ZAMBIA NATIONAL BUDGET 2021 - BDO Zambia
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ZAMBIA NATIONAL BUDGET 2021
TABLE OF CONTENTS 1.0 BUDGET OVERVIEW 1 2.0 BUDGET HIGHLIGHTS FOR 2021 4 3.0 DIRECT TAXES 5 4.0 VALUE ADDED TAX 7 50. PROPERTY TRANSFER TAX 8 6.0 TOURISM 9 7.0 CUSTOMS AND EXCISE 10 8.0 TRANSFER PRICING 12 9.0 NON-TAX MEASURES 12 10.0 DOUBLE TAXATION TREATIES 13 11.0 ABOUT US 14 BDO ZAMBIA - Budget 2021
“Stimulating
economic recovery &
building resilience...
1.0 BUDGET OVERVIEW
T he September 2020 Zambia Budget
Address for the year 1 January 2021 to 31
December 2021 was delivered to the National
to favour predictability in policy formulation
owing to the lack of drastic tax policy measures
and proposals, as has been the case in budgets
Assembly on Friday 25 September, 2020 by in the recent past. The central macro-economic
the Honourable Dr. Bwalya K.E. Ng’andu, MP, objectives of the 2021 budget outlined by the
Minister of Finance. Minister are as follows:
a) Achieve a real GDP growth rate of 1.8%, as
The Minister presented a K119 billion budget opposed to 3% proposed in last year’s budget;
with the theme “Stimulating Economic b) Reduce the inflation rate towards the 6% -
Recovery and Building 8% range, maintaining
Resilience to Safeguard the target proposed in last
Livelihoods and Protect the year’s budget;
Vulnerable”. At a glance, c) Reduce the fiscal deficit
the 2021 budget appears to to 9.3% as opposed to
largely be a continuation 5.5% set in last year’s
of the 2020 budget budget; and
agenda with a central d) Achieve domestic
purpose of stimulating revenue collection of not
economic growth. The less than 18% of GDP as
uniformity between the opposed to 22% proposed
two budgets can even be in last year’s budget.
inferred from the similarity
in the themes, as last year’s budget theme As a backdrop to the 2021 budget, the Minister
was “Focusing national priorities towards revealed that real GDP growth is projected
stimulating the domestic economy”. It is clear at negative 4.2% in 2020, representing the
that the Minister’s central objective remains first recession in the country since 1998.
stimulating growth in the Zambian economy Overall, all sectors of the Zambian economy
and to this end, he unveiled a medium-term are expected to record negative growth due
Economic Recovery Program (“ERP”), which to passive economic activity as a result of
is the successor to the Economic Stabilization COVID-19 suppression measures as well as
and Growth Program (“ESGP”) which ended in country-wide electricity rations. The Minister
2019. however expects the telecommunications and
agricultural sectors to register positive growth.
The ERP aims to bolster economic growth Continued depreciation of the Kwacha may
and restore debt sustainability and appears potentially curtail the anticipated growth.
BDO ZAMBIA - Budget 2021 1
“ ...to safeguard
livelihoods and
protect the
vulnerable
The Minister also notes that the external Imports of goods by Zambians declined by
public debt stock in 2019 increased to USD 30% to USD 2.3 billion from USD 3.3 billion
11.97 billion, representing a 4.3% increase in 2019. Similarly, export earnings declined
from 2019. He notes that Government, with by 15.5% from USD 3.8 billion to 3.2 USD
the help of various legal and financial advisors, billion. A decline in economic activity as result
is in the process of developing a liability of COVID-19 suppression measures as well as
management strategy aimed at achieving debt the deprecation of the Kwacha significantly
sustainability. contributed to the drop in imports and
export earnings. Copper earnings in particular
The Zambian Kwacha depreciated against the declined by 14.8%, however, copper export
US Dollar to K19.95 as at 22 September 2020, volumes increased by 16.5% to 449,000
representing a 41.9% drop from comparatives metric tones.
as at end of December 2019. Furthermore,
inflation exceeded the medium-term target In the 2021 budget, debt servicing constitutes
of 6% - 8% to hit 15.5% as at end of August the largest expenditure, representing around
2020. 40% of the total budget and further adding
pressure on the fiscus. The table on the
following page outlines the expenditure by
Inflation exceeded functions of Government proposed in the 2021
budget and provides a 2020 comparative.
the medium-term
Some of the notable achievements included
target of 6% - 8% to in this budget are the amendment of the
Republican Constitution; expansion in our
hit 15.5% health and education facilities; enhanced
interconnectivity of our country through
improved road infrastructure; and the
provision of social safety nets for the
vulnerable.
2 BDO ZAMBIA - Budget 2021
“ Debt servicing
constitutes 40% of
the total budget
1.0 BUDGET OVERVIEW
Share Share
Function 2021 of 2020 of
budget budget
General Public Services 57,819,227,707 48.3% K44,080,742,270 41.6%
Domestic Debt Interest 18,338,481,000 12,634,848,146
External Debt Interest 27,745,178,541 21,090,794,856
Dismantling of Arrears 2,762,080,579 2,278,733,732
Local Government Equalization Fund 1,164,567,612 1,164,567,612
General Elections and Voter Registration 598,112,678 135,000,000
Constituency Development Fund 249,600,000 249,600,000
MP's Gratuity 202,073,000
Public Affairs and Summit Meetings 200,000,000 143,726,597
Contingency 125,000,000 100,636,628
Compensation Fund 100,000,000 100,000,000
Sinking fund - 636,000,000
Defence 5,642,820,724 4.7% 6,526,391,423 6.2%
Public Order and Safety 3,078,694,172 2.6% 4,042,702,155 3.8%
Economic Affairs 21,499,987,741 18% 21,833,351,543 20.6%
• Road infrastructure 6,214,145,268 10,552,606,147
• Farmer Input Support Programme 5,701,404,933 1,111,840,201
• International Airports 567,334,377 1,823,481,818
• Strategic Food Reserves 517,500,000 660,000,000
• Rural Electrification Fund 307,199,557 166,339,781
• Empowerment Funds 266,285,212 -
• O/w You Empowerment Funds 155,237,025 -
• Energy/Power Infrastructure 11,167,970,334
Environment Protection 955,530,142 0.8% 611,777,853 0.6%
Housing and Community Amenities 2,221,524,168 1.9% 3,460,376,555 3.3%
• Water Supply and Sanitation 2,172,274,286 2,620,137,161
• Markets, Bus Stations and Solid 24,441,200
Waste Management
Health 9,653,313,513 8.1% 9,336,591,584
• Infrastructure 1,731,846,564 1,479,947,346
• Drugs and Medical Supplies 1,392,443,990 900,622,880
• Operations for Hospitals 627,263,831 686,266,173
Recreation, Culture and Religion 151,357,265 383,045,401
Education 13,772,752,981 13,121,648,466
• Infrastructure 1,216,937,500 1,071,920,363
• Skills Development Fund 178,857,469 179,181,956
Social Protection 4,820,803,202 2,580,984,987
• Social Cash Transfer 2,344,175,162 1,047,422,180
• Public Service Pension Fund 1,067,955,725 1,020,387,712
• Food Security Pack 1,100,000,000 122,162,992
TOTAL 119,616,011,615 100% 106,007,612,236
BDO ZAMBIA - Budget 2021 3
Some of the notable achievements included in this budget are the amendment of the Republican Constitution; expansion in our health
“ New tax
allowance for use
of selected local
raw materials
2.0 BUDGET HIGHLIGHTS FOR 2021
2.1 DIRECT TAXES
• PAYE threshold and bands have been increased
• Development allowance in horticulture increased to 5 years from 3 years
• Tax rate on betting increased to 25% from 10%
• Income tax rate on hotels and lodges reduced to 15% from 35%
• Introduction of new tax allowance for the use of selected local raw materials
2.2 VALUE ADDED TAX
• All tractors zero rated
• Full body sanitisation equipment zero rated
2.3 CUSTOMS AND EXCISE
• Import duty on safari game viewing motor vehicles suspended
• licences paid by tourism enterprises and hotel managers suspended
• Import duties on items used to support horticulture and floriculture subsectors removed or
suspended
• Export duty on crocodile skin removed
• Import duty on copper ores and concentrates removed
• High-value second hand motor vehicles to be subjected to ad valorem import duty
• Import duty increased to 40% on various agro-processed products
• Excise duty on plastic flat bags introduced at 30%
• Import duty on electric motor vehicles reduced to 15% from 30%
PAYE All
threshold
tractors
and
zero
bands
increased rated
4 BDO ZAMBIA - Budget 2021
THE BUDGET IN DETAIL
3.0 DIRECT TAXES
All of the following measures will take 3.3 INCREASE OF TAX CREDIT FOR
effect from 1st January, 2021. DIFFERENTLY ABLED PERSONS
The tax credit for differently abled persons
3.1 PERSONAL TAX RATES has been increased to K500 per month
from the current K250 per month.
The exempt threshold for Pay-As-You-Earn
has been increased to K4,000 from K3,300 3.4 INCREASE IN DEVELOPMENT
per month and the bands have been ALLOWANCE CLAIM PERIOD
adjusted as follows: The number of years for claiming the 10%
development allowance in the horticulture
and floriculture subsectors has been
Income Bands Income Tax
increased to 5 years from the existing 3
Per Annum Bands Rate %
years. This allowance applies to persons
Per Month growing rose flowers, tea, coffee, banana
plants or citrus fruit trees or other similar
First K48,000 First K4,000 0 plants or trees.
Next K9,600 Next K800 25
Next K25,200 Next K2,100 30
Balance over Balance over 37.5
K82,800 K6,900
3.2 INCREASE THE INCOME TAX Development allowance
DEDUCTION AVAILABLE FOR
EMPLOYING DIFFERENTLY ABLED
in horticulture increased
PERSONS to 5 years from 3 years
The amount allowable for deduction by
an employer for employing a differently 3.5 INCREASE IN INCOME TAX RATE IN
abled person has been increased to K2,000 THE GAMING AND BETTING
per annum from K1,000 per annum. This is INDUSTRY
aimed at encouraging the employment of The tax rate on betting has been increased
differently abled persons. to 25% from 10% of gross takings.
BDO ZAMBIA - Budget 2021 5
“ Tax rate on
betting increased
to 25% of gross
takings
3.6 REDUCTION OF INCOME TAX 3.9 CURRENCY FOR KEEPING BOOKS
RATES FOR HOTELS AND LODGES OF ACCOUNT
The corporate income tax rate on It will be mandatory to keep books of
income earned by hotels and lodges on account in Kwacha. Mining companies with
accommodation and food services has at least 75% of their earnings in foreign
been reduced to 15% from 35%. This is currency from abroad or within Zambia
aimed at resuscitating the tourism sector may keep accounts in US Dollars.
and promoting local tourism following the
disruptions caused to the industry by the 3.10 INCREASE IN COMMISSIONS TO
COVID-19 pandemic. TAX AGENTS
The maximum commission payable to tax
3.7 NEW LOCAL CONTENT agents will be increased from 3% to 10% in
ALLOWANCE order to allow agents to effectively recover
A local content allowance for income costs for their operations.
tax purposes at the rate of 2% will be
introduced for businesses using selected 3.11 INTRODUCTION OF WHT ON
local raw materials. This is aimed at ROYALTY FINANCING
encouraging the use of locally available The amendment introduces withholding
raw materials such as mangoes, pineapples tax on payments made under royalty
and cassava. financing agreements by a Zambian
resident to a non-resident.
3.8 ZAMBIA DEVELOPMENT AGENCY
TAX INCENTIVES 3.12 TAX APPLICABLE ON EMPLOYEE
The investment threshold for a Zambian LOAN BENEFITS
citizen to qualify for tax incentives under The amendment provides for the interest
the Zambia Development Agency Act No. rate to be used in determining the
11 of 2006 will be reduced to $100,000 benefits tax payable by employers on
from $500,000 for those intending to loans advanced to employees. This will
operate in a priority sector, a multi facility be amended from an ‘open market rate’
economic zone or industrial park. system to a rate of 2% above the Bank of
Zambia Policy Rate.
3.8 CLARIFICATION OF THE LIMITATION
RULE ON INTEREST DEDUCTIBILITY 3.13 UPDATED STATUTORY BODY
The amendment seeks to clarify that the MANDATES
limitation rule on interest deductibility Statutory bodies to request for Taxpayer
introduced in 2019 applies on all interest Identification Numbers and Tax Clearance
deductions of borrowings of both revenue Certificates before registering and
and capital nature. renewing membership or issuing any
licenses and permits.
6 BDO ZAMBIA - Budget 2021
“ Full body
sanitisation
equipment zero
rated
4.0 VALUE ADDED TAX
All of the following amendments to the ZRA to provide clarity on when the two-
VAT Act will take effect from 1st January, year limitation period is to commence.
2021 except where otherwise stated.
4.7 DEFINITION OF “PLACE OF SUPPLY
4.1 RATE OF VAT OF GOODS”
The VAT rate remains unchanged at 16%. ZRA to provide clarity on the definition of
“Place of supply of goods”.
4.2 ZERO RATING OF TRACTORS USED
IN AGRICULTURE INDUSTRY 4.8 ESCALATORY FINE TO BE
All tractors used in agriculture to be zero CHARGEABLE ON FALSE RETURNS
rated for VAT purposes. AND STATEMENTS
The applicable penalties are as follows:
4.3 EQUIPMENT USED IN FULL BODY
SANITISATION TO BE ZERO RATED
OFFENCE APPLICABLE PENALTY
As a result of the COVID-19 pandemic, all
equipment used for full body sanitisation
will be zero-rates for a period of one year First occurrence Up to 60,000 penalty
effective 26 September 2020. units (K18,000) per period
audited.
4.4 TAXABLE SUPPLIER OBLIGATED TO
PROVIDE AN ELECTRONIC Second Up to 120,000 penalty
PAYMENT MACHINE occurrence units (K36,000) per period
Taxable suppliers are obliged to provide an audited.
electronic payment machine and failure to
comply attracts a penalty.
Third occurrence Up to 240,000 penalty
4.5 FINE CHARGEABLE FOR EVASION units (K72,000) per period
OF VAT audited.
The fine chargeable for evasion of VAT has
been Increased to 300,000 penalty units Any repeat event Deemed as evasion of tax
(K90,000) from 30,000 penalty units beyond third and penalty chargeable
(K9,000). occurrence is 300,000 penalty units
(K90,000).
4.6 PROVIDE CLARITY ON WHEN THE
TWO-YEAR LIMITATION PERIOD IS
TO COMMENCE
BDO ZAMBIA - Budget 2021 7
“ Only Trusts that
are Public Benefit
Organisations are
exempt from PTT
5.0 PROPERTY TRANSFER TAX
All of the following amendments to the 5.3 FOREIGN CURRENCY
Property Transfer Tax Act will take effect TRANSACTIONS
from 1st January, 2021. The amendment prescribes the exchange
rate applicable to foreign currency
5.1 REDEFINING THE REALISABLE VALUE denominated transactions for PTT
ON INDIRECT TRANSFER OF SHARES purposes.
The measure is aimed at determining the
realisable value in respect of the transfer of 5.4 APPLICATION OF PTT TO INDIRECT
shares issued by a company incorporated FOREIGN TRANSFERS OF SHARES
outside Zambia to ensure that only In the case of indirect share transfers , this
the Zambian proportion of the value is measure exempts the liability to PTT where
included in the value chargeable to PTT. the value of the transferred shares is less
than 10% of the Zambian company value.
5.2 CLARITY ON APPROVED PUBLIC
BENEFIT ORGANISATIONS EXEMPT
FROM PTT Exchange rate applicable
This measure clarifies that only Trusts that to foreign currency
are approved Public Benefit Organisations
are exempt from PTT. denominated transactions
is prescribed for PTT
8 BDO ZAMBIA - Budget 2021“ Renewal
fees for licenses
suspended for
hotels & lodges
6.0 TOURISM
6.1 RATE OF INCOME TAX 6.4 SUSPENSION OF RETENTION FEES
Corporate income tax rate to be reduced Suspension of retention fees paid by
to 15% from 35% on income earned by tourism enterprises.
hotels and lodges on accommodation and
food services. 6.5 SUSPENSION OF REGISTRATION
FEES FOR HOTEL MANAGERS
6.2 IMPORT DUTY Suspension of registration fees for hotel
Import duty on safari game viewing motor managers.
vehicles and tourist buses and coaches to
be suspended. 6.6 IMPOSITION OF A PENALTY FOR
UNDER DECLARATION ON
6.3 SUSPENSION OF RENEWAL FEES ON TOURISM LEVY RETURNS
LICENCES Tourism levy regulations to provide for
Suspension of renewal fees paid by hotels the imposition of a penalty for under
and lodges on licences. declaration on tourism levy returns.
Import duty on
tourist game
viewing vehicles,
buses & coaches
suspended
BDO ZAMBIA - Budget 2021 9“ Excise duty on
plastic flat bags
introduced at
30%
7.0 CUSTOMS AND EXCISE
All of the following measures will take In January 2019, a 5% import duty was
effect from 1st January, 2021. introduced on importation of copper
ores and concentrates and this led to a
7.1 REMOVAL/REDUCTION OF IMPORT significant rise of procurement costs for
DUTY IN THE HORTICULTURE AND businesses operating in the mining and
FLORICULTURE SUBSECTORS processing sectors.
In an effort to enhance floriculture and
horticulture subsectors and to promote • The import duty on importation of
other traditional exports, the following refrigerated trucks has been suspended.
measures have been proposed: This measure is aimed at supporting the
domestic and export markets
• Suspension of import duty on biological • Reduction of import duty on selected
control agents trimmings from 25% to 5%
• Removal of import duty on greenhouse This is aimed at promoting the local
plastics garments and textile industry
• Reduction of import duty on selected • Reduction of import duty on electrical
bulb plants from 25% to 15% motor vehicles from 30% to 15%
• Reduction of import duty on secateurs The proposed measure is aimed at
from 15% to 5% and on pruners from reducing the use of fossil fuel
25% to 5%
• Removal of import duty on selected 7.3 MITIGATING REDUCTIONS
agricultural clippers. In mitigating the revenue loss arising from
• Removal of import duty on crocodile the above measures, the following were
skin proposed:
7.2 REMOVAL/REDUCTION OF OTHER • Increase import duty to 40% from
IMPORT DUTY 25% on agro products such as beef
Further incentives for other sectors aimed and beef processed products, chicken
at stimulating their economic activity were and chicken processed products as well
proposed. These include: as fish imported from outside the SADC
and COMESA regions
• The removal of import duty on copper • Introduce excise duty at the rate K1.50
ores and concentrates per litre on reconstituted milk
• Harmonization of import duty rate on
This measure has been proposed to reconstituted milk with other forms of
encourage local processing. milk at 15%
10 BDO ZAMBIA - Budget 2021“ Exclude high-
value vehicles
from definition of
used vehicle
• Adjust the specific excise duty rate on amended to provide a mechanism for an
cigarettes to K302 per mille from K265; intermediary to deduct the excise duty paid
• Introduce a surtax at the rate of 20% on on airtime and in turn charge excise duty to
Imported un-denatured ethyl alcohol the end user.
of an alcoholic volume strength of 80%
or higher 7.8 ADVANCE TARIFF RULING
• Introduce excise duty on plastic flat bags The Customs and Excise Act has been
at the rate of 30% amended to limit advance ruling to goods
• Harmonize the import duty rates of that are envisaged to be imported or
cotton and polyester fabric at 15% ad exported.
valorem or K 1.82 per kilogram
whichever is higher 7.9 ASSESSMENTS AND COLLECTION OF
• Exclusion of high value motor vehicles DUTY
from the definition of used motor The Customs and Excise Act has been
vehicles and subject them to ad valorem amended to provide for the assessment and
import duty collection of duty in convertible currencies
as prescribed by the Commissioner General.
7.4 CARBON EMISSION CERTIFICATE
VALIDITY PERIOD
Validity period of the carbon emission
certificate has been extended from 90 days
to 1 year for motor vehicles in transit or
imported temporarily.
7.5. PENALTIES FOR FALSE INVOICES
Extend penalties for false invoices, false
representation and forgery to service
providers.
7.6 PRODUCTION ALLOWANCE FOR
TOBACCO PRODUCTS
This will provide for a production loss
allowance at 5% for tobacco products.
Import duty increased to 40% on
agro products from outside the
7.7 INTRODUCTION OF CREDIT
SADC and COMESA regions
MECHANISM FOR AIRTIME
INTERMEDIARIES
The Customs and Excise Act has been
BDO ZAMBIA - Budget 2021 11“ Country by
County reporting
requirements
introduced
8.0 TRANSFER PRICING
All of the following amendments to the provides for amendment of the Income Tax
Transfer Pricing Act will take effect from 1st (Transfer Pricing) (Amendment) Regulations
January 2021 2018 to introduce Country by Country
(CbC) reporting requirements. Introduction
8.1 INTRODUCTION OF COUNTRY BY of CbC reporting requirements will allow for
COUNTRY REPORTING automatic exchange of corporate taxation
REQUIREMENTS data with other tax jurisdictions for entities
In order to effectively audit inter-company operating in Zambia that are part of Multi-
transactions for compliance with transfer National Enterprise groups.
pricing regulations, tax authorities require
good quality data on the two entities 8.2 INCREASE OF TRANSFER PRICING
involved in inter-company transactions. DOCUMENTATION EXEMPTION
Historically, the lack of data on corporate THRESHOLD
taxation of foreign-based related entities Zambian companies that are not part of a
has presented a major limitation for tax Multi-National Enterprise Group and have
authorities making it difficult to carry turnover below K20 million are currently
out transfer pricing assessments on exempt from the requirement to prepare
transactions between related companies. transfer pricing documentation. The
proposal increases the exemption threshold
Taking the above into account, the proposal from K20 million to K50 million annually.
9.0 NON-TAX REVENUE MEASURES
• The government private company
proposes to increase limited by shares and
various immigration the filing of annual
permit fees to cost returns made on the
recovery levels e-PACRA system have
• Discounts granted been removed
to the public on
fees paid for online
registration of a
12 BDO ZAMBIA - Budget 2021“Zambia has
over 20 double
taxation treaties...
10.0 DOUBLE TAXATION TREATIES
Applicable Tax Rates
Country Consultancy
Dividends Interest Royalties Fees
Botswana 5% or 7% 10% 10% 10%
Canada 15% 15% 15% 0%
China 5% 10% 5% 0%
Germany 5% OR 15% 10% 10% 0%
India 5% OR 15% 10% 10% 10%
Ireland 7.5% 10% 10% 0%
Italy 5% or 15% 10% 10% 0%
Japan 0% 10% 10% 0%
Kenya 20% 20% 20% 0%
Mauritius * TBA TBA TBA TBA
Netherlands 5% OR 15% 10% 10% 0%
Norway 15% 10% 15% 0%
Seychelles 5% or 10% 5% 10% 0%
South Africa 15% 15% 20% 20%
Sweden 5% OR 15% 10% 10% 0%
United Kingdom 5% or 15% 10% 5% 0%
* The current treaty with Mauritius expires 31 December 2020. A new treaty has not yet been
negotiated
This is a selection of countries most commonly transacted with and is not a comprehensive
list. For further details please contact us.
The rates available under the various DTAs are not automatic and have to be applied for.
BDO ZAMBIA - Budget 2021 1311.0 ABOUT US
BDO INTERNATIONAL
US$9.6 billion 2019 REVENUE
1,617 Offices
Countries
167
88,000+ Staff
* Increase from 2018: 10.1% year-over-year growth
PROVIDING A PERSONAL AND VALUE-FOR-MONEY
SERVICE THROUGH CONSTRUCTIVE AND EFFECTIVE
ADVICE, FINANCIAL PLANNING AND CONTROL.
BDO Zambia is a firm of public accountants, registered with the
Zambia Institute of Chartered Accountants, providing
audit, accounting, taxation, management and consulting services to some five hundred
clients of varying sizes and needs. BDO Zambia is part of the BDO International network.
Presently with 6 Partners and over 100 professional and administrative staff in our Lusaka
offices, the Firm places particular emphasis on providing a personal and value for money
service, through constructive and effective advice and financial planning and control.
In addition to our own team of financial experts, the Firm has a number of qualified
professionals providing advice on matters such as Human Resources Management and Legal
Draftsmanship.
We have cut out needless bureaucracy, so we can serve you responsively and flexibly. Our
systems work to support our people, not the other way around. That gives us more time to
get to know you and your business – and give more relevant, intelligent advice.
With the backing of the BDO international network, we are able to combine global coverage
with local knowledge. Our close relationship with BDO South Africa and BDO UK provides
us with additional resources and expertise to meet business requirements in Zambia.
The Partners, Directors and staff of BDO Zambia have established the Firm and its
related specialised business entities as the preferred provider of Financial Services in the
country. We have a commitment to total and exceptional client service and we build an
understanding of our clients’ businesses that allows us to play an active role in their success.
14 BDO ZAMBIA - Budget 2021YOUR BDO TEAM
LEADING THE WAY
William Saunders Douglas Ironside Deborah Nonde
Senior Partner Managing Partner Tax Partner
william.saunders@bdo.co.zm douglas.ironside@bdo.co.zm debbie.nonde@bdo.co.zm
Katrina Mabika Godsave Nhekede Tinashe Jerahuni
Tax Partner Audit Partner Audit Partner
katrina.mabika@bdo.co.zm godsave.nhekede@bdo.co.zm tinashe.jerahuni@bdo.co.zm
BDO ZAMBIA - Budget 2021 15OUR COMMITMENT TO SERVICE
EXCELLENCE, PROFESSIONALISM AND
CLIENT SATISFACTION HAS POSITIONED
US SECURELY AS ONE OF THE LEADING TAX
AND ACCOUNTING ORGANISATIONS IN
THE WORLD.
YOUR BDO TAX MANAGERS
Kafumu Mbewe Stanley Madabbwa
kafumu.mbewe@bdo.co.zm stanley.madabbwa@bdo.co.zm
16 BDO ZAMBIA - Budget 2021Z A M B I A TA X TA B L E S 2 0 2 1
(12 months ending 31 December 2021)
PERSONAL TAXATION (Monthly) Industrial buildings
0 - K4,000 0% * investment allowance 10%
K4,001 – K4,800 25% *initial allowance 10%
K4,801 – K6,900 30% *annual allowance 5%
Above K6,900 37.5% Commercial buildings 2%
Farm works & improvements 100%
Tax credit for differently abled Equipment used in farming &
persons K500 agro-processing 100%
Equipment used in
Car Benefits manufacturing,
*2800cc & above K40,000 tourism & generation
*1800cc to 2799cc K30,000 of electricity 50%
*Up to 1799cc K18,000 For leasing companies -
equipment leased out under
BUSINESS TAXATION an operating lease 50%
RATE Improvement allowance in
Corporate Income Tax 35% an MFEZ 100%
Farming & agro-processing 10% Development allowance on
Manufacture of organic & growing of roses, tea, coffee,
chemical fertilizers 15% banana plants 10%
Tourism (Accommodation & The number of years for claiming
Food) 15% development allowance 5 years
Mining Operations - Mining sector for assets
*Profit up to 8% 30% in use 20%
*Profit above 8% up to 45%
Mineral processing 35% WITHHOLDING TAX
Companies that add value Rental income (final tax) 10%
to copper cathodes 15% Commission to non-employees 15%
Non-traditional exports 15% Royalties, management &
Export of cotton without consultancy 15%
a permit 35% Dividends & interest
Income on commercial 15%
activities of Public benefit Dividends for companies
organisations 15% carrying on mining operations Nil
Turnover Tax 4%
(for annual turnover below WHT FOREIGN ENTITIES
K800,000) Telecommunication Commissions 20%
Companies - Royalties, management &
*First K250,000 35% consultancy fees 20%
*Above K250,000 40% Dividends, interest and
branch profits 20%
Tax losses can be carried forward Payments to non-resident
for up to 5 years entertainers & sports persons 20%
(10 years for companies in the Government Securities 15%
energy & mining sector)
Annual allowance to employer
for employing a person with a
disability K2,000
CAPITAL ALLOWANCES
RATE
Plant, machinery & commercial
vehicles 25%
Non-commercial vehicles 20%
BDO ZAMBIA - Budget 2021BDO Zambia Limited is a member of BDO International Limited,
a UK company limited by guarantee.
BDO is the brand name for the BDO International network and for
each of the BDO member firms.
www.bdo.co.zm
CONTACT US AT
BDO Lusaka Tel: +260 211 252 836 /
Gallery Office Park 250 222 / 250 631
Lagos Road, Rhodes Park tax@bdo.co.zm
PO Box 35139 www.bdo.co.zm
Lusaka, Zambia
The information contained in this document and the enclosed
bookmark is based on the Budget Address presented by the Minister
of Finance, Honourable Dr. Bwalya Ng’andu, MP. This document
provides an overview of the announcements made in the speech
and information provided by the Zambia Revenue Authority. Whilst
every effort has been made to ensure its accuracy, we are unable
to accept responsibility for errors and omissions. It should be noted
that the measures as introduced by the Budget Address are subject
to Parliamentary approval. No financial decisions should be made
based solely on the information contained herewith and no liability
will be accepted for decisions based on its contents without further
consultation with an official representative of BDO Zambia Limited.You can also read
