Zambia - Taxation



As of 2002, the corporate tax rate was a flat 35%, replacing an earlier schedule that ranged from 15% to 35%. Dividends are taxed at 15%, but dividends received from farming activities are exempt from taxes for the first five years of operation. Withholding taxes are 15% on income from dividends, rent, entertainment, and interest (above 60,000 Kwacha or about $13.00). There is also a mineral royalty tax and a property transfer tax.

Income taxes include a 1% charge by local Councils on the gross salaries of employees after a deduction of 300,000 Kwacha (about $66.55) and a 1.015% property tax. Individual income is taxed according to a progressive schedule with four bands: 0% on the first 600,000 Kwacha (about $133) of annual income; 10% on the next 600,000 Kwacha; 20% on the next 600,000 Kwacha, and 30% on the increment of annual income above 1,800,000 Kwacha (about $400).

A value-added tax (VAT) with a standard rate of 20% replaced the sales tax in 1995. The standard rate was subsequently reduced to 17.5%. Items exempted from VAT include insurance transactions, mosquito nets and insecticides.

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