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Investment & Legal Framework
considered priority sectors or range of priority prod-
ucts. This category of investors is also only entitled
to general incentives provided under the various
pieces of legislation.
General Incentives are available to investors seek-
ing opportunities in various sectors of the economy.
These incentives are provided by the pieces of leg-
islation falling under the Zambia Revenue Authority,
namely: the Customs and Excise Act, Income Tax
Act and Value Added Tax Act.
1.Income earned by companies in the first year of
listing on the Lusaka Stock Exchange qualifies for a
2% discount on the applicable company tax rate in
the particular sector, however companies with more
than 1/3 of their shares owned by Zambians qualify
for a 7% discount;
2.Implements, machinery and plants used for farm-
ing, manufacturing or tourism qualify for wear and
tear allowance of 50% of the cost per year in the
first two years;
3.Buildings used for manufacturing, mining or hotel
qualify for wear and tear allowance of 10% of cost
in first year and 5% of cost per year in subsequent
years;
4.Duty free importation of most capital equipment for
the mining and agriculture sectors;
5.Corporation tax at 15% on income from:
a.Farming;
b.Fertilizer production;
c.Non-traditional exports;
6.A Farm works allowance of 100% of expenditure
on stumping, clearing, prevention of soil erosion,
bore holes, aerial and geophysical surveys and wa-
ter conservation
7.Development allowance of 10% of the cost of capi-
tal expenditure on growing of coffee, banana plants,
citrus fruits or similar plants.
8.Farm improvement allowance - capital expenditure
incurred on farm improvement is allowable in the
year of incurring the expenditure.
9.Dividends paid out of farming profits are exempt
for the first five years the distributing company com-
mences business.
10.Initial allowance of 10% on capital expenditure
incurred on the construction or improvement of an
industrial building is deductible;
11.Foreign exchange losses of a capital nature in-
curred on borrowings used for the building and con-
GENERAL TAX INCENTIVES
VATSECTOR-SPECIFIC INCENTIVES
struction of an industrial or commercial building are
tax deductible.
12.Dividends declared by companies assembling
motor vehicles, motor cycles and bicycles are ex-
empt for the first five years of initial declaration of
dividends;
13.Carry Forward of Losses
Value Added Tax:
1.Relief for VAT registered enterprises on imports of
eligible capital goods. (VAT deferment);
2.0% tax rate on export of taxable products;
3.Relief of vat on transfer of business as a going
concern;
4.Equal treatment of services for vat-reverse vat;
5.Cash accounting for specialized associations e.g.
association of building and civil engineering contrac-
tors;
6.VAT relief on input tax paid for purchases made by
registered suppliers.
7.Input tax claim for three months prior to VAT regis-
tration for businesses that have already commenced
trading;
8.Reduction of VAT rate for investors in tax free
zones.
Agriculture
1.Input tax claim for three months prior to vat regis-
tration for businesses that have already commenced
trading;
2.Reduction of VAT rate for investors in tax free zones.
Manufacturing
1.Refund of Zambian VAT on purchase and export of
Zambian products by non-resident businesses under
the commercial exporters scheme;
2.Input tax claim for three months prior to registra-