ZAMBIA REVENUE AUTHORITY

UNOFFICIAL CONSOLIDATION OF THE

INCOME TAX ACT

2012 EDITION
(Includes amendments up to 1st April 2012 )

1
PREFACE

This is not an authoritative publication and accordingly cannot be quoted as authoritative in any
legal proceedings. The italic explanations in parenthesis which follow amended sections will
enable the reader to follow the course of the various amendments which have been introduced
by the amending Acts. This consolidation has been produced by the Zambia Revenue Authority
for the use of its employees

Besides incorporating some of the latest amended enactments and penalties covered under the
Fees and Fines Act of 1994, the Consolidated Act is designed to show simultaneously the
provisions which were repealed, amended or newly inserted and their period of validity. It
should be noted that certain new provisions were inserted and came into operation at certain
dates, not particularly relevant to certain year’s assessment, but applicable generally and such
provisions are described as having come into operation on a specified date.

Where no effective date is mentioned the date is 1st April, 1966, the date of commencement of the
Act or deemed to have come into operation on 1st April, 1966, by the subsequent amended Acts.
The revised arrangement of sections and schedules is in accordance with the Revised Edition of
the Laws of the Republic of Zambia which came into force in 1995.

This edition of the consolidation of the Act includes statute law in force for the charge year -
2012.

LUSAKA Berlin Msiska

March 2012 Commissioner – General.

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 Arrangement of clauses

THE INCOME TAX ACT

Chapter 323

ARRANGEMENT OF SECTIONS

PART I

PRELIMINARY AND INTERPRETATION

Section
1. Short Title
2. Interpretation
3. Repealed by Act No. 7 of 1996
4. Resident
5. Receipt of Income

PART II

ADMINISTRATION
6. Appointment of staff
7. Officers and delegation of functions
8. Secrecy
9. Regulations
10. Records of assessment
11. Forms and notices
12. Notice and service
13. Repealed by Act No. 7 of 1996

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 Repealed by Act No. 7 of 1996
21. Apportionment of gratuities and compensation for loss of office
22. Apportionment of 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 estates and trusts
28. Income of non-resident air, sea or land transport business

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 Arrangement of clauses
PART IV

DEDUCTIONS
29. Deductions generally
29A. Foreign currency exchange gains and losses
30. Losses
30A. Indexation of losses
31. Transfer of losses
32. Loses prior to bankruptcy, etc.
33. Capital allowances
34. Investment allowances
34A Development 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 by Act No. 3 of 1997
41. Charities
42. Repealed by Act No. 3 of 1997
43. Deduction for research
43A Deduction for bad and doubtful debts
43B Deduction for Mineral Royalty
43C Repealed by Act No. 49 of 2010
43D Deduction for employing a person with disability
43E Repealed by Act No. 7 of 1996
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
46B. Estimated provisional tax returns
47. Further provisions as to returns
48. Information generally
49. Statement of bank accounts, assets, etc.
50. Return of lodgers and inmates
51. Information as to business matters
52. Repealed by Act No. 3 of 1997
53. Public documents
54. Information as to companies
55. Accounts and records
56. Documents in support of returns
57. Examination by Commissioner-General
58. Production and preservation of books and documents
59. Repealed by Act No. 7 of 1996
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 by Act No. 1 of 2009
65.
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 Arrangement of clauses
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
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 by Act No. 9 of 1998
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 certificates
81C. Advance tax on income in respect of imported goods
82. Deduction of 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 by Act No. 7 of 1996
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 by Act No. 9 of 1977
91. Error or mistake relief
92. Remission of tax
92A Reduction in tax for tax free zones
93. Tax less than one hundred thousand Kwacha not payable

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 Arrangement of clauses
PART IX

AVOIDANCE
93. No set-off or refund where that is the object of change of ownership of
shares in company
94. Transactions designed to avoid tax liability
95A Repealed by Act No. 12 of 1982
95B Inter-company shareholdings
95C Repealed by Act No. 7 of 1996
95D Loans to effective shareholders
95. Incurred loss not deductible in certain cases
96. Commissioner-General may avoid trust
97A. Transfer pricing
97AA Special provisions where actual conditions include issuing security
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
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 Repealed by Revenue Appeals Act No 11 of 1998
108 Objection to assessment
109 Appeal against assessment
110 Determination of appeals
111 Appeal to High Court and Supreme Court
112 Privacy of proceedings
113 Adjustment on successful objection or appeal
114 Appeals from Commissioner-General’s discretion and determinations
11 5 Repealed by Act No. 9 of 1998
116A Repealed by Act No. 7 of 1996

PART XII

REPEALS AND TRANSITIONAL PROVISIONS

116 Repeals

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 Arrangement of Schedules

ARRANGEMENT OF SCHEDULES

FIRST SCHEDULE - FURTHER CLASSIFICATION OF INCOME

Paragraph
1. Maintenance
2. Improvements
3. Commencement and cessation of employment
4. Lump sum payments
5. Capital recoveries
6. Exotic timber
7. Farm stock
8. Repealed by Act No. 9 of 1979

SECOND SCHEDULE – EXEMPTIONS

PART I: EXEMPT OFFICE HOLDERS

PART II FOREIGN EXEMPTIONS
PART III: EXEMPT ORGANISATIONS
Various organisations
Charities
PART IV: EXEMPT INCOME Various
Exemptions
Passages Interest
Annuities

THIRD SCHEDULE – INSURANCE BUSINESS

1. Insurance other than life

2. Life insurance
3. Insurance and other business
4. Mutual and proprietary companies

FOURTH SCHEDULE – APPROVED FUNDS

1. Definition of “trustees”
2. Approval of pension funds
3. Procedural provisions relating to approval of funds and withdrawal of approval
4. Approval of annuity contracts and withdrawal of approval
5. Approval of foreign fund or scheme established by law
6. Appeals
7. Remoteness

FIFTH SCHEDULE – CAPITAL ALLOWANCES FOR BUILDINGS, IMPLEMENTS,

MACHINERY AND PLANT, AND PREMIUMS

PART I: BUILDINGS
1. Definition of industrial building
2. Definition of commercial building
3. Initial allowance for industrial building
4. Wear and tear allowance for buildings
5. Balancing allowance for buildings
6. Divided use

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 Arrangement of Schedules

PART II: IMPLEMENTS, MACHINERY AND PLANT

7. Business to include employment in this Part
8. Frequently replaceable articles not within this Part
9. Repealed by Act No. 11 of 1974
10. Wear and tear allowance for implements, machinery and plant
11. Capital recoveries for implements, machinery and plant
12. Divided use
13. Valuation in exceptional circumstances

PART III: PREMIUM ALLOWANCE

14. Deduction of premium allowance

PART IV: GENERAL PROVISIONS

15. Successions
16. Subsidies
17. Controlled sales

PART V: RATES OF INITIAL AND WEAR AND TEAR ALLOWANCES

18. Rates of initial and wear and tear allowances

PART VI: MINING DEDUCTIONS

19. Interpretation of terms
20. Capital expenditure deductions
21. Prospecting expenditure deductions
22. Mining expenditure deductions
23. Deductions for mining expenditure on non-producing and non-contiguous
mine
24. Deduction on cessation of mining operations
25. Change of ownership of mine
26. Controlled sales
27. Petroleum operations

SIXTH SCHEDULE – FARMING – IMPROVEMENT AND WORKS ALLOWANCES

AND LIVESTOCK VALUATION PART I: FARM IMPROVEMENT ALLOWANCE
1. Definitions
2. Farm improvement allowance
3. Divided use
4. Repealed by Act No. 3 of 1997.

PART II: FARM WORKS ALLOWANCE

5. Nature of farm works
6. Farm works allowance

PART III: VALUATION OF LIVESTOCK

7. Standard value
8. Repealed by Act No. 14 of 1987
9. Repealed by Act No. 11 of 1987

PART IV: GENERAL PROVISIONS

10. Subsidies

SEVENTH SCHEDULE - Repealed by Act No. 2 of 1995

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EIGHTH SCHEDULE – Approved Share Option Schemes

NINTH SCHEDULE – Presumptive Tax

TENTH SCHEDULE – Public Benefit Activities

 Arrangement of Schedules

CHARGING SCHEDULE
(Amended by Act No. 6 of 1999 )

PART I
TAX CREDIT

1. Individual tax credit and persons with disability tax

credit

PART II
RATES OF TAX

2. Individuals
3. Companies, etc.
4. Trusts, etc.
5. Special cases
6. Withholding tax
7. Rate of tax to be deducted
8. Interpretation

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 Arrangement of Schedules

SCHEDULE OF AMENDING ACTS

ACT NO.
i. 32 of 1967
ii. 23 of 1968
iii. 11 of 1969
iv. 26 of 1970
v. 17 of 1971
vi. 16 of 1972
vii. 11 of 1973
viii. 14 of 1973
ix. 46 of 1973
x. 11 of 1974
xi. 11 of 1975
xii. 14 of 1976
xiii. 9 of 1977
xiv. 9 of 1978
xv. 10 of 1979
xvi. 19 of 1979
xvii. 6 of 1980
xviii. 10 of 1981
xix. 13 of 1981
xx. 12 of 1982
xxi. 21 of 1982
xxii. 11 of 1984
xxiii. 11 of 1985
xxiv. 8 of 1986
xxv. 14 of 1987
xxvi. 17 of 1988
xxvii. 28 of 1988
xxviii. 33 of 1989
xxix. 15 of 1990
xxx. 29 of 1990
xxxi. 12 of 1991
xxxii. 11 of 1992
xxxiii. 4 of 1993
xxxiv. 13 of 1994
xxxv. 14 of 1994
xxxvi. 2 of 1995
xxxvii. 27 of 1995
xxxviii. 7 of 1996
xxxix. 3 of 1997
xl. 9 of 1998
xli. 6 of 1999
xlii. 4 of 2000
xliii. 1 of 2001
xliv. 8 of 2001
xlv. 3 of 2002
xlvi. 3 of 2003
xlvii 1 of 2004
xlviii 1 of 2005
xlix 7 of 2006
L 4 of 2007
Li 1 of 2008
Lii 1 of 2009
Liii 27 of 2009
Liv 49 of 2010
LV 27 of 2011
 Income Tax Act Part I

INCOME TAX

Chapter 323

An Act to provide for the taxation of incomes and matters connected therewith.

PART I

PRELIMINARY AND INTERPRETATION

Short Title

1. This Act may be cited as the Income Tax Act

Interpretation

2. (1) In this Act, unless the context otherwise requires:-

"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;

(Inserted by Act No. 23 of 1968)

"approved fund" means:-

(a) an approved pension fund;

(b) an approved annuity contract;

(c) any superannuation, pension, provident, widow's or orphan's fund established

by law in the Republic; and

(d) a pension fund approved before the enactment of this Act under sub-section
either (1) or (2) of section 11 of the former Act;

(As amended by Act No. 23 of 1968 and Act No. 26 of 1970.)

"approved pension fund" means a pension fund or scheme which has been approved by the
Commissioner-General under the Fourth Schedule;

(Inserted by Act No. 23 of 1968).

“approved share option scheme” means a scheme that has been approved, by the
Commissioner-General , under the Eighth Schedule;

(Inserted by Act No. 3 of 2002)

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Part I Income Tax Act

"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;
(As amended by Act No. 26 of 1970 and by Act No 27 of 1995).

“Authority” means the Zambia Revenue Authority established under the Zambia
Revenue Authority Act (Cap 321);
(Inserted by Act No. 7 of 1996,)

“bank” means a company that holds a banking licence granted under section four of the
Banking and Financial Services Act (Cap 387);
(Inserted by Act No 6 of 1999).

“bank subsidiary” means a company where more than fifty per centum of the voting
shares of the company (except any qualifying director’s shares) are owned directly or
indirectly by a bank;
(Inserted by Act No. 4 0f 2000)

"bankrupt's estate ” means the property of a bankrupt vested by law in and under the
control of the trustee in bankruptcy;
(Inserted by Act No. 23 of 1968).

“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, titanium, scandium,
vanadium and chromium;
(Inserted by Act No. 7 of 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;

"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; and

(e) hedging;

(As amended by Act No. 12 of 1982, Act No. 1 of 2008, Act No. 1 of 2009 and Act 27 of 2011)

"charge year" means the year for which tax is charged, that is, the period of twelve months
ending on the 31st December, and each succeeding such year;”

13
 Income Tax Act Part I
st st
Provided that for the year commencing on 1 April, 2012, and ending 31 December, 2012,
the charge year shall be for a period of nine months.

(As amended by Act No. 27 of 2011)

“Charging Schedule" means the last Schedule to this Act, by which tax credits and rates of
tax are fixed;

(As amended by Act No. 6 of 1999 and Act 27 of 2011)

"child" includes a step-child, a lawfully adopted child, an illegitimate child or any child to
whom an individual stands in the place of a parent;

“Commissioner-General ” means the Commissioner-General appointed under the Zambia

Revenue Authority Act (Cap 321);
(Inserted by Act No. 7 of 1996)

"company" means any company incorporated or registered under any law in force in the
Republic or elsewhere;

"date of enactment of this Act" means 20th May, 1967 and "enactment of the Act" shall be
construed accordingly;
Inserted by Act No. 23 of 1968).
"deceased's estate" means the estate of a deceased individual;

(Inserted by Act No. 23 of 1968).

"dividend" means any amount distributed or credited as construed in sub-section (3) by a

company to its shareholders;
(As amended by Act No. 10 of 1979, Act No. 12 of 1982 and Act No. 4 of 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;
(As amended by Acts No. 16 of 1972, No. 9 of 1998, No. 6 of 1999 and Act No. 4 of 2007).

“electronic communications network” has the meaning assigned to it in the Information

and Communication Technologies Act, 2009;
(Inserted by Act No. 49 of 2010)

“electronic communications service” has the meaning assigned to it in the Information and
Communication Technologies Act, 2009;
(Inserted by Act No. 49 of 2010)

"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;
(As amended by Act No. 26 of 1970).

"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;

(As amended by Act No. 26 of 1970)

14
"farming" means any husbandry, pastoral, poultry, fish rearing, or agricultural activity but
excludes the letting of any property for any such purpose;
Part I Income Tax Act

(As amended by
Acts No. 10 of 1981, No. 11 of 1984 and No. 4 of 2000).

“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
seventy-five 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
for a fixed or determinable price;

(iv) the lessor does not retain the risks and rewards of ownership;

(As inserted by Act No.4 of 2007 and as amended by Act No.1 of 2008)

“financial institution ” means a person that holds a financial institution’s licence granted under section ten
of the Banking and Financial Services Act;

(Inserted by Act No. 4 of 2000).

“former Zambia Consolidated Copper Mining Company” means any division or metal treatment
operation of Zambia Consolidated Copper Mines Limited sold under the Privatisation Act, and includes
any of its successors in title or assigns;

(Inserted by Acts No. 9 of 1998, No. 6 of 1999, No 4 of 2000, No of 2005)

“incapacitated person ” means any child who has not attained the age of twenty-one years, person of
unsound mind, lunatic, idiot or insane person;

(Inserted by Act No. 23 of 968)

"individual" means natural person;

“hydro and thermo power generation” means the production of electrical energy using physical and non-
physical sources of energy such as moving water, petroleum, coal, biomass and any other source of energy
except wood.
(Inserted by Act No. 1 of 2009)

“licensee” has the meaning assigned to it in the Information and Communication Technologies Act,
2009;
(Inserted by Act No. 49 of 2010)

"local authority" means a City Council, District Council, Municipal Council or any other authority
recognised as such under the Local Government Act (Cap 281);

(Inserted by Act No. 26 of 1968)

"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
16
 Income Tax Act Part I
d
uring 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;

(As amended by Act No. 11 of 1992)

"management or consultant fee" means payment in any form, other than an emolument, for or in respect
of any creation, design, development, installation and maintenance of any information technology or
solution, programme or system, administrative, consultative, managerial, technical or consultative or
any service of a like nature;

(As amended by Act No. 9 of 1978 and Act No. 4 of the 2007).

"manufacturer" means a person carrying on the business of manufacturing;

(Inserted by Act No. 12 of 1982).

"manufacturing" means subjecting any physical matter to any process which materially changes such matter
in substance, character or appearance thereby making it an article after such process, and includes the
assembly of motor vehicles and such other process as the Commissioner-General may determine to be
of a similar nature;

(As amended by Act No. 12 of 1982).

"mineral" includes any valuable crystalline or earthy substance forming part of or found within the earth's
surface and produced or deposited there by natural agencies, but does not include any clay (other than
fire-clay), gravel, sand, stone (other than limestone), or other like substance ordinarily won by the
method of surface working known as quarrying;

"mining operations" means any operation carried out under a mining right referred to in section six of the
Mines and Minerals Development Act, but does not include any operations carried out under a prospecting
permit, a prospecting licence or any operations involving only mineral processing;

(As Amended by Act no. 1 of 2008)

and "mine" whether used as a noun or a verb, is construed accordingly;

“minister” means the Minister responsible for financial matters;

"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;

17
 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;
(Inserted by Act No. 16 of 1972).

"non-traditional product" means 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;

(As amended by Acts No. 11 of 1985, No. 14 of 1994, No. 4 of 2000 and No. 1 of 2009).

“operating lease” means any lease of implements, machinery or plant, other than a finance lease.

(Inserted by Act No. 1 of 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 employees;

(Inserted by Act No. 12 of 1982).

Part I Income Tax Act

"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;

(Inserted by Act No. 23 of 1968).

“person with disability” has the meaning assigned to it under section two of the Persons
with Disabilities Act (Act No. 33 of 1996);

(Inserted by Act No. 6 of 1999).

“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;

(Inserted by Act No. 26 of 1970).

“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;

“pubic 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 amatuer 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.

(Inserted by Act No. 1 of 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;

(Repealed by Act No 3 of 1997 and re-inserted, with amendment, by Act No. 4 of 2000)

“registered insurer” means an insurer registered under part II of the Insurance Act (Cap
392);

(Inserted by Act No. 26 of 1970).

“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, fifty-five years of age;

“royalty” means a payment in any form received as a consideration for the use of, or the

19
 right to use, any copyright of literary, artistic or scientific work (including
cinematograph films and films and tapes for radio or television broadcasting), any
patent, trade mark, design or model, plan, secret formula or process, or for the use of,
or the right to use industrial, commercial or scientific equipment, or for information
concerning industrial, commercial or scientific experience;

(Inserted by Act No. 16 of 1972).

“rural area” means any area which is not an area declared or deemed to have been
declared an area of any city or municipality under the Local Government Act (Cap
281) but excluding the area declared to be the area of the Kafue township under the
said Act;

(Inserted by Act No. 14 of 1976)

“rural enterprises ” means -

(a) a manufacturing business which commenced on or after the 1 st April, 1976;

 Income Tax Act Part I

(b) a hotel, motel or lodge which commences on or after the 1 st April, 1981;

and which is located in a rural area.

(Inserted by Act No. 10 of 1981).

“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.

(Inserted by Act No. 3 of 2002).

"tax" means the income tax charged by this Act;

"taxpayer identification number" means the National Registration Card Number or such
number as may be designated and issued by the Commissioner General

(Inserted by Act No. 11 of 1992 and as amended by Act No. 3 of 2002)

“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 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 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.

“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 or voting powers in
such company.

(amended by Act No. 16 of 1972 and by Act No. 11 of 1975)

(1A) Subject to subsection (1B) where a provision of this 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 appropriate 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.

(1B) Where the payment referred to in subsection (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 subsection (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.

(Inserted by Act No. 6 of 1999).

(2) For the purpose 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

21
 Part I Income Tax Act

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 provisions
of the Bankruptcy Act (Cap 82) and "bankruptcy" shall be construed accordingly.

(Inserted by Act No. 23 of 1968).

3. Repealed by Act No. 7 of 1996.

Resident

4.(1) An individual is, for the purposes of this Act, not treated as 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 one hundred and eighty-three 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) Repealed by act No 4 of 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

22
 Income Tax Act Part I

(b) the central management and control of the person’s business or affairs are
exercised in the Republic for that year.

(As Amended by Act No. 11 of 1969 and Act No. 4 of 2000)

Receipt of Income

5.(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 stock holders, 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 subsection (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 stock holders registered on a day in the future, the dividend
shall be deemed to accrue to the share or stock holders on that day in the
future; and

(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.

(As amended by Acts No. 23 of 1968, No. 11 of 1973, No. 10 of 1979 and No. 6 of
1999).

23
Part II Income Tax Act

PART II

ADMINISTRATION

Appointment of staff

6.(1)The Commissioner-General shall be responsible for carrying out the provisions of this Act.

(2) The Commissioner-General shall appoint staff of the Domestic Taxes Division of the
Authority.

(As amended by Act No. 7 of 1996 and Act No. 49 of 2010)

Officers and delegation of functions

7.(1) The Commissioner-General may delegate to any officer in the Domestic Taxes Division
any power or duty by this Act conferred or imposed upon him, other than those conferred
on him by section one hundred and four 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.

(2) Every officer appointed for the purpose 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 any local Authority or other institution, to collect
tax assessed under paragraph (i) of the proviso to paragraph (c) of section sixty-four on
such terms and conditions as the Minister may by statutory instrument prescribe.

(4) The Commissioner-General may confer any of the functions of the Commissioner-General
under this Act upon any person if that person consents; and that person shall perform
those functions under the direction of the Commissioner-General.

(As amended by Acts No. 2 of 1995, No 2 of 1995, No 7 of 1996, No 4 of 2000, No 1 of 2001 and No.
49 of 2010).

Secrecy

8.(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

24
 Income Tax Act Part II

(c) Repealed by Act No. 7 of 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,

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 authorized by
the Minister in writing and to the Director of Public
Prosecutions when acting in exercise of his powers under the
Corrupt Practices Act (Cap 91);

(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 authorized 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 subsection (1) or who uses or reveals any
information, record or document disclosed to him in accordance with the proviso to
subsection (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.

(As amended by Act No.17 of 1971, Act No. 14 of 1973, No.14 of 1976, No. 8 of 1986, No. 13
of 1994, No.14 of 1994, No. 7 of 1996 and No.4 of 2000 )

Regulations

9 The Minister may make regulations by statutory instrument in furtherance of and incidental to
the provisions of this Act.

25
Part II Income Tax Act

Records of Assessment

10. The Commissioner-General shall cause a record to be kept of every assessment made under
this Act.

Forms and Notices

11.(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 authorized 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) Repealed by Act No. 7 of 1996

(As amended by Act No. 26 of 1970 and Act No. 7 of 1996 ).

Notices and Service

12.(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

(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, ten 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 sixty-six) in the manner provided by subsection (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 authorized to accept service of process under the Companies Act
(Cap 388) at the address filed with 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 subsection (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
26
 Income Tax Act Part II

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 Domestic Taxes Division duly authorized by the Commissioner-General to
receive such notice; or

(b) unless the Commissioner-General proves to the contrary, ten days after it has
been sent by post addressed to the Commissioner-General, or any officer of the
Domestic Taxes Division duly authorized by the Commissioner-General to receive
such notice.

(as amended by Acts No. 11 of 1975, No. 7 of 1996 and No. 49 of 2010)

(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 thirty days of such change.

(As amended by Act No. 26 of 1970, No. 11 of 1975, No. 7 of 1996 and No 1 of 2004).

13. Repealed by Act No. 7 of 1996.

27
Part III Income Tax Act

PART III

CHARGE OF TAX

Charge of tax

14.(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-

(a) by every person from a source within or deemed to be within the Republic; and

(b) by any individual who is 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;

(2) Subject to the other provisions of the Act, in the case of an individual, the amount of tax
which, apart from this subsection, 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 to tax shall -

(a) be for the whole amount of tax due before any tax credit; and

(b) show the amount due and payable after the reduction by the amount of any tax
credit due.

(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.

(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.

(5) An individual shall not be entitled to a tax credit except -

(a) against income provided for under section seventy-one and if the tax credit is
allowed in accordance with Regulations made under that section; or

(b) against income declared in a return under section forty-six;

(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 subsection (1).

(As amended by Acts No. 11 of 1969, No. 17 of 197, No. 12 of 1982, No. 11 of 1992, No. 4 of 1993,
No. 9 of 1998 and No. 6 of 1999).

28
 Income Tax Act Part III

Exemptions from tax

15. (1) There shall be exempt from tax the persons, funds, charities and income declared to be
exempt in the Second Schedule to the extent specified therein.

(2) The Minister may, by statutory order, approve, for the purpose of exemption from tax,
any person, agency, organization 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, organization 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.

(As amended by Act No. 11 of 1969 and No. 11 of 1973).

Suspension and Rebate of Income Tax

15A (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.

(As amended by Act No. 12 of 1991)

Chargeability of income that cannot be remitted on accrual

16. 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 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.

(As amended by Act No. 26 of 1970)

29
Part III Income Tax Act

Classification of income

17. 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.

(As amended by Act No. 23 of 1968, No. 12 of 1982 and No. 14 of 1987)

Income deemed within the Republic

18. (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 that person rendering the services is resident outside
the Republic solely for the purpose;

(d) is a pension granted by a person wherever resident, irrespective of where the

funds from which it is paid are situate, 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 direct or indirectly out of funds derived from

30
 Income Tax Act Part III

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;

(h) arises from a management or consultant fee incurred in the production of income
or in 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

(i) arises from 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.

(As amended by Act No. 27 of 2011)

(2) Where a business is carried on partly within and partly outside the Republic by a person to
whom this subsection 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.

(3) Subsection (2) 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;

(As amended by Acts No. 23 of 1968, No. 26 of 1970, No. 17 of 1971, No. 16 of 1972, No. 3 of
1997, No .9 of 1998 and No. 6 of 1999).

Income deemed received

19.(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 twenty-one years, the income or assets representing it shall be
deemed to be income of the settlor and not income of any other person.

(As amended by act No. 9 of 1998)

31
(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
Part III Income Tax Act

otherwise determine the settlement or any provision thereof; and

(b) in the event of the exercise of the power, the settlor or 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 subsection (1), not
income of any other person:

Provided that this subsection 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.

(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 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.

(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.

(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.

(6) This section applies to every settlement where so ever 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.

(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 Commissioner-General is made for

valuable and adequate consideration;

(ii) a settlement resulting from an order of a court;

33
 Income Tax Act Part III

(iii) any agreement made by an employer to pay an employee or to the

widow or any relative or dependant 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.

(As amended by Acts No. 11 of 1969 , No. 7 of 1996 and No. 9 of 1998).

20. Repealed by Act No. 7 of 1996.

Apportionment of gratuities and compensation for loss of office

21.(1) Where, upon the termination of a written contract of employment after a 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 an 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:

Provided however that -

(i) any income received by way of gratuity in excess of twenty-five 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 an

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 a gratuity by a company to an

individual who or whose spouse is carrying on a business alone or in
34
Part III Income Tax Act

partnership and the services of the individual are provided to such a

business by such company, shall for the purpose 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 an 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 the
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 intentions 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, any judicial order or judgment or the acceptance by an
employer of any independent award or of representations by recognized 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 an individual in any office or employment ,
income is received by such individual by way of compensation for loss of office or
employment, including termination for reason of redundancy or early retirement, normal
retirement or death, the first thirty- five million kwacha of such income shall be exempt
from income tax.

(As amended by Acts No. 11 of 1969, No. 16 of 1972, No. 11 of 1974, No. 14 of 1976, No. 14
of 1987, No 29 of 1990, No. 11 of 1992, No 4 of 1993, No. 14 of 1994, No. 7 of 1996, No. 6
of 1999, No. 3 of 2002, No of 2005, No. 1 of 2009, No 49 of 2010)

Apportionment of income

22. 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-
35
 Income Tax Act Part III

General, having regard to any special circumstances, otherwise determines.

Provisions relating to income from business

23. (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 part
of the reserve or provisions 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.

(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.

(As amended by Act No. 27 of 1970 and Act No. 9 of 1998).

Provisions relating to income after cessation of business

24. 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.

Insurance business

25. The gains or profits of an insurance business are ascertained in accordance with the
provisions of the Third Schedule.

Income of partner

26. 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.

Special provisions relating to deceased's estate and trusts

27. (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.

36
Part III Income Tax Act

(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 trustee 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.

(As amended by Act No. 23 of 1968 and by Act No. 14 of 1976).

Income of non-resident air, sea or land transport business

28.(1) The income that is deemed under paragraph (g) of subsection (1) of section eighteen 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 subsection (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 subsection (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 subsection (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 subsection (1).

(As amended by Acts No. 11 of 1975, No. 14 of 1976, No. 9 of 1977, No. 10 of 1981, and No. 11
of 1994)

37
 Income Tax Act Part IV

PART IV

DEDUCTIONS

Deductions generally

29. (1) Subject to the provisions of this Part -

(a) in ascertaining business gains or profits in any 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) in ascertaining 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.

Provided that on the amount payable by way of interest upon 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, a deduction shall be allowed.

(2) Only one deduction is allowed under this Act in respect of the same matter in any
charge year:
(As amended by Act No. 26 of 1970 and Act No. 3 of 2003).

Foreign currency exchange gains and losses

29A. (I) Notwithstanding the provisions of section twenty-nine 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 realized, 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:

Provided that foreign exchange losses of a capital nature incurred on borrowings used for the
building and construction of an industrial or commercial building shall be deductible.

(2) Subsection (1) shall not apply in the case of a bank.

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.

(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 subsection (1) in that charge year,
then the amount of that 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.

(4) In this section “industrial building” and “commercial building” have the meaning assigned

38
Part IV Income Tax Act

to them, in the Fifth Schedule.

(As amended by Acts No. 14 of 1987, No. 6 of 1999, No. 4 of 2000, No. 3 of 2002 and No. 3
of 2003)

Losses

30. (1) Subject to the other provisions of this section, any loss incurred in a charge year on a
source by a person, shall be deducted only from the income of the person from the same
source as that in which the loss was incurred.

(1A) Deleted by Act No. 1 of 2009

(2) Subject to other provisions of this section, where a loss referred to in subsection (1)
exceeds the income of a person for the charge year in which the loss was incurred, the
excess shall as far as possible, be deducted from, the income of the person from the
same source as that in which the loss was incurred for the following charge year:

Provided that :

(i) in the case of any loss incurred by any person carrying on mining operations, the
loss shall not be carried forward beyond ten subsequent charge years after the
charge year in which the loss is incurred;

(ii) in the case of a loss incurred by a person carrying on hydro and thermo power
generation, the loss shall not be carried forward beyond ten subsequent charge
years after the charge year in which the loss was incurred; and

(iii) in any other case, the loss shall not be carried forward beyond five subsequent
years after the charge year in which the loss was incurred; and

(iv) losses brought forward as at 31st March, 1997, shall be deemed to have been
incurred in the charge year ending 31 st March, 1997.

(Inserted by Act No. 1 of 2009)

(3) Where on the death of an individual his interest in a business passes to his spouse
any undeducted loss attributable to such interest shall be deducted from the
spouse's income from that business in accordance with the provisions in subsection
(2).

(4) Repealed by Act No. 7 of 1996

(As amended by Acts No. 11 of 1969, No. 11 of 1975, No. 14 of 1976, No. 9 of 1977, No. 10 of 1981,
No. 11 of 1984 ,No.7 of 1996, No. 3 of 1997, No. 9 of 1998 and No. 4 of 2000)

Indexation of losses

30A. (1) The losses to be deducted by a person carrying out any mining operations and keeping
books of accounts in United States dollars under subsection (3) of section fifty-five
shall be indexed losses.

(As amended by Act No. 27 of 2011)

(2) For the purposes of this section indexed losses shall be computed as follows:

39
 [1 + (R2-R1)/R1] x loss brought forward

Where:

R1 is the Kwacha against the United States dollar at the exchange rate ruling on the last
day of the preceding accounting year in which the loss is being claimed; and

R2 is the Kwacha against the United States dollar at the exchange rate to be used for this
purpose is the Bank of Zambia mid-rate at the end of the accounting period.

(Inserted by Act No. 7 of 2006)

Transfer of losses

31. 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
 Income Tax Act Part IV

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 a 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 thirty.

Provided that the combined period of loss carried forward for both the old and new
companies shall not exceed five years.

(As amended by Acts No. 14 of 1976, No. 14 of 1987 and No. 3 of 1997).

Losses prior to bankruptcy, etc.

32.(1) Subject to the provisions of subsection (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 thirty.

(As amended by Acts No. 11 of 1969 and No. 14 of 1976)

Capital Allowances

33. (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 I to VI inclusive of the Fifth Schedule;

(c) for farm improvements and works, according to the provisions of the Sixth
Schedule.

(2) The capital allowances to be claimed by a person carrying out mining operations and
keeping books of accounts in United States dollars under subsection (3) shall be indexed
capital allowances.

(As amended by Act No. 27 of 2011)

(3) For the purposes of this section indexed capital allowances shall be computed as follows;
[1 + (R2-R1)/R1] x capital allowance
41
 Where:
R1 is the Kwacha against the United States dollar at the exchange rate ruling on
the last day of the preceding accounting year in which the loss is being claimed;
and
R2 is the Kwacha against the United States dollar at the exchange rate ruling on
the last day of the accounting year in which the loss is being claimed.

The Kwacha against the United States Dollar exchange rate to be used for this
purpose is the Bank of Zambia mid-rate at the end of the accounting period.

(As amended by Acts No. 11 of 1969, No. 26 of 1970, No. 46 of 1973, No. 11 of 1975, No. 3 of
1997 and No. 7 of 2006)
Part IV Income Tax Act

Investment allowances

34.(1) 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 ten 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.

(As amended by Acts No. 11 of 1969, No. 26 of 1970, No. 12 of 1982, No. 11 of 1985, No. 14 of
1987 and by No.4 of 1993).

Development allowance

34A(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 ten per centum of such expenditure
shall be deducted in ascertaining the gains or profits of that business for the charge
year.

(2) The development allowance referred to in subsection (1) may, in the case of a person
growing for 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.

(As amended by Acts No. 10 of 1981, No. 3 of 2002 and No.3 of 2003)

Preliminary business expenses

35. A deduction is allowed in ascertaining the gains or profits of a business for the charge year
in which that business commences, in respect of any expenditure that -

(a) was incurred within eighteen months before the commencement of the business;
and

(b) would have been allowed as a deduction in ascertaining the gains or profits of the
business after its commencement.

Amount paid after cessation of business

36. Where any amount is paid by any person after the cessation of his business which, if it had
been paid prior to the cessation, would have been deductible in computing his gains or
profits from the business, then, to the extent to which that amount has not already been
deducted in computing the gains or profits, it shall be deducted from his income for the
charge year in which it is paid or, if he has no income in that charge year, from his income
for the charge year in which the business ceased, and such deductions shall be made before
deductions under sections thirty, thirty-one, and thirty-two.

(As amended Act No. 26 of 1970 and Act No. 4 of 2000)

43
Approved fund deductions

37. (1) A deduction shall, subject to the provisions of this subsection and subsection (12), be
allowed in ascertaining the income from emoluments of an employee for a charge year
of any amount paid by the employee during that charge year by way of contribution to
any approved fund including the National Pension Scheme Authority, if the fund to
which the contribution is made continues to be an approved fund for that charge year:

Provided that no deduction shall be allowed under this subsection in respect of any
contribution other than a contribution –

(a) which is not a contribution in arrear, in this subsection referred to as a

current contribution; or
(b) which is a special lump sum contribution allowed to be deducted under
and in accordance with subsection (2).

(2) A contribution paid by an employee –

(a) in respect of services rendered by the employee, while resident in the

Republic, to that employee’s employer prior to the date of the
employee becoming a member of the approved fund to which the
contribution is paid; or
(b) in respect of a period when the employee was resident and employed in
the Republic prior to the date of the employee becoming a member of a
fund within paragraph (c) of the definition of approved fund or a fund
approved under paragraph 5 of the Fourth Schedule to which the
contribution is paid;

in order that the employee may qualify for benefits under the approved fund to
which the contribution is paid in respect of such prior services or period shall
be a special lump sum contribution and shall, for the purposes of subsection (1)
be treated as a current contribution for the charge year or current contributions
for the charge years, in such amounts as the Commissioner General may direct.

(3) The deduction to be allowed to an employee for a charge year in respect of the
employee’s current contributions to approved pension funds shall not exceed –

(a) Fifteen per centum of the employee’s income from

emoluments liable to tax which have been received for that
charge year from any employer who established, adhered to or
continued the said approved pension fund, the fifteen per
centum to be calculated before any deduction under this
subsection; or
(b) One million, eight hundred and sixty thousand kwacha;
whichever is the less.

(4) The total deductions to be allowed to an employee for a charge year in respect
of current contributions to an approved fund within the meaning of paragraph
(c) of the definition of approved fund and a fund approved under paragraph (5)
of the Fourth Schedule, shall not exceed fifteen per centum of the income from
emoluments of the employee liable to tax before allowing any deduction under
this subsection for that charge year or one million, eight hundred and sixty
thousand kwacha, whichever is the less.
(5) The total of the deductions to be allowed for a charge year under subsections
(3) and (4) shall not exceed fifteen per centum of the income from emoluments
of the employee liable to tax before allowing any deduction under this
subsection for that charge year or one million, eight hundred and sixty thousand
kwacha, whichever is the less, and in any case shall not exceed the assessable
income of the employee for the charge year before allowing the deductions
under this subsection, subsection (9) and sections thirty, thirty two, thirty six
and forty one.

(6) A deduction shall, subject to the provisions of this subsection, be allowed in

ascertaining the gains or profits of an employer for a charge year of any amount
paid during that charge year by the employer by way of contribution to an
approved fund established for the benefit of employees, including an approved
fund within the meaning of paragraph (c) of the definition of approved fund
and a fund approved under paragraph 5 of the Fourth Schedule, if the fund to
which the contribution is made continues to be an approved fund for that
charge year:

Provided that no deduction shall be allowed under this subsection in

respect of any contribution other than a contribution –

(a) which is not a contribution in arrear, in this subsection referred

to as a current contribution; or
(b) which is a special lump sum contribution which is allowed to
be deducted under and in accordance with subsection (7).

(7) A contribution paid by an employer –

(a) in respect of services rendered to the employer by an employee

prior to the date of the employee becoming a member of the
approved fund to which the contribution is paid in order that
the employee may qualify for benefits under that approved
fund in respect of such prior services; or
(b) for any other reason approved by the Commissioner General;
shall be a special lump sum contribution and shall be treated as
a current contribution for such charge year or as current
contributions for such charge years and in such amounts as the
Commissioner General may direct.

(8) The deduction to be allowed for a charge year in respect of current

contributions to an approved fund other than a fund approved under subsection
(1) of section eleven of the former Act shall not exceed twenty per centum of
the emoluments liable to tax received from the employer in that charge year by
each employee in respect of whom the contributions are paid.

(9) A deduction shall, subject to the provisions of this subsection and subsection
(12), be allowed from the income of an individual for a charge year of any
amount paid by the individual during that charge year by way of a premium
payable under an approved annuity contract if the pension fund to which the
contribution is paid or the annuity contract under which the premium is paid
continues to be an approved fund for that charge year and such deduction shall
be deducted from the income of an individual before deductions under sections
thirty, thirty two, thirty six and forty one.

(10) The deduction to be allowed for a charge year under this subsection shall not
exceed one million, eight hundred and sixty thousand kwacha or the assessable
income of the individual for the charge year before allowing the deduction
under this subsection and a deduction under sections thirty, thirty two, thirty six
and forty one whichever is the less, except that in the case of an individual who
is not resident in the Republic, the deduction shall not exceed an amount equal
 to the contribution or premium paid, multiplied by the fraction of that
individual’s assessable income over the individual’s world income.

(11) For the purposes of subsection (10) “world income” in relation to any person,
means the total amount of that person’s income from all sources, excluding the
income which is chargeable to tax but which the Commissioner General is
precluded from including in an assessment, the amount of income from each
source being substantiated to the satisfaction of the Commissioner General.

(12) The total of all deductions to be allowed to an individual under subsections (1),
(2), (3), (4), (5), (9) and (10) for a charge year shall not exceed one million,
eight hundred and sixty thousand kwacha or the assessable income of that
individual for that charge year before allowing the deductions under sections
thirty, thirty two, thirty six and forty one, whichever is the less.

(As amended by Acts No. 23 of 1968, No.11 of 1969, No. 26 of 1970, No. 29 of 1970, No. 12 of 1982,
No. 11 of 1984, No. 14 of 1987, No. 11 of 1992, No. 4 of 1993, No. 14 of 1994, No. 2 of 1995, No.7 of
1996, No.6 of 1999, No.I of 2001and No. 1 of 2009)

Deduction for share option scheme

37A. A deduction shall be allowed in ascertaining the gains or profits of an employer for a
charge year of any amount incurred by the employer in the establishment or in the
administration of an approved share option scheme for that charge year.

(Inserted by Act No. 3 of 2002)

Technical education

38. A deduction shall be allowed in ascertaining the gains or profits of a business for any
payment made for the purposes of technical education relating to that business or for the
purposes of obtaining further experience, training or qualifications relating to that
business:

Provided that no deduction shall be allowed under this section in respect of any payment
made –

(a) on behalf of an individual who is related by blood or marriage to the person

making the payment, or to a person who is able to control directly or
indirectly the person making the payment;

(b) in pursuance of an agreement or undertaking to the effect that the person

making the payment will receive any reciprocal benefit for such payment
where made on behalf of an individual who is related by blood or marriage
to any other party to that agreement or undertaking.

(as amended by Act No. 26 of 1970)

Subscriptions

39. A deduction is allowed in ascertaining the gains or profits of a business or the emoluments
of any employment or office for any subscription paid by a person in respect of his
membership of a trade, technical or professional association which is related to his
business, employment or office.

40. Repealed by Act No. 3 of 1997.

Part IV Income Tax Act

Public Benefit Organisations

(As amended by Act No. 26 of 1970, No. 11 of 1973, No. 6 of 1980, No. 12 of 1982, No. 14 of
1987, No. 11 of 1992, No. 7 of 1996, No. 1 of 2009 and No. 27 of 2009).

41. (1) Subject to the other provisions of this section, an amount paid by a person during a
charge year to a public benefit organisation, shall be deducted from the income of that
person for that charge year if –

(a) the payment is in money or money’s worth;

(b) the payment is made for no consideration;

(c) subject to subsections (2) and (3), the Minister approves the public
benefit organisation to which the payment is made:

Provided that an approval by the Minister may be given retrospectively;

or
(d) the payment is made to a public benefit organisation that is owned by
the Government

(2) Where a public benefit organisation is owned by the Government, the organisation
shall not require the Minister’s approval.

(3) The Minister may withdraw an approval given under paragraph (c) of subsection
(1), if the public benefit organisation –

(a) is not exclusively providing a public benefit activity;

(b) submits false information in the organisation’s application to the

Minister for approval as a public benefit organisation; or

(c) uses resources for a purpose other than that provided for in the
organisation’s objectives .

(4) A deduction in the charge year under this section shall be allowed before a
deduction under sections thirty, thirty-one, thirty-two, and thirty six and shall not
exceed fifteen per centum of the assessable income of a person for that charge year.

42. Repealed by Act No. 3 of 1997.

Deduction for research

43.(1) A deduction is allowed in ascertaining the gains or profits of a business of any

expenditure, not being expenditure of a capital nature, incurred by the business during a
charge year on experiments or research relating to the business.

(2) A deduction is allowed in ascertaining the gains or profits of a business for any
contribution to a scientific or educational society or institution or other like body of a
public character approved by the Commissioner-General where a condition of the
contribution is that it must be utilised by the society, institution or body, as the case
may be, solely for the purposes of industrial research or scientific experimental work
connected with the business.
47
Deduction for bad and doubtful debts

43A. (1) A deduction shall be allowed in ascertaining the income from any source for debts to
the extent that the debts have been included in the income from that source and to
the extent that they are proved to the satisfaction of the Commissioner-General to
be bad or likely to become bad and, where there is no income from that source for
the charge year for which such deduction is due that deduction shall be deemed to
be a loss under section thirty.

(2) Where a deduction has been allowed under subsection (I) in respect of any debt, and
in the subsequent charge year part of all of the debt is recovered, or the amount of
the recovery or, where less, the total deductions allowed in one or more charge
years in respect of that debt, shall be assessable in the charge year in which the
recovery is received:

Provided that where recoveries are effected in more than one charge year, the
total
 Income Tax Act Part IV

amount assessable in each charge year after the first such charge
year shall not exceed the amount of the recovery in that later year
or, where less, the total of the deductions previously allowed less
any recoveries assessable in previous charge years.

(Inserted by Act No. 6 of 1999)

(3) Where a claim for a deduction is made under subsection (1) by a bank, bank
subsidiary or financial institution, subsection (1) shall apply subject to the
following:

(a) the words “to the extent that the debts have been included in the income
from that source” in that subsection shall not apply; and

(b) the maximum deduction for any debt falling within the classifications
set out by or under the Banking and Financial Services Act shall not
exceed the minimum level of provisioning for such a debt required by
the Bank of Zambia by or under the Banking and Financial Services
Act.

(Inserted by Act No. 4 of 2000)

Deduction for mineral royalty

43B. (1) A deduction shall be allowed in ascertaining gains or profits of a business

of any mineral royalty payable and paid for a charge year in pursuance of
the provisions of section sixty-six of the Mines and Minerals Act.

(2) This section shall not apply to any mineral royalty payable and paid for
any charge year prior to the charge year ending 31 st March 2000.

(Repealed by Act No. 17 of 1988 and Inserted by Act No. 6 of 1999)

Deduction for mortgage interest

43C. Repealed by Act No. 49 of 2010

Deduction for employing a person with disability

43D.(1) A deduction shall be allowed in ascertaining the gains or profits of a business

in respect of each person with disability who has been employed full time by
such business for the whole or substantial part of the charge year for which the
deduction is claimed.

(2) The amount of the deduction referred to in subsection (1) shall be one million
kwacha.

(As amended by Acts No. 11 of 1985, No 4 of 1993, No. 7 of 1996, and No. 3 of 2002 ).

43E.Repealed by Act No. 7 of 1996.

Case of no deduction

44. No deduction is made in respect of any of the following matters:

(a) the cost incurred by an individual in the maintenance of himself, his

49
Part IV Income Tax Act
family or establishment, or which is a domestic or personal expense;

(b) any loss or expense which is recoverable under any insurance contract or
indemnity;
(c) capital expenditure or loss of capital, other than loss of stock in trade,
unless specifically permitted under this Act;

(d) any payment to a pension or superannuation fund or scheme or premium

payable under any annuity contract, except such payments as are allowed
under section thirty seven;

(e) any tax or penalty chargeable under this Act;

(f) Repealed by Act No. 9 of 1998.

(g) any amount which would be deductible in ascertaining the income from a
source or from income which the Commissioner-General is prohibited
from including in any assessment under the provisos to subsection (1) of
section sixty three;

(h) any expenditure incurred or capital asset employed, whether directly or

indirectly, in the provision of entertainment, hospitality or gifts of any
kind:

Provided that this paragraph shall not apply to -

(i) any expenditure incurred or capital asset employed in the

provision of anything which it is the purpose of a person's
business to provide and which is provided in the ordinary course
of that business for payment or for the purpose of advertising to
the public generally without payment;

(ii) Repealed by Act No. 11 of 1992

(iii) any expenditure incurred in the provision of a gift to any person

consisting of an article incorporating a conspicuous
advertisement for the donor the cost of which to the donor, taken
together with the cost to him of any other such articles given by
him to that person in the same charge year, does not exceed one
hundred thousand Kwacha ;

(i) any amount incurred by the employer in the establishment or

administration of a share option scheme, except such amounts as are
allowed under section thirty-seven A.

(Repealed by Act No. 3 of 1997 and inserted by Act No. 3 of 2002)

(j ) Repealed by Act No. 3 of 1997.

(k) Repealed by Act No. 4 of 1993.

(l) the cost of any benefit or advantage not capable of being turned into
money or money's worth that is provided to employees, subject to such
directions as shall be issued by the Commissioner-General;

(m) any copper price participation payment or any cobalt price participation
payment;

50
 Income Tax Act Part IV
Provided that a deduction shall be allowed to Konkola Copper
Mines PLC and Mopani Mines Plc in respect of any payments
made pursuant to cobalt price participation and copper price
participation agreements between Konkola Copper Mines Plc or
Mopani Plc and Zambia Consolidated Copper Mines Limited;

(Inserted by Act No. 4 of 2000, substituted by No of 2005)

(n) incidental costs of obtaining finance such as commitment and guarantee

fees, commissions and any other incidental costs of a similar nature; and

(Inserted by Act No. 3 of 2003)

(o) any levy payable under the Medical

Levy Act. (Inserted by Act No. 3 of

2003)

51
Part V Income Tax Act

PART V

RETURNS AND ASSESSMENTS

Notice to Commissioner-General

45. Every person within thirty days from first receiving income liable to tax under this Act
shall give written notice accordingly to the Commissioner-General.

(As amended by Act No. 26 of 1970).

Duty to provide taxpayer identification number

45A (1) Every person shall provide his Taxpayer Identification Number with all forms,
notices, certificates, documents, and other communications submitted to the
Commissioner-General under this Act.

(2) Any person carrying on any business in partnership shall provide taxpayer identification
number of every partner with all documents, forms, notices, certificates, and other
communications submitted to the Commissioner-General under this Act.

(3) Every person making payments for which it is required to submit to the Commissioner-
General a return, notice, form, certificate, or other such document under sections fifty,
fifty-two, seventy-one, eighty, eighty one A, eighty-two or ninety five D of this Act shall
furnish to the Commissioner-General on or along with that document the taxpayer
identification numbers for all persons to whom the payments have been made.

(4) This section shall have effect irrespective of the charge year to which the forms, notices,
certificates, documents and other communications referred to in subsection (1) to (3)
pertain.

(5) For the purposes of subsection (1), “person” includes partnership.

(as amended by Act No. 11 of 1992)

Taxpayer identification number required for certain transactions

45B.(1) The institutions listed in column 1 of this subsection shall require a taxpayer
identification number from any person, applying for anything listed, or engaged in the
types of transactions listed, whichever is applicable, in column 2 of this section:
COLUMN 1 COLUMN 2

INSTITUTION TYPE OF TRANSACTION

Commissioner of lands Registration of titles

Registration and transfer of motor vehicles
Registrar of motor vehicles Import licensing and trade licensing

Ministry of Commerce Payment of deposit for power connection

Zambia Electricity Supply

Corporation Limited
 Income Tax Act Part V

(As amended by Act No. 27 of 2011)

(2) Each institution listed in column 1 of subsection (1) shall avail the Commissioner-General or
his authorised agent access to the documents, forms, notices, certificates and other
communications in which a taxpayer identification number is required to be used under
subsection (1) :

Provided that such access shall be as is necessary to assist in the enforcement of the
tax laws.

(3) Any person, including a person carrying on any business in partnership, who is required
under subsection (1) to furnish a taxpayer identification number and who furnishes a false
number shall be guilty of an offence under this Act.

(As amended by Acts No. 11 of 1992, No. 4 of 1993 and No 9 of 1998).

Returns generally

46.(1) Every person liable to tax for any charge year, other than an individual whose income
consists entirely of emoluments within the provisions of Part VI (which relates to Pay As
You Earn) shall furnish to the Commissioner-General a return of income and such
particulars as may be required for the purposes of ascertaining the income chargeable,
if any, and the tax liability due, if any under this Act.

(2) The return required under this section shall -

(a) contain a statement of the person's income liable to tax including income
deemed under this Act to be the income of the person in respect of whom
the return is submitted but excluding any income which cannot be assessed
by virtue of the proviso to subsection (1) of section sixty three;

(b) contain a computation, by or on behalf of the person liable to tax, of the

amount of tax due based on rates of tax applicable for such charge year and,
in the case of an individual, any deductions and tax credit to which he is
entitled;

(c) include a declaration by such person, or by the person in whose name he is

assessable, that such return includes a full statement of income liable to tax
and a proper computation of tax due for such charge year; and

(d) be designated in kwacha.

(3) The return referred to in subsection (1) shall be furnished to the Commissioner-General
not later than 30th June following the end of any charge year.

(As amended by Act No. 27 of 2011)

(4) Where a person fails to submit a return on or before the date provided for under
subsection (3), there shall be charged a penalty of:-

(a) in the case of an individual, one thousand penalty units per month or part
thereof; or

(b) in the case of a company, two thousand penalty units per month or part
thereof;

Provided that the Commissioner-General may in his discretion remit the whole or part
53 53
of any such penalty.

(As amended by Acts No. 11 of 1992, No. 13 of 1994, No. 2 of 1995, No 3 of 1997, No
9 of 1998, No 3 of 2002, No of 2005, No. 1 of 2008 and No. 1 of 2009)
Part V Income Tax Act

Provisional income

46A.(1) Without prejudice to the requirement under section forty-six, every person, excluding
an individual whose income consists entirely of emoluments within the provisions of Part
VI which relates to (Pay As You Earn), shall submit in accordance with this section a
return of provisional income and tax for any charge year:

Provided that an individual who does not expect to receive assessable income (other than
emoluments within the provisions of Part VI) in excess of one million nine hundred
and twenty thousand Kwacha for such charge year need not submit such return.

(2) The return of provisional income required under this section shall -

(a) contain an estimate (based on information reasonably believed to be true) of the

person's income liable to tax, including income deemed under this Act to be the
income of the person in respect of whom the return is submitted; but excluding
any Income which cannot be assessed by virtue of the proviso to sub section (1)
of section sixty-three

(b) contain a computation of tax based on rates of tax applicable for such charge year
and, in the case of an individual, deducting any tax credit to which the individual
is entitled, and any such computation shall exclude tax on income falling within
Part VI (Pay As You Earn) and any tax deducted from any other income.

(c) include a declaration by such person or by the person in whose name he is

assessable, that such provisional return includes a full and reasonable estimate of
his income for such charge year; and

(d) be designated in kwacha.

(3) The return of provisional income referred to in subsection (2) shall be furnished -

(a) in any charge year, not later than the 31st March of the charge year to which the
return relates; and

(b) in the charge year ending 31st December 2012, not later than 30th June, 2012:

Provided that where during the course of the charge year, any person discovers that
the return of provisional income furnished under this section is likely to be
substantially incorrect because of changed circumstances, such person shall furnish a
revised return of revised provisional income and in such a case, any alteration in the
amount of estimated tax payable shall be taken into account in the next instalment,
pursuant to section seventy-seven, immediately following the date of such revised
return.
(As amended by Act No. 27 of 2011)

(4) Where an individual is not required to make a return of provisional income and tax-

(a) for any charge year; and

(b) for the charge year ending 31st December 2012;

by virtue of the proviso to subsection (1), but at a time subsequent to 31st March in
that year, and in the case of paragraph (b) at a time subsequent to 30th June, 2012
that proviso ceases to apply to the individual, that individual shall make a return
in accordance with subsections (1) and (2) within fourteen days of the proviso

55
 ceasing to apply to that individual.
(As amended by Act No. 27 of 2011)

(5) Where upon receipt of a return of income pursuant to section forty-six, it is discovered that
income has been so understated that the tax on the return has been underpaid by at least
one-third, then such person shall be liable to a penalty under this section calculated at the
rate of twenty-five per cent of the tax which has been underpaid.

(6) In this Act any reference to a person's provisional income for any charge year is a reference
to the estimate calculated in accordance with paragraph (a) of subsection (2) of that
person's income for that charge year.
 Income Tax Act Part V

(7) In this Act any reference to any provisional tax which a person is liable to pay during any
charge year is a reference to the estimate calculated in accordance with paragraph (b) of
subsection (2) of that person's tax liability for that charge year.

(8) Where a person fails to submit a return or a revised return in accordance this section, there
shall be charged a penalty of-

(a) in the case of an individual, one thousand penalty units per month or part thereof
during which such failure continues; or

(b) in the case of a company, two thousand penalty units per month or part thereof
during which such failure continues:

Provided that the Commissioner-General may remit the whole or part of any such
penalty.

(9) Any reference to tax in subsection (7) of section seventy-eight, and in sections seventyeight
A, seventy-nine, seventy-nine A, seventy-nine B, seventy-nine C, seventy- nine D, eighty-
three, eighty -four, eighty-six, eight-seven, and ninety-two includes a reference to
provisional tax.

(As amended by Act No. 12 of 1982, No. 17 of 1988, No. 11 of 1992 Act No. 2 of 1995, No. 7 of 1996, No.
9 of 1998, No. 6 of 1999, No. 4, of 2000, No. 1 of 2001, No. 3 of 2002, No of 2005).

Estimated provisional tax return

46B. (1) Where any person has, for any year, failed to submit a return or revised return under
section forty-six A the Commissioner-General may -

(a) estimate such person’s income chargeable to tax, in accordance with paragraph
(a) of subsection (2) of section forty-six A; and

(b) compute the provisional liability to tax of that person on that estimated income in
accordance with paragraph (b) of subsection (2) of section forty-six A; and shall
serve notice on that person specifying the amount of income so estimated and the
provisional tax liability so computed

(2) Subject to subsections (1) and (3) of section forty-six A, a notice served on any person
under subsection (1) shall, for the purposes of this Act, be deemed to be a return of
provisional income and tax made by that person, and a person is not relieved of any
obligation to make any return of provisional income or tax or from any penalties for
failure to make such a return under section forty-six A.

(3) Where a person who has been served with a notice Under this section makes a return
under section forty-six A which, apart from the date on which the return is made,
complies with the requirements of that section, the notice under this section shall cease
to have effect.

Further provisions as to returns

47. (1) The Commissioner-General may, by notice in writing require any person to
furnish him, within a reasonable time specified in the notice, with further returns or
particulars in relation to any matter contained in a return made under this Act or in
relation to any transactions or matters appearing to the Commissioner-General to be
relevant to the ascertainment of the income of that person.

57
Part V Income Tax Act

(2) The Commissioner-General may determine that any person shall make a return
onanother person's behalf, and any such return is the return of that other person for
the purposes of this Act, save that the operation of this subsection shall not relieve
that other person of any liability under this Act.

(3) Any person preparing, signing or rendering any return or statement for the purposes of
this Act is deemed to be aware of the contents of that return or statement.

(As Amended by Act No. 6 of 1999)

Information generally

48. Every person shall furnish to the Commissioner-General such information, whether relating
to the affairs of himself or any other person, as the Commissioner-General determines is
necessary for the purposes of this Act, and every provision of this Act relating to the
delivery of information to the Commissioner-General is without prejudice to the generality
of this section.

Statement of bank accounts, assets, etc.

49. The Commissioner-General may give notice in writing to any person requiring him to
furnish within the time limited by such notice, not being less than thirty days from the date
of service of such notice, a statement in writing containing particulars of -

(a) all banking accounts, whether current or deposit, business or private, in his own
name or in the name or names of his wife or wives, or in any other name, in which
he is or has been interested, or on which he has or has had power to operate, jointly
or solely, and which are in existence or which have existed at any time during the
period stated in the notice;

(b) all savings and loan accounts, deposits, building society, and co-operative society
accounts, in regard to which he has, or has held, any interest or power to operate
jointly or solely during the period aforesaid;

(c) all assets, other than those referred to in paragraph (a) or (b) which he and his wife
or wives possess, or have possessed, during the period aforesaid;

(d) all sources of income not referred to in paragraph (a), (b) or (c) and the income
derived there from, and

(e) all facts bearing upon his liability to income tax to which he is or has been liable.

Return of lodgers and inmates

50. The Commissioner-General may by notice in writing require any person whose business is
to provide living accommodation to deliver a list of all persons he has so accommodated.

Information as to business matters

51. Whenever so required by the Commissioner-General, and in the prescribed form, everyone
carrying on business shall deliver returns showing:-

(a) particulars of all payments in respect of any share or interest in the business;

58
 Income Tax Act Part V

(b) particulars of all moneys received by him on deposit;

(c) particulars of any interest received or paid by him; and

(d) such other information as may be in his possession relating to the income received
by any other person.

52. Repealed by Act No. 3 of 1997

Public documents

53. Notwithstanding anything to the contrary in any written law, any officer in the service of
the Government, a local authority or public body who has charge of documents or
electronically stored data which might aid the carrying out of the provisions of this Act
shall permit the Commissioner-General or the Commissioner-General's authorised officer to
inspect and copy those documents or electronically stored data and have custody of such of
them as are necessary for production in proceedings.

(As Amended by Act No. 3 of 2002)

Information as to companies

54. Every resident company shall deliver to the Commissioner-General a copy of its
memorandum and articles of association, and copies of all amendments thereto, and, if the
Commissioner-General so determines, all such particulars relating to the company's affairs
and shareholders as the Commissioner-General may in writing require.

Accounts and records

55. (1) Every person carrying on a business shall keep, in the English language, books and
accounts of all his transactions, and, unless otherwise authorised by the Commissioner-
General, shall retain for six years from the date of the last entry all documents relating
to any Business carried on by him, or otherwise recording the details from which his
returns for the purposes of this Act were prepared.

(2) A person who retains, in accordance with conditions specified by the Commissioner-
General, photographic reproductions of the documents referred to in subsection (1) is
deemed to retain those documents for the purposes of that subsection.

(3) A person carrying out any mining operations may elect to keep books of account in
United States Dollars of all transactions relating to, connected with, or incidental to,
such operations if the Commissioner-General is satisfied that not less than 75 per
centum of that person's gross income from mining operations is earned in the form of
foreign exchange from outside the Republic.

Provided that such election shall not be reversed without the consent of the
Commissioner-General.

(As amended by Act No. 14 of 1994)

Documents in support of returns

56.(1) Notwithstanding the provisions of subsection (3) of section fifty-five every return
furnished under subsection (1) of section forty-six by any person shall be
accompanied by such accounts and other documents, in Kwacha as are necessary to
support the return and shall be signed by the person furnishing the return.
As amended by Act No. 3 of 2002)
59
 Income Tax Act Part V

(2) Where such accounts were audited by a person in a professional capacity or where such
accounts were not so audited but were prepared by a person in a professional capacity,
that auditor or person shall furnish a certificate signed by him stating-

(a) the nature of the books of account and other documents from which such accounts
were prepared;

(b) the extent of his verification of the books of account and other documents
produced to him;

(c) whether and to what extent, if any, there are included any estimated amounts or
balancing adjustments;

(d) whether and subject to what reservations, if any, he considers that such accounts
present a true and fair view of the gains or profits from such business for the
period and the state of the business at the end of the period; and

(e) the capacity in which he signs the certificate; and such certificate shall accompany
the return.

(3) Where any person furnishes a return supported by accounts and such accounts were not
audited or prepared by a person referred to in subsection (2) then he shall furnish a
certificate signed by himself stating -

(a) the nature of the books from which such accounts were prepared;

(b) whether and to what extent, if any, there are included any estimated amounts
or balancing adjustments;

(c) whether such accounts include all the transactions of his business and present
a true and fair view of the gains or profits from such business for such
period.

(4) In this section, "accounts" means a balance sheet or statement of assets and liabilities
together with a trading account, profit and loss account or an income and expenditure
account or other similar statement, however named.

(5) For the purposes of this section "person in a professional capacity" shall mean an
individual carrying on the profession of accountant or auditor or one who prepares
accounts for reward or in the course of his business either on his own or in partnership
or as an employee.

(As amended Act No. 16 of 1972 and Act No.49 of 2010).

Examination by Commissioner-General

57. Where the Commissioner-General determines that any person is able to impart information
necessary for the purposes of this Act, the Commissioner-General may, on reasonable
notice to that person, require him to attend to be examined at the time and place specified in
the notice.

Production and preservation of books and documents

58. For the purpose of obtaining full information in respect of the income of any person or
class of persons, the Commissioner-General may, by notice in writing, require, in the case

60

60
 of the income of any person, that person or any other person, and in the case of any class of
persons, any person -

(a) to produce for examination by the Commissioner-General, at such time and place
as may be specified in such notice, any accounts, books of account and other
documents or electronically stored data which the Commissioner-General may
consider necessary;

(b) to produce forthwith for retention by the Commissioner-General for such period
as may be reasonable for their examination any accounts, books of account and
other documents or electronically stored data which the Commissioner-General
may specify in such notice;

(c) not to destroy, damage or deface, on or after service of such notice, any of the
accounts, books of account and other documents or electronically stored data so
specified without permission of the Commissioner-General in writing.

(As amended by Act No. 3 of 2002)

59. Repealed by Act No. 7 of 1996.

Amount of dividends, interest or royalties to be included in income

60. (1) The amount of income received from which tax is deductible under sections eightyone,
eighty-one A, eighty-two or eighty-two A or on which tax is payable under section eighty-
one shall be the gross amount before deduction or payment:

Provided that the amount of income received by way of dividends from which tax has been
deducted in accordance with the direction of the Commissioner-General made
pursuant to the provision of paragraph (a) of subsection (1) of section eighty-one shall
be the amount that would have been received if tax had been deducted at the rate that
would have been deductible but for the direction.

(2) The amount of income received from a source outside the Republic (in this section called
foreign income) shall be the gross amount of that income before the deduction of the
amount of the foreign tax.

(3) The amount of the income received by a beneficiary from a trust or deceased's estate on
which tax has been paid or is payable by the trust or deceased's estate shall be the gross
amount of that income before the deduction of tax at the rate paid or payable on that
income by the trust or deceased's estate.

(4) In this section, "foreign tax" has the same meaning as in section seventy-five or seventy six,
as the case may require.

(As amended by Acts No. 16 of 1972, No. 11 of 1973, No. 11 of 1974, No. 9 of 1977, No. 9 of 1978
and No. 4 of 2000)

Partnership returns

61. Persons carrying on any business in partnership shall furnish a joint return of income of the
partnership for a charge year declaring therein the names and addresses of all the partners
and the amount of the share of the income to which each partner is entitled for that year,
together with such other particulars as the Commissioner-General may, in writing, require.
Part V Income Tax Act

Business accounts

62. (1) Where the accounts of the business of any person or partnership are made up for a
period of twelve months ending on some date other than the last day of the charge year, the
Commissioner-General may in his discretion accept such accounts for the purposes of
determining the gains or profits of the business in respect of the charge year ending either
before or after the closing date of such accounts, and the Commissioner-General may for
the purposes of this subsection accept accounts for a period of less than twelve months as
though the accounts had been made for a period of twelve months.

(2) Where the Commissioner-General accepts the accounts of the business of a person or
partnership pursuant to subsection (1), the accounts of that business shall for the purposes
of this Act be made up subject to subsection (3) for all subsequent charge years to the date
corresponding in subsequent charge years to the date so accepted.

(3) Where the accounts of the business of a person or partnership are not made up in respect of
a subsequent charge year to the date in that year corresponding to the date so accepted,
then the income of the business for that subsequent charge year and the preceding year
may be computed or adjusted, as the Commissioner-General, in his discretion, may decide.

(3A) Where a company makes up the accounts of its business for a period, in this section
referred to as “the accounting period”, ending on a date other than 31st December and such
accounts are or will be accepted by the Commissioner-General for the purpose of
determining the gains or profits of the business in respect of a charge year, in accordance
with the provisions of this section and that company is required by any provision of this
Act to submit a return of income, including a return of provisional income and tax, for that
charge year, that return shall be of income, or provisional income, for the accounting period
for which relevant accounts are or will be made up.
(As amended by Act No. 27 of 2011)

For purposes of subsection (3A) “ relevant accounts” in relation to any charge year means
the accounts which are or will be submitted to the Commissioner-General for the purposes
of determining the gains or profits of the business in question in respect of that charge
year.

(Inserted by Act No. 6 of 1999)

(4) Where the Commissioner-General has accepted the accounts of the business of a person or
partnership pursuant to subsection (1), and the business ceases, that person or partnership
shall return for assessment accounts to include all income of the business in the period
between the closing date of the last accounts so accepted for the immediately preceding
charge year and the date when the business ceased.

(5) Where the period referred to in subsection (4) exceeds twelve months, separate accounts
shall be delivered for the period of twelve months ending on the date accepted under sub-
section (1) as the closing date of the accounts of the business, and for the balance of the
period in excess of twelve months.

(6) The income determined on the basis of the accounts referred to in subsection (4) and (5) is
charged to tax as follows:

(a) where the period is in excess of twelve months, the income determined on the
basis of the accounts delivered for twelve months, as required under subsection
(5), is deemed to be the income for the charge year succeeding that in which the
income based on the accounts for the immediately preceding charge year was
assessed, and the income for the remaining period is deemed to be income

62
 Income Tax Act Part V

of the following charge year;

(b) where the period is one of less than twelve months, the income based on the
accounts delivered under subsection (4) is deemed to be the income of the charge
year succeeding that in which the income based on the accounts for the
immediately preceding year was assessed.

(7) Notwithstanding subsection (6), where a person or partnership has delivered accounts for
the assessment of his business, and the whole or part of the income determined on those
accounts has been charged to tax in more than one charge year, then when the business
ceases the income for the last charge year is reduced by an estimate determined by the
Commissioner-General of the income which has been so charged to tax in more than one
charge year, and if that estimate exceeds the income for the last charge year, then the
income for the penultimate charge year shall be reduced by the amount of such excess.

(8) For the purposes of this section, a person may be assessed in respect of his income
notwithstanding that he may not have been in existence during any part of the relevant
charge year.

(As amended by Act No. 4 of 1976, and Act No. 6 of 1999)

Averaging of farming and fishing income

62A. Where a person or partnership carries on in two consecutive charge years a business of
fishing or farming, excluding the letting of property for such purpose, and irrevocably so
elects by notice in writing to the Commissioner-General before the end of the charge year
immediately following the end of the second such consecutive charge year, the income
received from, or loss incurred in, such business in each of the two charge years shall be
averaged, and the average income or loss shall be deemed to have been received or
incurred in each of the two said charge years:

Provided that there shall be no right of election under this section where an election
has already been made under this section in respect of one or two consecutive
charge years in respect of the same income or loss.

(As amended by Act No. 17 of 1971 and by Act No. 14 of 1987).

Commissioner-General's power to assess

63.(1) Subject to the provisions of subsection (1A) and sections seventy-two and ninetythree, the
Commissioner-General shall assess every person who is liable to tax under this Act or who
claims, or is entitled to, a deduction under sections thirty, thirty-one, thirtytwo or thirty six:

Provided that the Commissioner-General shall take into account the provisions of any
agreement made under section 74, if applicable, and shall not include in any such
assessment for any charge year:-

(i) dividends from which tax in respect of that charge year has been deducted
under section eighty one;

(ii) a lump sum payment from which tax in respect of that charge year has been
deducted under section eighty two;

(iii) Repealed by Entertainment Act No.3 of 1996.

63
Part V Income Tax Act

(iv) in the case of a person who is not a resident in the Republic for any charge
year, interest, public entertainment fee royalties, any management or
consultancy fee or commission from which tax, in respect of that charge
year has been deducted under section eighty-two A; or
(As amended by Act No. 27 of 2011)

(v) in the case of a resident individual, interest from which tax in respect of that
charge year has been deducted under section eighty-two A.

(v) interest on Government Bonds from which tax in respect of that charge year
has been deducted under section eighty-two A..

(vi) income from an individual from which tax in respect of that charge year has
been paid under section sixty four A; and

(vii) in case of a person exempted under subparagraph (1) of paragraph 5 and

subparagraph (1) of paragraph 6 of the second schedule, interest from which
tax in respect of that charge year has been deducted under section 82A.

(1A) In any case where a person has made payments of tax or provisional tax in respect of any
charge year under section forty-six or forty-six A if the Commissioner-General is satisfied
that the person has no outstanding tax liability for that year, the Commissioner-General
need not assess that person under this section, unless the person makes a request in writing
for an assessment.

(IB) Where a person has made a return of tax under section forty-six but is assessed under this
section for any amount, the assessment shall not relieve that person of any liability under
section seventy-eight in respect of any failure to make any payment of tax.

(IC) Where a person has made payments of tax or provisional tax for a charge year but
subsection (IA) does not apply, the Commissioner-General shall make an assessment in
respect of that year and that person only for the amount by which the payments made
differ from the amount of tax due for that year.

(2) Subject to the provisions of subsection (1) to (1C), an assessment shall be made in respect
of every person for each charge year, and as many amended assessments may be made in
respect of such person for any such charge year as are necessary to give effect to the
provisions of this Act, and whereby his liability to tax may be increased, reduced or
cancelled, as the circumstances require.

(3) Wherever for the purposes of this Act income is chargeable to tax in any charge year
following the charge year in which it is received, the Commissioner-General may assess
any person in respect of such income at any time and may make such assessment at the
current rate of tax

(4) The liability of any person to render a return or other information required under this Act
for any charge year is not relieved because he is assessed for that charge year before such
return or information is rendered.

(As amended by No. 23 of 1968, No. 26 of 1970, No. 17 of 1971, No 16 of 1972,

No. 11 of 1973, No. 11 of 1974, No. 11 of 1975, No. 14 of 1976, No. 10 of
1979, No 11 of 1984, No. 11 of 1985, No. 4 of 1993, No. 9 of 1998, No. 6 of
99, and No. 3 of 2002).

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 Income Tax Act Part V

Estimated assessments

64. An assessment may be made by the Commissioner-General in any amount according to the
best of his judgement in respect of any person -

(a) who has not delivered a return as required by this Act, or on whose behalf no
return has been so delivered; or

(b) whose return does not satisfy the Commissioner-General; or

(c) who the Commissioner-General has reasons to believe is about to leave the
Republic; or

(d) where the Commissioner-General has reason to believe that the company is to be
wound up or liquidated:

Provided that -

(i) where the Commissioner-General does not have sufficient information on

which to estimate an assessment, the Commissioner-General may assess
a base tax of one hundred and fifty thousand kwacha in any charge
year; and

(ii) a credit shall be allowed for the amount of any base tax which has been
paid in a charge year when establishing the amount of tax which is due
and payable resulting from any subsequent assessment which the
Commissioner-General may determine for the same charge year.

(As amended by Acts No .14 of 1994, No. 3 of 1997, No. 6 of 1999, and No. 3 of 2002).

Standard Assessment

64A (1) The Commissioner-General may make a standard assessment requiring any individual
or partnership carrying on the business of operating a public service vehicle for the carriage
of persons to pay a presumptive tax as set out in Part I of the Ninth schedule.

(2) The Commissioner General may make a standard assessment requiring any person
carrying on any business, other than the business referred to in subsection (1), with an
annual turnover of two hundred million Kwacha or less, to pay tax on turnover at the
rate set out in Part II of the Ninth Schedule:

Provided that the provisions of this subsection shall not apply to income earned from
the provision of consultancy services or from mining operations or to income earned
from a business that qualifies for voluntary registration under the Value Added Tax
Act and is issued with a value added tax registration certificate.
(3) The Minister may, by statutory instrument, make regulations for the administration of this
section.
(Inserted by Act No.3 of 2003, amended by No 1 of 2004, amended by Act No. 4 of 2007 and Act No. 1 of
2008)

64B Repealed by Act No. 1 of 2009

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Part V Income Tax Act

Assessment rules

65. (1) Notice of assessment shall be given to the person charged.

(2) Save in case of fraud or wilful default or for the purposes of sections twenty one, eighty
seven, eighty eight, ninety-one or one hundred and thirteen, or Part VII (which provides
for double taxation relief), or paragraph (25) of the Fifth Schedule, or granting tax
credits as provided in the Charging Schedule, no assessment shall be made for any
charge year after six years from the end of that year.

(3) No assessment shall be made in respect of the income of any deceased person after the
expiry of three years after the end of the charge year in which such deceased person
died.

(4) An assessment made in accordance with generally prevailing practice is not affected by
any change in that practice after the time for objection to the assessment has expired.

(As amended by Act No. 26 of 1970, No. 14 of 1976 and No. 7 of 1996)

Taxpaying agents

66.(1) For the purposes of this Act, a taxpaying agent is, in relation to income -

(a) of a company, any of the individuals mentioned in subsection (1) of section sixty
nine;

(b) managed by an agent, the agent;

(c) remitted by a person or partnership in the Republic to a person who or partnership

which is outside the Republic, the person or partnership remitting the income;

(d) of a trust, a trustee of the trust;

(e) of a person who has died, his executor or administrator;

(f) of a deceased’s estate, the executor or administrator of the deceased person's

estate;

(g) of a bankrupt's estate, the trustee in bankruptcy;

(h) of an incapacitated person, his trustee, guardian, curator, committee or receiver

appointed by a court, as the circumstances of the case may require;

(i) of a company which is being wound up or is under judicial, management, the

liquidator or judicial manager.

(2) No provision concerning a taxpaying agent shall relieve any other person of any liability
under this Act.

(3) Every reference in this Act to a taxpaying agent is to him only as such, save where
otherwise provided.

(As amended by Acts No.23 of 1968 and No. 14 of 1976).

66
Assessment of taxpaying agent

67.(1) Every taxpaying agent, in respect of income which he receives as an agent, shall be
subject in all respects to the same duties, responsibilities and liabilities as if that income
were received by him beneficially and is assessed and charged in his own name in respect
of that income, but any such assessment is deemed to be made upon him as an agent.

(2) Any tax credit or deduction which might have been claimed by a person is allowed in
the assessment made upon his taxpaying agent as such an agent.

(As amended by Act No. 23 of 1968 and by Act No. 7 of 1996).

 Income Tax Act Part V

Right of taxpaying agent

68. Every taxpaying agent who pays tax in respect of income assessed on him is entitled to
recover the amount or that tax from the person on whose behalf the tax is paid or retain out
of any moneys that are or may come into his possession on behalf of that person so much as
is necessary to indemnify him for the payment.

Company’s taxpaying Agent

69.(1) Where a company carries on business or has a place of business in the Republic, a
director, the secretary or any individual concerned or appearing to be concerned in the
management of the company's business, is that company's taxpaying agent (and where a
company is being wound up or liquidated, the liquidator, receiver or manager of the
company, is that company's taxpaying agent) and with necessary modifications the
provisions of this Part relating to taxpaying agents apply accordingly.

(2) The Commissioner-General may require a company's taxpaying agent to answer for all
such acts and matters as the company might be required to answer for under this Act, and
if the company's taxpaying agent defaults in this requirement, he is liable to such
penalties as are provided for by this Act in the case of like default by an individual.

(As amended by Act No. 11 of 1973).

Errors in form

70. No assessment, document or proceeding under this Act is invalid -

(a) for any error in a person's name, if the erroneous name is or may be understood to
be that person's name, or the person has at any time been known by the erroneous
name, or one like it; or

(b) for any other error or defect, if the assessment, document or proceeding is in
substance in accordance with this Act.

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Part VI Income Tax Act

PART VI

PAY AS YOU EARN

Assessment, charge, collection and recovery

71.(1) On the making of any payment of, or on account of, any emolument, tax shall, subject to
and in accordance with regulations made by the Minister, be deducted or repaid by the
person or partnership making the payment, notwithstanding that when the payment is made
no assessment has been made in respect of the emoluments, and notwithstanding that the
emoluments are in whole or in part emoluments for some charge year other than the year
during which the payment is made, and, for the purposes of this subsection, payment shall
be deemed to be made when the emolument is received as provided in section five:

Provided that with reference to paragraph (1) of section forty four the requirements of this
subsection shall not apply to emoluments provided to employees in the form of non-
money fringe benefits.

(As inserted by section 12 of Act No. 11 of 1992 with efect from 1st April, 1992).

(2) Tax deducted, as reduced by any tax refunded, under subsection (1), shall be payable to the
Commissioner-General on the dates prescribed by the regulations made in accordance with
subsection (6).

(3) Where the tax payable in accordance with subsection (2) is not paid by the prescribed date,
a penalty equal to five per centum of the amount of tax payable but not paid shall be
chargeable thereto for each calendar month or part thereof for which, and to the extent that,
such tax remains unpaid, and for the purpose of any regulations relating to collection and
recovery of tax deducted under subsection (1), such penalty shall be deemed to be tax
deducted.

(4) Repealed by Act No. 9 of 1998.

(5) The Commissioner-General may, in his discretion, remit the whole or any part of the
penalty due under subsection (3) of this section.

(6)The Minister shall make regulations for the administration of this Part, and for the
assessment, charge, collection and recovery of tax in respect of emoluments accordingly,
and such regulations shall have effect notwithstanding anything in this Act.

(6A) Regulations under this section may create offences punishable with a fine not exceeding
ten thousand penalty units for any failure to comply with the provisions of the regulations,
other than a failure to which subsection (3) applies.

(Inserted by Act No. 6 of 1999)

(7) The Commissioner-General shall devise tax tables to ensure so far as possible, that -

(a) the total tax payable in respect of any emoluments for any charge year is
deducted from the emoluments paid during the year; and

(b) the tax deductible or repayable on the occasion of any payment of, or on account
of, emoluments in such that the total net tax deducted since the beginning of the
charge year bears to the total tax payable for the year the same proportion

69
 Income Tax Act Part VI

that the part of the year which ends with the date of the payment bears to the
whole year.

(8) In subsection (6), the references to the total tax payable for the year shall be construed as
references to the total tax estimated to be payable for the year in respect of the
emoluments, subject to a provisional allowance for deductions and tax credit and subject
also, if necessary, to an adjustment for amounts overpaid or remaining unpaid on account of
tax in respect of emoluments to which this section applies for any previous year.

(9) In estimating the total tax payable, it may be assumed, in relation to any payment of, or on
account of, emoluments, that the emoluments paid in the part of the charge year which
ends with the making of the payment will bear to the emoluments for the whole of that
year the same proportion that part of the year bears to the whole year.

(10) For the purposes of this section emoluments shall include any annuity or part thereof as is
not exempt from tax under paragraph 10 of the Second Schedule.

(As amended by Acts No. 26 of 1970; No. 11 of 1974, No. 11 of 1975 , No. 11 of 1992 and No 9
of 1998).

Assessments not always necessary

72.(1) Subject to the provisions of this section, no assessment need be made on an individual in
respect of his emoluments for any charge year if the total net tax deducted in the year in
question from his emoluments is the same as it would have been if all the relevant
circumstances had been known to all parties throughout the year, and deductions and
repayments had, throughout the year, been made accordingly, and had been so made by
reference to cumulative tax tables.

(2) In subsection (1) -

(a) “cumulative tax tables” means tax tables devised under the last preceding
section so as to require the tax to be deducted or repaid on each payment in the
year to be ascertained by reference to a total of emoluments paid in the year up to
the time of making that payment; and

(b) references to the total net tax deducted shall be construed as references to the
total tax deducted during the year by virtue of regulations made under the last
preceding section, less any tax repaid by virtue of any such regulations.

(3) Nothing in this section shall be construed as preventing an assessment being made on an
individual in respect of his emoluments and, without prejudice to this generality, an
assessment shall be made in respect of an individual's emoluments for any charge year if-

(a) the individual assessable, by notice in writing given to the Commissioner-General

within five years from the end of the charge year, so demands; or

(b) the Commissioner-General so elects.

(4) In any proceedings in regard to an assessment made under the subsection (3), that
assessment shall be treated as having been made in accordance with the practice generally
prevailing at the end of the year to which the assessment relates.

Priority on insolvency

73. In the distribution of the property of a bankrupt and in the distribution of the assets of

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Part VI Income Tax Act

any company being wound up, any sums due on account of tax deducted under this Part
shall be paid as if such sums were tax within the meaning of section three (d) of the
Preferential Claims in Bankruptcy Act (Cap 83), or the corresponding provisions of any Act
replacing that Act.

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 Income Tax Act Part VII

PART VII

DOUBLE TAXATION RELIEF

Double taxation agreements

74.(1) The President may enter into an agreement, which may have retrospective effect, with
the Government of any other country or territory with a view to the prevention, mitigation
or discontinuance of the levying, under the laws of the Republic and of such other country
or territory, of taxes in respect of the same income, or to the rendering of reciprocal
assistance in the administration of and the collection of taxes under the income tax laws of
the Republic and of such other country or territory.

(2) The Minister shall lay a copy of an agreement referred to in subsection (1) before the
Cabinet for ratification.

(3) As soon as may be after the conclusion and ratification of any such agreement, the terms
thereof shall be notified by the President by statutory instrument, whereupon, until such
statutory instrument is revoked by the President, the agreement shall have effect as if
enacted in this Act but only if, and for so long as, the agreement has the effect of law in the
other country or territory.

(4) The President may at any time revoke any such statutory instrument by a further statutory
instrument and the agreement shall cease to have effect upon the date fixed in such latter
statutory instrument, but the revocation of any statutory instrument shall not affect the
validity of anything previously done thereunder.

(5) The duty imposed by any law to preserve secrecy with regard to income tax shall not
prevent the disclosure to any authorised officer of the country or territory mentioned in any
statutory instrument issued in terms of subsection (3) of the facts, knowledge of which is
necessary to enable it to be determined whether immunity, exemption or relief ought to be
given or which it is necessary to disclose in order to render or receive assistance in
accordance with the arrangements noticed in such statutory instrument.

(As amended by Act No. 26 of 1970).

Double taxation relief

75.(1) This section applies where, by virtue of any agreement under this Part, tax (in this section
called foreign tax) payable to another country in respect of any income (in this section
called foreign income) is to be allowed as a credit against Zambian tax in respect of that
foreign income.

(2) The Zambian tax for any charge year in respect of foreign income is reduced by the
amount allowed as a credit in respect of that foreign income under any agreement under
this Part, but that reduction shall not exceed the amount of that foreign income included in
the income liable to tax under this Act, multiplied by the Zambian tax before the reduction,
divided by the sum of the income assessable under this Act and the income which the
Commissioner-General is prohibited from including in an assessment under provisos to
subsection (1) of section sixty-three.

(3) In this section, "Zambian tax" means income tax chargeable under this Act.

(As amended by Act No. 16 of 1972).

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Part VII Income Tax Act

Unilateral double taxation relief

76.(1) Where a person is liable to pay Zambian tax for any charge year in respect of income
received from a source within a country which has not entered into an agreement under
this Part (in this section called foreign income) and he has paid tax on that income in the
country from which it was received (in this section called foreign tax) then the Zambian
tax for that charge year in respect of the foreign income is reduced by the amount of
foreign tax, but that reduction shall not exceed the amount of that foreign income included
in the income liable to tax under this Act, multiplied by the Zambian tax before the
reduction, divided by the sum of the income assessable under this Act and the income which
the Commissioner-General is prohibited from including in an assessment under the
provisos to subsection (1) of section sixty three.

(2) In this section, "Zambian tax" means income tax chargeable under this Act.

(3) This section shall not apply to income which the Commissioner-General is prohibited from
including in an assessment under the provisos to subsection (1) of section sixtythree.

(As amended by Act No. 16 of 1972)

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 Income Tax Act Part VIII

PART VIII

COLLECTION, RECOVERY, REFUNDS AND RELIEFS

When tax due is payable

77.(1) Subject to the provisions of this Act, tax for any charge year payable by any person
required to submit a return under section .forty-six in respect of any income shall be due
and payable on 30th June immediately following the end of the charge year.

(IA) Any person who is liable to pay any tax in accordance with subsection (I) for any charge
year may deduct from the amount due-

(a) the amount of any payment of provisional tax which the person has made for that
charge year; and

(b) any amount of tax or provisional tax agreed by the Commissioner-General to have
been overpaid and which has not been refunded to that person or otherwise taken
into account

(1B) Any person who is required by section forty-six A to submit a return of provisional income
and tax any charge year shall make payments of provisional tax to the Commissioner-
General in accordance with subsections (1C) to (3).

(IC) Provisional tax for any charge year required to be paid under subsection (1B) shall be paid
during the charge year in four instalments, each one of which shall be equal to one quarter
of the amount of provisional tax shown in the return and shall paid after:

(a) 1st instalment on 31st March;

(b) 2nd instalment on 30th June;

(c) 3rd instalment on 30th September; and

(d) 4th instalment on 31st December

of the charge year to which such return of provisional income relates.

(As amended by Act No. 27 of 2011)

(1D) Notwithstanding subsection (1C), provisional tax required for the charge year ending 31st
December 2012, liable to be paid under subsection (1B), shall be paid during the charge
year in three instalments, each one of which shall be equal to one third of the amount of
provisional tax shown in the return and shall be paid as follows:

(a) 2nd instalment on 30th June, 2012;

(b) 3rd instalment on 30th September, 2012; and

(c) 4th instalment on 31st December, 2012.

(As amended by Act No. 27 of 2011)

(2) Any person who is liable to pay any provisional tax in accordance with subsection (IB) for
any charge year may deduct from the amount due any amount of tax or provisional tax
agreed by the Commissioner-General to have been overpaid and which has not been
74
Part VIII Income Tax Act
refunded to that person or otherwise taken into account.

(2A) A person who reduces an instalment of tax or provisional tax under this section shall-

(a) certify in writing to the Commissioner-General the amount of tax or provisional

tax overpaid and the charge year to which it relates; and

(b) attach to that certificate a copy of the Commissioner-General’s agreement that

the tax or provisional tax has been overpaid

(2B) Where a revised return is required to be made under subsection (4) or (6) of section forty-
six A by any date, the payments of tax required to be made in accordance with subsection (1B)
shall -
(a) in any charge year –
(i) be made in instalments on the dates specified in subsection (1C); and
(ii) be equal in amount to the amount of provisional tax shown in the return
divided by four; and

(b) in charge year ending 31st December, 2012-

(i) be made in instalments on the dates specified in subsection (1D); and
(ii) be equal in amount to the amount of provisional tax shown in the return
divided by three:

Provided that where an instalment payment has been made before an

instalment of a revised amount is due under this subsection, the
amount of that revised instalment shall be increased or reduced, as
the case may require, to take into account the excess or shortfall in
the earlier payment or payments.

(As amended by Act No. 27 of 2011)

(3) Any payment required by this section shall be made in such form as the Commissioner-
General may determine.

(4) Any tax payable by any person under an assessment made under subsection (3) of section
sixty-three or section sixty -four shall be due and payable on the date notice of the
assessment is given to the person under section sixty-five

(5) The Commissioner-General, may extend the time limited by subsections (1), (IC), (1D) and
(4) and where a time limit has been extended under this subsection, any reference elsewhere
in this Act or any regulations made under it to the time when any payment of tax or
provisional tax is due shall be construed as a reference to the time as so extended.
(As amended by Act No. 27 of 2011)

(6) Subsection (4) shall have effect notwithstanding that the person assessed objects to or
appeals against that assessment.

(Amended by Act No. 11 of 1992 and Act No. 6 of 1999)

Penalty for non-payment of tax

Subsection (1) is amended in paragraph (a) by the insertion of the word “or” after the semi
75
 Income Tax Act Part VIII
colon – Amendment Act No. 1 2009.

78.(1) Any person who fails to pay-

(a) any amount of tax within one month; or

(b) any amount of provisional tax within fourteen days

of the date on which that payment is due under section 77 shall be liable to the penalty
specified in subsection (2).

(2) Any person who fails to pay tax or provisional tax in accordance with section seventyseven
shall be liable to pay, in respect of each month during which that amount or any part of it
remains unpaid, an amount equal to five per centum of that amount or so much of it as
remains unpaid during the month in question.

(3) Where any person contravenes more than one provision of this Act in respect of tax or
provisional tax on the same income in respect of the same period of time that person shall,
under this section, be liable to pay only one penalty in respect of that contravention.

(4) Any penalties imposed under this section shall, for the purposes of this Act relating to
collection and recovery, be deemed to be tax.

(5) The penalty prescribed in subsection (1) and subsection (2) shall become due and payable
on the date of issue by the Commissioner-General of a notice to that effect.

(6) For the purposes of claiming relief under any of the provisions of this Act, any penalties
imposed under this section shall not be deemed to be part of the tax paid

(7) The Commissioner-General may, in his discretion, remit the whole or part of any penalties
due under this section.

(8) In the event of any refund of tax or any part thereof, the penalties imposed under this section
shall be reduced to the extent that the tax to which the penalties relate is set off or refunded
and the amount of such reduction shall be deemed to be tax paid in excess to which the
provisions of section eighty-seven shall apply.

(As amended by Acts No. 26 of 1970, No. 16 of 1972, No. 11 of 1973, No. 11 of 1975, No.
14 of 1976, No. 9 of 1977, No. 12 of 1982, No. 11 of 1992, No. 3 of 1997, No. 9 of 1998, No. 6
of 1999, No.1 of 2001,No 1 of 2008 and No. 1 of 2009 ).

Interest on overdue payments

78A.(1) Subject to subsection (3), any payment of tax which is overdue as specified in
regulations made under sections seventy-one or under section seventy-eight shall
attract interest at the rate prescribed in subsection (2) and shall continue to attract such
interest until such time as the payment of the tax has been remitted.

(2) The rate of interest prescribed for the purpose of sub-section (1) shall be the discount
rate published from time to time by the Bank of Zambia plus two per centum per
annum.

(3) The Commissioner-General may remit the whole or part of any interest due under this
section.

(4) Any interest imposed under this section shall, for the purposes of this Act relating to
collection and recovery, be deemed to be tax.

76
 (As amended by Act No.14 of 1994, Act No. 9 of 1998 and Act No. 6 of 1999)

Recovery and Proceedings

79. (1) Tax is a debt to the Government and may be recovered by the Commissioner-General
either by distress or by suit in any court of competent jurisdiction.

(2) Notwithstanding the other provisions of this Act where tax is found to be owing to the
Republic under this Act, the Commissioner General may, by notice in writing issued to
any individual or person, fix a date for the payment of such tax.

Provided that where payment of the tax referred to in this section is to be made by
instalments, the Commissioner General may set different dates for the payment of such
tax.

(As amended by Act No. 17 of 1971.)

Recovery by distress

79A.(1) Any officer appointed for the purpose of carrying out the provisions of this Act may,
under warrant by the Commissioner-General, levy distress upon the goods and chattels of the
person or partnership from whom tax is recoverable.

(2) For the purposes of levying any such distress, the officer authorised under warrant by the
Commissioner-General, together with such servants or agents as the officer may consider
necessary, may break open at any time between sunrise and sunset, any premises; and the
officer so authorised may require any police officer to be present while such distress in
being levied and any police officer so required shall comply with such requirement.
Part VIII Income Tax Act

(3) A distress levied under this section shall be kept for ten days either at the premises at
which such distress is levied or at such other place as the person authorised under warrant
may consider appropriate at the cost of the person or partnership from whom such tax is
recoverable.

(4) If the person or partnership from whom such tax is recoverable does not pay the tax due
together with costs incurred in levying the distress and all other costs incidental thereto
within the period of ten days mentioned in subsection (3), the goods and chattels upon
which distress has been levied shall be sold by public auction, sealed tender or bids and the
proceeds realized from such sale shall be applied towards the payment of the said costs and
all further costs incurred in completing such sale and, the surplus, if any, shall be applied in
the payment of the tax and, the balance, if any, shall be paid to such person or partnership
after deducting any further tax liable to be paid by such person or partnership.

(5) Where the full amount of the tax due and all the costs, mentioned in subsection (4) are not
recovered, the Commissioner-General may recover the deficiency either in accordance with
section 79B or any other provision contained in this Act.

(6) No civil or criminal proceedings shall be instituted against any officer for any act or
omission arising out of the levying of distress.

(7) If the person or partnership upon whose goods or chattels distress is to be levied, or has
been levied, fraudulently removes and conveys away such goods or chattel to prevent the
Commissioner-General from distraining them or completing the distress so levied, or if
any person or partnership wilfully and knowingly aids or assists such person or partnership
in such fraudulent conveying away or carrying off any part of such goods or chattels or in
concealing the same, every person or partnership so offending:

(a) shall forfeit to the Commissioner-General a sum equal to double the value of the
goods or chattels carried off or concealed as aforesaid, to be recovered by action;
and

(b) shall be guilty of an offence and liable on conviction to a fine not exceeding ten
thousand penalty units or to imprisonment for a term not exceeding twelve
months, or to both.

(As amended by Acts No. 17 of 1971, No. 14 of 1976, No. 9 of 1977, No.6 of 1999 and No. 1
of 2009 )

Recovery through court

79B.(1) Notwithstanding anything to the contrary contained in any law, the Commissioner-
General may institute proceedings in any subordinate court of the first or second class for
the recovery of any tax or other amount recoverable under this Act.

(2) Any officer appointed for the purposes of carrying out the provisions of this Act may
represent the Commissioner-General in the proceedings referred to in subsection (1)
and for that purpose may conduct any such proceedings and shall have a right of
audience in subordinate courts of the first or second class, notwithstanding any law to
the contrary.

(3) Proceedings in any court for the recovery of any tax or other amount are deemed to be
proceedings for the recovery of a debt validly acknowledged in writing by the debtor.

(4) In any proceedings for the recovery of tax -

(a) it is not competent to question any assessment whether or not an objection or

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 Income Tax Act Part VIII

appeal has been made against such assessment; and

(b) the mere production of an assessment or any document under the Commissioner'-
Generals hand or the hand of any officer duly authorised by him is conclusive
evidence as to the contents of the assessment or document.

(As amended by Act No. 17 of 1971).

Charge on land

79C.(1) Notwithstanding anything to the contrary contained in any other law, where a person or
partnership from whom tax is due is the owner of land situated in the Republic, the
Commissioner-General may give notice to the person or partnership in writing that the
amount of tax due shall be a charge on such land and such charge shall, without
registration that may be required under any law relating to the registration of charges
upon land, be effective from the date of service of the notice for so long as such land
remains in the ownership of such person or partnership or until the notice is withdrawn.

(2) For the purposes of this section, “land” includes any vacant piece or parcel of land and
also any buildings or improvements on any piece or parcel of land.

(As amended by Act No. 17 of 1971 and No. 14 of 1976).

Recovery of partner's tax from partnership

79D. Where the tax due by a person relates in whole or in part to tax charged on income derived
from a partnership, the tax charged on such income shall, where notice in writing to this
effect is given by the Commissioner-General to the partnership, be due from such
partnership and the provisions of this Act relating to collection and recovery shall apply as
if such tax had been charged on the partnership.

(As amended by Act No. 14 of 1976) 80.

Repealed by Act No. 9 of 1998.

Deduction of tax from dividends

81.(1) Subject to the provisions of this section, every company incorporated in the Republic
shall deduct from every payment of dividend, other than a dividend paid to the
Government, tax at the rate specified in the Charging Schedule or as the Commissioner-
General directs to -

(a) give effect to the provisions of any agreement made under section seventy -four;
or

(b) give effect to the provisions of the Second Schedule;

and shall account for such tax as if the payment were subject to Part VI (which relates to
Pay As You Earn); and for the purposes of this subsection payment shall be deemed to be
made on the day the dividend accrues to the share or stockholders as provided in subsection
(2) of section five.

(2) Subject to the provisions of this section, where, in a charge year a company has received
dividends from which tax has been deducted under subsection (1), the total amount which
the company is liable to account for under subsection (1) on dividends paid in the charge
year shall, as far as possible, be reduced by the amount of tax so deducted, and
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 Part VIII Income Tax Act

the company shall be liable to account only for the balance remaining after such reduction.

(3) Subject to the provisions of this section, where the total amount of tax deducted from
dividends in a charge year as referred to in subsection (2) exceeds the amount which a
company is liable to account for on dividends paid in the charge year before the operation
of subsection (2), the excess shall, as far as possible, be deducted from the total amount
which the company is liable to account for on dividends paid, after the operation of
subsection (2), in the following charge year and so on from year to year until the excess is
extinguished.

(4) Where in any charge year after the operation of subsections (2) and (3) there is an excess
available to be deducted in accordance with subsection (3) from the amount which a
company is liable to account for in the following or a subsequent charge year and the
company was directed by the Commissioner-General to deduct tax from dividends paid in
the charge year in accordance with paragraph (a) or (b) of subsection (1), then the
difference between what the company would have been liable to account for but for the said
direction and the amount the company is liable to account for before the operation of
subsections (2) and (3) (not exceeding the amount of excess available), shall be deemed to
be tax paid in excess to which the provisions of section eighty seven shall apply and the
excess available to be deducted in the following or a subsequent charge year shall be
reduced by the amount so treated as tax paid in excess.

(5) Every company, upon payment of a dividend as provided in subsection (1), shall furnish
the share or stockholder to whom the dividend is paid with a certificate stating in relation
to the dividend -

(a) the share or stock or stockholder’s name and address;

(b) the date of payment;

(c) the amount of dividend payable before deduction of tax;

(d) the amount of tax deducted;

(e) the net amount paid; and

(f) such other particulars as the Commissioner-General may by notice in writing

require;

and shall send a copy of the certificate to the Commissioner-General.

(6) The certificate furnished under subsection (5) shall be treated as if it were an assessment for
the purposes of Part XI only, and the date of service shall be deemed to be ten days after
the date of payment shown thereon.

(7) Repealed by Act No. 9 of 1998.

(As amended by Acts No.11 of 1974, No.11 of 1975, No. 14 of 1976, No.10 of 1979, No.9 of 1998)

Deduction of tax from payments to non-resident contractors

81A (1) Every person or partnership on making any payment on or after 1st April, 1998, to or on
behalf of a non-resident contractor in respect of construction or haulage operations,
irrespective of whether such payment is made outside the Republic or not, shall, before

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 Income Tax Act Part VIII

making any other deductions whatsoever, deduct tax from such payment at the rate
specified in the Charging Schedule and that person or partnership shall account for such
tax as if it were a payment subject to Part VI of the Act.

(2) For the purposes of this section -

(a) “non-resident contractor” means -

(i) an individual, who is neither resident nor ordinarily resident in the

republic; or

(ii) any other person or partnership who is not resident in the republic and
who does not have a permanent establishment in the Republic;

(b) a partnership shall be resident in the Republic-

(i) if the partners are resident or ordinarily resident in the Republic; or

(ii) if they are not all resident or ordinarily resident in the Republic, where
the majority of the partners are resident or ordinarily resident in the
Republic;

(c) “construction operations” include -

(i) the erection, alteration, maintenance, repair, extension or demolition of

any building or structure, whether permanent or not;

(ii) the installation in any building or structure of heating, elevators, air

conditioning, ventilation, power, drainage, sanitation, water or fire
protection, or like supplies or services;

(iii) the painting or decorating of the internal or external surfaces of any

building or structure;

(iv) any operations which are an integral part of, or prior to, or which render
complete, the operations described in paragraphs (i) to (iii) of this
subsection; and

(d) “haulage operations” includes transportation by land, water or air of persons,

livestock or any goods whatsoever including farm produce, or produce of a like
nature, or ores and minerals, food stuffs and merchandise.

(Added by Act No 9 of 1998)

Definition of permanent establishment

81AA. (1) Where a person, other than an agent of an independent status to whom subsection
(2) applies is acting on behalf of an enterprise and has, habitually exercises, in the
Republic an authority to conclude contracts in the name of the enterprise, that
enterprise shall be deemed to have a permanent establishment in the Republic in
respect of any activity which the person undertakes for the enterprise, unless the
activities of such person are limted to those mentioned in subsection (4) which, if
exercised through a fixed place of business, would not make this fixed place of
business a permanent establishment under the provisions of that subsection.

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 (2) An enterprise shall not be deemed to have a permanent establishment in the
Republic merely because it carries on business in the Republic through a broker,
general commission agent or any agent of an independent status, provided that such
persons are acting in the ordinary course of business.
(3) The fact that a company which is a resident of th Republic controls or is controlled
by a company which is a resident of another country, or which carries on business
in that other country (whether through a permanent establishment or otherwise,
shall not of itself constitute either company a permanent establishment of either
country.
(4) For purposes of subsection (1) the following activities shall not make a fixed place
of business a permanent establishment:
(a) the use of facilities solely for the purpose of storage or display of goods
or merchandise belonging to the enterprise;
(b) the maintenance of the sock of goods or merchandise belonging to the
enterprise solely for the purpose of storage or display;
(c) the maintenance of stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed plaxce of business solely for the purpose of
purchasing goods or merchandise, or for collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of
carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character; or
(f) the maintenance of a fixed palce of business solely for any combination
of activities mentioned in paragraph (a) to (e), provided that the overall
activity of the fixed place of business resulting from this combination is
of a preparatory or auxiliary character.

(5) For the purposes of section eighty-one A, “permanent establishment” means a

fixed place of business at which the business of an enterprise is wholly or partly
carried on and includes –
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, quarry or any other place of
extraction or exploitation of natural resources;
(g) a building site, a constrution, assembly or installation poject or
supervisory activity in connection with such site or activity, but
only where such sites, project or activity continues for a period,
or periods, or more than one hundred and eighty-three days;
(h) the furnishing of services, including consultancy services, by an
enterprise through employees or other personnel engaged by an
enterprise for such purpose, but only where activities of that
nature continue (for the same or connected project) within the
Republic for a period or periods exceeding in the aggregate one
hundred and eighty-three days in any twelve month period
commencing on or ending in the fiscal year concerned.

(Inserted by Act No. 7 of 2006)

Tax Clearance Certificate

81B. (1) Where any person, institution or authority is empowered by any written law or
otherwise to register the transfer of any property, that person, institution or authority shall
not register the transfer unless the person or partnership transferring the property produces
a tax clearance certificate issued to them for the purpose of the transfer.
Part VIII Income Tax Act
(2) Any person, institution or authority empowered to issue a trading licence under the Trades
Licensing Act or any other written law shall not issue the trading licence to any applicant
unless the applicant produces a tax clearance certificate.

(3) Any person, institution or authority empowered to issue a permit or mining licence under
the Mines and Minerals Act shall not issue the permit or licence to any applicant unless the
applicant produces a tax clearance certificate.

(4) A person, partnership, institution, organisation or association shall not transact with a
supplier of goods or services unless the supplier produces a tax clearance certificate:

provided that the Minister may by regulations determine the threshold at which goods
or services may be supplied by a person or partnership without the requirement of a tax
clearance certificate.

(5) The Commissioner General may by notice in writing cancel a tax clearance certificate and
the cancellation shall have effect from the date of service of the notice on the holder of the
tax clearance certificate.

(6) The holder of a tax clearance certificate shall, within thirty days after the date of service
and of the notice of cancellation of the certificate, return the certificate to the Commissioner
General.

(7) For purposes of this section-

“mining licence” means a small scale or large scale gemstone licence, or a small

scale or large scale mining licence.

"property” has the meaning assigned to it in the Property Transfer Tax Act; and

(As amended by Act No. 27 of 2011)

“tax clearance certificate” means a certificate issued by the Commissioner-

General,valid for such period as may be specified in it, stating that the person or
partnership to whom or to which it is issued fulfilled all obligations imposed upon
them or it by this Act and by any other Act for which the Commissioner-General is
responsible or has made arrangements satisfactory to the Commissioner-General for
doing so.

(Amended by Acts No. 28 of 1988, No. 7 of 1996, No. 1 of 2001, No. 3 of 2003, substituted by No of
2005 and amended by Act No. 27 of 2009).

Advance tax on income in respect of imported goods

81C (1) Subject to subsection (3), every person or partnership importing goods for commercial
purposes shall pay advance tax on income in respect of those goods at the port of entry
at the rate specified in the Charging Schedule:

Provided that the provisions of this subsection shall not apply to goods which
are imported for personal use.

(2) At the end of each charge year, any person who or partnership that has paid the advance
tax referred to in subsection (1) shall submit the receipt issued in respect of payment
with the returns made under section forty-six.

(3) The Minister may, in consultation with the Commissioner-General, by statutory

instrument, prescribe –

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 Income Tax Act Part VIII
(a) the circumstances under which the provisions of this section shall not apply to any
person or partnership; or
(b) the extent to which and the period for which the provisions of this section shall not
apply to any person or partnership, as the case may be.

Deduction of tax from lump sum payments.

82. (1) Every person or partnership on making payment from an approved fund of a lump sum
payment shall, before making any other deductions, deduct tax from such part of the
payment as is liable to tax at the rate specified in the Charging Schedule and that person
or partnership shall account for such tax as if the payment were subject to Part
V1(which relates to Pay As You Earn) and for the purposes of this subsection payment
shall be deemed to be made when the income is received by the recipient as provided in
section five.

(2) Every person or partnership on making a payment referred to in subsection(1) shall

furnish the person or partnership to, or on behalf of whom it is made with a certificate
stating, in relation to the payment-

(a) the title of the approved fund;

(b) the date of approval of the fund;

(c) the date of the payee’s admission to the fund;

(d) the date of change in contribution rates if increased since 30th June, 1960;

(e) the payee’s name and address;

(f) the date of payment;

(g) the gross amount of the payment;

(h) the amount of tax deducted under subsection (1);

(i) the net amount of the payment; and

(j) such other particulars as the Commissioner-General may, by notice in writing

require;

and shall send a copy to the Commissioner-General.

(As amended by Acts No. 26 of 1970, No. 11 of 1974, No. 14 of 1976 and No. 6 of 1999)

Deduction of tax from certain payments

82A.(1) Subject to the provisions of this section, every person or partnership making a payment
of-

(a) a management or consultant fee deemed under section eighteen to be from a

source within the Republic;

(b) interest and royalties from a source within or deemed, under section eighteen, to
be within the Republic:

Provided that-
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Part VIII Income Tax Act

(i) this section shall not apply to interest payable on a bill of exchange
drawn for one hundred and eighty days or less; and

(ii) the payment of any amount in excess of the original issue price for any
treasury bill or any similar financial instrument sold at a discount from
face value shall be deemed for the purposes of this section to be
payment of interest when any such treasury bill or any other similar
financial instrument is presented for redemption or re-discount;

(c) rent from a source within the Republic;

(d) commissions, other than commissions received by an individual whose income is

from employment or office;

Provided that the Commissioner-General may determine that the provisions of

paragraph (c) or (d) shall not apply in any particular case and shall, in writing,
direct the person or partnership concerned in that behalf; and the provisions of
paragraph (c) or (d) as applicable shall not apply to such person or partnership to
the extent and to the period specified in such direction.

(e) a public entertainment fee to, or on behalf of, a person or persons in partnership
not resident in the Republic, or

(g) commission deemed under section eighteen to be from a source within the
Republic;

irrespective of whether such payment under this subsection is made outside the Republic,
shall, before making any other deductions, deduct tax from the payment referred to in
paragraphs (a), (b), (c), (d), (e) and (f) at the rate specified in the Charging Schedule or as
the Commissioner-General may direct to give effect to the provisions of any agreement
made under section seventy -four or the provisions of the Second Schedule and that person or
partnership shall account for such tax as if that payment were subject to Part VI and for the
purposes of this Subsection, payment shall be deemed to be made when the income is
received by the recipient as provided in section five.
(As amended by Act No. 27 of 2011)

(2) Every person or partnership shall, on making the payment referred to in subsection (1),
record on the form prescribed by the Commissioner-General the amount of the payment,
the amount of tax deducted and such other particulars as the Commissioner-General may
require.

(3) Within fourteen days from the end of the month in which the payment from which tax is
required to be deducted under subsection (1) was made, the person or partnership making the
payment, shall forward to the Commissioner-General the form referred to in subsection (2)
together with a statement and declaration in the form prescribed by the Commissioner-
General.

(4) Within fourteen days of the end of the month in which any payment under subsection (1) is
made, the person or partnership making the payment shall furnish each person or
partnership to or on behalf of whom a payment has been made with a certificate stating the
amount of the payment made to or on behalf of such person or partnership, the amount of
tax deducted there from, the date of issue of the certificate and such other particulars as the
Commissioner-General may require.

(5) The certificate issued under subsection (4) shall be treated as if it were an assessment for
the purposes of Part XI only and the date of service shall be deemed to be fourteen days
after the end of the charge year in which the payment to which the certificate relates was
made.

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 Income Tax Act Part VIII

(6) For the purposes of this section "rent" means a payment in any form, including a fine,
premium or any like amount, made as a consideration for the use or occupation of or the
right to use or occupy any real property including personal property directly connected
with the use or occupation of, or the right to use or occupy such real property.

(7) Any person who, or partnership which, receives from the Commissioner-General a receipt
showing that such person or partnership has deducted tax under this section from any
payment of rent shall, within fourteen days from the day of receiving such a receipt furnish
that receipt to the payee of the rent.

(8) Where a person fails to furnish the Commissioner-General or any other person authorised
by the Commissioner-General with any document in accordance with the requirements of
this section, there shall be charged a penalty of –

(a) in the case of an individual one hundred and seventy penalty units per month or
part there of during which such failure continues; or

(b) in the case of a company, three hundred and forty penalty units per month or part
thereof during which such failure continues:

provided that the Commissioner-General may remit the whole or part units per month or
part there of during which such failure continues of any such penalty.

(As amended by Acts No. 11 of 1973, No. 11 of 1974, No. 11 of 1975, No. 9 of 1977, No. 11 of 1984,
No. 11 of 1985, No. 8 of 1986, No. 14 of 1987, No. 4 of 1993, No. 11 of 1992, No 4 of 1993, No. of
1994, No. 9 of 1995, No. 6 of 1999, No. 4 of 2000, No.1 of 2001 and No 1 of 2004)

Definition of property

82B. For the purposes of sections eighty-three, eighty -four and eighty six "property" shall
include moneys, cheques, promissory notes and all other kinds of bills of exchange, and
movable and immovable property of whatsoever nature and kind.

(As amended by Act No. 17 of 1971).

Property not in possession

83. Any person or partnership who holds or is in possession of any kind of property whatsoever
on behalf or on account of another person or partnership shall give the Commissioner-
General all such information in relation to that property as the Commissioner-General may
require, and, in relation to any tax due by that other person or partnership, the
Commissioner-General’s rights in regard to any such property are the same and may be
exercised in as full and ample a manner as if the property were held or in the possession of
that other person or partnership.

(As amended by Act No. 14 of 1976).

Agent for payment of tax

84.(1) Any person or partnership may be declared by the Commissioner-General to be an agent

for the payment of tax due by another person or partnership.

(2) Any person or partnership declared to be an agent in pursuance of subsection (1) shall
apply to the payment of the tax due so much of any kind of property whatsoever held by
him or coming into his hands on behalf of the person or partnership from whom the tax is
due as is sufficient to pay such tax, and any such agent is hereby indemnified against any
person or partnership whatsoever in respect of all payments so made by him.
86
(3) Where the Commissioner-General has reasonable ground to believe that a person or
partnership has disposed of any kind of property whatsoever without full consideration in
money or money’s worth to another person or partnership with the intention of avoiding
payment of tax that is or may become due, he may declare such other person or partnership
an agent for the payment of tax due from the person or partnership which has disposed of
the said property and such property shall, for the purposes of subsection (2), be deemed to
be property held by such other person or partnership on behalf of the person or partnership
which has disposed of the said property to the extent that the open market value of the said
property at the time of the disposal exceeds the consideration given.
Part VIII Income Tax Act

(4)Any person or partnership declared by the Commissioner-General to be an agent for the

payment of tax due by another person or partnership under the provisions of any previous
enactment shall be deemed to have been declared an agent under the provisions of
subsection (1).

(5)Notwithstanding the other provisions of this section, where a shareholder of a company is

absent from Zambia the company shall be deemed to have been declared an agent for the
payment of tax due by the shareholder under subsection (1):

Provided that this subsection shall not apply to a company the ordinary share capital of
which may be bought or sold on a stock exchange or which is controlled by any such
company or any company controlled directly or indirectly by Government.

(6) Any person who wilfully obstructs or wilfully attempts to obstruct an agent in the execution
of the duties imposed upon him by this section shall be guilty of an offence and shall, upon
conviction, be liable to a fine not exceeding thirty thousand penalty units or to
imprisonment for a term not exceeding three years, or to both.

(As amended by Acts No. 17 of 1971, No 11 of 1974, No. 14 of 1976, No. 9 of 1977, No. 11 of 1992
and No. 13 of 1994).

85. Repealed by Act No. 7 of 1996.

Liability where property alienated

86. Every person who or partnership which is an agent in accordance with the provisions of
section sixty-six or declared to be an agent in accordance with the provisions of section
eighty -four and who or which alienates or charges any kind of property whatsoever from
which tax ought to have been paid by such person or partnership shall be liable for such
tax as if it were tax charged on that person or partnership.

(As amended by Act No. 14 of 1976).

Refunds in general

87.(1) Where for any charge year any person or partnership claims that tax has been paid or is
deemed to have been paid by deduction or otherwise in excess of the amount-

(a) liable to be paid by the person or partnership in accordance with the provisions of
this Act;

(b) deductible by the person or partnership in accordance with the provisions of this
Act;

(c) liable to be paid by the person or partnership because relief is due in accordance
with the provisions of sections seventy-six, eighty-eight, eighty-nine, ninety,
ninety A, ninety-one, ninety-five, ninety-five D, or one hundred and thirteen;

the Commissioner-General shall make such assessment or adjustments as are necessary to

determine the amount of such excess and shall give written notice to the person or
partnership of the amount so determined as paid or deemed to have been paid in excess.

(2) A claim under subsection (1) shall be made in accordance with the provisions of the section
or Schedule under which it is made, or if none, the claim shall be made in writing to the
Commissioner-General not later that six years after the end of the charge year to which the
claim relates, or if later, six years after the date of service of the notice of

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 Income Tax Act Part VIII

assessment or of the notification of an amount of tax deductible under the provisions of

this Act in the charge year, to which the claim relates.

(3) Where any tax is due and payable to the Commissioner-General for any charge year under
this or any other Act, the amount of the excess shall first be applied towards the
satisfaction of the tax so due and payable to the extent of such tax, and the Commissioner-
General shall give written notice to the person or partnership of the amount so applied:

Provided that-

(i) such part of the excess which relates to tax paid by deduction shall be deemed to
be available for application on the last day of the charge year to which the excess
relates; and

(ii) subject to the provisions of section ninety-five D, such part of the excess which
relates to tax paid or deemed to have been paid other than by deduction shall be
available for application on the day such part was paid or deemed to have been
paid.

(4) Where any person or partnership claims a refund of the amount of the excess adjusted in
accordance with the provisions of subsection (3), the Commissioner-General shall refund
such adjusted excess.

(5) A claim under subsection (4) shall be made in writing to the Commissioner-General not
later than six years after the end of the charge year to which the excess relates or, if later,
six years after the date of service of a written notice of the amount of the excess given in
accordance with the provisions of subsection (1).

(As amended by Acts No. 11 of 1975 , No. 14 of 1996, No. 10 of 1979 and No. 9 of 1998).

Refunds in cases of accumulated income

88.(1) Where under any will or settlement, other than a settlement to which section nineteen or
ninety-seven applies, any income (in this section referred to as the trust income) arising
from any fund is accumulated for the benefit of any individual contingently on his
attaining some specified age or marrying, then, if such individual claims and the
Commissioner-General determines that such contingency has happened, the sum equal to the
amount by which the total amount of tax paid on the trust income during the period of
accumulation exceeds the total amount of additional tax which would have been paid by
him during such period if such trust income and the income from any other fund subject to
the like trust for accumulation has been included in his income shall be deemed to be tax
paid in excess to which the provisions of section eighty-seven apply; but in calculating
such sum a deduction shall be made in respect of any tax paid by the trust and already
repaid to him.

(2) Every claim under this section shall be made in writing to the Commissioner-General within
six years after the expiry of the charge year in which the contingency happened.

(As amended by Act No. 14 of 1976).

Refund or set-off of tax chargeable on a beneficiary

89. Where a beneficiary entitled to the whole or part of the income of a trust or deceased's
estate is assessed and chargeable to tax for any charge year in respect of that income, any

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Part VIII Income Tax Act

tax paid by a trust or deceased's estate and attributable to the income so assessed and
charged on the beneficiary shall be set off against the tax chargeable for that charge year
on the beneficiary and the provisions of section eighty-seven shall apply to any amount so
paid in excess of such tax chargeable.

(As amended by Act No. 14 of 1976).

Refund or set-off of tax deducted from dividends, etc.

90. The amount of tax deducted from or paid under sections eighty, eighty-one, eighty-one A,
eighty-two or eighty-two A on income received by a person for any charge year shall be
set-off against the tax chargeable on his income for that charge year and the provisions of
section eighty-seven shall apply to any tax so deducted or paid in excess of the tax so
chargeable:

Provided that-

(i) subject to paragraph (ii), where the amount of tax which a company is required by
subsection (1) of section eighty-one to account for in any charge year is reduced
by an amount of tax which has been deducted from dividends received by the
company in that year, the amount of tax on income from dividends received by
the company in that year which may be set off under this section against the tax
chargeable on the company’s income for that year shall be the balance of that tax
after any such reduction;

(ii) in the case of a person who is not resident in the Republic for a charge year and
who receives dividends in such charge year, subject to the provisions of any
agreement under section seventy -four, the tax deducted under section eighty one
shall not be set-off or refunded;

(iii) in the case of a person who receives a lump sum payment, the tax deducted under
section eighty two shall not be set-off or refunded; and

(iv)in the case of a person who is not resident in the Republic for a charge year and
who receives interest, royalties management or consultant fees, or public
entertainment fees in such charge year, subject to the provisions of any
agreement made under section seventy -four the tax deducted under section
eighty two A shall not be set-off or refunded.

(As amended by Acts 16 of 1972, No. 11 of 1973, No. 11 of 1974, No 11 of 1975, No. 4 of
1976, No. 9 of 1978 and No. 10 of 1979).

Job credits

90A. The Minister may, by statutory order, provide for the granting of job credits in such
amounts, for such periods and for such employees of such businesses as may be prescribed
therein:

Provided that any such order may be made with retrospective effect.

(As amended by Act No. 6 of 1980).

90B. Repealed by Act No. 9 of 1977.

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 Income Tax Act Part VIII

Error or mistake relief

91.(1) If any person alleges that an assessment is excessive by reason of some error or mistake
in the return or statement made by him for the purposes of the assessment, he may, at any
time, not later than six years after the end of the charge year in respect of which the
assessment was made, make an application in writing to the Commissioner-General for
relief.

(2) On receiving any such application, the Commissioner-General shall inquire into and
determine the matter and shall, subject to the provisions of this section make any
assessment or adjustments necessary to give effect to such determination and the
provisions of section eighty-seven shall apply to any tax paid in excess as a result of such
determination.

(3) In determining any application under this section, the Commissioner-General shall have
regard to all the relevant circumstances of the case, and in particular shall consider whether
the granting of relief would result in exclusion from the charge to tax of income of the
applicant, and for this purpose the Commissioner-General may take into consideration the
liability of the applicant and assessments made upon him in respect of the other years.

(As amended by Act No. 26 of 1970 and by Act No. 14 of 1976).

Remission of Tax

92.(1) The Commissioner-General may remit tax if he is satisfied that it is not recoverable; and
where the person to be charged with tax is also subject to equity levy under the Equity levy
Act, 1982 (Cap 338), and the amount of the equity levy is greater than the amount of tax
payable under this Act, the Commissioner-General shall remit such tax.

(2) On the Commissioner-General’s recommendation the Minister may remit tax if he is

satisfied that it is just to do so.

(3) This section shall not give rise to any appeal or other proceedings.

(As amended by Act No. 23 of 1968 and by Act No. 12 of 1982)

Reduction in tax for tax free zones

92A. The Minister may, by statutory instrument, exempt from, or reduce the payment of
corporate tax, income tax and withholding tax on dividends for investors in manufacturing,
agriculture, commercial banking and insurance who operate in an area declared a tax free
zone under the customs and excise Act to such an extent as may be specified in that
statutory instrument.

(Inserted by Act No. 8 of 2001)

Tax less than one hundred thousand kwacha not payable.

93. Notwithstanding anything contained in this Act, no tax in respect of a Charge year shall be
payable by a person if the tax with which the person is chargeable in respect of that year is
less than one hundred thousand Kwacha.

(As amended by Acts No. 11 of 1992, No. 2 of 1995, No. 7 of 1996 and No. 4 of 2000).

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Part IX Income Tax Act

PART IX AVOIDANCE

No set-off or refund where that is the object of change of ownership of shares in company

94. The Commissioner-General shall not allow any set-off or refund of tax deducted under
section eighty-one where he determines that the object, or one of the objects of a change in
ownership of shares in a company, whether direct or indirect, was to obtain such setoff or
refund.

Transaction designed to avoid tax liability

95.(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 (whether
before or after the commencement of this Act) 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, he may, if he determines it to be just and
reasonable, direct that such adjustments shall be made as respects liability to tax as he
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 subsection (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;

(b) the charging of a greater amount of tax than would be chargeable but for the
adjustments; and

(c) repealed 1999

(3) Any direction of the Commissioner-General under this section shall specify the transaction
giving rise to the direction and the adjustments as respects liability to tax which the
Commissioner-General considers appropriate.

(As amended by Acts No. 26 of 1970, No .16 of 1972, No. 11 of 1973, No. 14 of 1979, No. 6 of 1980, No.
6 of 1981, No. 12 of 1982 and No .6 of 1999).

95A. Repealed by Act No. 12 of 1982.

Inter-company shareholdings

95B.(1) Where shares in any company are held by-

(a) another company or other companies, some or all of whose shares are held by the
first mentioned company; or

(b) a company which is not incorporated in the Republic some or all of whose shares
are held by-

(i) an individual who is resident in the Republic; or

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 Income Tax Act Part IX

(ii) a nominee on behalf of the individual mentioned in sub-paragraph(i);

whether by direct holding or through an interest in some other company or

companies, the Commissioner-General may, by notice in writing to the companies
concerned, direct that, for the purposes of this Act, the shares of all or any such
companies shall be deemed to be held in such manner as he shall determine
(notwithstanding the actual share-holdings in such companies) and any distribution of
dividends by those companies shall be deemed to have been received by the
shareholders so determined in such companies in accordance with such determination.

(As amended by Act No. 16 of 1972 and by Act No. 11 of 1984).

95C. Repealed by Act No. 7 of 1996.

Loans to effective shareholders

95D.(1) For the purposes of this section-

"amount of a loan" means the amount of money advanced, the extent of credit facilities
provided, the difference between the cost of providing any benefit or advantage and
the amount paid for such benefit or advantage when provided or the difference
between the open market value, as determined by the Commissioner-General, of an
asset transferred and the amount paid for this at the date of transfer, as the case may
be;

"grossed up equivalent of a loan" means such an amount as after deduction of tax at the
highest rate specified in the Charging Schedule in respect of the income of an
individual for the charge year in which the loan is made, is equal to the amount of the
loan;

"loan" includes any advance of money, the provision of credit facilities, the provision of
any benefit or advantage (whether or not such benefit or advantage is capable of being
turned into money or money's worth) and the transfer of an asset.

(2) Subject to the other provisions of this section, where in any charge year a company makes,
directly or indirectly, any loan to any person who at the time the loan is made is an
effective shareholder of the company or a nominee of the effective shareholder, the
company shall pay, without assessment, such an amount as is equal to the difference
between the amount of the grossed up equivalent of the loan and the amount of the loan, as
if the amount were tax charged on the company.

(2A) Subsection (2) shall not apply where the ordinary business of the lender includes the
making of loans and the loan is a normal commercial loan made in the ordinary course of
that business,

(3) Subject to the other provisions of this section, the amount which a company is liable to pay
under this section shall be due and payable to the Commissioner-General within fourteen
days after the end of the income tax month in which the loan is made and for the purposes of
this section a loan shall be deemed to be made by when the loan would have been received,
as provided by section five, by the effective shareholder or the nominee, if the loan had been
income of the effective shareholder or of the nominee.

(4) On making payment of any amount due under this section, the company shall furnish the
Commissioner-General with a certificate stating in relation to the loan in respect of which
the amount is being paid-

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Part IX Income Tax Act

(a) the name and address of the person to whom the loan has been made;

(b) the date the loan was made;

(c) the grossed up equivalent of the amount of the loan;

(d) the amount of the payment;

(e) the amount of the loan; and

(f) such other particulars as the Commissioner-General may, by notice in writing,

require;

and shall send a copy of the certificate to the person to whom the loan was made.

(5) The Commissioner-General may, in his discretion, extend the time limited by subsection (3)
within which the amount payable under this section shall be paid.

(6) Where any part of the amount payable under this section is not paid within the time limited
by subsection (3), or as extended under subsection (5), penalties shall be chargeable in
accordance with subsections (1) and (2) of section seventy-eight as if the amount payable
were tax and the remaining subsections except subsection (7) of that section shall apply to
such penalties as if they were penalties charged in relation to tax.

(7) Where a company has paid any amount payable under this section in any charge year in
respect of any loan made and the Commissioner-General determines that the loan or part
thereof has been repaid by the person to whom the loan was made or, in the event of the
death of such person by his executor or administrator, the amount paid relating to the loan
or part thereof so repaid, shall at the end of the charge year in which the loan or part
thereof was repaid, be deemed to be tax paid in excess to which the provisions of section
eight-seven shall apply.

(8) Where any amount is payable under this section in any charge year in respect any loan
made, or where such an amount would have been payable but for the provisions of
subsection (12), and the loan or part thereof is released or written off, the grossed up
equivalent of the amount so released or written off shall be deemed to be income of the
person to whom the loan was made or, in the event of the death of such person before the
date on which the loan or part thereof is released or written off, of his estate, received on
the day on which the loan or part thereof is released or written off:

Provided that-

(i) where the loan relates to the provision of a benefit or advantage or to the
transfer of an asset, that loan shall be deemed to have been released or
written off on the last day of the accounts period of the company in which
the loan was made to the extent that the loan is not included in the debtors
as shown in the balance sheet of the company on that day;

(ii) where the person to whom a loan is made is not an individual, this subsection
shall not apply if at the time the loan is released or written off such person is
not in existence.

(9) Where a company releases or writes off a loan or part thereof and subsection (8) applies, the
company shall, within thirty days after releasing or writing off such loan or part thereof,
furnish the Commissioner-General with a certificate stating in relation to such loan or part
thereof-

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 Income Tax Act Part IX

(a) the name and address of the person to whom the loan was made;

(b) the date the loan was made;

(c) the amount of the loan released or written off;

(d) the date the amount of the loan was released or written off; and

(e) such other particulars as the Commissioner-General may, by notice in writing,

require;

and shall send a copy of the certificate to the person to whom the loan was made.

(10) Where a company releases or writes off a loan or part thereof and subsection (8) applies,
the amount paid by the company under this section in respect of the loan or part thereof so
released or written off, shall be applied firstly towards the satisfaction of any tax payable
by the person deemed to have received income in respect of the loan or part thereof
released or written off to the extent of such tax and the excess shall be deemed to be tax
paid in excess by the company to which the provisions of section eighty-seven shall apply.

(11) Where any amount paid by a company is applied towards the satisfaction of the tax
payable by any person in accordance with subsection (10), the company shall be entitled to
recover the amount so applied from the person on whose behalf the amount was so applied
or to retain out of any moneys that are or may come into his possession on behalf of that
person so much as is necessary to indemnify him for the payment.

(12) This section shall not apply to a loan made to an effective shareholder or to his nominees
where the joint total of all loans made to the effective shareholder and his nominees by all
companies to which this section applies and of which the effective shareholder is an
effective shareholder, does not exceed ten million Kwacha:

Provided that where the said joint total exceeds ten million Kwacha this section shall
only apply to the excess.

(13) Where the Commissioner-General is of the opinion that a company is liable to pay an
amount under this section but has failed to do so, he may forthwith make an assessment on
such company specifying the particulars required in the certificate to be furnished by the
company under subsection (4) and the date such amount was due to be paid in accordance
with subsection (3).

(14) Any amount assessed by the Commissioner-General in accordance with subsection (13)
shall be deemed to be tax due and payable on the date such amount was due to be paid as
stated in the assessment and the provisions of Part VIII, relating to the collection, recovery
and charging of penalties shall apply thereto:

Provided that where an assessment is made on a company under subsection (12) by reason
that while the joint total of the loans made by such company did not exceed ten
million Kwacha, but the joint total of the loans made by such company and other
companies did exceed that sum and the Commissioner-General determines that
company had taken all reasonable steps before making the loan to ascertain whether
or not this section applied to the loan or part thereof, the amount payable shall be due
and payable within thirty days of the date of service of the notice of assessment.

(15)The provisions of Part V, relating to the making of assessments, and the provisions of Part
XI, relating to objections and appeals against assessments, shall apply to an

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Part IX Income Tax Act

assessment made under this section.

(As amended by Acts No. 11 of 1975, No. 14 of 1976, No. 13 of 1994, No. 7 of 1996 and No. 6 of
1999)

Incurred loss not deductible in certain cases

96.(1) No deduction shall be made in respect of any loss arising from any business which,
having regard to the nature of the business, to the principal occupation of the owner,
partners, shareholders or other persons having a beneficial interest therein, to the
relationship of the business to the domestic establishment of any such person or to any
other relevant factor, the Commissioner-General considers it reasonable to regard as not
being carried on mainly with a view to the realization of profits; and ,without prejudice to
the generality of the foregoing, a business shall be deemed not to be carried on for any
charge year with a view to the realization of profits where more than one-quarter of the
amount of the revenue expenditure incurred in such business in such year relates to goods,
services, amenities or benefits, or to the production of goods, services, amenities or
benefits, which are of a personal or domestic nature enjoyed by the owner, partners,
shareholders or other persons having a beneficial interest in the business or a member of
the family or the domestic establishment of any such person.

(2) Where the Commissioner-General is of the opinion that any change in the shareholding in
any company, as a direct or indirect result of which income has been received by or has
accrued to that company during any charge year, has been effected by any person solely or
mainly for the purpose of utilising any loss incurred by the company in order to avoid
liability or the part of that company or any other person for the payment of tax or to reduce
the amount thereof any loss incurred in any charge year prior to the charge year in which
the change in shareholding took place and not deducted from income and the loss incurred
for the period from the commencement of the charge year in which the change of
shareholding took place to the date of the change in shareholding shall not be deducted
from any income received by the company after the date of the change in shareholding.

(As amended by Act No. 26 of 1970).

Commissioner-General may avoid trust

97.(1) Where because of the existence of a trust the incidence of tax for any charge year in
relation to a person beneficially interested in that trust is less than would be the case if that
trust (apart from the ascertainment of the nature and amount of the beneficiary's interest for
the purposes of this subsection) did not exist, the Commissioner-General may determine that
the income of the trust attributable to that beneficiary's interest for any charge year shall
for the purposes of this Act be assessed as if it were his income, and it shall be assessed
and charged accordingly.

(2) This section applies, with necessary modifications, to the administration of the estate of a
deceased person as from a year after his death.

Transfer Pricing

97A (1) In this section-

“actual conditions" means conditions which are made or imposed between any two
associated persons on their commercial or financial relations;

“arms length conditions”, means subject to section ninety-seven AA where that

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 Income Tax Act Part IX

section applies, conditions or no conditions which would have been made or

imposed if persons were not, associated with each other.

(2) The provisions of this section shall apply where by reason of the actual conditions having
been made or imposed instead of the arms length conditions there is, except for this
section, a reduction in amount of income taken into account in computing the income of
one of those associated persons referred to in subsection ( 1), in this section referred to as the
first taxpayer, chargeable to tax for a charge year, in this section referred to as the income
year.

(3) The income of the first taxpayer chargeable to tax in the income year shall be computed for
tax purposes on the basis that the arms’ s length conditions had been made or imposed, as
between the first taxpayer and the other associated persons referred to in subsection (2)
instead of the actual conditions; and a computation on that basis is referred to as a
computation on the arm’s length basis.

(4) If-

(a) in the income year and by reason of the actual conditions, an amount of income
received by that other person associated with the first taxpayer, in this section
referred to as, the second taxpayer, is increased;

(b) that increase in income corresponds to the reduction in income of the first
taxpayer referred to in subsection (2); and

(c) a claim under this subsection has been made in writing by the second taxpayer to the
Commissioner-General ;

the second taxpayer's income chargeable to tax in the income year shall be computed on
the arm’s length basis for all tax purposes except for the purposes of section forty-six A.

(5) For the purposes of this section -

(a) references to a reduction in an amount of income include references to a

reduction to nil or to the accrual of a loss or an increased loss; and

(b) references to an increase in income include references to the reduction in a loss

whether to a smaller amount or to nil.

(6) Subsection (4) shall not apply unless the amount of income mentioned in paragraph (a) of that
subsection would be taken into account in computing the amount of the second taxpayer’s
income chargeable to tax for the income year.

(7) For the purposes of subsection (6) in a case where no loss accrues or a smaller loss accrues,
as mentioned in paragraph (a) of subsection (4) and in subsection (5), a profit shall instead
be deemed to have accrued.

(8) Where an assessment or an amended assessment is made on the first taxpayer and the
computation of income on which it is based takes into account a different amount of
income from that on which earlier computations were based, the second taxpayer may
amend a claim under subsection (4) accordingly.

(9) A claim by the second taxpayer under subsection (4) shall not be made in relation to an
income year unless-

(a) the first taxpayer has made a return on the arm’s length basis under section

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Part IX Income Tax Act

forty-six or forty-six A for the income year or an assessment on the arm's length
basis is made on that first tax payer for that year; and

(b) it is made within three years of the date on which that return or, if earlier, that
assessment is made, or such longer period as the Commissioner-General may
allow.

(10) A claim may not be amended under subsection (8) by reason of an assessment or amended
assessment unless the amended claim is made within one year of date on which the
assessment or amended assessment is made.

(11) Where a claim under subsection (4) or an amended claim under subsection (8) is allowed
and the claimant has been or may be given credit by virtue of any agreement made under
section seventy -four or under seventy-six for foreign tax, within the meaning of section
seventy five or seventy-six, in computing the amount of that credit-

(a) the foreign tax to be taken into account as having been paid or as being payable
by the claimant shall exclude any amount of foreign tax which would not have
been paid or payable if the computation of the income on which the foreign tax is
chargeable had, so far as it includes income to which the claim or amended claim
relates, been made on the arm’s length basis; and

(b) the amount of income to be taken into account as having been received by the
claimant and in respect of which the claimant is or may be given credit for
foreign tax shall be determined, so far as it includes income to which the claim or
amended claim relates, on the arm’s length basis.

(12) Any adjustment required to be made by virtue of this section shall be made by way of
discharge or repayment of tax, by an amended assessment or otherwise and may be made
notwithstanding that the adjustment relates to a charge year which ended more than six
years earlier; and subsections (3), (4) and (5) of section eighty-seven shall apply to any
excess tax due to the taxpayer under this section as they apply to an excess determined
under subsection (1) of section eighty-seven.

(13) Notwithstanding any provision in this Act, for any transaction for the sale of base metals or
any substance containing base metals or precious metals, directly or indirectly, between
related or associated parties, the applicable sale price of such metals or recoverable metals
shall be the reference price.

(14) For the purposes of subsection (13), “reference price” means -

(a) the monthly average London Metal Exchange cash price;

(b) the monthly average Metal Bulletin cash price to the extent that the base metals or
precious metal prices are not quoted on the London Metal Exchange;

(c) the monthly average cash price of any other metal exchange market as approved by the
Commissioner-General to the extent that the base metal price or precious metal price is
not quoted on the London Metal Exchange or Metal Bulletin; or

(d) the average monthly London Metal Exchange cash price, average monthly metal
market exchange cash price approved by the Commissioner-Geenral, less any
discounts on account of proof or low quality or grade.
(15) For the purposes of subsection (13), “related or associated parties” include but are not
limited to –

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 (a) parties connected directly or indirectly through shareholidng, equity or partnerships;

(b) any joint venture owned or operated jointly with or an unrelated party;

(c) connected persons; or

(d) parties connected through management and control.

(16) For the purposes of subsection (15), two persons are connected with each other if –

(a) one of them is an individual and the other is that persons spouse, a relative of that
person or of that person’s spouse, or the spouse of such a relative; or

(b) one of them is a trustee of a settlement and the other is –

(i) a person who, in relation to that settlement, is a settlor; or

(ii) a person who is connected with a person falling within subparagraph (i).

(17) For purposes of subsection (16), “relative” means a brother, sister, ancestor or lineal
descendant.

(Inserted by Act No. 6 of 1999, Amended by Act No. 1 of 2001 and No 1 of 2008)

Special provisions where actual conditions include issuing security 97AA

(1)Where-

(a) actual conditions are imposed in terms of subsection (1) of section ninety–seven
A between two associated persons and those conditions include the issuing of a
security; and

(b) the matters specified in subsection (2) are relevant, in any way and to any extent,
to the determination of the arms length conditions for the purposes of section
ninety- seven A;

those conditions shall be determined, not only as if the issuing company and the other
person, referred to in this section as “the first associate”, were not associated, but also as if
there were no relationship, arrangement or connection, whether formal or informal,
between the issuing company and any other person which is associated with the issuing
company unless they are both members of the same Zambian grouping.

(2) The matters referred to in paragraph (b) of subsection(1) are-

 Income Tax Act Part IX

(a) the appropriate level or extent of the issuing company’s overall indebtedness;

(b) whether it might be expected that the issuing company and a particular person
would have become parties to a transaction involving the issue of a security by
the issuing company or the making of a loan, or a loan of a particular amount, to
that company; and

(c) the rate of interest and other terms that might be expected to be applicable in any
particular case to such a transaction;

and the fact that it is not part of a company’s business to make loans generally shall be
disregarded for the purposes of this section.

(3) The membership of a Zambian grouping in relation to any issuing company shall be
determined as follows:

(a) where the issuing company is not a subsidiary of a company resident in the
resident Republic-

(i) if the issuing company has no subsidiaries, the only member of the Zambian
grouping shall be the issuing company;

(ii) if it has one or more subsidiaries, the only members of the Zambian grouping
shall be the issuing company and its subsidiaries; and

(b) where the issuing company is a subsidiary of a company resident in the Republic,
in this section referred to as “the Zambian holding company”, the only members
of the Zambian grouping shall be-

(i) if there is more than one company resident in Zambia of which the
issuing company is a subsidiary, such one of them as is not itself a
subsidiary of any of the others, and all its subsidiaries;

(ii) if sub paragraph (i) does not apply, the Zambian holding company and
all its subsidiaries;

but the first associate is not a member of the Zambian grouping in any case.

(4) For the purposes of this section-

(a) a company, in this section, referred to as “the subsidiary”, is a subsidiary of

another company in this section referred to as “the parent” at any time if-

(i) the parent would be beneficially entitled to more than fifty percent of any
of any profits of the subsidiary available for any distribution to equity
holders of the subsidiary; and

(ii) the parent would be beneficially entitled to more than fifty percent of
any assets of the subsidiary available for distribution to its equity
holders on winding up; and for the purpose any profits or assets
available for distribution to any equity holder otherwise than as an
equity holder shall be disregarded.

(b) “the issuing company” means the company which issued the security referred to in
paragraph (a) of subsection (1);

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Part IX Income Tax Act

(c) “security” includes securities not creating or evidencing a charge on assets , and
any-

(i) interest paid or payable by a company on money advanced without the

issue of a security for the advance; or

(ii) other consideration given by a company for the use of money so

advanced;

shall be treated as if paid or payable or given in respect of a security issued for

the advance by the company;

(d) “subsidiary” shall have the meaning assigned to it by paragraph(a) of this

subsection; and

(e) “Zambian grouping” refers to those companies that are members of the Zambian
grouping within the meaning of subsection (3);

(5) For the purposes of subsection (4)-

(a) the percentage entitlement of a company means the percentage to which the
company is or would be entitled either directly or through another body corporate
or other bodies corporate or partly directly and partly through another body
corporate or other bodies corporate;

(b) the entitlement means, in the case of profits, the entitlement during the charge year,
which is the income year in question within the meaning of subsection (2) of
section ninety-seven A and, in the case of assets, the entitlement at the end of the
charge year;

(c ) “equity holder” means a person who-

(i) holds ordinary shares in the company; or

(ii) is a loan creditor of the company in respect of a loan which is not a

normal commercial loan; and

(d)“ordinary shares” means all shares other than fixed-rate preference shares.

(6) A “loan creditor”, referred to in subparagraph (ii) of paragraph (c ) of subsection(5), in

relation to a company means a creditor in respect of any debt incurred by the company-

(a) for any money borrowed or capital assets acquired by the company; or

(b) in respect of any redeemable loan capital issued by the company:

Provided that a person carrying on the business of banking shall not be deemed to be a loan
creditor in respect of any loan capital or debt issued or incurred by the company for
money lent by that person in the ordinary course of that business.

(7) The “fixed rate preference shares” referred to in paragraph (d) of subsection (5) are shares
which-

(a) do not carry any right either to conversion into shares or securities of any
description or to the acquisition of any additional shares or securities;

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 Income Tax Act Part IX

(b) do not carry any right to dividends other than dividends which-

(i) are of a fixed amount or at a fixed rate per centum of the nominal value of
the shares; and

(ii) represent no more than reasonable commercial return on the

consideration received by the company in respect of the issue of
shares; and

(c) on the repayment do not carry any rights to an amount exceeding that
consideration.

(8) A “normal commercial loan” referred to in paragraph (c) of subsection (5) is a loan-

(a) which does not carry any right either to conversion into shares or securities or the
acquisition of any additional shares or securities;

(b) which does not entitle the loan creditor to any amount by way of interest which
depends to any extent on the results of the company’s business or which exceeds
a reasonable commercial return on the amount lent ; and

(c) in respect of which the loan creditor is entitled on repayment to an amount which
does not exceed the amount lent.

(Inserted by Act No. 1 of 2001. Amended by Act No.3 of 2002)

Non-Application of section 97A

97B (1) Section ninety-seven A (2) shall not apply in relation to the computation of income of
any person who carries on a business in so far as that income is determined by reference to
the accounts for that business for a period beginning before 1 st April, 1999.

(2) Nothing in section ninety-seven A shall apply in relation to any interest which is allowable
as deduction under paragraph 22 of the Fifth Schedule to this Act or which would be so
allowable but for the provisions of paragraph 22A of that Schedule.

(3) Nothing in section ninety-seven A shall apply for the computation of any allowance which
may, in accordance with sections thirty-three, thirty -four or thirty -four A of this Act, be
deducted in ascertaining the profits or gains of a business or the emoluments of any
employment or office.

(Inserted by Act No. 6 of 1999)

Provisions supplementary to section 97A

97C. (1) For the purposes of sections ninety-seven A and ninety-seven B-

(a) any reference to a computation on the arm’s length basis shall be construed in
accordance with subsection (3) of section ninety-seven A;

(b) a return by a person or an assessment on a person is made on the arm's length

basis if the computation of income on which it is based is made by virtue of
subsection (3) of section ninety-seven A;

(c) any reference to arrangements or agreements means any arrangement or

agreement whether legally enforceable or not, and includes a reference to
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Part IX Income Tax Act

understandings or mutual practices; and

(d) “ person” includes a partnership.

(2) Section ninety-seven A applies whenever the conditions in question were made or
imposed, whether before, on or after 1st April, 1999.

(3) For the purposes of sections ninety-seven A and ninety-seven B conditions may be
taken to have been made or imposed between associated persons in their commercial
or financial relations-

(a) whether they are made or imposed in one arrangement or agreements or in a series
of arrangements or agreements; and

(b) where conditions are made or imposed in a series of arrangements or agreements,

notwithstanding that-

(i) conditions made or imposed in one arrangement or agreement differ

from those made or imposed in another; or

(ii) the parties to one arrangement or agreement differ from those to

another; or

(iii) any party to an arrangement or agreement is not associated with any

other party to that or any other arrangement or agreement.

(4) The Minister may by regulations make supplementary provision for the interpretation
of subsection (3).

(5) For the purposes of section ninety-seven A and ninety-seven B, one person is
associated with another if-

(a) one participates directly or indirectly in the management, control or capital of the
other; or

(b) the same persons participate directly or indirectly in the management, control or
capital of both of them.

(6) The Minister shall make provision by regulations on the direct and indirect participation
in the management, control or capital of a person, and different provision may be
made in relation to different cases or different classes of each case.

(7) For the purposes of section ninety-seven A and ninety-seven B where conditions are
made or imposed between associated persons in their commercial or financial
relations-

(a) it shall be assumed, unless the contrary is shown to the satisfaction of

the Commissioner-General, that different conditions or no conditions
would have been imposed if those persons were not associated; and

(b) where a claim is made under subsection (4) of section ninety-seven A,

it shall be for the claimant to prove that the claim satisfies that
subsection.

(Inserted by Act No .6 of 1999)

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 Income Tax Act Part IX

Objections and appeals involving transfer pricing

97D. (1) The Minister shall make regulations enabling a person, in such cases as may be
prescribed in the regulations, to be joined as a party to an appeal to the Revenue Appeal
Tribunal under section one hundred and nine or to make representations to the
Commissioner-General on an objection assessment under section one hundred and eight.

(2) Regulations under subsection (1) shall apply only in cases where one of the grounds of the
appeal or the objection relates to the question whether section ninety -seven A applies in relation
to any computation relevant to the assessment or whether any computation has been made in
accordance with that section.

(Inserted by Act No. 6 of 1999)

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Part X Income Tax Act

PART X

OFFENCES AND PENALTIES

General Penalty

98. Any person guilty of an offence against this Act shall, unless any other penalty is
specifically provided therefor, be liable on conviction therefor to a fine not exceeding ten
thousand penalty units or to imprisonment for a term not exceeding twelve months, or to
both.

(As amended by Acts No. 11 of 1992, No. 13 of 1994, No.14 of 1994 and No 2 of 1995).

Penalty for failure to comply with notice, etc.

99. Every person who-

(a) without just cause shown by him fails to furnish a full and true return in
accordance with the requirements of any notice served upon him under this Act
or of section forty-six or forty-six A or fails to give notice to the Commissioner-
General as required by section forty-five;

(b) without just cause shown by him fails to furnish within the required time to the
Commissioner-General or to any other person any document which under this
Act or under any notice served on him under this Act he is required so to furnish;
or

(c) fails to keep any records, books, accounts or documents that he is required to
keep under this Act; or

(d) fails to produce any document for the examination or inspection of the
Commissioner-General or other person in accordance with requirements of this
Act; or

(e) without just cause shown by him fails to attend at a time and place in accordance
with the requirements of any notice served on him under this Act; or

(f) without just cause shown by him fails to answer any question lawfully put to him
or to supply or furnish any information lawfully required from him under this
Act; or

(g) otherwise contravenes or fails to comply with any of the provisions of this Act or
of any regulations made there under, or fails to comply with any requirements of
the Commissioner-General lawfully made under this Act or under any of the
Schedules thereto; or

(h) obstructs or hinders any officer acting in the discharge or his duty under this Act;

shall be guilty of an offence against this Act.

(As amended by Act No. 6 of 1999)

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 Income Tax Act Part X

Penalty for incorrect returns, etc.

100.(1) A person who negligently, fraudulently or through wilful default-

(a) fails to furnish a return of income in accordance with the requirements of

subsection (2) of section forty-six;

(b) fails to furnish a provisional return of income and tax in accordance with the
requirements of section forty-six A;

(c) makes an incorrect return by omitting or understating any income of which the
person is required by this Act to make a return;

(d) gives any incorrect information in relation to any matter affecting the person’s
own liability to tax or the liability to tax of any other person; or

(e)submits any incorrect balance sheet, account, or other document;

shall pay a penalty equal to:-

(i) in relation to a person liable to pay mineral royalty under

the Mines and Minerals Development Act, 2008-

(A) in the case of negligence, one point five percent of
the gross value or norm value;

(B) in the case of fraud, four point five percent of the

gross value or norm value; and

(C) in the case of wilful default, three percent of the

gross value or norm value;

Omitted or understated, in consequence of such failure,

incorrect return, information or submission;

(ii) in relation to a person liable to pay turnover tax -

(A) in the case of negligence, one point five percent
of the amount;

(B) in the case of wilful default, three percent of the

amount; and

(C) in the case of fraud, four point five percent of

the amount;

of any income omitted or understated, in consequence of

such failure, incorrect return, information or submission;
(As amended by Act No. 27 of 2011)

(iii) in any other case-

(A) in case of negligence, seventeen point five percent of the

amount;
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 (B) in the case of fraud, fifty-two point five percent of the amount;
and

(C) in the case of wilful default thirty-five percent of the amount;

of any income omitted or understated, or any expenses overstated, in

consequence of such failure, incorrect return, information or submission.

(Amended by Act No. 49 of 2010)

(2) Except for paragraph (a), any reference in subsection (1) to tax or income includes a
reference to provisional tax and provisional income respectively.

(3) The penalties provided by this section are a debt due to the Government and shall be treated
as if they were tax for the purpose of recovery and shall be recoverable accordingly
whether or not any proceedings are commenced for any offence against this Act arising out
of the same facts.

(4) The Commissioner-General may accept a pecuniary settlement instead of taking

proceedings for the recovery of a penalty under this section and may, in his discretion,
mitigate or remit any penalty or stay or compound any proceedings for recovery thereof
and may also after judgment in any proceedings under this Act further mitigate or entirely
remit the penalty.

(5) Notwithstanding anything contained in Part XI, where, in any appeal against an assessment
which includes penalty, one of the grounds of appeal relates to the charge of such penalty,
then the decision of the Revenue Appeal Tribunal in relation to such ground of appeal shall
be confined to the question as to whether or not the failure, claim, understatement or
omission which gave rise to the penalty under subsection (1) was due to any neglect, wilful
default or fraud.

(As amended by Acts No. 11 of 1973, No. 14 of 1973, No. 10 of 1979, No. 11 of 1992, No. 4 of
1993 and No. 6 of 1999)
Part X Income Tax Act

Time limit

101. No complaint charging any offence under section ninety-eight or ninety-nine shall be
made at any time subsequent to six years after the date of the commission of the offence.

Penalty for fraudulent returns, etc.

102.(1) Any person who wilfully with intent to evade or to assist another person to evade tax-

(a)`omits from a return made under this Act any income which should under this Act
be included therein; or

(b) makes any false statement or entry in any return under this Act; or

(c) gives any false answer, whether verbally or in writing, to any question or request
for information asked or made in accordance with the provisions of this Act; or

(d) prepares or maintains or authorizes the preparation or maintenance of any false

books of account or other records, or falsifies or authorizes the falsification of
any books of account or records; or

(e) makes use of any fraud, art or contrivance whatsoever or authorizes the use of any
such fraud, art or contrivance; or

(f) makes any fraudulent claim for the refund of any tax;

shall be guilty of an offence and on conviction shall be liable to a fine not exceeding thirty
thousand penalty units or to imprisonment for a term not exceeding three years, or to both.

(2) Whenever in any proceedings under this section it is proved that any false statement or
entry is made in any return furnished under this Act by or on behalf of any person or
partnership or in any books of account or other records maintained by or on behalf of any
person or partnership, that person or the partners shall be presumed ,until the contrary is
proved, to have made that false statement or entry with intent to evade tax.

(3) Any reference in this section to income or tax includes a reference to provisional income
and provisional tax, respectively.

(As amended by Acts No. 17 of 1971, No. 11 of 1992, No. 13 of 1994, No. 2 of 1995 and No. 9
of 1998).

Bodies corporate

103. Where any offence under this Act has been committed by a body corporate, every person
who, at the time of the commission of the offence was a director, general manager,
secretary or other similar officer of such body corporate or who was acting or purporting to
act in any such capacity, shall also be guilty of that offence, unless he proves that the
offence was committed without his knowledge or consent, and that he exercised all such
diligence to prevent the commission of the offence, as he ought to have exercised, having
regard to the nature of his function in such capacity and all the circumstances.

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 Income Tax Act Part X

Power to search and seize

104. If an officer authorized by the Commissioner-General to inquire into the affairs under this
Act of any person satisfies a magistrate that in fact or according to reasonable suspicion
that person has committed an offence under this Act, the magistrate may, by warrant,
authorize the officer to exercise all or any of the following powers:

(a) between sunrise and sunset to enter any premises to search for money or
documents or electronically stored data;

(b) to open, or remove from the premises and open, any article in which money or
documents or electronically stored data may be contained;

(c) to seize any documents or electronically stored data which may be necessary for
assessment or any criminal or other proceedings and retain them for so long as
they are required for such purposes.

(As amended by Act No. 3 of 2002)

Documents in evidence

105.(1) In any civil or criminal proceedings under this Act any relevant document in the
Commissioner-General's possession shall be received in evidence on mere production as
such and shall be prima facie evidence of its contents, but the person affected by such
production shall be given not less than four days’ notice of intention to produce a
document under this section, and he shall be given an opportunity to inspect and copy
that document.

(2) Statements made or documents produced by or on behalf of any person shall not be
inadmissible in any proceedings to which this section applies by reason only that it has
been brought to his attention that -

(a) in relation to tax the Commissioner-General may accept pecuniary settlements

instead of instituting proceedings; and

(b) though no undertaking can be given as to whether or not the Commissioner-

General will accept such a settlement in the case of any particular person, it is the
practice of the Commissioner-General to be influenced by the fact that a person
has made a full confession of any fraud or default to which he has been a party
and has given full facilities for investigation;

and that he was or may have been induced thereby to make the statements or produce the
documents.

(As amended by Act No. 17 of 1971.)

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Part XI Income Tax Act

PART XI

OBJECTIONS AND APPEALS

Assessments good until disproved

106. Subject to the Commissioner-General's powers relating to assessment, every assessment

under this Act shall stand good unless proved otherwise by the person assessed upon
objection or appeal under this Part.

107. Repealed by Act No 11 of 1998

Objection to assessment

108. Within thirty days of the date of service of notice of assessment, the person assessed may
make to the Commissioner-General a written statement of objection to the assessment
setting out the grounds of objection, and the Commissioner-General shall give that person
written notice of his decision concerning that objection:

Provided that-

(i) the Commissioner-General may determine that an objection may be made within a
longer period than thirty days but where he does not so determine he shall give
the person written notice of his determination and the person may appeal against
the determination under section one hundred and nine without making an
objection;

(ii) the right of objection to an amended assessment which is not made as a result of
an objection shall be restricted to the items in that assessment which differ from,
or are additional to, the items in the assessment for the same charge year made
immediately prior to that assessment and only to the extent of such difference or
addition;

(iii) the right of objection to an amended assessment which is made as a result of an

objection shall be the same right of objection as existed to the assessment
objected to; and

(iv) an amended assessment issued as a result of an objection shall, unless objected

to, be the Commissioner-General's written decision concerning the objection.

(As amended by Act No. 11 of 1975).

Appeal against assessment

109.(1) If a person assessed is dissatisfied with the Commissioner-General's decision

concerning his objection to the assessment, that person may, by written notice to the
Chairperson, within thirty days of the date of service of the written notice of the
Commissioner-General's decision, appeal against the assessment to the Tribunal and shall
send a copy of the notice to the Commissioner-General.

(As amended by Acts 14 of 1973, Act No. 11 of 1975 and Act No. 4 of 2000)

Determination of Appeals

110 Upon the hearing of an appeal under the Revenue Appeals Tribunal Act, 1998, (No. 11
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 Income Tax Act Part XI

of 1998) the Tribunal may make such order in relation to the assessment under appeal as is
in accordance with this Act.

(Amended by Acts No. 26 of 1970, Act No.14 of 1973 and Act No. 4 of 2000)

Appeal to High Court and Supreme Court

111(1) Either party to an appeal to the Tribunal may appeal to the High Court from the decision
of the court on any question of law or question of mixed law and fact but not on a question
of fact alone.

(2) The High Court shall hear and determine any such appeal and may confirm, reduce,
increase or annul the assessment determined by the Tribunal and make such further or other
order on such appeal, whether as to costs or otherwise, as to the High Court may seem fit.

(3) An appeal from a decision of the High Court under this section shall lie to the Supreme
Court as it lies in the case of and as though it were a judgment of the High Court made in
the exercise of its original civil jurisdiction.

(As amended by Acts No. 14 of 1973, Act No. 11 of 1974, and Act No.4 of 2000)

Privacy of proceedings

112.(1) Where a person assessed so requests, all proceedings concerning him under this Part
shall be in private, or in camera, as the case may be.

(2) Nothing in subsection (1) shall prevent the printing or publishing of the judgement or order
made on the determination of an objection or appeal if the High Court or the Supreme
Court does not prohibit publication, but any such publication shall not disclose the identity
of the taxpayer concerned.

(As amended by Act No. 14 of 1973 and by Act No. 11 of 1974).

Adjustment on successful objection or appeal

113. On the final determination of an objection or appeal against an assessment, the

Commissioner-General shall make all assessments and adjustments as are necessary to give
effect to the determination and the provisions of section eighty-seven shall apply to any tax
paid in excess as a result of such determination.

(As amended by Acts No.26 of 1970 and No.14 of 1976).

Appeals from Commissioner-General's discretions and determinations

114.(1) Where it is provided by this Act that any matter is subject or according to-

(a) the Commissioner-General's discretion, such discretion shall not be questioned

in any proceedings;

(b) the Commissioner-General's determination, such determination shall only be

questioned in any proceedings on the ground that it is unreasonable.

(2) If a person is dissatisfied with a determination of the Commissioner-General, that person

may object to or appeal against that determination as if the determination were an
assessment and the provisions of this Part relating to objections and appeals against

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Part XI Income Tax Act

assessment shall apply mutatis mutandis.

(3) Where the Commissioner-General’s determination as provided for in this Act is in relation to
any assessment, any appeal against that determination shall be heard as a preliminary point
upon an appeal against that assessment, and in any other case such appeal shall be heard as
if the determination were an assessment.

115. Repealed by Act No. 9 of 1998.

115A. Repealed by Act No. 7 of 1996.

PART XII

REPEALS AND TRANSITIONAL PROVISIONS

Repeals

16. Subject to the Seventh Schedule, the Income Tax Act, Chapter A.L. 31 of the 1965 Edition
of the Applied Laws, the Income Tax (Employments) Act, 1966, and the Taxes Charging
Act, 1966, are repealed.

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 Income Tax Act Sch 1

FIRST SCHEDULE

(Section 17) FURTHER CLASSIFICATION OF INCOME

Maintenance.

1. Income includes amounts received by way of maintenance or allowance under any judicial
order or decree in connection with matrimonial proceedings, or, under a written separation
agreement.

(amended by Act No. 3 of 1997)

Improvements

2.(1) Income includes, in the case of any person to whom, under any agreement relating to or
derived from the grant to any other person of the use or occupation of land or buildings,
there accrues the right to have improvements effected on the land or to the buildings by any
other person:-

(a) the amount stipulated in the agreement as the value of, or the amount to be spent
on, the improvements; or

(b) if no amount is stipulated, an amount representing the value of the

improvements;

and in either case the amount is deemed for the purposes of this Act to have been received
by the first-mentioned person in equal monthly instalments from the date the improvements
were effected over the un-expired period of the agreement or over twentyfive years,
whichever period is the less.

(2) All the instalments deemed under sub-paragraph (1) to have been received by a person that
have not been included in his income before any of the following events are treated as
having been received by him immediately before the happening of any such event:

(a) the cancellation of the agreement;

(b) the sale or other disposal of the land or buildings as improved; or

(c) his death or bankruptcy, or, in the case of a company, its liquidation.

Commencement and cessation of employment

3. Income includes any amount received in connection with the taking up of employment or by
reason of the cessation of any agreement for employment including compensation for loss of
office or employment.

Lump sum payments

4. Income includes lump sum payments.

Capital recoveries

5. (1) Income of a person includes any amount paid by which recoveries from capital
expenditure exceed:
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Sch 1 Income Tax Act

(a) in the case of a building, such residue of the expenditure ranking for capital
allowances incurred in respect of the building on which capital recovery has been
made as remains after the deduction of any initial, wear and tear or other capital
allowance or similar deduction whether allowed under this Act or under any
provisions of the previous law for any charge year in respect of the building; but
in no case shall the amount to be included in the income exceed the total of the
deductions so allowed to him in respect of the building;

(b) in the case of implements, machinery or plant, such residue of the expenditure
ranking for capital allowances incurred in respect of implements, machinery or
plant on which capital recovery has been made as remains after the deduction of
wear and tear or other capital allowance or similar deduction whether allowed
under this Act or under any provisions of the previous Law for any charge year;
but in no case shall the amount to be included in the income exceed the total of
the deductions so allowed to that person in respect of those implements,
machinery or plant;

(Amended by Act No. 4 of 2000)

(c) in relation to a mine in respect of assets on which an allowance has not been
claimed under Part I or Part II of the Fifth Schedule, the balance of unredeemed
capital expenditure; provided that this paragraph shall not apply to recoveries
from expenditure incurred on farm improvements and farm works to which Part I
or Part II of the Sixth Schedule applies.

(2) For the purposes of items (a) and (b) of sub-paragraph (1):

(a) a recovery from capital expenditure shall be deemed to have taken place when:

(i) a building ceases to belong to such person without being sold, or

permanently ceases to be used by such person for the purposes of any
business;

(ii) any implement, machinery or plant ceases to belong to such person

without being sold, or permanently ceases to be used by such person
for the purposes of his business.

(b) the amount of the recovery from capital expenditure shall be the amount which,
according to the Commissioner-General’s determination, the asset would have
realized in the open market at the time the event giving rise to the recovery
occurred.

(3) For the purposes of this paragraph the expression "capital allowances" shall not include
any investment allowance deducted pursuant to section thirty -four, or pursuant to
paragraph (w) of subsection (2) of section thirteen of the former Act.

(As amended by Act No. 11 of 1974 and by Act No. 11 of 1969).

Exotic timber

6. Where land is disposed of for valuable consideration, and there is on that land exotic timber
which has been grown for sale, the market value of that timber at the time the land is
disposed of is included in income.

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 Income Tax Act Sch 1

Farm stock

7. Any stock owned by a farmer at the beginning and end of each period for which he makes
up the accounts of his farming business shall, in computing the gains or profits from such
business, be taken into account:

Provided that where livestock bought by a farmer for stud has been included in stock at the end
of a period for which accounts are made up such livestock shall be included in stock at the
beginning of the next period for which accounts are made up.

For the purposes of this paragraph "stock" includes all livestock, produce, and crops which have
been harvested.

(As amended by Acts No. 11 of 1974 and 6 of 1999 ).

Share Options

8. Income includes the gross sale proceeds or proceeds from sale of options in respect of shares
allotted, reserved or acquired by an individual in terms of an approved share option
scheme net of any amount paid for the acquisition or exercise of such shares or options by
the individual concerned, and shares or options sold shall be deemed to be the shares or
options longest held:

Provided that the relief afforded by sub-section (5) of section twenty-one shall extend to
such income to the extent not absorbed by compensation received for loss of office or
employment where the gross sale proceeds are receivable within one year of
termination of services.

(Inserted by Act No. 3 of 2002.)

9. Amounts refunded to any person carrying on mining operations pursuant to paragraph (a) of
subsection 3 of section one hundred and twenty two of the Mines and Minerals Act shall be
deemed to be income in the year that the refund is made.

(Inserted by Act No. 7 of 2006 and amended by Act No. 27 of 2009)

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Sch 2 Income Tax Act

SECOND SCHEDULE

(Section 15) EXEMPTIONS

PART I

EXEMPT OFFICE HOLDERS

1. The emoluments of the President are exempt from tax.

2. The income of the Litunga of Western Province as Litunga and the income of any Chief
received as a Chief from the Government, are exempt from tax.

(As amended by Act No. 33 of 1989)

PART II

FOREIGN EXEMPTIONS

3. There shall be exempt from tax:

(a) the emoluments of any individual payable in respect of any office which he holds
in the Republic as an official of any foreign government, if such individual is
resident in the Republic solely for the purpose of carrying out the duties of his
said office;

(b) the emoluments of any domestic or private servant of any individual referred to in
sub-paragraph (a) payable in respect of domestic or private services rendered or to
be rendered by such servant to such individual, if such servant is not a Zambian
citizen and is resident in the Republic solely for the purpose of rendering the said
services;

(c) the emoluments payable to any individual who is not a Zambian citizen and who
is temporarily employed in the Republic in connection with any technical
assistance scheme provided by any foreign country, any international
organization or agency, any foreign foundation or any foreign organization, if the
exemption of such emoluments or such part of the emoluments as may be
specified is authorized under the terms of an agreement entered into by the
Government of such foreign country, international organization or agency,
foreign foundation or foreign organization with the Government of the Republic;

(d) the emoluments of any individual in respect of service with any international
organization or any agency of a foreign government or any foreign foundation or
organization which organization agency or foundation is approved by the
Minister by order in the Gazette and such individual is not a Zambian citizen and
is resident in the Republic solely for the purpose of rendering the said service or
secondment to any Zambian organization, agency, or foundation.

(As amended by Acts No. 26 of 1970, No. 16 of 1972 and No. 12 of 1982)

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 Income Tax Act Sch 2
4. There shall be exempt from tax such income of:

(a) any international organization;

(b) any agency of a foreign government;

(c) any foreign foundation or organization;

as is approved by the Minister by order in the Gazette.

(As amended by Act No. 11 of 1969 and Act No .26 of 1970).

PART III

EXEMPT ORGANIZATIONS

Various organizations

5.(1)The income is exempt from tax of any:

(a) local authority;

(with effect from 1st April, 1966).

(b) Repealed by Act No 11 of 1992.

(c) registered trade unions;

(with effect from 1st April, 1968).

(d) agricultural society, mining society or commercial society, whether

corporate or unincorporate, or any other society having similar objects,
not operating for the private pecuniary gain or profits of its members;

(e) club, society or association organized and operated only for social welfare,
civil improvements, pleasure, recreation or like purposes, if its income,
whether current or accumulated, may not in any way be received by any
member or shareholder;

(Amended with effect from 1st April, 1966).

(f) approved fund or medical aid society or approved share option scheme;

(with effect from 1 st April, 1966 and Amended by Act No. 3 of 2002).

(g) Repealed by Act No 7 of 1996.

(h) employee's savings scheme or fund, if approved by the Commissioner-

General;

(with effect from 1st April, 1966).

(i) repealed by Act No 11 of 1992.

(j) political party registered as a statutory society under the Societies Act
(Cap. 119); and

(k) Statutory body

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(Amended by Act No. 10 of 1981, Act No. 16 of 1988 , No. 11 of 1992 and No. 1 of 2009).
Sch 2 Income Tax Act

(2) The income of the following shall be exempt from tax:

(a) the Commonwealth Development Corporation;

(with efect from 1st April, 1968).

(b) the Economic Co-operation Administration and Mutual Security Agency, or

successor agencies of the Government of the United States of America;

(with efect from 1st April, 1968).

(c) repealed by Act No. 11 of 1992;

(d) repealed by Act No. 11 of 1992;

(e) repealed by Act No. 7 of 1996.

(As amended by Acts No. 10 of 1981, No. 14 of 1987, No. 17 of 1988, No. 11
of 1992 and No. 7 of 1996.)

(3) The income of a co-operative society registered under the Co-operative Societies Act
(Cap. 397) shall be exempt from tax if the gross income, before deduction of any
expenditure, of such co-operative society when divided by the number of its members
(that is to say, the number of individuals who are members together with, where
another co-operative society so registered is a member, the number of individuals who
are members of that other co-operative society) on the last day of any accounting
period of twelve months does not exceed the amount taxable at the rate of zero per
centum per annum as set out in clause (c) of subparagraph (1) of paragraph 2 of the
Charging Schedule or, if such accounting period is more or less than twelve months,
such figure as bears the same relation to the amount taxable at the rate of zero per
centum per annum as set out in clause (c) of subparagraph (1) of paragraph 2 of the
Charging Schedule as the number of months in such accounting period bears two to
twelve.

(with efect from 1st April, 1970 and as amended by section 14 of Act No. 12 of 1982 with
efect from 1 st April, 1982 and Act No 3 of 2002 ).

(4) The income of a non-resident person derived from the carrying on of the business of
ship owner, charterer or air transport operator shall be exempt from tax where the
country in which such non-resident person is resident extends a similar exemption to
ship owners, charterers, and air transport operators who are not resident in such
country but who are resident in the Republic.

(with efect from 1st April, 1968).

(5) The income of any organization, partnership or body corporate, or such part of the
income as is specified, shall be exempt from tax where the objects and activities
within the Republic of such organization, partnership or body corporate are to assist in
the development of the Republic and such exemption of the income, or such part
thereof as is specified, is approved by the Minister by statutory order.

(with efect from 1st April, 1968, as amended by Acts No. 11 of 1969, No. 26 of 1970, No. 17
of 1971 and No. 16 of 1972).

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 Income Tax Act Sch 2
Public Benefit Organisations

6.(1) There shall be exempt from tax the income of any public benefit organisation or of any
body of persons or trust established for the promotion of religion or education, or for the
relief of poverty or other distress, if, in relation to the people of the Republic, the income
may not be expended for any other purpose.

(2) If the income referred to in sub-paragraph (1) is the profit of a business carried on by a
public benefit organisation, body or persons or trust receiving it, that income is not exempt
from tax and shall be taxed at the rate specified in the charging schedule.

(Amended by Act No. 27 of 2009)

Interest on Treasury bills etc received by public benefit organisations subject to

withholding tax

6A (1) Notwithstanding the provisions of sub-paragraph (1) of paragraph 5 and sub-paragraph (1)
of subparagraph of paragraph (6), or any other provisions of this Act, any interest on
treasury bills, government bonds, corporate bonds or any financial instrument or securities
received by any public benefit organisation, body, person or trust referred to in those
paragraphs, shall be subject to withholding tax under section eighty-two A.

(2) In this paragraph “securities” has the meaning assigned to it by section two of the
Securities Act.

(As Amended by Acts No. 3 of 2003 and No 1 of 2004).

PART IV

EXEMPT INCOME

Various exemptions

7. There is exempt from tax income received:

(a) by way of lump sum payments withdrawn from an approved fund at retirement
age or death or on the beneficiary becoming permanently incapable of engaging
in an occupation or such sums withdrawn from an approved fund which the
Commissioner-General determines cannot be enjoyed by the member until he
attains retirement age;

(b) as a war disability pension, or as a war widow's pension or as an old age pension,
paid out of public funds, or as a benefit paid under any written law in respect of
injury or disease suffered in employment;

(c) in conjunction with the award of military, police, and fire brigade decorations
for distinguished or good conduct or long service;

(d) by an individual or his dependants or heirs being on account of his injury or

sickness from any approved fund or registered trade union or medical aid society
or under any policy of insurance;

(e) as a local overseas allowance by any member of the Defence Force of the
Republic while on service officially declared to be active service;

(f) as an allowance paid for service outside the Republic by the Government or a
statutory corporation in respect of an excess of living expenses due to such
service;

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Sch 2 Income Tax Act

(g) in respect of a scholarship or bursary, for the purposes of education and

maintenance during such education;

(h) by way of alimony, maintenance or allowance under any judicial order or

decree in connection with matrimonial proceeds, or under any separation
agreement, to the extent of the amount of alimony, maintenance or allowance
that has not been allowed as a deduction to another individual under this Act;

(i) Repealed by Act No 9 of 1998.

(j) by any individual, the amount of which is prescribed by the Ministerial and
Parliamentary Office (Emoluments) Act, (Cap 262), and which pursuant to the
provisions of the Act, is exempt from tax;

(k) by way of grant as compensation for loss of office or disturbance by an officer

admitted to the permanent and pensionable establishment of the Government;

(l) by way of any passage value payable to a public officer or payable in respect of
his wife or children subject to the provisions of paragraph 8(3);

Amended by Act No 3 of 2002

(m) repealed by Act No. 4 of 1993

(n) repealed by Act No.3 of 2003

(o) repealed by Act No. 9 of 1998.

(p) by a person designated as an enterprise under the Zambia Development Agency

Act, 2006 , or its successor, as the case may be, who has
been granted the incentives provided under that Act, to such extent and for such
period as the Minister may prescribe;

(As amended Act No. 17 of 1988 and Act No. 1 of 2009)

(q) by way of pension received by an individual from an approved fund;

(Effective 1st April, 1989).

(r) by way of a dividend declared from farming income for the first five years the
distributing company commences farming;

(s) by an individual by way of sitting allowance for attending a council meeting.

(As amended by section 3 of 2nd Act of 1995)

(t) ex-gratia payments made to a spouse, child or dependant on the death of an

employee.
(As amended by Act No 3 of 1997)

(u) by a person designated as micro or small enterprise under the Zambia

Development Agency Act, 2006:

Provided that –
(i) for an enterprise in an urban area the income shall be exempt from tax
for the first three years; and
(ii) for an enterprise in a rural area the income shall be exempt from tax for
the first five years.

(As amended by Act No. 6 of 1999).

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 Income Tax Act Sch 2

(v) by way of a lump sum payment paid to an employee on loss of office or

employment on medical grounds;
(Inserted by Act No. 1 of 2001)

(w) by way of allotment or acquisition of shares in terms of an approved share option

scheme;

(Inserted by Act No.3 of 2002).

(x)` as emoluments by a former President of the Republic.

(Inserted by Act No. of 2003)

(y) by way of a dividend declared by a company listed on the Lusaka Stock

Exchange to an individual;

(z) by way of dividends for a period of five years from the date of first declaration by
a company engaged in the assembly of motor vehicles, motor cycles and bicycles;
and

Deletion of Small Enterprises Act and subsitution therefor with Zambia Development
Agency Act, 2006 – Amendment Act No. 1 2009.

(aa) by way of dividends declared by a company approved under the Zambia

Development Agency Act, 2006 for a period of five years from the date of the
first declaration.

(Inserted by Act No. 7 of 2006 and Act No. 1 of 2009)

Passages

8.(1) For the purposes of this paragraph:

"child" means a child of an individual who at the commencement of the charge year in
which a passage is made is under nineteen years of age and is, at the time the
passage is made, unmarried and wholly dependant on such individual;

"commencement passage" means the first passage under the terms of written contract
granting such passage to the Republic from the home country of an individual;

"home country" means the country in which an individual is resident for the purposes
of income tax or the equivalent tax, immediately before coming to the Republic,
or the country of which the individual is a citizen;

"leave passage" means a return passage taken for leave purposes between the
Republic and the home country of an individual or, in the case of a child of the
individual;

"passage" means a journey by air by the cheapest available fare as an economy class
passenger on a scheduled airline the cost of which is granted to an individual
under the terms of a written contract for his employment in the Republic;

"terminal leave" means leave due to an individual under the terms of a written contract
for his employment in the Republic, taken after the last day of service of the
individual in the Republic under such contract;

"terminal passage" means the last passage under the terms of the written contract
granting the passage from the Republic to the home country of an individual.

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(As amended by Acts No. 11 of 1975 and No.3 of 2002 ). (2)

This paragraph shall not apply to the value of a passage made:

(a) by an individual, his wife or child referred to in sub-paragraph (l) of paragraph 7,

subject, however, to the provisions of sub-paragraph (3);

(b) by an individual or by the spouse or child of such individual where the individual
is an effective shareholder or a director, other than the whole-time service
director, of the company granting the passage;

(c) by the spouse or child of an individual who alone or in partnership as employer

grants the passage;

(d) by an employee of a company granting a passage or the spouse or child of such

employee, where the employee or his spouse is carrying on a business alone or in
partnership and the services of the employee are provided to such business by
such company; or

(e) by the wife or child of an individual where the passage is granted under the terms
of a written contract for the employment of the wife in the Republic if at the time
such passage is made the wife is living with the individual and subparagraph (9)
does not apply.

(3) The right of an individual to exemption from tax in respect of the value of a passage under
this paragraph shall be available under the terms of only one written contract for
employment in any one period of employment in the Republic.

(4) Subject to the other provisions of this paragraph, the value of a commencement and terminal
passage made by an individual shall be exempt from tax.

(5) Subject to the other provisions of this paragraph the value of a commencement and
terminal passage made by the wife or child of an individual shall be exempt from tax:

Provided that:

(i) the written contract which grants the cost of the passage specifies that the
individual is to be employed in the Republic for a period of not less than one year,
excluding terminal leave;

(ii) the individual is so employed under the contract for the specified period or for a
lesser period, where the Commissioner-General determines that the individual
was prevented from being so employed for the specified period due to
circumstances beyond the control of such individual;

(iii) for each contract the value of not more than one commencement and one terminal
passage in respect of a wife shall be exempt from tax; and

(iv) Repealed by Act No 3 of 2002.

(6) Subject to the provisions of this paragraph, the value of a leave passage made by an
individual, his wife or his child, shall be exempt from tax:

Provided that:

(i) the written contract which grants the cost of the passage specifies that the
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 individual is to be employed in the Republic for a period of not less than
three years, excluding terminal leave;

(ii) the individual is so employed under the contract for the specified period;

(iii) the passage is made during the period of which the individual is so employed
under the contract;

(iv) subject to proviso (v), for each contract the value of not more than one such
leave passage shall be exempt from tax;

(v) for each contract the value of one further such leave passage shall be exempt
from tax for each period of not less than two years, excluding terminal leave,
for which the individual is so employed, in addition to the
Sch 2 Income
Income
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ActAct Sch 2

first three years; and

(vi) where the Commissioner-General determines that the individual was

prevented from being so employed under the contract for the specified
period due to circumstances beyond the control of the individual the value
of the passage shall be exempt from tax.

(7) Repealed by Act No 3 of 2002.

(8) Where a passage is made the value of which would be exempt from tax under this
paragraph if it were made by air or from, or to, a place provided by this paragraph but is
not so made, the value of such passage shall, subject to a limit of the value of a passage
which would be exempt from tax if made by air and from, or to, a place so provided, be
exempt from tax.

(9) Where an individual is permanently incapable of engaging in an occupation and his wife is
employed in the Republic then the wife shall, for the purposes of this paragraph, be
deemed to be the individual and the individual the wife.

(As amended by Acts No. 26 of 1970, No. 16 of 1972, No. 11 of 1974, No. 11 of 1975, No 14
of 1976, and No .3 of 2002).

Interest

9.(1)Deleted by Act No 2 of 1995.

(2) The following interest is exempt from tax:

(a) interest on any public loan raised by the Government or a statutory corporation,
where the terms of the loan provide that the interest thereon shall be exempt
from tax;

(b) interest on any bond issued under or in respect of a loan of the kind described in
clause (a);

(c) Repealed by Act No. 3 of 2003

(3) Repealed by Act No. 11 of 1973

(4) (As amended by Acts No. 23 of 1968, No. 14 of 1976, No. 12 of 1982, No. 11 of 1985, No. 14 of
1987, No. 11 of 1992, No. 4 of 1993, No of 1996, No. 6 of 1999, No 1 of 2004 and deleted by Act
No. 1 of 2009).

(5) (As amended and inserted by Acts No. 23 of 1968, No. 11 of 1969, No. 11 of 1974, No. 14 of 1976,
No 12 of 1982, No 11 of 1985, No. 11 of 1992, No.14 of 1994, No.7 of 1996 and deleted by Act No.
1 of 2009)

(6) Inserted by Act No. 17 of 1988 and deleted by Act No of 1996.

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Annuities

10.(1) An annuity shall be exempt from tax where such annuity is bought by an annuitant out of
a lump sum payment withdrawn from an approved fund at retirement age, or death, or the
beneficiary being permanently incapable of engaging in an occupation and which is exempt
from tax under paragraph 7(a).

(2) An annuity, other than an annuity payable out of an approved fund, shall be exempt from tax
to the extent that it represents a return of the purchase price.

(As amended Act No. 11 of 1975).

11. This Schedule shall not apply to income comprising Fees paid or payable in respect of the
management of a pension Fund of any class or description, including any approved fund,
and such fees are not exempt from tax by virtue of this Schedule.

(Inserted by Act No. 4 of 2000)

12. Repealed by Act No. 11 of 1992.

13. Repealed by Act No. 11 of 1992.

 Income Tax Act Sch 3

THIRD SCHEDULE

(Section 25) INSURANCE BUSINESS

Insurance other than life

1.(1)The profits of carrying on insurance business, other than life insurance business, by a
resident company are ascertained for a financial year of the company by -

(a) taking the gross premiums, interest, and other income, less premiums refunded or
paid on reinsurance; and

(b) adding any reserves for unearned premiums and outstanding claims made at the
beginning of the financial year;

(c) deducting any such reserves made at the end of the financial year;

(d) deducting the actual losses (less the amounts received under reinsurance), and
other expenses, including deductions under Part II of the Fifth Schedule,
allowable as a deduction in calculating business profits.

(2) The profits of carrying on insurance business, other than life insurance business, by a
company that is not resident are ascertained for a financial year of the company by:

(a) taking the gross premiums, interest and other income received in the Republic,
less premiums refunded or paid on reinsurance; and

(b) adding any reserves for unearned premiums and outstanding claims made at the
beginning of the financial year; and

(c) deducting any such reserves made at the end of the financial year; and

(d) deducting the actual losses (less the amounts received under re-insurance),
agency expenses and deductions allowed under Part II of the Fifth Schedule incurred
in the Republic, and such proportion of the company’s head office expenses as the
Commissioner-General determines.

(Amended by Acts No.4 of 2000 and No.1 of 2001)

(3) For the purposes of this paragraph—

(a) a “reserve for unearned premiums” means a reserve calculated by reference to the
net premiums income:

provided that a reserve for unearned premiums or for outstanding claim

does not include an equalisation reserve, that is to say, an amount set
aside out of past or current underwriting profits to meet future
underwriting losses;

(b) the amount which may be deducted as a reserve for unearned premiums is the
amount which would constitute that reserve if its amount were computed on the
one twenty-fourth or more accurate basis where the one twenty-fourth figure is
computed on the basis that the contracts coming into force in a given month
commence in the middle of that month and spread evenly in half monthly periods

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; and

(c) the amount which may be deducted as a reserve for outstanding claims shall not
exceed such amount as is reasonable having regard to relevant historical or
actuarial data and other factors, and shall not in any event exceed the amount of
the reserve actually made.

(Amended by Act No. 4 of 2000)

Life insurance

2. (1) The profits from the life insurance business of a resident insurance company for a
financial year shall be the excess of the total investment income from that business for that
year over the aggregate of –

(a) the amount disbursed during the year as expenses of management wholly and
exclusively attributable to that business; and

(b) any amount allowable under Part II of the Fifth Schedule as a deduction in
calculating business profits.

(2) the profits from the life insurance business of a non-resident insurance company for a
financial year shall be—

P = (A/B)I-E

where-

P is the profit to be found

A is the mean actuarial liabilities of the company for the year in question in respect of
local life policies;

B is the mean of the company’s total actuarial liabilities for the year in question; I is

the total investment income of the company for that year; and E is the aggregate

of –

(a) the amount disbursed by the company during that year as expenses of
management wholly and exclusively attributable to the life insurance
business of the company carried on in Zambia (including such proportion of
the Company’s head office expenses as the Commissioner-General may
determine); and

(b) any amount allowable under Part II of the Fifth Schedule as a deduction in
calculating business profits.

(2A) Any expenses of management which are not set against a life insurance company’s
investment income for a financial year in accordance with sub-paragraph(1) or (2) due to
an insufficiency of investment income shall, for the purposes of this Act, be treated as
losses accruing to the company for that year.

(3) For the purposes of this paragraph -

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 Income Tax Act Sch 3

“actuarial liabilities” means the actuarial liabilities determined on the basis used by the
company for making returns of actuarial liabilities in terms of the insurance legislation
of the Republic;

“local life policy” has the meaning assigned to “life policy” by section two of the Insurance
Act, 1997, and is a policy issued in accordance with section seventy-eight of that Act,
in Zambia, by a licensed insurer but does not include a policy which constitutes part of
an approved fund (as defined in this Act) and an annuity policy under which an
annuity is paid.

“mean actuarial liabilities” means one half of the sum of the actuarial liabilities calculated
at the beginning and end of the company’s financial year for which the Commissioner-
General has, in respect of the charge year concerned, accepted the accounts of the
company under subsection (1) of section sixty-two.

(As amended by Acts No. 4 of 2000 and Act No.1 of 2001)

Insurance and other business

3. The tax on the profits of a company that carries on life insurance business in conjunction with
any other insurance business is charged in one sum, but the profits of the life insurance
business are separately calculated.

Mutual and proprietary companies

4. This Schedule applies as well to a mutual insurance company as to a proprietary insurance

company.

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FOURTH SCHEDULE

(section 37) (Inserted by Act No. 23 of 1968)

APPROVED FUNDS

Definition of “trustees”

1. In this Schedule, “trustees" means the persons, by whatsoever name called, having the
management or control of a fund which either is or was an approved fund within the
meaning of approved fund as defined in this Act, or which is a fund or scheme in relation to
which an application is made under paragraph 2 for the approval of the Commissioner-
General.

Approval of pension funds

2.(1)Where any fund or scheme is established by or on behalf of an employer for the payment,
under the rules relating thereto, of pensions and other benefits to his employees in respect of
service with him on the retirement of his employees from such services or to dependants of
his employees from such services or to dependants of his employees on the death of his
employees, then application under paragraph 3 may be made for such fund or scheme to be
approved, by the Commissioner-General; and where any fund or scheme is so approved it
shall be known as an approved pension fund.

(2) The Commissioner-General shall not approve any fund or scheme unless he considers that
the rules relating thereto have as their main object the provision of pensions to employees
on their retirement from the service of the employer on or after attaining a specified age
and unless the Commissioner-General is satisfied:

(a) that the fund or scheme is established in the Republic in connection with any
business carried on wholly or partly within the Republic by the employer; and

(b) that the rules do not:-

(i) provide for the payment to any employee during the employee’s life of
any sum except a pension, which may, subject to this paragraph, be
commuted, or, in the event of the employee leaving the service of the
employee’s employer in circumstances in which no pension is payable
to the employee,

(a) any contributions to the fund or scheme made by the

employee and the employee’s employer together with
reasonable interest; or

(b) a defined benefit scheme fund or scheme made by the

employee and the employee’s employer together with
reasonable interest

Substituted by Act No 1 of 2004.

(ii) provide for the payment of the pension otherwise than on the retirement
of the employee from the service of his employer on or after attaining
the age of 55 years or on earlier retirement on account of any infirmity
of mind or body;

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 Income Tax Act Sch 4

(iii) provide for the payment of any other sums on the death of the
employee except a lump sum, or sums payable by way of annuity to
the widow or widower or dependants of the employee;

(iv) provide for the payment of the pension otherwise than during the life
of the employee or for the payment to the widow or widower of the
employee of an annuity otherwise than for a term certain or during the
life of the widow or widower or during the minority of any dependant
of the employee;

(v) provide for the annuity, if any, payable to the widow or widower of
the employee to be of a greater annual amount than the pension
payable to the employee; and

(c) that the rules do:-

(i) provide that all annual contributions of a recurrent nature to the fund or
the scheme shall be in accordance with specified scales and clearly
specify the benefits payable to members and their dependants from the
fund or under the scheme;

(ii) provide the membership of the fund or scheme shall be open to all
employees of the group or class of groups or classes specified in the
rules;

(iii) provide that no pension, annuity or other sum payable out of the fund
or under the scheme shall be capable of surrender or assignment
except as provided for in sub-paragraph (2)(c)(vii);

(iv) provide that no contribution made to the fund or scheme by the

employer shall be returnable to him;

(v) provide, in any case where the employer is a company the directors
whereof have a controlling interest therein, that no director or the
widow or widower or any dependant of a director, of the company shall
be entitled to any payment out of the fund or under the scheme in
respect of his service while he is such a director and that no
contributions shall be made to the fund or scheme in respect of the
service of such a director; and for the purposes of this sub-paragraph
director does not include a whole time service director;

(vi) provide that, if the fund or scheme is wound up, the assets thereof
shall be applied in the purchase of annuities for its members or, if a
member so elects ,shall be transferred to another approved fund;

(vii) provide that, where any pensions payable out of the fund or under the
scheme to an employee may be commuted, the amount of the pension
that may be commuted shall not exceed five million Kwacha or onehalf
of the pension, whichever may be the greater.

(As amended by Act No.14 of 1994 and act No 3 of 2002)

(3) The Commissioner-General may, in his discretion and subject to any conditions he thinks
proper to impose:-

(a) approve a fund or scheme the rules relating to which otherwise satisfy sub-

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paragraph (2), notwithstanding that the fund or scheme:-

(i) is established outside the Republic in connection with any business

carried on wholly or partly within the Republic by the employer;

(ii) is established in connection with a function exercised in the Republic by

the employer which is not a business;

(iii) provides for a pension to be paid to an employee before he attains the

age of 55 years, but not before he attains the age of 45 years, if the
Commissioner-General is satisfied that the nature of the service of the
employee is one in which persons customarily retire before attaining
the age of 55 years;

(iv) provides, in the event of the death of an employee after he has

commenced to draw a pension from the fund or under the scheme, for
the payment of such a sum as together with the total amount paid to
him by way of a pension does not exceed the contribution made to the
scheme in respect of him together with reasonable interest thereon;

(v) provides for the employer to recover out of the amount standing to the
credit of any employees any sum due by the employee under this Act
and paid on his behalf and on his authority by the employer;

(b) approve a fund or scheme notwithstanding that the rules relating thereto do not
satisfy the other provisions of this paragraph if, in his opinion, such rules satisfy
substantially those provisions;

(c) approve part of a fund or scheme where the rules relating to that part satisfy
substantially the other provisions of this paragraph; and in any such case the part
so approved shall be the approved pension fund.

(As amended by Act No. 26 of 1970)

Procedural provisions relating to approval of fund and withdrawal of approval

3.(1)Where application is made for approval of any fund or scheme under paragraph 2, then the
trustees of the fund or scheme shall make the application in writing to the Commissioner-
General; and the application shall be accompanied by two copies of any instrument under
which the fund or scheme is established and of the rules relating to the fund or scheme.

(2) After consideration of any application referred to in sub-paragraph (1), the Commissioner-
General shall inform the trustees of the fund or scheme, in writing of his decision and, if
the decision is an approval of the fund or scheme, of the charge year in relation to which it
is approved, whether the fund or scheme is approved in whole or in part and of any
conditions to which the approval is subject; and, where any fund or scheme or part thereof
has been approved by the Commissioner-General for any charge year, the fund or scheme or
part thereof shall, subject to sub-paragraph (3), be deemed to be approved for each
subsequent charge year unless the Commissioner-General withdraws approval under sub-
paragraph (4).

(3) Where there is any alteration to the instrument establishing any approved pension fund or
to any rules relating to any such fund, then the trustees of the fund in question shall
immediately inform the Commissioner-General in writing of the alteration; and if the

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Commissioner-General is not so informed ,the approval of the fund in question shall be

deemed to have been withdrawn as from the date of the alteration.

(4) The Commissioner-General may at any time by notice in writing withdraw his approval of
any approved pension fund, if in his opinion-

(a) the conditions on which the approval of the fund in question was granted have
not been complied with; or

(b) there has been any alteration to the instrument establishing the fund in question
or to any rules relating to it.

(5) Where any approved pension fund ceases to be an approved fund, the provisions of section
eighty two shall nevertheless continue to apply in respect of the return of any contributions
made while it was an approved fund.

(6) The accounts of an approved pension fund shall be maintained in such form and for such
periods as the Commissioner-General may determine.

(7) References in sub-paragraphs (3) to (6), both inclusive, to approved pension fund within the
meaning of paragraph (d) of the definition of approved fund; and fund shall be construed
accordingly.

Approval of annuity contracts and withdrawal of approval

4.(1)Where an individual in any charge year pays a premium under a contract providing for the
payment to him of a life annuity (hereinafter referred to as an annuity contract) then he
may apply for the contract to be approved by the Commissioner-General.

(2) Subject to sub-paragraph (3), the Commissioner-General shall not approve an annuity
contract unless he considers that the main object of such contract is the provision for the
individual applying for its approval, of a life annuity in old age and unless the
Commissioner-General is satisfied:-

(a) that the annuity contract is made in the Republic with an insurance company or
body of persons lawfully carrying on in the Republic the business of granting
annuities on human life;

(b) that the annuity contract provides for annual contributions by the individual
throughout the currency of the contract; and

(c) that the annuity contract does not:-

(i) provide for the payment during the life of the individual of any sum
except sums payable to the individual by way of annuity, which may,
subject to this paragraph, be commuted; or

(ii) provide for the annuity payable to the individual to commence before
he attains the age of 55 years or after he attains the age of 65 years; or

(iii) provide for the payment of any other sums except sums payable by
way of annuity to the individual's widow or widower and any sums
which, in the event of no annuity becoming payable to the individual, are
payable to the executors or administrators of the individual by way of
return of premiums by way of reasonable interest on

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premiums or by way of bonuses out of profits; or

(iv) provide for annuity, if any, payable to the individual's widow or

widower to be of a greater annual amount than that paid or payable to
the individual; or

(v) provide for the payment of an annuity otherwise than for the life of the
annuitant.

(d) that the annuity contract does:-

(i) provide that no annuity payable under it shall be capable in whole or in

part of surrender or assignment except as provided for in subparagraph
(2) (d) (ii);

(ii) provide that not more than one-third of any annuity payable under it to
the individual may be commuted;

(iii) provide that no annuity payable under it to the individual's widow or

widower may be commuted;

Provided that, save under such conditions as the Commissioner-General thinks proper to
impose, no annuity contract shall be approved by the Commissioner-General if the
individual is contributing to any approved pension fund or an approved fund within the
meaning of paragraph (c) of the definition of approved fund.

(3) The Commissioner-General may, in his discretion and subject to any conditions he thinks
proper to impose, approve an annuity contract otherwise satisfying sub-paragraph (2)
notwithstanding that such annuity contract was made by an individual resident in the
Republic in a country other than the Republic with an insurance company or body of
persons lawfully carrying on the business of granting annuities on human life before he
became resident or that the annuity contract provides:

(a) for the payment after the death of the individual of an annuity to a dependant not
the widow or widower of the individual;

(b) for the payment to the individual of an annuity commencing before he attains the
age of 55 years, if the annuity is payable on his becoming incapable through
infirmity of mind or body of carrying on his own occupation or any occupation
of a similar nature for which he is trained or fitted;

(c) if the individual's occupation is one in which persons customarily retire before
attaining the age of 55 years, for the annuity to commence before he attains that
age (but not before he attains the age of 50 years);

(d) for the annuity payable to any individual to continue for a term certain (not
exceeding 10 years) notwithstanding his death within that term or for the annuity
payable to any individual to terminate or be suspended on marriage (or re-
marriage) or in other circumstances;

(e) in the case of an annuity which is to continue for a term certain, for the annuity
to be assignable by will and, in the event of any individual dying entitled to it,
for it to be assignable by his executors or administrators in the distribution of the
estate so as to give effect to a testamentary disposition, or to the rights of those
entitled on intestacy, or to an appropriation of it to a legacy or to an
appropriation of it to a legacy or to a share or interest in the estate.

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(4) The Commissioner-General may at any time, by notice in writing given to the persons by
and to whom premiums are payable under any approved annuity contract, withdraw that
approval on such grounds and from such date as may be specified in the notice.

Approval of foreign fund or scheme established by law

5.(1) On receiving a claim for approval, the Commissioner-General may, in his discretion, and
subject to any conditions he thinks proper to impose, approve a fund or scheme established
by law in any other country, the main object of which is to provide for the payment under
the rules relating thereto of pensions to its members on retirement from employment and
,where any such fund or scheme is so approved, it shall be known as an approved pension
fund.

(2) The Commissioner-General may at any time withdraw approval of a fund approved under
this paragraph.

(As amended by Act No.26 of 1970 )

Appeals

6. Where under this Schedule the Commissioner-General may approve any pension fund or
annuity contract (but not where he may approve thereof subject to any conditions) or may
withdraw approval from any approved fund, then any person aggrieved by the refusal of
the Commissioner-General to grant his approval or by the withdrawal of any approval
already granted, may appeal therefrom as if the refusal or withdrawal of approval were a
determination and such an appeal shall be heard accordingly.

Remoteness

7. The Commissioner-General’s approval, for the purposes of this Schedule, is not subject to
any rule of law against remoteness, and in any case is without prejudice to any such rule.

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FIFTH SCHEDULE

(Section 33)

CAPITAL ALLOWANCES FOR BUILDINGS, IMPLEMENTS, MACHINERY AND

PLANT, AND PREMIUMS

PART 1

BUILDINGS Definition of an

industrial building

1.(1) In this Part an industrial building means a building or structure in use for the purposes of
any electricity, gas, water, inland navigation, transport, hydraulic power, bridge or tunnel
undertaking, or any like undertaking of public utility, or is in use for the purpose of any
trade which –

(a) is carried on in a mill, factory or like premises;

(b) consists of the manufacture of goods or materials, or their subjection to any

process;

(c) consists of the storage of goods or materials to be used in the manufacture or

processing of other goods;

(d) consists of the storage of goods on import or for export; or

(e) consists in working of a mine or well for the extraction of natural deposits.

(As amended by Acts No .26 of 1970 and No .11 of 1975)

(2) For the purposes of this Part, the expression “industrial building” does not, save as
provided in subparagraphs (3) and (4), include any building or structure in use as, or as
part of, or ancillary to the purposes of, a dwelling-house, retail shop, showroom, hotel or
office or in use for the purposes of any retail, repair or servicing trade or a trade of a like
nature.

(As amended by Act No.11 of 1973)

(3) Any building which on first construction after the commencement of this Act is an hotel,
or which is an extension made after the commencement of this Act to a building first
constructed as an hotel and which is certified by that body of the Government for the time
being responsible for the hotel industry as conforming to such standards as it may from
time to time prescribe, is an industrial building for the purposes of this Part.

(4) Any building constructed or acquired by a person to provide housing for the purposes of
that person’s business is an industrial building for the purposes of this Part:

Provided that -

(i) the cost of each housing unit does not exceed twenty million kwacha (in this
paragraph referred to as low cost housing);

(ii) this sub-paragraph shall have effect in relation to expenditure incurred on or

after 1 st April, 1997;
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 Income Tax Act Sch 5

(As amended by Acts No. 26 of 1970, No 11 of 1973, No 11 of 1994, No 11 of 1975,

No 3 of 1997 and No 9 of 1998 and by SI No 302 of 1967,).

(5) Any building in use for the welfare of employees engaged in the undertakings and trades
referred to in subparagraph (1) is an industrial building for the purposes of this Part.

(6) This paragraph applies to a part of an undertaking or trade as it applies to an undertaking or

trade.

(7) Where a part of a building is an industrial building, and a part is not, and the capital
expenditure incurred on the latter part is not more than ten per centum of such expenditure
incurred on the whole building, the whole building is an industrial building for the
purposes of this Part.

(As amended by Acts No 26 of 1970, 11 of 1973, 11 of 1974, 11 of 1975, and 9 of 1998)

Definition of commercial building

2 In this Part a commercial building means a building or structure, or part thereof, which is not
an industrial building as defined in paragraph 1, or farm improvement or farm works as
defined in the Sixth Schedule, and which is in use for the purposes of any business:

Provided that the construction of such building or structure is completed for first use on or
after 1 st April, 1969.

(Definition of commercial building inserted by Act No.11 of 1969).

Initial allowance for industrial building

3.(1) In ascertaining the business profits of a person who, for the purposes of his business, has
incurred capital expenditure on the construction of a building intended to be used as an
industrial building, or on an addition to or an alteration of an industrial building, a
deduction (called an initial allowance) of the percentage of the expenditure incurred, as set
out in Part V, is allowed in the charge year in which the said building, addition to or
alteration is brought into use as an industrial building.

(2) Capital expenditure amounting to the cost of acquisition is incurred by a person for the
purposes of subparagraph (1) where he -

(a) acquires the building from another person who constructed it in the course of his
trade; and

(b) is the first user of that building.

Wear and tear allowance for buildings

4.(1) In ascertaining for any charge year the business profits of any person who in that year uses
for the purposes of his business an industrial or commercial building which he has
acquired, constructed, added to or altered, a deduction shall be allowed (called a wear and
tear allowance) for each charge year of such use according to the case and at the
percentage, as set out in Part V, of the original cost to such person:

Provided that in no case shall the total of all deductions allowed to such person under this
Part exceed the cost to such person of such acquisition, construction, addition or
alteration, as the case may be.

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(2) Where a building is used by a person as an industrial building for part of a charge year and
as a commercial building for another part of the same charge year, that building shall be
regarded as used by that person solely as an industrial building for that charge year.

(3) No allowance shall be deductible under this paragraph in ascertaining the business profits
of any person for any charge year in respect of any building if at any time during the said
charge year that building is used as his usual dwelling place by -

(a) any individual who uses such building for the purposes of the business, or by any
individual partner in such business;

(b) any individual who, by reason of his shareholdings, or of his control of

shareholdings, in any company or by reason of any partnership interest, is in a
position to exercise control, directly or indirectly, over the person or persons
using the building for the purposes of the business;

(c) a director of a company using the building for the purposes of its business, who is
not a whole time service director thereof.

(As amended by Act No. 11 of 1969)

Deduction of improvement allowance

4A. In ascertaining for any charge year the business profits of any person approved under the
Zambia Development Agency Act, 2006 which in that year uses for the business an
industrial or commercial building which the person has constructed, or altered, a deduction
shall be allowed (called improvement allowance) for that charge year at a per centum of
the original cost to such person as set out in Part V.

(Inserted by Act No. 4 of 2007)

Balancing allowance for buildings

5.(1) Where any building, in respect of which an initial or wear and tear allowance has been or
could have been deducted in ascertaining the profits of a person carrying on a business,
ceases to belong to that person or permanently ceases to be used by him for the purposes of
any business whatsoever, a deduction (called a balancing allowance) shall be allowed in
ascertaining the profits of the business for the purposes of which the said building was last
used for the charge year of such cessation.

(2) The balancing allowance deductible under subparagraph (1) in respect of a building shall
be equal to the amount by which any recovery of capital expenditure on that building
together with any initial wear and tear allowance deducted under this Part in respect of that
building falls short of the original cost of that building to the person referred to in that sub-
paragraph:

Provided that where wear and tear allowance has been deducted for part only of the entire
period of ownership or possession of the building by the person who has been allowed
the deduction of the said wear and tear allowance, the allowance deductible shall be
determined by multiplying the balancing allowance as above calculated by the
number of years in respect of which wear and tear allowance has been deducted and
dividing the result by the number of years of the said ownership or possession.

(3) In calculating the balancing allowance in respect of any building upon any cessation
referred to in sub-paragraph (1), the recovery from capital expenditure on the building
shall be the amount which, according to the Commissioner-General's determination, it
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 Income Tax Act Sch 5
would have realized in the open market at the time of the cessation.

(As amended by Act No. 11 of 1969)

Divided use

6. If any building is used by a person both for the purpose of his business and for other
purposes, the amount of any allowance provided by this Part shall be reduced according to
the Commissioner-General's determination.

(As amended by Act No. 11 of 1969).

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Sch 5 Income Tax Act

PART II

IMPLEMENTS, MACHINERY AND PLANT

Business to include employment in this Part

7. Notwithstanding the definition of "business" as contained in section two, for the purposes of
this Part "business" includes employment and the letting of property.

Frequently replaceable articles not within this Part

8. This Part does not apply to implements requiring frequent replacement.

9. Repealed by Act No. 11 of 1974.

Wear and tear allowance for implements machinery and plant

10.(1) Where a person has used any implements, machinery or plant belonging to him for the
purposes of his business a deduction (called a wear and tear allowance) shall be allowed in
ascertaining the profits of the business for each charge year.

(2) Where a person holds any implements, machinery or plant under a hire-purchase
agreement as defined in the Hire-Purchase Act or a finance lease, then the implement,
machinery on plant shall be deemed to belong to that person for the purposes of this
paragraph.

(3) The wear and tear allowance for any charge year shall be at the percentage and in the cases
set out in Part V:

Provided that in a charge year in which the business ceases the allowance shall be the
amount of the residue of the original cost referred to in sub-paragraph (4).

(4) The wear and tear allowance for any charge year shall be calculated on a straight-line basis
of the original cost of the implements, machinery and plant:

Provided that in the case of any implements, machinery or plant which were acquired by a
person other than for the purpose of a business, the original cost shall be the current
market value of such implements, machinery or plant as determined by the
Commissioner-General in the charge year that they are first used for the purpose of a
business.

(As amended by Act No. 11 of 1974, Act No. 14 of 1976 and Act No. 29 of 1990 ).

(5) Notwithstanding any other provisions of this Act to the contrary the wear and tear
allowance on any implements, machinery or plant which is proved to the satisfaction of the
Commissioner-General to be exclusively and directly used in farming, manufacturing,
tourism or leased out under an operating lease for any charge year, shall be calculated on a
straightline basis at the rate of fifty per centum of the cost.

(As amended by Acts 10 of 1981, No. 11 of 1984, No.4 of 1993 and No. 1 of 2001)

(6) Notwithstanding any other provisions of this Act, the wear and tear allowance on the cost
of any new plant or machinery acquired and used by any soft drinks manufacturer in
respect of such business carried on by him in a rural area, shall, in any charge year, be
calculated on a straight-line basis at the rate of twenty per centum of the cost of such
plant and machinery.

140
(As amended by Acts No. 14 of 1976 and 12 of 1982)

Capital recoveries from implements, machinery and plant

11. For the purpose of paragraph 10 -

(a) a recovery from capital expenditure on implements, machinery or plant shall be

deemed to have taken place when the implements, machinery or plant -

(i) permanently cease to be used for purposes of a business; or

(ii) cease to belong to the person carrying on a business;

(b) the amount of recovery from capital expenditure shall be the amount which,
according to the Commissioner-General's determination, the implements,
machinery or plant would have realized in the open market at the time the event
giving rise to the recovery occurred.

(As amended by Act No. 11 of 1974).

Divided use

12. If any implement, machinery or plant is used by a person both for the purposes of his
business and for other purposes, the amount of any allowance provided for by this Part
shall be reduced to the Commissioner-General's determination.

Valuation in exceptional circumstances

13.(1) In the calculation of any allowance under this Part, the original cost to any person of any
implement, machinery or plant that has been -

(a) used outside the Republic by him, and brought by him to the Republic for the
purposes of his business;

(b) used by him for a purpose other than the purposes of his business, and is then
used for the purposes of his business; or

(c) acquired by him for no valuable consideration; is

according to the Commissioner-General’s determination.

(2) For the purposes of this part, the original cost to any person of a road vehicle used for the
purposes of his business and the vehicle was acquired by the person after the
commencement of this Act, whether the vehicle is a commercial vehicle or otherwise shall
be used in the calculation of the allowance.

(3) In this paragraph, "commercial vehicle" means a road vehicle of a type not commonly used
as a private vehicle and unsuitable to be used as such but includes all types of road vehicles
used solely for hire or carriage of the public for reward.

(As amended by Acts 11 of 1974, No. 6 of 1980, No. 10 of 1981, No. 8 of 1986 and No. 29 of
1990).
 Income Tax Act Sch 5

PART III

PREMIUM ALLOWANCE

Deduction of premium allowance

14.(1) A deduction is allowed (called a premium allowance) in ascertaining the profits of a

person's business equal to the amount of any premium or like consideration paid by him
for the right of use of machinery or plant, or for the use of any patent, design, trade mark
or copyright, or for the use of other property which the Commissioner-General determines
is of a like nature, where such right is used by that person for the purposes of his business.

(2) The amount of any deduction allowed for any charge year under sub-paragraph (1) shall not
exceed the amount of the premium or like consideration divided by the number of years for
which the right of the use is granted.

(3)Where a person acquires any interest in the ownership of property for payment of a premium
or like consideration for the right of use of which he has been allowed a deduction under
sub-paragraph (1), he ceases to be allowed that deduction as from the date of such
acquisition.

PART IV

GENERAL PROVISIONS Successions

15.(1) Where a person succeeds to another person's business or there is a change in any
partnership engaged in the business, any property which immediately before the succession
or change was in use for the purposes of the business, and, without being sold, is in such
use immediately afterwards, is, for the purposes of this Schedule, treated as if it had been
sold for an open market price as determined by the Commissioner-General at the time of
the succession or change to the person carrying on the business immediately afterwards;
but no initial allowance under this Schedule shall be deducted by virtue of this paragraph.

(2) Where there is a succession or change in terms of subparagraph (1), and notwithstanding
that sub-paragraph, the Commissioner-General may, upon written application of the parties
concerned, make such adjustments in relation to the allowances which may be deducted
under this Schedule as will provide for the continuity of those allowances in relation to the
business the subject of the succession or change, but in any event any such adjustment is
subject and according to the Commissioner-General's discretion.

Subsidies

16. For the purposes of this Schedule, the amount of any capital expenditure is reduced by the
amount of any subsidy or grant from public funds towards or in aid or in recognition of the
object of such expenditure.

Controlled sales

17.(1) This paragraph has effect in relation to the transfer by sale or otherwise of any property in
respect of which any deductions have been allowed under Parts I, II and III, where either -

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Sch 5 Income Tax Act

(a) the transferee has control of the transferor, or the transferor has control of the
transferee, or some other person has control of both; or

(b) the Commissioner-General determines by reference to the consideration given for

the property that the transfer was not at arm's length.

(2) Where any property as is mentioned in sub-paragraph (1) is transferred other than at a price
that it would have fetched if sold in the open market, then, subject to sub-paragraph (3), the
like consequences shall ensue as would have ensued if the property had been sold for the
price which it would have fetched if sold in the open market.

(3) Where the transfer is one to which sub-paragraph (1) (a) applies and the transferee uses the
property transferred for the purposes of a business, then, subject to the parties to the
transfer by notice in writing to the Commissioner-General so electing, sub-paragraph (2)
shall not have effect, but the like consequences shall ensue as would have ensued if the
property had been transferred for a sum equal to the residue of capital expenditure on the
property still undeducted immediately before the transfer, and, in the case of such an
election -

(a) no initial allowance shall be deducted in respect of the transferee; and

(b) in respect of a subsequent sale or cessation of use of the property for the purposes
of the business by the transferee, the amount included in his income as a capital
recovery shall be such an amount as would have been included in the transferor's
income in a like case but for the transfer, and as if the transferor had been
allowed all such deductions in respect of the property as were, in fact, allowed to
the transferee.

(As amended by Act No. 26 of 1970).

PART V

RATES OF INITIAL AND WEAR AND TEAR ALLOWANCES

18. Under paragraph 3 -

Initial allowance for industrial buildings…

… … … … … … ten per centum
Under paragraph 4 -

Wear and tear allowance for industrial

building, in the case of low cost housing…
… … … … … … ten per centum
And for other industrial buildings … … … … … ... five per centum
And for commercial buildings … … … … … … two per centum

Under paragraph 4A -

Improvement allowance for commercial

and industrial buildings … … … … … … one hundred per centum

Under paragraph 10 -
Wear and tear for implements machinery
and plant including commercial vehicles … … … … … … … Twenty five per centum

Wear and tear for vehicles other than

commercial vehicles… … … … … … … … ..Twenty per centum

143
(As amended Act No. 11 of 1974, No. 14 of 1976, No. 29 of 1990 and No 4 of 2007)
Sch 5 Income Tax Act Sch 5

PART VI

MINING DEDUCTIONS

Interpretation of terms

19. In this part unless the context otherwise requires -

“capital expenditure” means expenditure, in relation to mining or prospecting

operations –

(a) on buildings, works, railway lines or equipment;

(b) on shaft sinking, including expenditure on pumps, pumps chambers, stations

and ore bins accessory to a shaft;

(c) on the purchase of or on the payment of a premium for the use of any patent,
design, trademark, process or other expenditure of a similar nature;

(d) incurred prior to the commencement of production or during any period of a

non-production on preliminary surveys, boreholes, development or
management, or;

(e) by way of interest payable on any loan for mining or prospecting purposes;

“deemed loss” means a deduction allowable in accordance with paragraph 21

“equity” means in relation to a company limited by shares -

(a) issued ordinary share capital or stock, but only to the extent that such share
capital or stock is paid up;

(b) issued, deferred, preferred, preference or other priority share capital or stock,
but only to the extent that such share capital or stock is paid up and provided
that such share capital or stock carries no rights of early repayment on
demand;

(c) capital reserves in so far as they are not capable of distribution except either
by way of diminution of capital or by addition to issued capital; and

(d) revenue reserves to the extent that they have remained constant throughout
the previous twelve months;

but does not include -

(i) loan stock or debentures whether carrying conversion rights or not;

(ii) bank overdrafts or other drawing facilities;

“estimate of life” means the number of years not exceeding in relation to a mine –
(a) in the case of a mine operated for the purpose of producing lead or
zinc, ten years; and

(b) in the case of any other mine, twenty years, during which mining
operations at the mine may be expected to continue after the beginning
of the charge year;

“existing mine” means –

145
145
 (a) any mine that has a production commencement date before 1st April,
2008;
(b) any mine that is not in regular production but whose development
commenced before 1st April 2008; or
(c) a combination of (a) and (b);

“expenditure” means net expenditure after taking into account any rebates, returns
or recoveries from expenditure;

“pre-production expenditure” means capital expenditure incurred in charge years

prior to the production charge year;

“production commencement date”, means in relation to a mine, the latest of any of

the following dates:

(a) the date on which the mine first commenced regular production;

(b) where the mine, having previously been in production, was closed
down and then re-opened, the date on which it first recommenced
regular production; or

(c) where the mine has changed ownership and has been reorganised with
substantially new development and new plant, the date on which it first
commenced regular production after such re-organisation;

“production charge year” means a charge year in which a mine first commences
regular production;

“prospecting expenditure” means expenditure incurred in relation to prospecting

operations, including, any capital expenditure incurred in connection with such
operations, and such expenditure as the Commissioner-General determines to
be ancillary to expenditure on prospecting operations;

(As amended by Act No 7 of 1996, and Act No. 1 of 2008)

Capital expenditure deductions

20. There shall be no capital expenditure deduction allowed except under the provisions of this
Part.

(As amended by Act No. 7 of 1996)

Prospecting expenditure deduction

21.(1) Subject to the other provisions of this paragraph, the amount of prospecting expenditure
incurred by a person in a charge year in respect of an area in Zambia over which a mining
right has been granted shall be allowed as a deduction to that person.
 Income Tax Act Sch 5

(2) A company that is entitled may, by notice in writing given to the Commissioner-General
within twelve months after the end of the charge year in which the expenditure is incurred,
irrevocably elect to forego the deduction in favour of its shareholders; whereupon the
deductions shall be allowed, not to the company but to its shareholders instead, in
proportion to the calls on shares paid by them during the relevant accounting period or in
such other proportions as the Commissioner-General having regard to any special
circumstances, may determine:

Provided that this sub-paragraph shall not apply to a company carrying on mining
operations in Zambia.

(3) Where -

(a) a company (in this sub-paragraph called “the parent company”) is entitled and
under this paragraph to a deduction; and

(b) subsequent to the date the expenditure is incurred, a new company, of which the
parent company is a shareholder, is incorporated for the purpose of -

(i) continuing the prospecting operations of the parent company; or

(ii) carrying on mining operations in the Republic; and

the parent company may, by notice in writing given to the Commissioner-General

within twelve months after the incorporation of the new company, irrevocably
elect to forego the deduction in favour of the new company but to the new
company instead:

Provided that this sub-paragraph shall not apply -

(i) to a company carrying on mining operations in Zambia; or

(ii) in respect of expenditure incurred after the new company takes

over the prospecting operations of the parent company or
commences to carry on mining operations.

(4) A deduction allowable under this paragraph shall be deemed to be a loss and shall be
allowed, in accordance with section 30 of the Income Tax Act as a loss incurred -

(a) in the case of sub-paragraphs (1) and (2), in the charge year in which the
expenditure is incurred; and

(b) in the case of sub-paragraph (3), in the charge year in which the new company
takes over the prospecting or exploration operations or commences to carry on
mining operations:

(5) In computing a loss incurred by the operator of a mine in any charge year, prospecting
expenditure incurred in relation to the mine and allowable as a deduction shall be deemed to
be deducted last.

(As amended by Act No 7 of 1996)

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 Sch 5 Income Tax Act

Mining expenditure deductions

22.(1) Subject to the other provisions of this paragraph and the provisions of paragraph (5), a
deduction shall be allowed in determining the gains or profits from carrying on of mining
operations by any person in a charge year in respect of the capital expenditure incurred
by the person on a mine which is in regular production in the charge year.

(2) The deduction to be allowed for a charge year for a mine shall be one hundred per
centum of the original expenditure to the the extent that the expenditure has not already
been allowed as a deduction.

(Inserted by Act No. 1 of 2009)

(3) Where separate and distinct mining operations are carried on by a person in mines which
are not contiguous, the deduction allowable under subparagraph (2) shall be calculated
separately according to the respective mines:

Provided that this subparagraph shall not apply to any existing mine.

(4) A deduction shall be allowed in ascertaining gains or profits of a person involved in

mining operations in respect of actual costs incurred by way of restoration and
rehabilitation works or amounts paid into the Environmental Protection Fund pursuant to
section one hundred and twenty-two of the Mines and Minerals Development Act, 2008.
(Inserted by Act No. 3 of 2006 and Amended by Act No. 49 of 2010)

Disallowance of interest in certain areas

22A. Where at any time in any charge year a company has outstanding loans which in
aggregate exceed an amount equal to more than thrice the equity of the company at that
time, any interest on borrowings which may be allowed in any charge year shall not
include any amount of interest paid in that year in respect of so much of the borrowings in
that year as exceed that amount; and where there is more than one loan, interest on
borrowings taken out earlier shall be allowed in priority to interest on later borrowings.

(As amended by Act No. 4 of 2007)

Deductions for mining expenditure on a non-producing and non-contiguous mine

23. (1) Where a person is carrying on mining operations in a mine which is in regular
production and is also the owner of, or has a right to work a mine which is not
contiguous with the producing mine and from which the person has a loss in the
charge year, the amount of such loss shall not be deducted in ascertaining the gains or
profits from the mining operations:
Provided that the loss incurred may be allowed as a deduction in ascertaining the gains
or profits arising from the same mine when it commences reguar production.

(2) The provisions of subparagraph (1) shall not apply to any existing mine.

(As amended by Acts No. 7 of 1996, No. 9 of 1998, No. 4 of 2000, No 4 of 2007 and No. 1 of 2008)

Deductions on cessation of mining production

24. Where a mine ceases regular production due to the expiration of the life of the mine, or where the
mining right has ended, or for any other reason acceptable to the Commissioner-General, and
148
the person who was carrying on the mining operations irrevocably so elects, by notice in writing
to the Commissioner-General, within twelve months after the end of the charge year in which
the mine ceased regular production, the deduction allowable in ascertaining the gains or profits
from the carrying on of the mining operations in respect of the capital expenditure on the mine
for each of the last six charge years in which the mine was in regular production shall be an
amount arrived at by taking the sum of -

(a) the unredeemed capital expenditure on the mine at the commencement of the six
charge years; and

(b) the capital expenditure on the mine incurred in the six charge years; and dividing
the sum so obtained by six.
(As amended by Act No. 7 of 1996)

Change of ownership of mine

25. Subject to the provisions of paragraph 26, when change in the ownership of a mine takes
place, the consideration for the assets which qualify, for the purposes of this Part, as capital
expenditure shall, for income tax purposes -

(a) be allowable as capital expenditure incurred by the new owner; and

(b) be deemed to be a capital recovery by the previous owner in the charge year in
which the change takes place.

Controlled sales

26.(1) Whenever there is a change in the ownership of a mine, this paragraph shall have effect in
relation to the sale of any property in respect of which any deductions have been allowed
under this Schedule in any case where either -

(a) the buyer has control of the seller, or the seller has control of the buyer, or some
other person has control of both; or

(b) the Commissioner-General determines, by reference to the consideration given

for the property, that the same was not at arm’s length.

(2) Where the property is sold at a price other than what it would have fetched if sold in the
open market, then, subject to the provisions of sub-paragraph (3), the same consequences
shall ensue as would have ensued if the property had been sold for the price which it would
have fetched if sold in the open market.

(3) Where the sale is one to which clause (a) of sub-paragraph (1) applies and the parties to the
sale irrevocably so elect, by notice in writing to the Commissioner-General, then sub-
paragraph (2) shall not have effect but, instead, the same consequences shall ensue as
would have ensued if the property had been sold for a sum equal to the residue of capital
expenditure on the property still unredeemed immediately before the sale.
(As amended by Acts No. 9 of 1977, Act No.14 of 1995 and Act No. 7 of 1996)

Petroleum operations

27.(1) Nothing in this Part shall apply to petroleum operations.

 Income Tax Act Sch 5

(2) The Minister may, by statutory instrument, make provisions regulating deductions in
connection with petroleum operations.

(As amended by Act No. 11 of 1985 and Act No. 7 of 1996)

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Sch 6 Income Tax Act

SIXTH SCHEDULE

(Section 33)

FARMING:- FARM IMPROVEMENT AND WORKS ALLOWANCES AND

LIVESTOCK VALUATION

PART I

FARM IMPROVEMENT ALLOWANCE

Definitions

1. In this Part:-

"farm dwelling" means a permanent building, used as a dwelling (the original cost of
which is taken for the purposes of this Part as not in excess of twenty million
kwacha), which is not used by the farmer claiming the allowance under this Part
as the homestead of himself and his family; and

"farm improvement" means any permanent work, including a farm dwelling and
fencing appropriate to farming and any building constructed for and used for the
welfare of, employees, and in relation to farming land owned or occupied by the
farmer claiming the allowance under this Part for ascertainment of his profit.

(As amended by Acts No. 6 of 1980, Act No. 14 of 1987, No 3 of 2000, No 1 of 2004).

NOTE: Restriction of cost under the definition of "farm dwelling" has been as follows: - K
with effect from 1st April, 1966 . 6, 000
with effect from 1st April, 1980 . . 8, 000
with effect from 1st April, 1987 .. 20, 000
with effect from 1st April, 1995 .. 200, 000
with effect from 1st April, 1996 .. 1, 000, 000
with effect from 1 st April 2002 .. 5, 000, 000
with effect from 1st April 2004… 10,000 ,000
st
with effect from 1 April 2008… 20,000 ,000
Farm improvement allowance

2. For any expenditure incurred in a charge year on farm improvements, a deduction called
improvement allowance shall be allowed in determining the profits of the farming business
for the charge year.

(As amended by Act No. 11 of 1974 and by Act of 7 of 1996,).

Divided use

3. Where the expenditure referred to in paragraph 2 partly in respect of a farm improvement,

and partly in respect of some other purposes, only such proportion of that expenditure as
the Commissioner-General may determine is taken into account for the purposes for that
paragraph.

Income Tax Act Sch 6

4. Repealed by Act No 3 of 1997.

PART II

FARM WORKS ALLOWANCE

Nature of farm works

5. The deduction under this Part (called the farm works allowance) is allowed to a farmer in
respect of expenditure on farming land in his ownership or occupation and for the purposes
of farming, on stumping and clearing, works for the prevention of soil erosion, boreholes,
wells, aerial and geophysical surveys, and water conservation (in this Part collectively
referred to as "farm works").

Farm works allowance

6. The expenditure incurred by any person for any charge year in respect of any farm works
is allowed as a deduction in ascertaining the profits of his farming business for that year:

Provided that where the person incurs the expenditure in a charge year prior to the charge
year in which he commences farming operations the expenditure shall be allowed as a
deduction in the charge year in which he commences farming operations.

(As amended by section 43 of Act No. 26 of 1970 with efect from 1 st April, 1969).

152

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 PART III

VALUATION OF LIVESTOCK

Value of livestock

7.(1) In ascertaining a farmer's gains or profits the value of his livestock (other than livestock
bought by him for stud) is the standard value or if he so irrevocably elects, whichever is
the lower of the market value or the cost to him of the livestock.

(2) The standard value for the purposes of this paragraph applicable to any class of livestock
shall be that adopted by the farmer in the first return delivered by him after he commences
farming, if the Commissioner-General determines that such value may be approved and
that standard value shall not be varied for the purposes of any subsequent charge year
unless the Commissioner-General so determines, and subject to any conditions he may
impose on such determination.

(3) For the purpose of this paragraph and paragraph 7 of the First Schedule the value of
livestock bought for stud shall be the cost price or market value whichever is the lower.

(As amended by Act No. 14 of 1987 and Act No. 17 of 1988)

Sch 6 Income Tax Act

PART IV

GENERAL PROVISIONS

Subsidies

8. For the purposes of this Schedule the amount of any capital expenditure incurred in respect of
farm improvement to which Part I applies for expenditure incurred in respect of farm works
to which Part II applies is reduced by the amount of any subsidy or grant from public funds
towards or in aid or in recognition of the object of such expenditure.

(as amended by Act No. 23 of 1968 and by Act No. 14 of 1987)

SEVENTH SCHEDULE

(Section 117)

TRANSITIONAL PROVISIONS

(Seventh Schedule repealed by Section 17 of Act No. 2 of 1995 with efect from 1st April,
1995).

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 Income Tax Act Sch 8

EIGHTH SCHEDULE

(Section 37A) APPROVED SHARE OPTION SCHEMES

1. In this Schedule, “trustee “ means the person, by whatever name called, having the
management or control of a scheme, which is or was an approved share option scheme.

2. (1) Where any scheme is established by or on behalf of an employer under which some or
all of the employees (including Directors) or such employer become entitled to acquire
shares or an interest in shares in the issued or authorized equity capital of such employer or
of some other entity specified in sub paragraph (2) (I) , an application may be made for
that scheme to be approved by the Commissioner-General. (2) The Commissioner-General
shall approve any share option scheme if satisfied that the constitution (whether by trust
deed or otherwise) and rules relating to the scheme have as their main objective the
entitlement to acquires shares or an interest in shares as described in sub-paragraph (1),
and that the entitlement is, for a set number of shares, at a fixed price, for a specific type of
share and during a set period of time:

Provided that –

(a) the scheme is established in the Republic by or on behalf of an employer

carrying on business wholly or partly within the Republic and employees who
are citizens or permanent residents of the Republic regardless of the place where
the duties of that employment are performed; and

(b) the constitution and rules –

(i) provide for the participation by all employees of the employer meeting clearly
defined criteria or all employees of designated holding or subsidiary
companies of the employer or other business enterprises which the
Commissioner-General accepts as being closely affiliated with the
employer in accordance with this Act;

(ii) restricts the criteria for participation so as to exclude employees who are
not individuals or have not worked for the employer or entities specified in
item (I) for a minimum of twenty hours per week during the period of two
years to eligibility, or for at least five months as seasonal full time
personnel during such period;

(iii) restrict the criteria for participation so as to limit the total number of shares
or interest in shares to be required under the scheme by any one employee
to one-fifth of all the shares and interests in shares issued or acquired to be
issued in terms of the scheme;

(iv) require that, on becoming eligible for participation, all employees are
advised by the employer in writing, of their eligibility, of the constitution
and rules of the scheme, of the results of the scheme over the last ten
financial years of operation or since inception if the scheme has been
established for less than ten years and, of the pricing formula and period
over which the option may be exercised, and of the risk and benefits
associated with participation in such schemes in general and the employer’s
scheme in particular, except that the price of the shares shall be fixed at the
time the option is given and price shall not be less than the

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Sch 8 Income Tax Act

market value of the shares at that time, and only ordinary shares of the
company may participate in the scheme;

(v) require that all shares and interests in shares acquired through the scheme
are registered, with the details of the prices at which shares and interests in
shares are issued, exercised, sold or relinquished whether by effluxion of
time or otherwise;

(vi) require that all administration and other expenses of the scheme are borne
by the employer, and that the scheme shall be independently audited by the
auditors or independent accountants who examine or report on the financial
statements of the employer;

(vii) require that eligibility for participation in the scheme and the extent of that
participation shall be on the basis of the period of service with the
employer or other entities specified in item (i), basic emoluments over a
defined period, termination of service benefits from employer or other
entities specified in item (i) or a combination of some or all of these criteria
which shall apply equally to all employees who are in the service of the
employer and are not on notice by either party for termination of service at
the date eligibility arises except to the extent that the rules of the scheme
permit accrued or other terminal benefits to be applied for participation in
the scheme;

(viii) require that in the case of a scheme which provides for acquisition of
shares or interests in shares in a private company notice of intent to sell or
relinquish such shares or interest in shares shall be deemed to be given by
an employee participating in the scheme on termination of service or on
death, and that any amount unpaid in respect of the acquisition price of
such shares or interests in shares, shall be recoverable by the trustee from
the sale proceeds, but not exceeding that amount in the event of death;

(ix) require the trustees and the employer to act as taxpayer agent for an
employee participating in the scheme for all matters connected with the
scheme including the taxation of proceeds of shares or interests in shares
sold or otherwise disposed of by employees participation in the scheme;

(x) provide that the scheme may be terminated at the instigation of an

employer where shares and interests in shares held by employees
participating in the scheme are the subject of unconditional arrangements
for sale by participants at fair market value as certified by the auditor of the
scheme and the employer;

(xi) do not prevent an employee participating in the scheme from selling the
employee’s shares on the basis of the price formula detailed herein after
five years from acquisition of such shares or interests in shares, except
where the date of termination of service with the employer or of the death of
the employee in the course of the realization of that employee’s estate is
earlier;

(xii) do not provide for the issue to or acquisition by employees of shares as

interests in shares conveying a preference as to dividends unless such
shares participate in dividends declared on ordinary shares in the same
entity in excess of the level of such preference and confer rights of
participation on dissolution or redemption no less favourable than the

156
 Income Tax Act Sch 8

rights attributable to holders of such ordinary shares or interests therein;

(xiii) do not require any participating employee to contribute additional amounts

beyond amounts determinable in terms of the constitution and rules at the
date of the employee agreeing to participate in the scheme;

(xiv)do not permit the rules or constitution to be amended in a manner

detrimental to employees participating in the scheme without the consent of
the trustees, and without confirmation from the Commissioner-General;

(xv) do not permit the granting of credit for any amount towards financing the
exercise of an option to acquire shares.

3. (1) In this Schedule “employee” or “employer” includes any employee or employer

specified in paragraph 2(2)(b)(i) except that as regards provision of financial information
where an option scheme extends to holding or subsidiary companies or affiliates financial
information shall be provided only to employees participating in the scheme, or to
employee eligible to participate in the scheme in respect to the company in which they are
or will be entitled to acquire shares or interest in shares and that the auditors required in
terms of paragraph 2(2)(b)(vi) shall apply only to the employer who undertakes the
administration of the fund or its procurements and, if more than one, to such employer
having the largest number of participants in the scheme;

(2) In this Scheme “shares” means any shares issued by a company duly incorporated
under the written laws of the Republic or elsewhere conveying rights to an undivided share
of its distributable profits and of proceeds arising on dissolution or winding-up of such
company and “interest in shares” means an employee’s entitlement to shares held by or on
behalf of such a scheme and to the employee’s right, if any, to exercise an option to
acquire shares.

4. (1) An application for approval of any share option scheme under paragraph 2, may be
made by the trustees of the scheme or a sponsoring employer prior to appointment of such
trustees in writing to the Commissioner-General; and the application shall be accompanied
by a copy of the instrument constituting the scheme and of the rules relating to the scheme.

(2) Within one month of submission of any application referred to in subparagraph (1), the
Commissioner-General shall inform the applicant in writing of approval or rejection of the
share option scheme and of the charge year in relation to which it is approved.

(3) Where any share option scheme has been approved by the Commissioner-General
under subparagraph (2) for any charge year, the scheme shall be deemed to be approved
for each subsequent charge year unless the Commissioner-General withdraws approval
under sub-paragraph (5).

(4) Where there is any alteration to the instrument constituting any share option scheme
approval by the Commissioner-General under this Schedule or to any rules relating to any
such scheme, the trustee of the scheme shall forthwith inform the Commissioner-General
in writing of the alteration; and, if the Commissioner-General is not so informed, the
approval of the scheme shall be deemed to have been suspended as from the date of the
alteration.

(5) The Commissioner-General shall at any time by notice in writing withdraw approval of
any share option scheme if satisfied that –

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Sch 8 Income Tax Act

(a) the conditions set out in paragraph 2 on which the approval of the scheme was granted
have not been complied with; or

(b) there has been any alteration to the instrument constituting the scheme or to any rules
relating to it resulting in the non compliance with the conditions set out in paragraph 2.

(6) In the event of suspension or withdrawal of approval in respect of a share option

scheme the Commissioner-General shall ensure, as far as practical that employees
participating in the scheme are not prejudiced as regards transactions they have irrevocably
committed themselves to prior to receiving notification of such suspension or withdrawal.

5. Where under this Schedule the Commissioner-General rejects an application to approve a

share option scheme, or suspends or withdraws approval from any scheme, any person
aggrieved by the refusal of the Commissioner-General to grant approval or by the
suspension or withdrawal of any approval, may appeal there from as if the refusal or
suspension or withdrawal of approval were a determination of the Commissioner-General
under this Act.

158
 NINTH SCHEDULE

(Section 64A)

PRESUMPTIVE TAX
PART I
TAX ON MOTOR VEHICLES FOR THE CARRIAGE OF PERSONS
Type of vehicle Amount of tax per
(sitting capacity) vehicle
(per annum)

64 seater and above K7,200,000

50-63 seater K6,000,000
36-49 seater K4,800,000
22-35 seater K3,600,000
18-21 seater K2,400,000
12-17 seater K1,200,000
Below 12 seater ( including taxis) K 600,000

PART II
TAX ON TURNOVER
Turnover per annum K200,000,000 Tax rate 3 per cent
and below

(Substituted by Act No 1 of 2004)

 TENTH SCHEDULE

(Section 2)

PUBLIC BENEFIT ACTIVITIES

(1) Welfare and Humanitarian

(a) The care or counselling of education programmes relating to

abandoned, abused, neglected, orphaned or homeless children;

(b) The care or counselling of poor and needy persons where more than
ninety per centum of those persons to whom the care or counselling is
provided are over the age of sixty years;

(c) The care or counselling of, or the provision of education programmes

relating to physically or mentally abused and traumatised persons;

(d) The provision of disaster relief;

(e) The rescue or care of persons in distress;

(f) Rehabilitative care or counselling or education of persons with a

physical disability;

(g) Rehabilitative care or counselling or education of prisoners, former

prisoners, parolees, convicted offenders and persons awaiting trial;

(h) The rehabilitative care or counselling of persons addicted to a

dependence forming substance or the provision of preventative and
education programmes regarding addiction to a dependence forming
substance;

(i) Conflict resolution, the promotion of reconciliation, mutual respect

and tolerance among the various people of Zambia;

(j) The promotion or advocacy of human rights and democracy;

(k) The protection of the safety of general public;

(l) The promotion or protection of family stability;

(m) The provision of legal services for poor and needy persons;

(n) The provision of facilities or the protection and care of children under
school going age or poor and needy parents;

(o) The promotion or protection of the rights and interests of, and the care of
asylum seekers and refugees;

(p) Community development for poor and needy persons and poverty
eradication initiatives, including –
 I. The promotion of community based projects relating to self help,
empowerment, capacity building, skills development or poverty
eradication;
II. The provision of training support or assistance to community based
projects contemplated in clause (i); or
III. The provision of training, support or assistance to emerging micro
enterprises to improve capacity to start and manage a business
IV. , which may include the granting of loans on such conditions as may be
prescribed by the Minister by way of statutory instrument; or

(q) the promotion of access to media and a free press.

(2) Health Care

(a) the provision of equipment or other aids used by persons with a physical
disability, without the recovery of cost;
(b) the provision of health care services to poor and needy persons;
(c) the care or counselling of terminally ill persons or persons with a physical
or mental disability and the counselling of their families in this regard;
(d) the prevention of HIV infection and the provision of preventative and
education programmes relating to HIV/AIDS;
(e) the care, counselling or treatment of persons afflicted with HIV/AIDS,
including the care or counselling of their families and dependants in this
regard;
(f) the provision of blood transfusion, organ donation or similar services;
(g) the provision of primary health care, education, sex education or family
planning;
(h) the prevention of malaria and programmes aimed at the eradication of
malaria;
(i) the prevention of tuberculosis and leprosy infection and the provision of
preventative and education programmes relating to tuberculosis and leprosy;
or
(j) the care, counselling or treatment of cancer patients including the
counselling of their families and dependants.

(3) Land and Housing

(a) the provision of residential care for retired persons, where-
(i) more than ninety per centum of the persons to whom the residential care
is provided are over the age os sxty years and nursing services are
provided by the organisation carrying on such activities; and
(ii)residential care for persons who are poor and needy is actively provided
by that organisation without the recovery of cost
(b) building and equipping of-
(i) clinics or day care nursery; or
(ii) community centres, sport facilities or other facilities of a similar
nature for the benefit of the poor, needy and persons with a
physical disability;
(c) construction of low cost housing for poor and needy persons without the
recovery of cost; or
(d) the promotion, facilitation and support of access to land and use of land,
housing and infrastructural development for promoting official land reform
programmes.

(4) Education and Development

(a) the provision of education by a government school or grant aided school as

defined in the Education Act;
(b) the provision of higher education by an institution excluding a private
institution as defined in terms of the Technical Education, Vocational and
Entrepreneurship Training Act, 1998
(c) or a public university as defined by the University Act, 1999;
 (d) educational enrichments, academic support, supplementary tuition or outreach
programmes for the poor and needy;
(e) the training or education of persons with a physical or mental disability;
(f) the provision of educare or early childhood development services for pre school
children to the poor, needy and vulnerable children;
(g) the training of persons employed in the national, provincial and local spheres of
government, for purposes of capacity building in those spheres of government;
(h) the provision of school buildingsor equipment for public schools and
educational institutions engaged in public benefit activities;
(i) career guidance and counselling services provided to persons attending any
school or higher education institution as envisaged in subparagraphs (a) and (b);
(j) programmes addressing needs in education provision, learning, teaching,
training, curriculum support, governance, whole schools development, safety
and security at schools, pre schools or educational institutions engaged in public
benefit activities; or
(k) the provision of scholarships, bursaries and awards for study, research and
teaching on such conditions as may be prescribed by the Minister, by statutory
instrument.

(5) Religion

The promotion or practice of religious or ecclesiastical activities that encompass

acts of worship, witness, teaching and community service.

(6) Culture

(a) the advancement, promotion, or preservation of art, culture or customs;

(b) the promotion, establishment, protection, preservation or maintenance of
areas, collections or buildings of historical or cultural interest, national
monuments, national heritage sites, museums, including art galleries,
archives and libraries; or
(c) the provision of youth leadership or development programmes.

(7) Conservation, Environment and Animal Welfare

(a) the conservation, rehabilitation or protection of the natural environment,
including flora, fauna or the biosphere;

(b) the care of animals, including the rehabilitation, or prevention of the

ill treatment of animals

(c) the promotion of, and education and training programmes relating to
environment awareness, greening, clean up or sustainable development
projects;

(d) the establishment and management of a trans frontier area, involving two or more
countries, which
(i) is or will fall under a unified or coordinated system of management without
compromising national sovereignty; and
(ii) is established with the explicit purpose of supporting the conservation of
biodiversity, job creation and free movement of animals and tourists across the
international boundaries.

(8) Research and Consumer Rights

(a) research including agricultural, economic, educational, industrial, medical,

political, social, scientific and technological research; or
(b) the protection and promotion of consumer rights and the improvement of control
and quality with regard to products or services.
 Income Tax Act

(9) Sport

The administration, development, coordination or promotion of sport or recreation in which the

participants take part on a non professional basis as a pass-time.

(10) Providing of Funds, Assets or Other Resources

The provision of-

(a) funds, assets, services or other resources by way of donation;
(b) assets or other resources by way of sale for a consideration not exceeding the direct
cost to the organisation providing the assets or resources; or
(c) funds by way of a loan at no charge.

(11) General

(a) the provision of support services to, or promotion of the common interests of public
benefit organisations contemplated in this Schedule; or
(b) the bid to host or the hosting of any international event approved by the Minister for
purposes of this paragraph, having regard to
(i) the foreign participation in that event; and
(ii) the economic impact that the event may have on the country as a whole.

(Inserted by Act No. 1 of 2009)

CHARGING SCHEDULE

(Section 14) PART I

TAX CREDIT
1. (1) Subject to sub-paragraph (2) the tax credit referred to in subsection (2) of section fourteen
which is appropriate-

(a) to an individual for any charge year is zero;

(b) to an individual who is a person with disability for any charge year is three
million kwacha per annum.

(Amended by Act No. 1 of 2009, No. 27 of 2009 and No. 49 of 2010)

(2) The tax credit for any charge year appropriate to an individual to whom this subparagraph
applies shall be equal to -
AB/12

where A is the amount of the tax credit apart from this sub-paragraph, and B is the
number of months in the charge year in which the individual is living in the Republic for
any time.

(3) Sub-paragraph (2) applies to any individual who-

(a) is resident in the Republic for the charge year in question but was not so resident
for the immediately preceding charge year and is not so resident for the
immediately succeeding charge year, or

163
Ch Sch Income Tax Act
(b) is not resident in the Republic for the charge year in question, and who in either
case is absent from the Republic for part of that charge year of that charge year.

PART II

RATES OF TAX

2. (1) Subject to the provisions of this Act, tax in respect of the income of an individual for a
charge year shall be charged as follows -

(a) on income received by way of lump sum payments, under section eighty-two at the
rate of ten per centum per annum:

Provided that the refund of employer’s contribution from a defined contributory

pension fund or scheme and defined benefit fund or scheme shall be taxed in
accordance with clauses (b), (c), (d), (e) and (f) of this sub-paragraph.

(Added by Act No 1 of 2004)

(b) on any income falling within subsection (5) of section twenty-one which is not
exempt from tax under that subsection, at the rate of ten per centum per annum;

(c) on the balance of so much of an individual's income as does not exceed twenty-
four million kwacha at the rate of zero per centum per annum;

(d) on the balance of so much of an individual’s income as exceeds twenty-four

million kwacha but does not exceed thirty-three million, six hundred thousand
kwacha at the rate of twenty-five per centum per annum;

(e) on the balance of so much of an individual’s income as exceeds thirty-three

Million, six hundred thousand kwacha but does not exceed sixty-eight million,
four hundred thousand kwacha at the rate of thirty per centum per annum;

(f) on the balance of so much of an individual's income as exceeds sixty-eight

million, four hundred thousand kwacha at the rate of thirty five per centum per
annum.
(As amended by Act No. 27 of 2011)

(1A) Notwithstanding sub-paragraph (1) and subject to the

other provisions of this Act, tax in respect of the income of an individual for
the charge year ending 31st December, 2012, shall be charged as follows:

(a) on income received by way of lump sum payment, under section

eighty-two, at the rate of ten percent:

Provided that the refund of employer’s contribution from a defined

contributory pension fund or scheme and defined benefit fund or
scheme shall be taxed in accordance with clauses (b), (c), (d), (e) and
(f);

(b) on any income falling within subsection (5) twenty-one which is not
exempt from tax under that subsection, at the rate of ten percent;

(c) on the balance of so much of an individual’s income as does not exeed

164
 eighteen million kwacha, at the rate of zero percent;

(d) on the balance of so much of an individual’s income as exceeds

eighteen million, but does not exceed twenty-five million, two hundred
thousnd kwacha at the rate of twenty-five percent;

(e) on the balance of so much of an individual’s income as exeeds twenty-

five million, two hundred thousand kwacha, but does not exceed fifty-
one million, three hundred thousand kwacha, at the rate of thirty
percent; and

(f) on the balance of so much of an individual’s income as exceeds fifty-

one million, three hundred thousand kwacha, at the rate of thirty-five
percent.

(As amended by Act No. 27 of 2011)

(2) Where in a charge year, a person receives income by way of gratuity under subsection
(1) of section twenty one the gratuity shall be charged as follows:
(i) income not exceeding the amount set out in clause (c ) of sub-
paragraph (1) of this paragraph shall be exempt; and
(ii) the balance of so much of an individual’s income as exceeds the income
specified in clause (i) of this sub-paragraph at the rate of twenty five per
centum per annum.
(Amended by Act No. 1 of 2009, No. 27 of 2009 and No. 49 of 2010)

(2A) Notwithstanding sub-paragraph (2), in the charge year ending (2), in the charge year
ending 31st December, 2012, where a person receives income by way of gratuity
under subsection (1) of section twenty-one, the gratuity shall be charged as follows:

(a) income not exceeding the amount set out in clause (c) of sub-paragraph (1A) of
this paragraph shall be exempt; and

(b) the balance of so much of an individual’s income as exceeds the income

specified in clause (i), at the rate of twenty-five percent;
(As amended by Act No. 27 of 2011)

Companies

3. (I)(1) Subject to the provisions of this Act, tax in respect of the income of a person other
than the income of an individual, a trust, deceased’s estate or a bankrupt’s estate for a
charge year, shall be charged as follows-

(a) on the income of any company listed on the Lusaka Stock Exchange in the first
year of its listing, at the rate of two per cent below the rates specified-

(i) in clauses (b), (c), (d) and (e) of this sub-paragraph; and

(ii) in clauses (b), (c) and (d) of paragraph 5; Provided that—

A. any company whose shares were listed on the Lusaka Stock

Exchange prior to 1 st April 2004 shall not qualify for the tax
incentive referred to in this clause; and

B. where any company whose shares are listed on the Lusaka Stock
Exchange on or after 1st April 2004, offers and sells one-third of
its shares to indigenous Zambians, the income of that company
 shall be charged at an additional rate of five per cent below the
rates specified—

(i) in clauses (b), (c), (d) and (e) of the sub-paragraph; and
(ii) in clauses (b), (c) and (d) of paragraph 5;
(b) on the income of any company other than an elctronic communications network
or service licensee, at the rate of thirty-five per centum per annum;

(c) on so much of income of electronic communications network or service licensee

as does not exceed two hundred and fifty million kwacha at the rate of thirty-
five per centum per annum;

(d) on so much of the income of electronic communications network or service

licensee as exceeds two hundred and fifty million kwacha, at the rate of forty per
centum per annum;
(As amended by Act No. 27 of 2011)
 Income Tax Act Ch Sch

(e) where the income from mining operations does not exceed eight per centum of
the gross sales, at the rate of thirty per centum per annum;

(f) Where the income from mining operations exceeds eight percent of the gross
sales at the rate determined in accordance with the following formula:

Y=30% + [a – (ab/c)]
Where –
Y= the tax rate to be applied per annum;
a= 15%
b= 8%; and
c= the percentage ratio of the assessable income to gross sales;

(g) the rate of tax for income received by any public benefit organisation referred to
in paragraph 6 of the Second Schedule shall be fifteen per centum.

(Amended by Act No 1 of 2004, No. 1 of 2009, No. 27 of 2009 and No. 49 of 2010)

(2) Clause (f) of subparagraph (1) shall have effect from 1st April, 2009.

(Inserted by Act No. 49 of 2010)

Trusts

4. Subject to the provisions of this Act, tax in respect of the income of a trust, a deceased’s
estate or bankrupt’s estate for a charge year shall be charged at the rate of thirty-five per
centum per annum.

Special cases

5. Notwithstanding the provisions of paragraphs (1), (2), (3), (4), (6) and (7) –

(a) the tax chargeable on income received from a rural enterprise shall be reduced for
each of the first five charge years for which that business is carried on, by such
amount as equal to one-seventh of the tax which would otherwise be chargeable
on that income;

(b) the maximum rate for income received from farming shall be ten per centum per
annum;
(As amended by Act No. 27 of 2011)

(c) the maximum rate of tax on that portion of income which is determined by the
Commissioner-General as originating from the export of non-traditional products
shall be fifteen per centum per annum:

provided that—

the foreign earnings of Sun International Limited, in relation to a

Development Agreement executed on the 22nd September, 1999, shall be
deemed as income originating from the export of non traditional products;
and

for the purposes of this subparagraph “ foreign earnings” means the total
income generated by Sun International Limited from non-Zambian residents
167
Ch Sch Income Tax Act
through its operations and shall be calculated as a percentage of rooms
revenue by non-Zambians compared to total rooms revenue in each year;
the percentage reached shall then be applied to the total earnings by Sun
International Limited, to compute foreign earnings.

(d) the maximum rate of tax for income received from the chemical manufacture of
fertilizer shall be fifteen per centum per annum.
(e) On the income of a business enterprise operating in a priority sector declared
under the Zambia Development Agency Act, 2006 tax shall be charged
(i) at zero per centum for a period of five years starting from the first year
profits are returned;
(ii) fifty per centum from the sixth to the eighth year after profits are returned;
(iii) at seventy-five per centum from the ninth to the tenth year and at hundred
per centum after the tenth year after profits are returned;

(f) Tax to be deducted from any dividend declared by a company operating under a
priority sector declared under the Zambia Development Agency Act, 2006, shall
for a period of five years from the date of the first declaration be at the rate of
zero per centum per annum; and

(g) Tax to be deducted from a payment of any management fee, consultancy fee,
interest or payment to a non-resident contractor by a person developing a multi-
facility economic zone or an industrial park under the Zambia Development
Agency Act, 2006, and any person operating in a multi-facility economic zone or
an industrial park shall for a period of five years from the first date that the
payment is due, be at the rate of zero per centum per annum.

(Inserted by Act No. 1 of 2009)

Withholding tax

6(1) Tax required to be deducted from any dividend under section eighty-one and section
eightyone A shall be deducted -

(a) at the rate of fifteen per centum per annum;

(b) at such other rate as the Commissioner-General directs to give effect to the
provisions of any agreement made under section seventy -four or to give effect to
any provision in the second Schedule; or

(c) at the rate of zero per centum per annum for any dividends paid by any person carrying on
mining operations.

(2) The tax required to be paid on any import under section eighty-one C shall be at the rate of
six per centum of the value for duty purposes, of the goods.

(Amended by Act No. 1 of 2009)

Rate of tax to be deducted

7. Tax required to be deducted from any payment under section eighty-two A shall be deducted
at the rate of fifteen per centum per annum.

Provided that-

168
 (i) tax required to be deducted from any payment of interest, other than interest
on Government Bonds, to an individual under section eighty-two A shall be
deducted at the rate of fifteen per centum per annum, and shall be the final
tax;
(ii) tax required to be deducted from payment of interest on Government Bonds
to an individual shall be the final tax;
(iii) tax required to be deducted from payment of interest on Treasury Bills and
Government Bills to any charitable institution, body, person or trust
exempted under subparagraph (1) of paragraph 5 and subparagraph (1) of
paragraph 6 of the Second Schedule shall be the final tax; and

(iv) [renumbering of clause (v) and (vi) as clause (iv) and (v)]. As per Act No. 1
of 2008– not existing!!

Interpretation

8. Any reference in this Act or in any other document to any provisions of the Charging
Schedule as it had effect immediately before the coming into operation of the Income Tax
Act (Amendment) Act 1999 shall be construed as a reference to the corresponding
provision of this Schedule as it has effect thereafter.

(As amended by Act No. 4 of 2000, No. 1 of 2001, No. 3 of 2002, No 1 of 2004, and No of 2005)