with effect from 1 April, 1987 20
st
with effect from 1 April, 1995 200
st
with effect from 1 April, 1996 1, 000
st
with effect from 1 April, 2002 5, 000
st
with effect from 1 April, 2004 10, 000
st
with effect from 1 April, 2008 20, 000

Farm improvement allowance

2. For any expenditure incurred in a charge year on farm improvements, a deduction

called improvement allowance shall be allowed in determining the profits of the
farming business for the charge year.
(As amended by Acts No. 11 of 1974 and 7 of 1996,).

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Divided use

3. Where the expenditure referred to in paragraph 2 partly in respect of a farm

improvement, and partly in respect of some other purposes, only such proportion of
that expenditure as the Commissioner-General may determine is taken into account
for the purposes for that paragraph.

4. Repealed by Act No 3 of 1997.

PART II

FARM WORKS ALLOWANCE

Nature of farm works

5. The deduction under this Part (called the farm works allowance) is allowed to a
farmer in respect of expenditure on farming land in his ownership or occupation
and for the purposes of farming, on stumping and clearing, works for the
prevention of soil erosion, boreholes, wells, aerial and geophysical surveys, and
water conservation (in this Part collectively referred to as "farm works").

Farm works allowance

6. The expenditure incurred by any person for any charge year in respect of any farm
works is allowed as a deduction in ascertaining the profits of his farming business
for that year:

Provided that where the person incurs the expenditure in a charge year prior to the
charge year in which he commences farming operations the expenditure shall be
allowed as a deduction in the charge year in which he commences farming
operations.
(As amended by section 43 of Act No. 26 of 1970 with efect from 1 st April,
1969).

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Sch 6 Income Tax Act

PART III

VALUATION OF LIVESTOCK

Value of livestock

7.(1) In ascertaining a farmer's gains or profits the value of his livestock (other than
livestock bought by him for stud) is the standard value or if he so irrevocably
elects, whichever is the lower of the market value or the cost to him of the
livestock.

(2) The standard value for the purposes of this paragraph applicable to any class of
livestock shall be that adopted by the farmer in the first return delivered by him
after he commences farming, if the Commissioner-General determines that such
value may be approved and that standard value shall not be varied for the purposes
of any subsequent charge year unless the Commissioner-General so determines,
and subject to any conditions he may impose on such determination.

(3) For the purpose of this paragraph and paragraph 7 of the First Schedule the value
of livestock bought for stud shall be the cost price or market value whichever is the
lower.
(As amended by Act s No. 14 of 1987 and 17 of 1988)

PART IV

GENERAL PROVISIONS
Subsidies

8. For the purposes of this Schedule the amount of any capital expenditure incurred in
respect of farm improvement to which Part I applies for expenditure incurred in
respect of farm works to which Part II applies is reduced by the amount of any
subsidy or grant from public funds towards or in aid or in recognition of the object
of such expenditure.
(as amended by Act No. 23 of 1968 and 14 of 1987)

SEVENTH SCHEDULE (Section 117)

TRANSITIONAL PROVISIONS

(Seventh Schedule repealed by Section 17 of Act No. 2 of 1995 with efect from 1st
April, 1995).

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 Income Tax Act Sch 8

EIGHTH SCHEDULE

(Section 37A) APPROVED SHARE OPTION SCHEMES

1. In this Schedule, “trustee “ means the person, by whatever name called, having the
management or control of a scheme, which is or was an approved share option scheme.

2. (1) Where any scheme is established by or on behalf of an employer under which some
or all of the employees (including Directors) or such employer become entitled to
acquire shares or an interest in shares in the issued or authorized equity capital of such
employer or of some other entity specified in sub paragraph (2) (I) , an application may
be made for that scheme to be approved by the Commissioner-General. (2) The
Commissioner-General shall approve any share option scheme if satisfied that the
constitution (whether by trust deed or otherwise) and rules relating to the scheme have as
their main objective the entitlement to acquire shares or an interest in shares as described
in sub-paragraph (1), and that the entitlement is, for a set number of shares, at a fixed
price, for a specific type of share and during a set period of time:

Provided that –

(a) the scheme is established in the Republic by or on behalf of an employer carrying on

business wholly or partly within the Republic and employees who are citizens or
permanent residents of the Republic regardless of the place where the duties of that
employment are performed; and

(b) the constitution and rules –

(i) provide for the participation by all employees of the employer meeting clearly
defined criteria or all employees of designated holding or subsidiary companies
of the employer or other business enterprises which the Commissioner-General
accepts as being closely affiliated with the employer in accordance with this
Act;

(ii) restricts the criteria for participation so as to exclude employees who are not
individuals or have not worked for the employer or entities specified in item (I)
for a minimum of twenty hours per week during the period of two years to
eligibility, or for at least five months as seasonal full time personnel during such
period;

(iii) restrict the criteria for participation so as to limit the total number of shares or
interest in shares to be acquired under the scheme by any one employee to one-

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Sch 8

fifth of all the shares and interests in shares issued or acquired to be issued in
terms of the scheme;

(iv) require that, on becoming eligible for participation, all employees are advised by
the employer in writing, of their eligibility, of the constitution and rules of the
scheme, of the results of the scheme over the last ten financial years of operation
or since inception if the scheme has been established for less than ten years and, of
the pricing formula and period over which the option may be exercised, and of the
risk and benefits associated with participation in such schemes in general and the
employer’s scheme in particular, except that the price of the shares shall be fixed
at the time the option is given and price shall not be less than the market value of
the shares at that time, and only ordinary shares of the company may participate in
the scheme;

(v) require that all shares and interests in shares acquired through the scheme are
registered, with the details of the prices at which shares and interests in shares are
issued, exercised, sold or relinquished whether by effluxion of time or otherwise;

(vi) require that all administration and other expenses of the scheme are borne by the
employer, and that the scheme shall be independently audited by the auditors or
independent accountants who examine or report on the financial statements of the
employer;

(vii) require that eligibility for participation in the scheme and the extent of that
participation shall be on the basis of the period of service with the employer or
other entities specified in item (i), basic emoluments over a defined period,
termination of service benefits from employer or other entities specified in item (i)
or a combination of some or all of these criteria which shall apply equally to all
employees who are in the service of the employer and are not on notice by either
party for termination of service at the date eligibility arises except to the extent
that the rules of the scheme permit accrued or other terminal benefits to be applied
for participation in the scheme;

(viii) require that in the case of a scheme which provides for acquisition of shares or
interests in shares in a private company notice of intent to sell or relinquish such
shares or interest in shares shall be deemed to be given by an employee
participating in the scheme on termination of service or on death, and that any
amount unpaid in respect of the acquisition price of such shares or interests in
shares, shall be recoverable by the trustee from the sale proceeds, but not
exceeding that amount in the event of death;

(ix) require the trustees and the employer to act as taxpayer agent for an employee
participating in the scheme for all matters connected with the scheme including
the taxation of proceeds of shares or interests in shares sold or otherwise disposed
of by employees participation in the scheme;

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 Income Tax Act Sch 8

(x) provide that the scheme may be terminated at the instigation of an employer where
shares and interests in shares held by employees participating in the scheme are
the subject of unconditional arrangements for sale by participants at fair market
value as certified by the auditor of the scheme and the employer;

(xi) do not prevent an employee participating in the scheme from selling the
employee’s shares on the basis of the price formula detailed herein after five years
from acquisition of such shares or interests in shares, except where the date of
termination of service with the employer or of the death of the employee in the
course of the realization of that employee’s estate is earlier;

(xii) do not provide for the issue to or acquisition by employees of shares as interests in
shares conveying a preference as to dividends unless such shares participate in
dividends declared on ordinary shares in the same entity in excess of the level of
such preference and confer rights of participation on dissolution or redemption no
less favourable than the rights attributable to holders of such ordinary shares or
ineterests therein;

(xiii) do not require any participating employee to contribute additional amounts

beyond amounts determinable in terms of the constitution and rules at the date of
the employee agreeing to participate in the scheme;

(xiv)do not permit the rules or constitution to be amended in a manner detrimental to

employees participating in the scheme without the consent of the trustees, and
without confirmation from the Commissioner-General;

(xv) do not permit the granting of credit for any amount towards financing the exercise
of an option to acquire shares.

3. (1) In this Schedule “employee” or “employer” includes any employee or employer

specified in paragraph 2(2)(b)(i) except that as regards provision of financial
information where an option scheme extends to holding or subsidiary companies or
affiliates financial information shall be provided only to employees participating in
the scheme, or to employee eligible to participate in the scheme in respect to the
company in which they are or will be entitled to acquire shares or interest in shares
and that the auditors required in terms of paragraph 2(2)(b)(vi) shall apply only to
the employer who undertakes the administration of the fund or its procurements
and, if more than one, to such employer having the largest number of participants
in the scheme;

(2) In this Scheme “shares” means any shares issued by a company duly
incorporated under the written laws of the Republic or elsewhere conveying rights
to an undivided share of its distributable profits and of proceeds arising on
dissolution or winding-up of such company and “interest in shares” means an
employee’s entitlement to shares held by or on behalf of such a scheme and to the
employee’s right, if any, to exercise an option to acquire shares.
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Sch 8 Income Tax Act

4. (1) An application for approval of any share option scheme under paragraph 2, may
be made by the trustees of the scheme or a sponsoring employer prior to
appointment of such trustees in writing to the Commissioner-General; and the
application shall be accompanied by a copy of the instrument constituting the
scheme and of the rules relating to the scheme.

(2) Within one month of submission of any application referred to in

subparagraph (1), the Commissioner-General shall inform the applicant in writing
of approval or rejection of the share option scheme and of the charge year in
relation to which it is approved.

(3) Where any share option scheme has been approved by the Commissioner-
General under subparagraph (2) for any charge year, the scheme shall be deemed to
be approved for each subsequent charge year unless the Commissioner-General
withdraws approval under sub-paragraph (5).

(4) Where there is any alteration to the instrument constituting any share option
scheme approval by the Commissioner-General under this Schedule or to any rules
relating to any such scheme, the trustee of the scheme shall forthwith inform the
Commissioner-General in writing of the alteration; and, if the Commissioner-
General is not so informed, the approval of the scheme shall be deemed to have
been suspended as from the date of the alteration.

(5) The Commissioner-General shall at any time by notice in writing withdraw

approval of any share option scheme if satisfied that –

(a) the conditions set out in paragraph 2 on which the approval of the scheme
was granted have not been complied with; or

(b) there has been any alteration to the instrument constituting the scheme or to
any rules relating to it resulting in the non compliance with the conditions set
out in paragraph 2.

(6) In the event of suspension or withdrawal of approval in respect of a share option

scheme the Commissioner-General shall ensure, as far as practical that employees
participating in the scheme are not prejudiced as regards transactions they have
irrevocably committed themselves to prior to receiving notification of such
suspension or withdrawal.

5. Where under this Schedule the Commissioner-General rejects an application to

approve a share option scheme, or suspends or withdraws approval from any
scheme, any person aggrieved by the refusal of the Commissioner-General to grant
approval or by the suspension or withdrawal of any approval, may appeal there

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from as if the refusal or suspension or withdrawal of approval were a determination
of the Commissioner-General under this Act.

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 NINTH SCHEDULE (Section 64A)

PRESUMPTIVE TAX
PART I

TAX ON MOTOR VEHICLES FOR THE CARRIAGE OF PERSONS

Type of vehicle Amount of tax per

(sitting capacity) vehicle (per annum)

64 seater and above K12,960

50-63 seater K10,800
36-49 seater K8,640
22-35 seater K6,480
18-21 seater K4,320
12-17 seater K2,160
Below 12 seater ( including taxis) K1,080
(Amended by Act No. 16 of 2017 and by Act No. 43 of 2021 )

PART II

TAX ON TURNOVER

Turnover per annum Tax Rate

K800,000 or below 4 percent
((Substituted by Act No 1 of 2004, Amended by Acts No. 10 of 2012, 7 of 2014, 11 of
2016, Act No. 45 of 2016 and Act No. 17 of 2018)

PART III
TAX ON BETTING AND GAMING
Type of Game Monthly Tax Rate or Monthly Tax Amount

1. Online Casino Live Games 20 percent of gross takings

2. Online Casino Machine Games 35 percent of gross takings
3. Casino Games (Brick and Motor) K5,000 per table
4. Lottery Winnings 35 percent of net proceeds
5. Betting 25 percent of gross takings
6. Gaming Machines K500 per machine

NOTES:
1. “Net proceeds” means the gross proceeds less sums paid out for the prizes.
2. “Gross takings” means the total amount staked by players less the
winnings payable and redemptions by the players.

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(Inserted by Act No. 17 of 2018, amended by Act No. 20 of 2020 and by Act No. 43 of
2021)
TENTH SCHEDULE

(Section 2) PUBLIC BENEFIT ACTIVITIES

(1) Welfare and Humanitarian

(a) The care or counselling of, or the provision of education

programmes relating to, abandoned, abused, neglected, orphaned or
homeless children;
(Amended by Act No. 43 of 2021)

(b) The care or counselling of poor and needy persons where more than
ninety per centum of those persons to whom the care or counselling
is provided are over the age of sixty years;

(c) The care or counselling of, or the provision of education

programmes relating to physically or mentally abused and
traumatised persons;

(d) The provision of disaster relief;

(e) The rescue or care of persons in distress;

(f) Rehabilitative care or counselling or education of persons with a

physical disability;

(g) Rehabilitative care or counselling or education of prisoners, former

prisoners, parolees, convicted offenders and persons awaiting trial;

(h) The rehabilitative care or counselling of persons addicted to a

dependence forming substance or the provision of preventative and
education programmes regarding addiction to a dependence
forming substance;

(i) Conflict resolution, the promotion of reconciliation, mutual respect

and tolerance among the various people of Zambia;

(j) The promotion or advocacy of human rights and democracy;

(k) The protection of the safety of general public;

(l) The promotion or protection of family stability;

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 (m) The provision of legal services for poor and needy persons;

(n) The provision of facilities or the protection and care of children

under school going age or poor and needy parents;

(o) The promotion or protection of the rights and interests of, and the
care of asylum seekers and refugees;

(p) Community development for poor and needy persons and poverty
eradication initiatives, including –

(i) The promotion of community based projects relating to self help,

empowerment, capacity building, skills development or poverty
eradication;
(ii) The provision of training support or assistance to community
based projects contemplated in clause (i); or
(iii)The provision of training, support or assistance to emerging micro
enterprises to improve capacity to start and manage a business,
which may include the granting of loans on such conditions as may
be prescribed by the Minister by way of statutory instrument; or

(q) the promotion of access to media and a free press.

(2) Health Care

(a) the provision of equipment or other aids used by persons with a
physical disability, without the recovery of cost;
(b) the provision of health care services to poor and needy persons;
(c) the care or counselling of terminally ill persons or persons with a
physical or mental disability and the counselling of their families in
this regard;
(d) the prevention of HIV infection and the provision of preventative
and education programmes relating to HIV/AIDS;
(e) the care, counselling or treatment of persons afflicted with
HIV/AIDS, including the care or counselling of their families and
dependants in this regard;
(f) the provision of blood transfusion, organ donation or similar
services;
(g) the provision of primary health care, education, sex education or
family planning;
(h) the prevention of malaria and programmes aimed at the eradication
of malaria;
(i) the prevention of tuberculosis and leprosy infection and the
provision of preventative and education programmes relating to
tuberculosis and leprosy;
or

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 (j) the care, counselling or treatment of cancer patients including the
counselling of their families and dependants.

(3) Land and Housing

(a) the provision of residential care for retired persons, where-
(i) more than ninety per centum of the persons to whom the
residential care is provided are over the age of sixty years and
nursing services are provided by the organisation carrying on
such activities; and
(ii) residential care for persons who are poor and needy is actively
provided by that organisation without the recovery of cost.

(b) building and equipping of-

(i) clinics or day care nursery; or
(ii) community centres, sport facilities or other facilities of a
similar nature for the benefit of the poor, needy and
persons with a physical disability;
(c) construction of low cost housing for poor and needy persons
without the recovery of cost; or
(d) the promotion, facilitation and support of access to land and use of
land, housing and infrastructural development for promoting
official land reform programmes.

(4) Education and Development

(a) the provision of education by a government school or grant aided school

as defined in the Education Act;
(b) the provision of higher education by an institution excluding a private
institution as defined in terms of the Technical Education, Vocational
and Entrepreneurship Training Act, 1998 or a private higher education
institution as defined by the Higher Education Act, 2013;
(Amended by Act No. 43 of 2021)
(c) educational enrichments, academic support, supplementary tuition or
outreach programmes for the poor and needy;
(d) the training or education of persons with a physical or mental disability;
(e) the provision of educare or early childhood development services for pre
school children to the poor, needy and vulnerable children;
(f) the training of persons employed in the national, provincial and local
spheres of government, for purposes of capacity building in those spheres
of government;
(g) the provision of school buildings or equipment for public schools and
educational institutions engaged in public benefit activities;
(h) career guidance and counselling services provided to persons attending
any school or higher education institution as envisaged in subparagraphs
(a) and (b);
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 (i) programmes addressing needs in education provision, learning, teaching,
training, curriculum support, governance, whole schools development,
safety and security at schools, pre schools or educational institutions
engaged in public benefit activities; or
(j) the provision of scholarships, bursaries and awards for study, research
and teaching on such conditions as may be prescribed by the Minister, by
statutory instrument.

(5) Religion

The promotion or practice of religious or ecclesiastical activities that encompass

acts of worship, witness, teaching and community service.

(6) Culture

(a) the advancement, promotion, or preservation of art, culture or customs;

(b) the promotion, establishment, protection, preservation or maintenance
of areas, collections or buildings of historical or cultural interest,
national monuments, national heritage sites, museums, including art
galleries, archives and libraries; or
(c) the provision of youth leadership or development programmes.

(7) Conservation, Environment and Animal Welfare

(a) the conservation, rehabilitation or protection of the natural environment,
including flora, fauna or the biosphere;

(b) the care of animals, including the rehabilitation, or prevention of the

ill treatment of animals

(c) the promotion of, and education and training programmes relating to
environment awareness, greening, clean up or sustainable development
projects;

(d) the establishment and management of a trans frontier area, involving two
or more countries, which
(i) is or will fall under a unified or coordinated system of management
without compromising national sovereignty; and
(ii) is established with the explicit purpose of supporting the conservation
of biodiversity, job creation and free movement of animals and tourists
across the international boundaries.

(8) Research and Consumer Rights

(a) research including agricultural, economic, educational, industrial, medical,

political, social, scientific and technological research; or
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 (b) the protection and promotion of consumer rights and the improvement of
control and quality with regard to products or services.

(9) Sport

The administration, development, coordination or promotion of sport or recreation in

which the participants take part on a non professional basis as a pass-time.

(10) Providing of Funds, Assets or Other Resources

The provision of-

(a) funds, assets, services or other resources by way of donation;
(b) assets or other resources by way of sale for a consideration not exceeding the
direct cost to the organisation providing the assets or resources; or
(c) funds by way of a loan at no charge.

(11) General

(a) the provision of support services to, or promotion of the common interests of
public benefit organisations contemplated in this Schedule; or
(b) the bid to host or the hosting of any international event approved by the
Minister for purposes of this paragraph, having regard to
(j) the foreign participation in that event; and
(ii) the economic impact that the event may have on the country as a whole.

(Inserted by Act No. 1 of 2009)

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 Income Tax Act

CHARGING SCHEDULE

(Section 14) PART I

TAX CREDIT
1. (1) Subject to subparagraph (2), the tax credit referred to in section 14 (2) which is
appropriate is—
(a) zero for an individual for a charge year; and
(b) six thousand Kwacha per annum for a person with a disability registered by
the Zambia Agency for Persons with Disabilities.;
(Amended by Acts No. 1 of 2009, No. 27 of 2009, No. 49 of 2010, No.
20 of 2020 and No. 43 of 2021)

(2) The tax credit for any charge year appropriate to an individual to whom this sub-
paragraph applies shall be equal to -
AB/12

where A is the amount of the tax credit apart from this sub-paragraph, and B is the
number of months in the charge year in which the individual is living in the
Republic for any time.

(3) Sub-paragraph (2) applies to any individual who-

(a) is resident in the Republic for the charge year in question but was not so
resident for the immediately preceding charge year and is not so resident
for the immediately succeeding charge year, or

(b) is not resident in the Republic for the charge year in question, and who in
either case is absent from the Republic for part of that charge year of that
charge year.

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Ch Sch Income Tax Act

PART II

RATES OF TAX

2. (1) Subject to the provisions of this Act, tax in respect of the income of an individual
for a charge year shall be charged as follows -

(a) on income received by way of lump sum payments, under section eighty-
two at the rate of ten per centum per annum:

Provided that the refund of employer’s contribution from a defined

contributory pension fund or scheme and defined benefit fund or scheme
shall be taxed in accordance with clauses (b), (c), (d), (e) and (f) of this
sub-paragraph.
(Added by Act No 1 of 2004)

(b) on any income falling within subsection (5) of section twenty-one which is
not exempt from tax under that subsection, at the rate of ten per centum per
annum;

(c) on the balance of so much of an individual's income as does not exceed

fifty-four thousand kwacha at the rate of zero per centum per annum;
(Amended by Act No. 43 of 2021)

(d) on the balance of so much of an individual’s income as exceeds fifty-four

thousand Kwacha but does not exceed fifty-seven thousand six hundred
Kwacha at the rate of twenty-five percent per annum;
(Amended by Act No. 43 of 2021)

(e) on the balance of so much of an individual’s income as exceeds fifty-seven

thousand six hundred Kwacha but does not exceed eighty-two thousand
eight hundred Kwacha at the rate of thirty percent per annum;

(f) on the balance of so much of an individual's income as exceeds eighty- two

thousand eight hundred Kwacha at the rate of thirty-seven point five per
centum per annum.

(As amended by Acts No. 27 of 2011, 10 of 2012, 18 of 2013, 45 of

2016 and 20 of 2020)

(1A) Notwithstanding sub-paragraph (1) and subject to the other provisions of

this Act, tax in respect of the income of an individual for the charge year
ending 31st December, 2012, shall be charged as follows:

(c) on income received by way of lump sum payment, under section

eighty-two, at the rate of ten percent:

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 Provided that the refund of employer’s contribution from a
defined contributory pension fund or scheme and defined benefit
fund or scheme shall be taxed in accordance with clauses (b), (c),
(d), (e) and (f);

(d) on any income falling within subsection (5) twenty-one which is not
exempt from tax under that subsection, at the rate of ten percent;

(e) on the balance of so much of an individual’s income as does not

exceed eighteen thousand kwacha, at the rate of zero percent;

(f) on the balance of so much of an individual’s income as exceeds

eighteen thousand, but does not exceed twenty-five thousand, two
hundred Kwacha at the rate of twenty-five percent;

(g) on the balance of so much of an individual’s income as exeeds

twenty-five thousand, two hundred Kwacha, but does not exceed
fifty-one thousand, three hundred Kwacha, at the rate of thirty
percent; and

(h) on the balance of so much of an individual’s income as exceeds fifty-

one thousand, three hundred Kwacha, at the rate of thirty-five percent.
(As amended by Act No. 27 of 2011)

(2) Where in a charge year, a person receives income by way of gratuity under
subsection (1) of section twenty one the gratuity shall be charged as follows:
(i) income not exceeding the amount set out in clause (c ) of sub-
paragraph (1) of this paragraph shall be exempt; and
(ii) the balance of so much of an individual’s income as exceeds the
income specified in clause (i) of this sub-paragraph at the rate of
twenty five per centum per annum.
(Amended by Acts No. 1 of 2009, 27 of 2009 and 49 of 2010)

(2A) Notwithstanding sub-paragraph (2), in the charge year ending (2), in the
charge year ending 31st December, 2012, where a person receives income by
way of gratuity under subsection (1) of section twenty-one, the gratuity shall
be charged as follows:

(a) income not exceeding the amount set out in clause (c) of sub-paragraph (1A)
of this paragraph shall be exempt; and

(b) the balance of so much of an individual’s income as exceeds the income

specified in clause (i), at the rate of twenty-five percent;
(As amended by Act No. 27 of 2011)
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Companies

3. (1) Subject to the provisions of this Act, tax in respect of the income of a person
other than the income of an individual, a trust, deceased’s estate or a bankrupt’s
estate for a charge year, shall be charged as follows-

(a) on the income of any company whose shares are listed on the
Lusaka Securities Exchange in the first year of its listing, at
the rate of two per cent below the rates specified –

(i) in clauses (b), (c), (d) and (e) of this subparagraph; and

(ii) in clauses (b), (c) and (d) of paragraph 5:

Provided that –

A. a company whose shares were listed on the Lusaka

Securities Exchange prior to 1st April, 2004, shall not
qualify for the tax incentives referred to in this clause;

B. where a company, whose shares are listed on the

Lusaka Securities Exchange on or after 1st April, 2004,
offers and sells one third of its shares to indigenous
Zambians in the year of listing, the income of that
company shall be charged at an additional discounted
rate of five per cent below the rates specified –

(i) in clauses (b), (c), (d) and (e) of this

subparagraph; and
(ii) in clauses (b), (c) and (d) of paragraph 5; and

C. where a company, whose shares are listed on the

Lusaka Securities Exchange on or after 1st April, 2004,
offers and sells one third of its shares to indigenous
Zambians, the income of that company shall be
charged at a rate of five per cent below the rates
specified –

(i) in clauses (b), (c), (d) and (e) of this

subparagraph; and
(ii) in clauses (b), (c) and (d) of paragraph 5;

for the period that the one third of the company’s

shares are owned by indigenous Zambians;

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 Income Tax Act Ch Sch

(b) on the income of any company other than an electronic communications

network or service licensee, at the rate of thirty per centum per annum;
(Amended by Act No. 43 of 2021)
(c) on so much of income of electronic communications network or service
licensee as does not exceed two hundred and fifty thousand Kwacha at the
rate of thirty per centum per annum;
(Amended by Act No. 43 of 2021)
(d) on so much of the income of electronic communications network or service
licensee as exceeds two hundred and fifty thousand Kwacha, at the rate of
forty per centum per annum;
(As amended by Act No. 27 of 2011)

(e) the rate of tax for income received by any public benefit organisation
referred to in paragraph 6 (2) of the Second Schedule shall be fifteen per
centum.
(Renumbered by Act No. 43 of 2021

(Amended by Acts No 1 of 2004, 1 of 2009, 27 of 2009 and 49 of 2010, 7 of

2014, 6 of 2015, 19 of 2015, 11 of 2016, 17 of 2018 and 15 of 2019).

Trusts

4. Subject to the provisions of this Act, tax in respect of the income of a trust, a
deceased’s estate or bankrupt’s estate for a charge year shall be charged at the rate
of thirty percent per annum;
(As Amended by Act No. 43 of 2021)

Special cases

5. Notwithstanding the provisions of paragraphs (1), (2), (3), (4), (6) and (7) –

(a) the tax chargeable on income received from a rural enterprise shall be
reduced for each of the first five charge years for which that business is
carried on, by such amount as equal to one-seventh of the tax which
would otherwise be chargeable on that income;

(b) the maximum rate for income received from farming and agro-processing
shall be ten per centum per annum;
(As amended by Acts No. 27 of 2011 and 10 of 2012)

(c) the maximum rate of tax on income the Commissioner-General determines

as originating from the export of non-traditional products is fifteen percent,
except that where the Commissioner-General determines income as
originating from the export of non-traditional products from farming or
agro-processing, the maximum rate of tax on that income is ten percent;
and

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(As Amended by Act No. 17 of 2018)

(d) the maximum rate of tax for income received from the production of
organic fertiliser and the chemical manufacture of fertilizer shall be fifteen
per centum per annum.
(Amended by Act No. 10 of 2012)

(e) the maximum rate of tax for turnover received by a person or partnership
from the letting of property shall be-
(i) four percent per annum on turnover as does not exceed eight hundred
thousand Kwacha; and
(ii) twelve and a half percent per annum on turnover as exceeds eight
hundred thousand Kwacha;

(Inserted and amended by Act Nos. 1 of 2009, 10 of 2012 ,18 of 2013, 7 of 2014,
19 of 2015, 45 of 2016, and deleted by Act No. 16 of 2017, Amended by Act No.
43 of 2021).

(f) the maximum rate of tax on income received by a company, from the
manufacture of products made out of copper cathodes, is fifteen percent per
annum.;
(Inserted by Act No. 17 of 2018)

(g) the maximum rate of tax for the charge years 2021 and 2022 on income
received by a person providing accommodation and food services is fifteen
percent;
(Inserted by Act No. 20 of 2020 and Amended by Act No. 43 of 2021)

(h) the maximum rate of tax for the charge years 2022 and 2023 on income
received by a person carrying on the business of manufacturing ceramic
products is zero percent;
(Inserted by Act No. 43 of 2021)

(i) on the income earned from exports of a business enterprise approved by the
Zambia Development Agency and carrying on manufacturing activities in a
multi-facility economic zone or an industrial park, tax shall be charged at—

(i) zero percent for a period of ten years starting from the year of
commencement of works;

(ii) half of the standard income tax rate on the business enterprise’s
profits earned in year eleven to thirteen after the commencement
of works; and

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Ch Sch Income Tax Act

(iii) three quarters of the standard income tax rate on business

enterprise’s profits earned in year fourteen and fifteen after the
commencement of works
(Inserted by Act No. 43 of 2021)

Withholding tax

6(1) Tax required to be deducted from any payment made under section eighty-one and
section eighty one A shall be deducted at:

(a) the rate of fifteen percent for dividends payable to residents;

(As Amended by Act 17 of 2018)

(b) the rate of twenty percent for –

(i) dividends payable to non-residents; and

(ii) payment to non-resident contractors;
(Amended by Act No. 17 of 2018)

(c) such other rate as the Commissioner-General directs to give effect to the
provisions of any agreement made under section seventy-four or to give
effect to any provision in the Second Schedule; or

(d) the rate of zero percent per annum for any dividends paid by any person
carrying on mining operations

(e) the rate of zero percent per annum—

(i) for dividends paid by a company operating in a multi-facility
economic zone or industrial park under the Zambia Development
Agency Act, 2006, on profits made on exports; and

(ii) for a period of ten years from the time of commencement of works
in the multi-facility economic zone or industrial park under the
Zambia Development Agency Act, 2006.

(Inserted by Act No. 43 of 2021)

(2) The tax required to be paid on any import under section eighty-one C shall be at the
rate of fifteen per centum of the value for duty purposes, of the goods.

6A. Tax required to be deducted from a payment or distribution of branch profits shall
be at the rate of twenty percent;

(Amended by Act No. 1 of 2009, 45 of 2016 and 17 of 2018)

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Rate of tax to be deducted

7. Tax required to be deducted from any payment under section eighty-two A shall be
deducted at the rate of fifteen per centum per annum.

Provided that-

(i) tax required to be deducted from a payment of interest under section

82A arising from interest earning accounts held by an individual with
a financial service provider registered under the Banking and
Financial Services Act, 2017, shall be deducted at the rate of zero
percent per annum;
(Amended by Act No. 43 of 2021)

(ii) tax required to be deducted from a payment of interest under section

82A, other than interest arising from all interest earning accounts
held by an individual with a financial service provider registered
under the Banking and Financial Services Act, 2017, shall be
deducted at the rate of fifteen percent per annum and shall be the
final tax;
(Amended by Act No. 43 of 2021)

(iii) tax required to be deducted from payment of interest on Treasury

Bills and Government Bonds to any charitable institution, body,
person or trust exempted under subparagraph (1) of paragraph 5 and
subparagraph (1) of paragraph 6 of the Second Schedule shall be the
final tax; and

(iv) tax required to be deducted from the payment of a management or

consultancy fee deemed under section eighteen to be from a source
within the Republic shall be at the rate of twenty percent; and

(v) tax required to be deducted from the payment of royalties to a non-

resident deemed under section eighteen to be from a source within
the Republic shall be at the rate of twenty percent

(vi) tax required to be deducted from the payment of commissions to a

nonresident deemed under section eighteen to be from a source within
the Republic shall be at the rate of twenty percent;
(vii) tax required to be deducted from the payment of public entertainment
fees shall be at the rate of twenty percent;
(viii) tax required to be deducted from the payment of winnings from
gaming, lotteries and betting shall be at the rate of twenty percent;
and

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 (ix) tax required to be deducted from the payment of interest, except
interest on Treasury Bills and Government bonds to a non- resident,
shall be at the rate of twenty percent.
(Amended by Acts No. 10 of 2013, 18 of 2013, 17 of 2018, 15 of 2019
and renumbered by 43 of 2021)

(x) tax required to be deducted from the payment of a reinsurance

premium to a recipient not registered in the Republic shall be at the
rate of twenty percent.
(Inserted by Act No. 43 of 2021)

Interpretation

8. Any reference in this Act or in any other document to any provisions of the Charging
Schedule as it had effect immediately before the coming into operation of the
Income Tax Act (Amendment) Act 1999 shall be construed as a reference to the
corresponding provision of this Schedule as it has effect thereafter.
(As amended by Acts No. 4 of 2000, 1 of 2001, 3 of 2002, 1 of 2004, and 1 of 2005)

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