INCOME TAX ACT
Arrangement of Sections
Section
PART I
PRELIMINARY AND INTERPRETATION
1. Short title
2. Interpretation
3. Repealed
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. Notices and service
13. Repealed
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 Repealed
21. Apportionment of gratuities and compensation for loss of office
22. Apportionment of income
22A. Assessable 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 estate and trusts
28. Income of non-resident air, sea or land transport business
PART IV
DEDUCTIONS
29. Deductions generally
29A. Foreign currency exchange gains and losses
30. Losses
30A. Indexation of losses
31. Transfer of losses
32. Losses 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 Repealed
41. Public benefit organisation
42. Repealed
43. Deduction for research
43A. Deduction for bad and doubtful debts
43B. Deduction of mineral royalty
43C. Repealed
43D. Deduction for employing 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 tax
46B. Estimated provisional tax returns
47. Further provisions as to returns
48. Furnishing of information
48A Disapplication of secrecy obligations
49. Statement of bank accounts, assets, etc.
50. Return of lodgers and inmates
51. Information as to business matters
52. Repealed
53. Public documents
54. Information as to companies
55. Accounts and records
55A. Submission of business transactions in time
55B. Use of electronic fiscal device
56. Documents in support of returns
57. Examination by Commissioner-General
58. Production and preservation of books and documents
59. Repealed
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
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
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 certificate
81C. Advance tax on income in respect of imported goods
82. Deduction on 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
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
91. Error or mistake relief
92. Remission of Tax
92A. [Repealed]
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
95B. Inter-company shareholdings
95C. Repealed
95D. Loans to effective shareholders
96. Incurred loss not deductible in certain cases
97. Commissioner-General may avoid trust
97A. Transfer pricing
97AA. Repealed
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
98A. Summary imposition of penalties
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
OBJECTIONS AND APPEALS
106. Assessments good until disproved
107. Establishment of Tax Appeal Court, its composition and powers
108. Objection to assessment
109. Appeal against assessment
110. Determination of appeals under Act 11 of 1998
111. Appeals from Tax Appeals Tribunal
112. Privacy of proceedings
113. Adjustment on successful objection or appeal
114. Appeals from Commissioner-General's discretion and determinations
115. Repealed
115A. Repealed
PART XII
REPEALS AND TRANSITIONAL PROVISIONS
116. Repeals
AN ACT
to provide for the taxation of incomes and matters connected therewith.
[1st April, 1966]
Act 32 of 1967,
Act 23 of 1968,
Act 11 of 1969,
Act 26 of 1970,
Act 27 of 1970,
Act 17 of 1971,
Act 16 of 1972,
Act 11 of 1973,
Act 14 of 1973,
Act 46 of 1973,
Act 11 of 1974,
Act 11 of 1975,
Act 14 of 1976,
Act 9 of 1977,
Act 9 of 1978,
Act 10 of 1979,
Act 19 of 1979,
Act 6 of 1980,
Act 10 of 1981,
Act 13 of 1981,
Act 12 of 1982,
Act 21 of 1982,
Act 11 of 1984,
Act 11 of 1985,
Act 8 of 1986,
Act 14 of 1987,
Act 17 of 1988,
Act 28 of 1988,
Act 33 of 1989,
Act 15 of 1990,
Act 29 of 1990,
Act 12 of 1991,
Act 11 of 1992,
Act 4 of 1993,
Act 13 of 1994,
Act 14 of 1994,
Act 2 of 1995,
Act 27 of 1995,
Act 7 of 1996,
Act 3 of 1997,
Act 9 of 1998,
Act 6 of 1999,
Act 4 of 2000,
Act 1 of 2001,
Act 8 of 2001,
Act 3 of 2002,
Act 3 of 2003,
Act 1 of 2004,
Act 1 of 2005,
Act 7 of 2006,
Act 4 of 2007,
Act 1 of 2008,
Act 1 of 2009,
Act 27 of 2009,
Act 49 of 2010,
Act 27 of 2011,
Act 10 of 2012,
Act 18 of 2013,
Act 7 of 2014,
Act 6 of 2015,
Act 19 of 2015,
Act 11 of 2016,
Act 45 of 2016,
Act 16 of 2017,
Act 17 of 2018,
Act 15 of 2019,
Act 20 of 2020,
Act 43 of 2021,
Act 24 of 2022.
[General Note— (1) Section 29 of the Act 6 of 1999 deleted the words "handicapped person" wherever they appeared and substituted them by the words "person with disability" w.e.f. 1 April 1999.
(2) Section 12 of the Act 4 of 2007 deleted the words "section 23 of the Mines and Minerals Act" wherever they appeared and substituted them by the words "section 25 of the Mines and Minerals Act".
(3) Section 13(a) of the Act 1 of 2009 deleted the words "Mines and Minerals Act" wherever they appeared and substituted them by the words "Mines and Minerals Development Act 2008".
Section 13(b) of the Act 1 of 2009 deleted the words "Small Enterprises Development Act" and substituted them by the words "Zambia Development Agency Act, 2006".
(4) Act 27 of 2009 deleted "charities", "charitable institution", and "charitable institutions", wherever they appeared and substituted them with "public benefit organisation".
(5) Section 7 of the Act 49 of 2010 deleted the words "Direct Taxes Division" wherever they appeared and substituted them by the words "Domestic Taxes Division".
(6) Section 12 of the Act 15 of 2019 deleted the words "Lusaka Stock Exchange" wherever they appeared and substituted them by the words "Lusaka Securities Exchange".
(7) Section 16 of the Act 20 of 2020 deleted the words "Domestic Taxes Division" wherever they appeared and substituted them by the word "Authority".]
PART I
PRELIMINARY AND INTERPRETATION
This Act may be cited as the Income Tax Act.
(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;
[Ins by s 2(a) of Act 10 of 2012 w.e.f. 1 January 2013,
"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;
"approved collective investment scheme" means a collective investment scheme approved under the Securities Act;
[Ins by s 2(b) of Act 15 of 2019 w.e.f. 1 January 2020.]
"approved fund" means—
(a) an approved pension fund;
(b) an approved annuity contract;
(c) any superannuation, pension, provident, widows' or orphans' fund established by law in the Republic;
(d) a pension fund approved before the enactment of this Act under either sub-section (1) or (2) of section 11 of the former Act;
"approved pension fund" means a pension fund or scheme which has been approved by the Commissioner-General under the Fourth Schedule;
"approved share option scheme" means a scheme that has been approved by the Commissioner-General, under the Eighth Schedule;
[Ins by s 2(b) of Act 3 of 2002 w.e.f. 1 April 2002,
"artisanal mining" has the meaning assigned to the words in the Mines and Minerals Development Act;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"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;
"Authority" means the Zambia Revenue Authority established under the Zambia Revenue Authority Act;
[Ins by s 2 of Act 7 of 1996 w.e.f. 1 April 1996,
"Bank" means a company that holds a banking licence granted under section 4 of the Banking and Financial Services Act;
[Ins by s 2(a) of Act 6 of 1999 w.e.f. 1 April 1999,
"bankrupt's estate" means the property of a bankrupt vested by law in and under the control of the trustee in bankruptcy;
"bank subsidiary" means a company where more than 50 per centum of the voting shares of the company (except any qualifying director's shares) are owned directly or indirectly by a bank;
[Ins by s 2(a) of Act 4 of 2000 w.e.f. 1 April 2000,
"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, scandium, vanadium and chromium;
[Ins by s 2(a) of Act 7 of 2006 w.e.f. 1 April 2006,
"basic salary" means the gross amount payable to an employee without any allowances;
"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;
[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 2014,
"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;
[Subs by s 2(b) of Act 10 of 2012 w.e.f. 1 January 2013,
"charge year" means the year for which tax is charged, that is, the period of 12 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;
[Subs by s 2(b) of Act 27 of 2011 w.e.f. 1 April 2012,
"Charging Schedule" means the last Schedule to this Act, by which, tax credits and rates of tax are fixed;
[Am by s 2(b) of Act 6 of 1999 w.e.f. 1 April 1999,
"child" for tax purposes, includes a child of family or any child to whom an individual stands in the place of a parent;
[Subs by s 2(a) of Act 24 of 2022 w.e.f. 1 January 2023.]
"child of family" has the meaning assigned to the words in the Children’s Code Act;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"collective investment scheme" means a collective investment scheme registered under the Securities Act;
[Ins by s 2(a) of Act 10 of 2012 w.e.f. 1 January 2013,
"Commissioner-General" means the Commissioner-General appointed under the Zambia Revenue Authority Act;
[Ins by s 2 of Act 7 of 1996 w.e.f. 1 April 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 mineral deposit or other natural resource in the Republic, but does not include the repayment of the purchase price for the commodity royalty;
[Subs by s 2(a) of Act 43 of 2021 w.e.f. 1 January 2022.]
"company" means any company incorporated or registered under any law in force in the Republic or elsewhere;
"date of enactment of this Act" means the 20th May, 1967, and "enactment of this Act" shall be construed accordingly;
"deceased's estate" means the estate of a deceased individual;
"dividend" means any amount distributed or credited as construed in sub-section (3) by a company to its shareholders;
[Am by s 2(a) of Act 4 of 2007 w.e.f. 1 April 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;
[Subs by s 2(a) of Act 9 of 1998 w.e.f. 1 April 1998,; am by s 2(c) of Act 6 of 1999 w.e.f. 1 April 1999,, s 2(b) of Act 4 of 2007 w.e.f. 1 April 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;
[Ins by s 2(c) of Act 19 of 2015 w.e.f. 1 January 2016.]
"electronic communications network" has the meaning assigned to it in the Information and Communication Technologies Act;
[Ins by s 2 of Act 49 of 2010 w.e.f. 1 April 2011,
"electronic communications service" has the meaning assigned to it in the Information and Communication Technologies Act;
[Ins by s 2 of Act 49 of 2010 w.e.f. 1 April 2011,
"electronic fiscal device" means an electronic device, approved by the Commissioner-General, which has a fiscal memory capable of generating and storing fiscal information and has the capacity to generate or record data and other reports and is capable of transmitting that data in real time to the Authority;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"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;
"employee", in relation to an employer, means any individual who is paid, given or granted any emolument by that employer;
"employer", in relation to an employee, means any person who or any partnership which pays, gives or grants any emoluments to that employee;
"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;
[Subs by s 2(a) of Act 15 of 2019 w.e.f. 1 January 2020.]
"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 75 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 25 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;
[Ins by s 2(d) of Act 4 of 2007 w.e.f. 1 April 2007,; am by s 2(b) of Act 1 of 2008 w.e.f. 1 April 2008,
"financial institution" means a person that holds a financial institution's licence granted under section 10 of the Banking and Financial Services Act;
[Ins by s 2(a) of Act 4 of 2000 w.e.f. 1 April 2000,
…
["former Zambia Consolidated Copper Mining Company" rep by s 2(a) of Act 7 of 2006 w.e.f. 1 April 2006,
"gig economy" is a segment of the digital economy which involves individuals carrying out business through an online platform and under flexible or temporary conditions, and includes an independent contractor or freelancer conducting business through an online platform;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
…
["handicapped person" rep by s 2(e) of Act 6 of 1999 w.e.f. 1 April 1999,
…
["hydro and thermo power generation" rep by s 2(a) of Act 19 of 2015 w.e.f. 1 January 2016.]
"incapacitated person" means a child or a person who has a mental disability that inhibits that person from exercising independent legal capacity;
[Subs by s 2(a) of Act 16 of 2017 w.e.f. 1 January 2018.]
"income generating real estate" means real estate properties that generate a consistent recurring revenue in the form of dividends, interest or cash distribution;
[Ins by s 2(b) of Act 43 of 2021 w.e.f. 1 January 2022.]
"income real estate investment trust" means a collective investment scheme that invests primarily in income generating real estate;
[Ins by s 2(b) of Act 43 of 2021 w.e.f. 1 January 2022.]
"individual" means a natural person;
"industrial minerals" has the meaning assigned to it in the Mines and Minerals Development Act;
[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]
"industrial park" has the meaning assigned to it in the Zambia Development Agency Act;
[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 2014,
"licensee" has the meaning assigned to it in the Information and Communication Technologies Act;
[Ins by s 2 of Act 49 of 2010 w.e.f. 1 April 2011,
"livestock" has the meaning assigned to the word under the Animal Health Act;
[Ins by s 2(a) of Act 15 of 2019 w.e.f. 1 January 2020.]
"local authority" means a City Council, District Council, Municipal Council or any other authority recognised as such under the Local Government Act;
"loss", in relation to gains or profits, means the loss computed in like manner as gains or profits;
"lump sum 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;
"management or consultant 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;
[Subs by s 2(b) of Act 16 of 2017 w.e.f. 1 January 2018.]
"manufacturer" means a person carrying on the business of manufacturing;
"manufacturing" means subjecting any physical matter to any process which materially changes such material in substance, character or appearance, thereby making it an article after such process, and includes the assembly of motor vehicles and such other processes as the Commissioner-General may determine to be of a similar nature;
"mineral" has the meaning assigned to it in the Mines and Minerals Development Act;
[Subs by s 2(a) of Act 7 of 2014 w.e.f. 1 January 2015.]
"mineral processing" has the meaning assigned to it in the Mines and Minerals Development Act;
[Subs by s 2 of Act 6 of 2015 w.e.f. 1 July 2015.]
"mining licence" has the meaning assigned to the words in the Mines and Minerals Development Act;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"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;
[Subs by s 2 of Act 6 of 2015 w.e.f. 1 July 2015.]
"minister" means the minister responsible for financial matters;
"multi-facility economic zone" has the meaning assigned to it in the Zambia Development Agency Act;
[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 2014,
"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
(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;
"non-traditional product" 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;
[Subs by s 2(b) of Act 1 of 2009 w.e.f. 1 April 2009,
"open cast mining operations" has the meaning assigned to it in the Mines and Minerals Development Act;
[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]
"operating lease" means any lease of implements, machinery or plant, other than a finance lease;
[Ins by s 2(d) of Act 1 of 2008 w.e.f. 1 April 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 employee;
"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;
"person with disability" has the meaning assigned to it in the Persons with Disabilities Act;
[Subs by s 2(b) of Act 10 of 2012 w.e.f. 1 January 2013,
"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;
[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 2014,; am by s 12 of Act 15 of 2019 w.e.f. 1 January 2020.]
"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;
[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 2014,
"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;
"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;
[Ins by s 2(c) of Act 1 of 2009 w.e.f. 1 April 2009,
"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;
[Ins by s 2(c) of Act 1 of 2009 w.e.f. 1 April 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;
[Ins by s 2(a) of Act 4 of 2000 w.e.f. 1 April 2000,
"public private partnership project" means a project that shall be transferred back to the Republic that involves the—
(a) design, finance, construction, development or operation of a new infrastructure, asset or facility;
(b) provision of social sector services; or
(c) rehabilitation, modernisation, expansion, operation or management of an existing infrastructure, asset or facility;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"purchase price" is the amount paid by a person or partnership to a person or partnership resident in the Republic in return for future payments of commodity royalty;
[Subs by s 2(a) of Act 24 of 2022 w.e.f. 1 January 2023.]
"registered insurer" means an insurer registered under Part II of the Insurance Act;
"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, 60 years of age;
[Am by s 2(b) of Act 19 of 2015 w.e.f. 1 January 2016.]
"royalty" means a payment of any kind received as a consideration for the use of, or the right to use—
(a) any copyright of literary work;
(b) any artistic or scientific work, including cinematograph films, films, video tapes, sound recording or any other like medium;
(c) any computer programme or software;
(d) any patent, trademark, design or model, plan, secret formula or process;
(e) any industrial, commercial or scientific equipment; or
(f) any information concerning industrial, commercial or scientific experience;
[Subs by s 2(a) of Act 24 of 2022 w.e.f. 1 January 2023.]
"royalty financing" means a financing agreement or arrangement where a purchase price is made and includes an arrangement of a similar nature;
[Ins by s 2 of Act 20 of 2020 w.e.f. 1 January 2021.]
"rural area" means any area which is not an area declared or deemed to have been declared an area of any city or municipality or township under the Local Government Act;
"rural enterprise" means—
(a) a manufacturing business which commenced on or after the 1st April, 1976;
(b) a hotel, motel or lodge which commenced on or after the 1st April, 1981,
and which is located in a rural area;
"savings group" includes village banking and a co-operative society;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"Securities and Exchange Commission" means the Securities and Exchange Commission established under the Securities Act;
[Ins by s 2(b) of Act 43 of 2021 w.e.f. 1 January 2022.]
"services" means any services provided in the normal course of business by a person engaged in any business activity specified in the Third Schedule;
"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;
[Ins by s 2(b) of Act 3 of 2002 w.e.f. 1 April 2002,
"small scale mining" has the meaning assigned to the words in the Mines and Minerals Development Act;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"special purpose vehicle" means a company incorporated in the Republic by a successful bidder for the purpose of undertaking a public private partnership project in accordance with the Public Private Partnership Act;
[Ins by s 2(b) of Act 24 of 2022 w.e.f. 1 January 2023.]
"tax" means the income tax charged by this Act;
"taxpayer identification number" means a number designated and issued by the Commissioner-General to—
(a) a corporate person or unincorporate body of persons; and
(b) an individual who has attained the age of 16 years;
[Subs by s 2(a) of Act 24 of 2022 w.e.f. 1 January 2023.]
"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 the 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 the 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;
[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]
"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 of or voting powers in such company;
"Zambia Agency for Persons with Disabilities" means the Zambia Agency for Persons with Disabilities established under the Persons with Disabilities Act;
[Ins by s 2(b) of Act 43 of 2021 w.e.f. 1 January 2022.]
"Zambia Development Agency" means the Zambia Development Agency established under the Zambia Development Agency Act.
[Ins by s 2(b) of Act 43 of 2021 w.e.f. 1 January 2022.]
(1A) Subject to sub-section (1B) where a provision of the 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 appropriated 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.
[S 2(1A) ins by s 2(f) of Act 6 of 1999 w.e.f. 1 April 1999,
(1B) Where the payment referred to in sub-section (1A) is a payment of interest and the borrower has borrowed the principal in the course of a business carried on by the borrower, the conversion required by sub-section (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.
[S 2(1B) ins by s 2(f) of Act 6 of 1999 w.e.f. 1 April 1999,
(2) For the purposes 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 the provisions of the Bankruptcy Act, and "bankruptcy" shall be construed accordingly.
[S 2 am by Act 23 of 1968, 11 of 1969, 26 of 1970, 17 of 1971, 16 of 1972, 11 of 1973, 11 of 1975, 14 of 1976, 9 of 1977, 10 of 1979, 10 of 1981, 12 of 1982, 11 of 1984, 11 of 1985, 8 of 1986, 14 of 1987, 15 of 1990, 12 of 1991, 11 of 1992, 4 of 1993, 12 of 1994, 2 of 1995, 7 of 1996, 3 of 1977.]
[S 3 rep by s 3 of Act 7 of 1996 w.e.f. 1 April 1996,
(1) An individual is, for the purposes of this Act, not treated as a 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 183 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) …
[S 4(2) rep by s 3(a) of Act 4 of 2000 w.e.f. 1 April 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.
[S 4 am by Act 11 of 1969; s 4(3) subs by s 3(b) of Act 4 of 2000 w.e.f. 1 April 2000,; s 4(3)(b) subs by s 3 of Act 16 of 2017 w.e.f. 1 January 2018.]
(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 stockholders, 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 sub-section (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 stockholders registered on a day in the future, the dividend shall be deemed to accrue to the share or stockholders on that day in the future; and
[S 5(2)(a) proviso subs by s 3 of Act 6 of 1999 w.e.f. 1 April 1999,
(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.
[S 5 am by Act 23 of 1968, 11 of 1973, 10 of 1979.]
PART II
ADMINISTRATION
6. Commissioner-General's functions
(1) The Commissioner-General shall be responsible for carrying out the provisions of this Act.
(2) ...
[S 6 subs by s 4 of Act 7 of 1996 w.e.f. 1 April 1996,; s 6(2) am by s 7 of Act 49 of 2010 w.e.f. 1 April 2011,; s 6(2) rep by s 3 of Act 20 of 2020 w.e.f. 1 January 2021.]
7. Officers and delegation of functions
(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 104 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.
[S 7(1) am by s 16 of Act 20 of 2020 w.e.f. 1 January 2021.]
(2) Every officer appointed for the purposes 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.
[S 7(3) subs by s 4 of Act 16 of 2017 w.e.f. 1 January 2018.]
(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). …
[S 8(1)(c) rep by s 6 of Act 7 of 1996 w.e.f. 1 April 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;
[S 8(1)(d) am by s 5 of Act 4 of 2000 w.e.f. 1 April 2000,
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 authorised by the Minister in writing and to the Director of Public Prosecutions when acting in exercise of his powers under the Anti-Corruption Commission Act;
(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 authorised 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 sub-section (1) who uses or reveals any information, record or document disclosed to him in accordance with the proviso to sub-section (1) save as his official duties require shall be guilty of an offence punishable with imprisonment for a term not exceeding two years or with a fine not exceeding two hundred penalty units, or to both.
[S 8 am by Act 17 of 1971, 14 of 1973, 14 of 1976, 8 of 1986, 13 of 1994, 14 of 1994.]
The Minister may make regulations by statutory instrument in furtherance of and incidental to the provisions of this Act.
The Commissioner-General shall cause a record to be kept of every assessment made under this Act.
(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 authorised 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) …
[S 11 am by Act 26 of 1970; s 11(3) rep by s 7 of Act 7 of 1996 w.e.f. 1 April 1996,
(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
[S 12(2)(a) am by s 2(a) of Act 1 of 2004 w.e.f. 1 April 2004,
(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, 10 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.
(3) Notice is given to any company at the time it is given to that company's taxpaying agent (as determined in section 66) in the manner provided by sub-section (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 authorised to accept service of process under the Companies Act at the address filed with the 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 sub-section (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 authorised by the Commissioner-General to receive such notice; or
[S 12(5)(a) am by s 2(b) of Act 1 of 2004 w.e.f. 1 April 2004,
(b) unless the Commissioner-General proves to the contrary, 10 days after it has been sent by post addressed to the Commissioner-General or any officer of the Authority duly authorised by the Commissioner-General to receive such notice.
[S 12(5) am by s 8 of Act 7 of 1996 w.e.f. 1 April 1996,
(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 30 days of such change.
[S 12 am by Act 26 of 1970, 11 of 1975.]
[S 13 rep by s 9 of Act 7 of 1996 w.e.f. 1 April 1996,
PART III
CHARGE OF TAX
(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—
[S 14(1) am by s 4(a) of Act 6 of 1999 w.e.f. 1 April 1999,
(a) by every person from a source within or deemed to be within the Republic; and
(b) by any individual 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.
[S 14(1)(b) subs by s 3(a) of Act 9 of 1998 w.e.f. 1 April 1998,
(2) Subject to the other provisions of the Act, in the case of an individual, the amount of tax which, apart from this sub-section, 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 shall—
(a) be for the whole amount of tax due before any tax credit; and
(b) show the amount due and payable after reduction by the amount of any credit due.
[S 14(2) subs by s 3(b) of Act 9 of 1998 w.e.f. 1 April 1998,; am by s 4(b) of Act 6 of 1999 w.e.f. 1 April 1999,
(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.
[S 14(3) subs by s 3(b) of Act 9 of 1998 w.e.f. 1 April 1998,
(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.
[S 14(4) ins by s 3(b) of Act 9 of 1998 w.e.f. 1 April 1998,
(5) An individual shall not be entitled to a tax credit except—
(a) against income provided for under section 71 and if the tax credit is allowable in accordance with Regulations made under section; or
(b) against income declared in a return under section 46.
[S 14(5) ins by s 3(b) of Act 9 of 1998 w.e.f. 1 April 1998,
(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 sub-section (1).
[S 14 am by Act 11 of 1969, 17 of 1971, 12 of 1982, 11 of 1992, 4 of 1993.]
(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.
[S 15(1) am by s 4 of Act 43 of 2021 w.e.f. 1 January 2022.]
(2) The Minister may, by statutory order, approve, for the purposes of exemption from tax, any person, agency, organisation 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, organisation 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.
[S 15 am by Act 11 of 1969, 11 of 1973.]
15A. Suspension and rebate of income tax
(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.
[S 15A am by Act 12 of 1991.]
16. Chargeability of income that cannot be remitted on accrual
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 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.
[S 16 am by Act 26 of 1970.]
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.
[S 17 am by Act 23 of 1968, 12 of 1982,14 of 1987.]
18. Income deemed within the Republic
(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 the person rendering the services is resident outside the Republic solely for that purpose;
(d) is a pension granted by a person wherever resident, irrespective of where the funds from which it is paid are situated, 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 directly 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;
[S 18(1)(g) am by s 3(a) of Act 27 of 2011 w.e.f. 1 April 2012,
(h) arises from a management or consultant fee incurred in the production of income or in the 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 is rendered by the person or persons in partnership in the carrying on of a business in the Republic; or
[S 18(1)(h) am by s 3(b) of Act 27 of 2011 w.e.f. 1 April 2012,
(i) arises from a 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.
[S 18(1)(i) ins by s 3(c) of Act 27 of 2011 w.e.f. 1 April 2012,
(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.
[S 18(1)(j) ins by s 3 of Act 7 of 2014 w.e.f. 1 January 2015.]
(2) Where a business is carried on partly within and partly outside the Republic by a person to whom this sub-section 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.
[S 18(2) and (4) rep and s 18(3) renumbered as s 18(2) by s 3 of Act 3 of 1997 w.e.f. 1 April 1997,; am by s 4(a) of Act 9 of 1998 w.e.f. 1 April 1998,, s 5 of Act 6 of 1999 w.e.f. 1 April 1999,
(3) Sub-section (3) 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.
[S 18 am by Act 23 of 1968, 26 of 1970, 17 of 1971, 16 of 1972; s 18(3) ins by s 4(b) of Act 9 of 1998 w.e.f. 1 April 1998,
(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 21 years, the income or assets representing it shall be deemed to be income of the settlor and, not income of any other person.
[S 19(1) rep and s 19(2) renumbered as s 19(1) by s 10 of Act 7 of 1996 w.e.f. 1 April 1996,; am by s 5 of Act 9 of 1998 w.e.f. 1 April 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
(b) in the event of the exercise of the power, the settlor or the 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 sub-section (1), not income of any other person:
Provided that this sub-section 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.
[S 19(3) renumbered as s 19(2) by s 10(b) of Act 7 of 1996 w.e.f 1 April 1996,
(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 of 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.
[S 19(4) renumbered as s 19(3) by s 10(b) of Act 7 of 1996 w.e.f 1 April 1996,
(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.
[S 19(5) renumbered as s 19(4) by s 10(b) of Act 7 of 1996 w.e.f 1 April 1996,
(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.
[S 19(6) renumbered as s 19(5) by s 10(b) of Act 7 of 1996 w.e.f 1 April 1996,
(6) This section applies to every settlement wheresoever 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.
[S 19(7) renumbered as s 19(6) by s 10(b) of Act 7 of 1996 w.e.f 1 April 1996,
(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—
(i) a settlement which in the opinion of the 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 to an employee or to the widow or any relative or dependent 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.
[S 19 am by Act 11 of 1969; s 19(8) renumbered as s 19(7) by s 10(b) of Act 7 of 1996 w.e.f 1 April 1996,
[S 20 rep by s 11 of Act 7 of 1996 w.e.f. 1 April 1996,
21. Apportionment of gratuities and compensation for loss of office
(1) Where, upon the termination of a written contract of employment after 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 any 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:
[S 21(1) am by s 6(a) of Act 6 of 1999 w.e.f. 1 April 1999,
Provided however that—
(i) any income received by way of gratuity in excess of 25 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 any 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 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 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 purposes 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 any 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 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 intention 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, judicial order or judgment or the acceptance by an employer of any independent award or of representations by recognised 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.
(5) Where, upon the termination of the services of any 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;
the first 35 kwacha of the total or aggregate income received, as applicable, shall be exempt from income tax.
[S 21 am by Act 11 of 1969, 16 of 1972,14 of 197 4, 14 of 1976, 14 of 1987, 29 of 1990,11 of 1992, 4 of 1993, 14 of 1994; s 21(5) subs by s 3 of Act 18 of 2013 w.e.f. 1 January 2014,; s 21(5)(b) am by s 3 of Act 19 of 2015 w.e.f. 1 January 2016.]
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.
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.
[S 22A ins by s 3 of Act 6 of 2015 w.e.f. 1 July 2015.]
23. Provisions relating to income from business
(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 in part of the reserve or provision 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.
[S 23(1) proviso rep by s 6 of Act 9 of 1998 w.e.f. 1 April 1998,
(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.
[S 23 am by Act 27 of 1970.]
24. Provisions relating to income after cessation of business
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.
The gains or profits of an insurance business are ascertained in accordance with the provisions of the Third Schedule.
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.
27. Special provisions relating to deceased's estate and trusts
(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:
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 trustees 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.
[S 27 am by Act 23 of 1968, 14 of 1976.]
28. Income of non-resident air, sea or land transport business
(1) The income that is deemed under paragraph (g) of sub-section (1) of section 18 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 sub-section (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 sub-section (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 sub-section (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 sub-section (1).
[S 28 am by Act 11 of 1975, 14 of 1976, 9 of 1977, 10 of 1981, 11 of 1984.]
PART IV
DEDUCTIONS
(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
(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.
[S 29(1) subs by s 4(a) of Act 20 of 2020 w.e.f. 1 January 2021.]
(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.
[S 29(1A) ins by s 4(b) of Act 20 of 2020 w.e.f. 1 January 2021.]
(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 per cent of the tax earnings before interest, tax, depreciation and amortisation.
[S 29(1B) ins by s 4(b) of Act 20 of 2020 w.e.f. 1 January 2021.]
(2) Only one deduction is allowed under this Act in respect of the same matter in any charge year:
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.
[S 29(2) proviso ins by s 4 of Act 3 of 2002 w.e.f. 1 April 2002,
(3) Despite sub-section (1)(a), interest, including disallowed interest, is subject to the deduction of withholding tax in accordance with section 82A.
[S 29(3) ins by s 2(b) of Act 17 of 2018 w.e.f. 1 January 2019.]
(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.
[S 29(4) subs by s 5(a) of Act 43 of 2021 w.e.f. 1 January 2022.]
(4A) The interest referred to in sub-section (4) shall not exceed 30 per cent of the tax earnings before interest, tax, depreciation and amortisation.
[S 29(4A) ins by s 5(b) of Act 43 of 2021 w.e.f. 1 January 2022.]
(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.
[S 29(5) ins by s 2(b) of Act 17 of 2018 w.e.f. 1 January 2019.]
(6) This section does not apply to an institution registered under the Banking and Financial Services Act, the Pension Scheme Regulation Act, or the Insurance Act.
[S 29(6) ins by s 2(b) of Act 17 of 2018 w.e.f. 1 January 2019.]
(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.
[S 29 am by Act 26 of 1970; s 29(7) ins by s 2(b) of Act 17 of 2018 w.e.f. 1 January 2019.]
29A. Foreign currency exchange gains and losses
(1) Notwithstanding the provisions of section 29 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 realised, 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:
[S 29A(1) subs by s 7 of Act 6 of 1999 w.e.f. 1 April 1999,
Provided that foreign exchange losses of a capital nature incurred on borrowing used for the building and construction of an industrial or commercial building shall be deductible.
[S 29A(1) proviso ins by s 3(a) of Act 3 of 2003 w.e.f. 1 April 2003,
(2) Sub-section (1) shall not apply in case of a bank.
[S 29A(2) subs by s 7 of Act 6 of 1999 w.e.f. 1 April 1999,
(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 sub-section (1) in that charge year, then the amount of that gain or loss shall be deemed to be a 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.
[S 29A(3) subs by s 6 of Act 4 of 2000 w.e.f. 1 April 2000,
(4) In this section "industrial building" and "commercial building" have the meaning assigned to them in the Fifth Schedule.
[S 29A(4) ins by s 3(b) of Act 3 of 2003 w.e.f. 1 April 2003,
(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 50 per cent of the income of the person from the mining operation.
(2) Where a loss referred to in—
(a) paragraph (a) of sub-section (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 sub-section (1) exceeds 50 per cent of the income from a mining operation for a charge year, the excess shall, as far as possible, be deducted from 50 per cent of that person’s income from the mining operation in the following charge year.
(3) Subject to sub-section (1) and (2), a loss incurred by a person—
(a) carrying on a mining operation or electricity generation, shall not be carried forward beyond 10 subsequent charge years after the charge year in which the loss is incurred; and
[S 30(3)(a) am by s 4 of Act 19 of 2015 w.e.f. 1 January 2015.]
(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.
(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 sub-section (2).
[S 30 subs by s 4 of Act 6 of 2015 w.e.f. 1 July 2015.]
(1) The losses to be deducted by a person carrying out any mining operations and keeping books of accounts in United States dollars under sub-section (3) of section 55 shall be indexed losses.
[S 30A(1) subs by s 4 of Act 27 of 2011 w.e.f. 1 April 2012,
(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; and
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.
[S 30A(2) subs by s 3 of Act 17 of 2018 w.e.f. 1 January 2019.]
(3) The Kwacha against the United States Dollar exchange rate to be used for the purpose of sub-section (2) is the average Bank of Zambia mid-rate for the relevant accounting years.
[S 30A(3) ins by s 3 of Act 17 of 2018 w.e.f. 1 January 2019.]
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;
the new company after the transfer referred to in paragraph (c) shall be allowed the old company’s loss as 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 30:
Provided that the combined period of loss carried forward for both the old and new companies shall not exceed five years.
[S 31 am by Act 14 of 1976, 14 of 1987; proviso ins by s 5 of Act 3 of 1997 w.e.f. 1 April 1997,
32. Losses prior to bankruptcy, etc
(1) Subject to the provisions of sub-section (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 30.
[S 32 am by Act 11 of 1969, 14 of 1976.]
(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 Ito VI inclusive of the Fifth Schedule; and
[S 33(1)(b) proviso rep by s 6 of Act 3 of 1997 w.e.f. 1 April 1997,
(c) for farm improvements and works, according to the provisions of the Sixth Schedule.
[S 33 renumbered as s 33(1) by s 5(a) of Act 7 of 2006 w.e.f. 1 April 2006,
(2) The capital allowances to be claimed by a person carrying out any mining operations and keeping books of accounts in United States dollars under sub-section (3) of section 55 shall be indexed capital allowances.
[S 33(2) subs by s 5 of Act 27 of 2011 w.e.f. 1 April 2012,
(3) For the purposes of this section indexed capital allowances shall be computed as follows:
[1 + (R2-R1)/R1}] × (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.
[S 33(3) subs by s 4 of Act 17 of 2018 w.e.f. 1 January 2019.]
(4) The Kwacha against the United States Dollar exchange rate to be used for the purpose of sub-section (3) is the average Bank of Zambia mid-rate for the relevant accounting years.
[S 33(4) ins by s 4 of Act 17 of 2018 w.e.f. 1 January 2019.]
(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.
[S 33 am by Act 11 of 1969, 26 of 1970, 46 of 1973, 11 of 1975; s 33(5) ins by s 4 of Act 17 of 2018 w.e.f. 1 January 2019.]
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 10 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.
[S 34 am by Act 11 of 1969, 26 of 1970, 11 of 1985, 14 of 1987, 4 of 1993.]
(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 10 per centum of such expenditure shall be deducted in ascertaining the gains or profits of that business for the charge year.
[S 34A(1) am by s 4 of Act 3 of 2003 w.e.f. 1 April 2003,
(2) The development allowance referred to in sub-section (1) may, in the case of a person growing for the 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 three consecutive years be carried forward.
[S 34A am by Act 10 of 1981; s 34A(2) am by s 5 of Act 3 of 2002 w.e.f. 1 April 2002,, s 5 of Act 20 of 2020 w.e.f. 1 January 2021.]
(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 per cent of the expenditure shall be deducted in ascertaining the gains or profits of that business for the charge year.
(2) The prescribed agricultural product referred to under sub-section (1) shall be grown within the Republic.
(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.
[S 34B ins by s 6 of Act 20 of 2020 w.e.f. 1 January 2021.]
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