PROPERTY TRANSFER TAX ACT
Arrangement of Sections
Section
1. Short title
2. Interpretation
3. Functions and powers of Commissioner-General
4. Property transfer tax
5. Realised value
6. Exemptions
7. Liquidators, receivers, trustees in bankruptcy etc.
8. Transfer by agents, mortgages etc.
9. Returns, notices, etc.
9A. Penalties under the Income Tax Act to apply
9B. Transactions designed to avoid tax liability.
10. Objections and appeals
11. Payment of tax and penalty for late payment
12. Recovery of tax
12A. Tax information exchange agreements and mutual assistance in tax matters
12B. Disclosure of information
13. Regulations
AN ACT
to provide for the charging and collection of a tax based on the value realised from the transfer of certain property in the Republic; and to provide for matters connected with or incidental to the foregoing.
[30th March, 1984]
Act 12 of 1984,
Act 4 of 1986,
Act 11 of 1987,
Act 28 of 1990,
Act 4 of 1994,
Act 4 of 2002,
Act 4 of 2003.
Act 3 of 2005,
Act 4 of 2009,
Act 50 of 2010,
Act 13 of 2012,
Act 14 of 2013,
Act 9 of 2014,
Act 16 of 2015,
Act 11 of 2017,
Act 13 of 2019,
Act 22 of 2020,
Act 46 of 2021,
Act 27 of 2022.
This Act may be cited as the Property Transfer Tax Act.
(1) ln this Act, unless the context otherwise requires—
"Authority" means the Zambia Revenue Authority established under the Zambia Revenue Authority Act;
[Ins by s 2 of Act 22 of 2020.]
…
["Commissioner" rep by s 2(a) of Act 4 of 2002.]
"Commissioner-General" means the Commissioner-General appointed under section 19 of the Zambia Revenue Authority Act;
[Ins by s 2(b) of Act 4 of 2002.]
"financial service provider" has the meaning assigned to the words in the Banking and Financial Services Act;
[Ins by s 2(b) of Act 27 of 2022 w.e.f. 1 January 2023.]
"group of companies" means a holding company together with all its subsidiaries;
[Ins by s 2(a) of Act 13 of 2012.]
"holding company" means a company that—
(a) holds the majority of the voting rights in another company;
(b) is a member of another company and controls a majority of the voting rights on its own or pursuant to an agreement entered into with the other members; or
(c) is a member of another company and controls, and has the right to appoint or remove a majority of, the board of directors in that other company;
[Ins by s 2(a) of Act 13 of 2012.]
"immediate family" means a spouse, child, duly adopted child or step-child;
"intellectual property" includes a patent, trademark, copyright or industrial design;
[Ins by s 2(a) of Act 11 of 2017.]
"land" includes any building, structure or other improvement thereon;
"mineral processing licence" has the meaning assigned to the words in the Mines and Minerals Development Act;
[Ins by s 2(b) of Act 46 of 2021 w.e.f. 1 January 2022.]
"mining right" has the meaning assigned to it in the Mines and Minerals Development Act;
[Ins by s 2(a) of Act 13 of 2012; am by s 2 of Act 16 of 2015.]
"person" includes a partnership;
"property" means—
(a) a land in the Republic;
(b) a share issued by a company incorporated in the Republic or by a company incorporated outside the Republic where the company directly or indirectly owns at least 10 per cent of the shares in a company incorporated in the Republic;
(c) a mining right issued under the Mines and Minerals Development Act;
(d) a mineral processing licence issued under the Mines and Minerals Development Act; and
(e) intellectual property;
[Subs by s 2(a) of Act 27 of 2022 w.e.f. 1 January 2023.]
"realised value" means the value, as calculated in accordance with the provisions of section 5, of any property liable to tax;
"Registrar" means—
(a) the person appointed as Registrar under section 366 of the Companies Act; and
(b) the person appointed as Registrar under section 3 of the Lands and Deeds Registry Act and includes an Assistant Registrar and any person appointed to act in any of such capacities;
[Subs by s 2 of Act 3 of 2005.]
"related company" includes—
(a) companies connected directly or indirectly through shareholding or equity;
(b) any joint venture owned or operated jointly with or an unrelated company;
(c) connected companies; or
(d) companies connected through management and control;
[Ins by s 2(a) of Act 11 of 2017.]
"share" includes a stock, certificate, warrant or equivalent rights, and an interest in a mining right or an interest in a mineral processing licence;
[Subs by s 2(a) of Act 27 of 2022 w.e.f. 1 January 2023.]
"tax" means the property transfer tax charged under this Act;
"transfer"—
(a) in relation to land, excludes—
(i) letting or sub-letting;
(ii) leasing, under-leasing or sub-leasing, for a period of less than five years;
(b) in relation to a share, excludes the allocation of the same by the company to the member in whose name it is first registered.
{mprestriction ids="2,3,5"}
(2) Unless the context otherwise requires, words and expressions not defined in this Act but defined in the Income Tax Act shall, in this Act, have the meaning assigned thereto in the Income Tax Act.
3. Functions and powers of Commissioner-General
(1) The Commissioner-General shall, subject to the direction of the Minister, be responsible for giving effect to the provisions of this Act and shall in exercising those functions have all the powers conferred on the Commissioner-General by the Income Tax Act.
(2) The Commissioner-General may, in writing and subject to conditions that the Commissioner-General may specify, delegate to an officer in the Authority any power conferred, or any duty imposed, on the Commissioner-General by this section.
[S 3 subs by s 3 of Act 46 of 2021 w.e.f. 1 January 2022.]
(1) Whenever any property is transferred, there shall be charged upon, and collected from, the person transferring such property a property transfer tax in accordance with the provisions of this Act.
(1A) In the case of the transfer of a share issued by a company incorporated outside the Republic where that company directly or indirectly owns at least 10 per cent of a company incorporated in Zambia, tax shall be charged and collected from the Zambian incorporated company.
[S 4(1A) ins by s 3(a) of Act 11 of 2017.]
(1B) A transfer of shares referred under sub-section (1A), is not liable to tax if the total value of the transferred shares over a period of three consecutive years represents less than ten per cent of the total value of shares in the company incorporated in the Republic.
[S 4(1B) ins by s 4 of Act 22 of 2020; am by s 4(a) of Act 46 of 2021 w.e.f. 1 January 2022.]
(2) The rate of tax is —
(a) ten per cent of the realised value in respect of a mining right for a mining licence;
(b) five per cent of the realised value in respect of a mining right for an exploration licence;
(c) ten per cent of the realised value in respect of a mineral processing licence;
(d) five per cent of the realised value in respect of land;
(e) five per cent of the realised value in respect of shares; and
(f) five per cent of the realised value in respect of intellectual property.
[S 4(2) subs by s 3 of Act 27 of 2022 w.e.f. 1 January 2023.]
(3) For the purpose of establishing the taxable value of transactions, the Commissioner-General may use assessments done by the Government Valuation Department or any other relevant organisation he considers expedient.
[S 4 am by Act 4 of 1984, 28 of 1990, 4 of 1994.]
(1) Where the property to be valued is land, the realised value shall be the price at which it could, at the time of its transfer, reasonably have been sold on the open market as determined by the Commissioner-General.
(2) Where the property to be valued is a share issued by a company incorporated in the Republic, the realised value shall be the price at which it could, at the time of its transfer, reasonably have been sold on the open market as determined by the Commissioner-General, or its nominal value, whichever is the greater.
[S 5(2) subs by s 4(a) of Act 11 of 2017.]
(2A) Where the property to be valued is a share issued by a company incorporated outside the Republic that directly or indirectly owns at least 10 per cent of a company incorporated in the Republic, the realised value shall be, whichever is greater of the—
(a) proportion that the value of the company incorporated in the Republic bears to the value of the company whose shares are being transferred multiplied by the value of the transferred shares;
(b) proportion that the value of the company incorporated in the Republic bears to the value of the company whose shares are being transferred multiplied by the consideration for the transferred shares; and
(c) proportion that the value of the company incorporated in the Republic bears to the value of the company whose shares are being transferred multiplied by the nominal value of the transferred shares.
[S 5(2A) subs by s 4(a) of Act 27 of 2022 w.e.f. 1 January 2023.]
(2B) Despite sub-section (2A), where the Commissioner-General is satisfied that a transfer is made for the purpose of group reorganisation and that there is no change in the shareholding with respect to the company incorporated in the Republic, the Commissioner-General may determine a nil value for that transfer, except that this sub-section shall only apply to a company that has been part of the group of companies for three years or more preceding the transfer.
[S 5(2B) subs by s 4(b) of Act 27 of 2022 w.e.f. 1 January 2023.]
(2C) For the purposes of this Act, a share, that is registered outside the Republic and that is transferred by a related company is deemed to have been a transfer by a company incorporated in Zambia if before the transaction, the company incorporated in Zambia was indirectly owned by a related company.
[S 5(2B) ins by s 4(b) of Act 11 of 2017; renumbered as s 5(2D) by s 5(c) of Act 22 of 2020; s 5(2C) rep by s 4(c) and s 5(2D) renumbered as s 5(2C) by s 4(d) of Act 27 of 2022 w.e.f. 1 January 2023.]
(2D) The Commissioner-General, in determining the realised value for shares, may make adjustments in accordance with the provisions of sections 97A and 97C of the Income Tax Act.
[S 5(2C) subs by s 3(b) of Act 13 of 2019; renumbered as s 5(2E) by s 5(c) of Act 22 of 2020; renumbered as s 5(2D) by s 4(d) of Act 27 of 2022 w.e.f. 1 January 2023.]
(3) Where the property to be valued is an intellectual property or a mining right, the realised value of the intellectual property or mining right shall be the actual price of the intellectual property or mining right or as determined by the Commissioner-General, whichever is higher.
[S 5(3) subs by s 4(e) of Act 27 of 2022 w.e.f. 1 January 2023.]
(4) Where the Commissioner-General determines that there has been unreasonable delay between the date on which the property is sold and the date on which it is transferred, and that as a result of such delay the value of the property is different at the two dates, the realised value of such property shall be the greater of the two values.
[S 5(3) renumbered as s 5(4) by s 4(b) of Act 13 of 2012.]
(5) Where a person transfers his property to a member of his immediate family, the realised value of such property shall be the actual price, if any, received therefor by such person.
[S 5(4) renumbered as s 5(5) by s 4(b) of Act 13 of 2012.]
(5A) Where a financial service provider transfers a foreclosed property, the realised value of the property shall be the actual price, if any, received by the financial service provider.
[S 5(5A) ins by s 4(f) of Act 27 of 2022 w.e.f. 1 January 2023.]
(6) Where, within a group of companies whose holding company is incorporated in Zambia, a company transfers property to another company (other than a company which is not resident in the Republic) within the same group and the Commissioner-General is satisfied that such transfer was carried out for the purpose of effecting internal organisation of that group, he may determine that such transfer shall have no realised value.
[S 5 am by s 4 of Act 4 of 2002, s 5(5) renumbered as s 5(6) by s 4(b) of Act 13 of 2012, am by s 2 of Act 9 of 2014.]
(1) The following shall be exempt from the provisions of this Act—
(a) the Government;
(b) any foreign government;
(c) such international organisation, foundation or agency as the Minister may approve for the purpose;
(d) an exempt public benefit organisation in accordance with the Income Tax Act;
[S 6(1)(d) subs by s 5 of Act 46 of 2021 w.e.f. 1 January 2022.]
(e) any co-operative society registered under the Co-operative Societies Act;
(f) the organisations listed in paragraphs 5(1) and (2) of the Second Schedule to the Income Tax Act;
[S 6(1)(f) subs by s 3 of Act 14 of 2013.]
(g) any transfer of property by a shareholder of a company incorporated under the Companies Act, if such transfer is his contribution towards the equity of that company;
(h) the surrender or forfeiture of shares for no consideration, except that a subsequent transfer to a different person shall be liable to tax.
[S 6(1)(h) ins by s 5 of Act 27 of 2022 w.e.f. 1 January 2023.]
(2) Where property held in trust or constructive trust is transferred to another person to hold in trust or constructive trust for the same beneficiaries, such transfer shall not be liable to tax.
(3) Where property is settled in trust for the benefit of a member of the immediate family of the settler, the transfer of such property to the trustees or the transfer by the trustees to such beneficiary shall not be liable to tax.
(4) Where property devolves upon death, the resulting transfer of such property shall not be liable to tax if the transferee is a member of the immediate family of the deceased; nor shall any intermediate transfer to or by an executor, administrator, personal representative or other person acting in similar capacity be liable to tax if such intermediate transfer is carried out to give effect to such devolution.
(5) The Minister may, by statutory order, exempt from tax any person, transfer or property, or any class thereof.
[S 6 am by Act 11 of 1987.]
7. Liquidators, receivers, trustees in bankruptcy etc.
(1) Any transfer of property to a person in his capacity as a liquidator shall not be liable to tax.
(2) Where a person in his capacity as a liquidator holds any property belonging to a debtor, any transfer of such property by him to any person other than the debtor shall be liable to tax and the amount of such tax shall be recoverable from the liquidator.
(3) ln this section—
"debtor" includes a bankrupt or other person whose property has been placed in the hands of a liquidator for the purpose of settling the affairs or debts of such debtor, and in the case of a company, for the purpose of winding up such company;
"liquidator" includes receiver, trustee in bankruptcy, assignee in bankruptcy or under a deed of arrangement, or any other person acting in a similar capacity.
8. Transfer by agents, mortgagees, etc.
(1) Where a mortgagee transfers any mortgaged property to enforce his rights under a mortgage, the mortgagee shall be deemed to be an agent of the mortgagor and sub-section (2) shall apply.
(2) Where an agent, attorney, sheriff, or other person acting in the name of the owner or holder of any property transfers such property, the owner or holder of such property and such agent, attorney, sheriff or other person, as the case may be, shall both be jointly and severally liable for tax in respect of such transfer.
(3) ln this section "mortgagee" includes any person entitled to security in any property, or to the benefit of a charge, encumbrance or other similar liability over any property, of another, and "mortgage", "mortgagor" and "mortgaged property" shall be construed accordingly.
(1) Every person who transfers any property, whether such property was transferred on his own behalf or on behalf of another, shall render a provisional return of tax in such form and giving therein such details of the property and the transaction as may be prescribed by the Commissioner-General.
[S 9(1) am by s 5(a) of Act 4 of 2002.]
(1A) Despite sub-section (1), a person, other than the transferor of the property, shall be permitted to render a provisional return on behalf of the transferor where that person is—
(a) permitted to do so through a court order; or
(b) appointed as a proxy for the Registrar of the High Court, where the Registrar of the High Court is appointed by the court to render a provisional return on behalf of the transferor.
[S 9(1A) ins by s 6 of Act 46 of 2021 w.e.f. 1 January 2022.]
(1B) A person referred to in sub-section (1A) shall be permitted to render a provisional return on behalf of the transferor if the transferor—
(a) is deceased;
(b) is absent from the Republic; or
(c) cannot be located despite reasonable efforts to do so.
[S 9(1B) ins by s 6 of Act 46 of 2021 w.e.f. 1 January 2022.]
(2) The provisional return referred to in sub-section (1) shall be—
(a) in Kwacha, except that where the transaction which is the subject of the provisional return is in another currency the values shall be converted into Kwacha at the appropriate Bank of Zambia mid-rate as at the end of the day immediately preceding the day on which the provisional return is submitted; and
(b) submitted—
(i) in the case of land, to the Commissioner-General together with the consent to transfer or assign issued under the Lands Act; and
[S 9(2)(b)(i) subs by s 6(a) of Act 27 of 2022 w.e.f. 1 January 2023.]
(ii) in all other cases, to the Commissioner-General within thirty days of the transfer.
[S 9(2) subs by s 7 of Act 22 of 2020.]
(3) The Registrar shall not register any transfer of property unless he is satisfied that any tax due under this Act in respect of such transfer has been paid.
[S 9(3) rep by s 6(b) and s 9(4) renumbered as s 9(3) by s 6(c) of Act 27 of 2022 w.e.f. 1 January 2023.]
(4) Notwithstanding any other written law, the Minister responsible for mines, the Director of Mines or the Director of Geological Survey, as applicable, shall not approve the transfer, assignment, encumbrance or other dealing with a mining right or interest therein, if the transferor fails to pay the tax due in respect of the transfer, assignment, encumbrance or other dealing with a mining right or interest therein, under this Act.
[S 9(5) ins by s 5(a) of Act 13 of 2012; renumbered as s 9(4) by s 6(c) of Act 27 of 2022 w.e.f. 1 January 2023.]
(5) Without prejudice to the other provisions of this Act, sections 45, 46, 47, 48, 66, 69 and 70 of the Income Tax Act shall apply, mutatis mutandis, in relation to the tax under this Act as they apply in relation to the tax under the Income Tax Act.
[S 9(5) renumbered as s 9(6) by s 5(b) of Act 13 of 2012; renumbered as s 9(5) by s 6(c) of Act 27 of 2022 w.e.f. 1 January 2023.]
(6) An assessment shall be made in respect of every person liable to tax under this Act, and sections 63 to 69 (inclusive) of the Income Tax Act shall apply, mutatis mutandis, in relation to the assessments under this Act as they apply in relation to the assessments under the Income Tax Act.
[S 9(6) renumbered as s 9(7) by s 5(b) of Act 13 of 2012; renumbered as s 9(6) by s 6(c) of Act 27 of 2022 w.e.f. 1 January 2023.]
9A. Penalties under Income Tax Act to apply
Subject to the other provisions of this Act, the provisions of Part X of the Income Tax Act relating to offences and penalties shall apply, with necessary changes, to the offences and penalties under this Act.
[S 9A am by Act 11 of 1987.]
9B. Transactions designed to avoid tax liability.
(1) Where the Commissioner-General has reasonable grounds to believe that the main purpose or one of the main purposes for which any transaction was effected was the avoidance or reduction of liability to tax for any charge year, or that the main benefit which might have been expected to accrue from the transaction within the three years immediately following the completion thereof, was the avoidance or reduction of liability to tax, the Commissioner-General may, if the Commissioner-General determines it to be just and reasonable, direct that such adjustments shall be made as respects liability to tax as the Commissioner-General considers appropriate to counteract the avoidance or reduction of liability to tax which would otherwise be effected by the transaction.
(2) Without prejudice to the generality of the powers conferred by sub-section (1), the powers conferred thereby extend to—
(a) the charging with tax the income of persons who, but for the adjustments, would not be chargeable with any tax or would not be chargeable to the same extent; and
(b) the charging of a greater amount of tax than would be chargeable but for the adjustments.
(3) Any direction of the Commissioner-General under this section shall specify the transaction giving rise to the direction and adjustments as respects liability to tax which the Commissioner-General considers appropriate.
[S 9B ins by s 3 of Act 50 of 2010.]
Any determination or assessment made under this Act may be objected to or appealed against by the person affected thereby; and without prejudice to the other provisions of this Act, the provisions of Part XI of the Income Tax Act relating to objections and appeals shall apply, mutatis mutandis in relation to objections and appeals under this Act as they apply in relation to objections and appeals under the Income Tax Act.
11. Payment of tax and penalty for late payment
(1) The tax shall become due and payable within 14 days of the date of issue of the assessment in respect thereof.
(2) Where any amount of tax is not paid within the period specified in sub-section (1), a penalty equal to five per centum of the unpaid amount shall be charged for each month or part thereof for which the tax remains unpaid; and for the purposes of recovery and collection such penalty shall be deemed to be part of the tax.
(3) (a) Where any amount of tax or penalty due is not paid within the period specified in sub-section (1), such an amount shall attract interest at the rate prescribed in paragraph (b) and shall continue to attract such interest until such date as the payment of the tax has been remitted;
(b) the rate of interest prescribed for the purpose of paragraph (a) shall be the discount rate published from time to time by the Bank of Zambia plus two per centum per annum.
(4) The Commissioner-General may remit the whole or part of any penalty and interest due under this section.
[S 11 am by Act 4 of 1994; s 11(4) ins by s 5 of Act 11 of 2017.]
Subject to the provisions of this Act, sections 79, 79A, 79B, 79C and 79D of the Income Tax Act shall apply, mutatis mutandis, to the recovery of tax under this Act as they apply to the recovery of tax under the Income Tax Act.
12A. Tax information exchange agreements and mutual assistance in tax matters
(1) The President may enter into an agreement, which may have retrospective effect, with the Government of any other country or territory for the exchange of information on tax matters or for mutual assistance in tax matters with the objective of rendering reciprocal assistance in the—
(a) provision of data on fraud, civil and criminal tax offences;
(b) administration and collection of taxes under the property transfer tax laws of the Republic and such other country or territory;
(c) carrying out of tax examinations in Zambia or abroad; and
(d) carrying out of simultaneous or joint tax examinations.
(2) Any information received by a country or territory under an agreement entered into under sub-section (1) shall be treated as secret in the same manner as information obtained under the domestic laws of that country or territory and shall be disclosed only to persons or authorities involved in the assessment, collection enforcement, prosecution or determination of appeals in relation to, the taxes under this Act.
(3) Sub-section (1) shall not be construed so as to impose on a country or territory the obligation to—
(a) carry out administrative measures at variance with the laws and administrative practices of that country or territory;
(b) supply information which is not obtainable under the laws of that country or territory or under the laws of Zambia; or
(c) supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.
(4) The Minister shall lay a copy of an agreement referred to in sub-section (1) before Cabinet for approval.
(5) The President shall, as soon as practicable after the conclusion and approval of any agreement under this section, notify the public of the terms of the agreement by statutory instrument, and the agreement shall, from the date of commencement of the statutory instrument, have effect as if enacted under this Act as long as the agreement has the effect of law in the other country or territory.
12B. Disclosure of information
(1) A company shall, within one month after another company has become related to it, lodge with the Commissioner-General a notice of that fact together with particulars identifying that company.
(2) If a company fails to comply with this section, the company, and each officer in default, commits an offence and is liable, on conviction to a penalty not exceeding ten thousand penalty units for each day that the failure continues.
[S 12B ins by s 6 of Act 11 of 2017.]
The Minister may, by statutory instrument, make regulations for the better carrying out of the purposes of this Act.
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