Zambia's 2024 Budget aims to unlock economic potential through policy consistency and implementation. Growth is projected to rise from 4% in 2023 to 4.8% in 2024. External debt is contained, inflation decreasing. The tax measures are aimed at promoting growth through incentives, leveling playing field and tightening administration.
Direct Tax Measures
1. Personal Tax Rates
- Raised PAYE threshold: the income exempt from income tax rises from K4,800 to K5,100.
- Lowered top PAYE rate: maximum monthly tax rate drops from 37.5% to 37%.
2. Rural investment tax incentive
- Lower taxes for 5 years: 20% off their income tax bill, up from 14.2%.
- More industries welcome: All sectors can benefit, except mining.
3. Cotton producers' incentives
- Seed & ginning: Profits from growing and processing cotton seed are tax-free for 5 years.
- Spinning & weaving: Profits from spinning and weaving are tax free for 10 years.
4. Multi-facility economic zones incentives: Developers now join investors in enjoying 100% immediate tax write-offs for new equipment, boosting investment in these special zones
5. Sorghum and Mullet value addition incentive: 2% tax break now applies to income earned from processing sorghum and millet, just like it does for tomato, mango, pineapple, and cassava.
Transfer Pricing
1. Clarification od Date of Assessment
- Litigation Delays No Longer Penalize Taxpayers: Zambia's tax law now clarifies that the date of final ruling or determination in disputed cases will be considered the official date of assessment for making corresponding adjustments.
- Previous 12-Month Deadline Adjusted for Fairness: This ensures taxpayers aren't unfairly cut off from adjustments due to lengthy litigation processes.
2. Transfer Pricing Audits
- Zambia Removes Statutory Restriction: Tax officials can now assess transfer pricing issues beyond the previous six-year limit if delays arise from information exchange between taxpayers and the tax authority.
3. Pre-approval required for non-OECD methods: Companies must get the Commissioner’s approval before using non-OECD methods for related-party transactions.
4. Tax rules to align with OECD: Key terms like "Surrogate Parent Entity" switch from "state" to "jurisdiction" to match international tax standards set by the OECD.
Tax Administration
- Appointment of royalty withholding agents: Royalty withholding agents improve compliance among small-scale miners.
- Leveling the playing field for miners: Penalties for negligence, deliberate underreporting, and fraud in artisanal and small-scale mining tax are now mirrored in the turnover tax regime.
- Extension of Commissioner’s powers on information requests: the Commissioner General's power to request information now extends to regulators and professionals under four key acts: Banking and Financial Services Act, Evidence Act, Accountants Act and Legal Practitioners Act.
If you wish to discuss these topics, please contact:
WTS Tax Matrix
