Understanding Business Taxes in Zambia

Taxes are an essential part of running a business in Zambia. Whether you own a small shop, a service-based company, or an online business, understanding the tax requirements set by the Zambia Revenue Authority (ZRA) is crucial for compliance and business growth.

This guide will cover the types of taxes for SMEs, how to register for tax with ZRA, and tax incentives available to small businesses.

Types of Taxes for Small Businesses in Zambia

Small and medium-sized enterprises (SMEs) in Zambia are subject to various taxes, depending on their business structure and revenue. The most common taxes include:

1. Turnover Tax

• Applicable to businesses with an annual turnover of ZMW 800,000 or less.
• Charged at 4% of total revenue.
• Simple and requires less complex record-keeping.

2. Value Added Tax (VAT)

• Required for businesses earning over ZMW 800,000 annually.
• The standard VAT rate is 16%.
• Businesses must register, charge, and remit VAT to ZRA.

3. Company Income Tax

• Applies to incorporated businesses.
• Standard corporate tax rate is 30%.
• SMEs under the Presumptive Tax System may pay lower rates.

4. Withholding Tax

• Applies to payments made for rent, commissions, dividends, and consulting services.
• Standard rate varies, typically between 10% and 20%.

5. Pay As You Earn (PAYE)

• Applies if you hire employees.
• Employers must deduct and remit income tax on salaries.
• PAYE rates range from 0% to 37.5%, depending on income levels.

6. Excise Duty

• Charged on specific goods such as alcohol, tobacco, and fuel.
• Businesses in manufacturing or importation may be subject to this tax.

How to Register for Tax with ZRA

To legally operate and comply with Zambian tax laws, businesses must register for tax with the Zambia Revenue Authority (ZRA). Here’s a step-by-step guide:

Step 1: Obtain a TPIN (Taxpayer Identification Number)

• Visit the ZRA website or nearest ZRA office.
• Fill out the Taxpayer Registration Form.
• Provide business details, including Company Registration Certificate (PACRA) and NRC/Passport.
• Receive your TPIN (used for all tax-related transactions).

Step 2: Register for the Relevant Taxes

• Businesses with annual revenue above ZMW 800,000 must register for VAT.
• If you hire employees, register for PAYE.
• Companies must register for Corporate Tax.

Step 3: File Tax Returns

• Depending on the tax type, SMEs must file monthly, quarterly, or annual tax returns.
• Use the ZRA e-Services portal to submit returns online.

Step 4: Make Tax Payments

• Payments can be made via banks, mobile money, or online through the ZRA portal.
• Always keep receipts and tax clearance certificates for reference.

Tax Incentives for Small Businesses in Zambia

The Zambian government provides several tax incentives to ease the burden on SMEs and promote business growth. Here are some key incentives:

1. Presumptive Tax for Small Businesses

• Designed for businesses earning below ZMW 800,000 annually.
• Allows simplified tax compliance with lower tax rates.

2. Zero-Rated VAT for Certain Goods and Services

• Some essential goods (e.g., exported products, farming inputs) qualify for a 0% VAT rate.
• Helps SMEs in agriculture and export industries.

3. Tax Holidays for Startups in Priority Sectors

• New businesses in sectors like manufacturing, tourism, and agriculture may qualify for a 5-year tax holiday.
• Encourages investment in strategic industries.

4. Import Duty Exemptions

• SMEs importing machinery, farming equipment, and manufacturing tools can benefit from reduced or zero import duty.

5. Investment Promotion and Tax Rebates

• Businesses registered under the Zambia Development Agency (ZDA) may qualify for corporate tax reductions and incentives.

Also Read: Frequently Asked Questions about Taxes

Conclusion: Stay Tax Compliant and Enjoy Business Growth

Tax compliance is a critical part of running a successful business in Zambia. By understanding your tax obligations, registering correctly, and leveraging available tax incentives, you can avoid penalties, build business credibility, and enhance growth opportunities.

To make tax compliance easier, download our free SME Tax Checklist to track your tax obligations efficiently.

📥 Download the SME Tax Checklist