Zambia’s 2025 Budget introduces wide-ranging tax reforms across income, turnover, VAT, property transfer, and excise duties to boost revenue and compliance.

Zambia has introduced a range of tax changes in its 2025 Budget, affecting income tax, turnover tax, VAT, property transfer tax, and excise duties. The reforms aim to increase revenue and improve tax compliance across sectors.

The changes will take effect from 1 January 2025. For detailed guidance on the 2025 updates, refer to the Practice Note issued by the Zambia Revenue Authority.

The budget outlines the following updates:

Turnover tax rate increased
The turnover tax rate has increased from 4% to 5% on turnover exceeding ZMW 12,000 up to ZMW 5 million. Turnover up to ZMW 12,000 remains subject to a 0% rate.

Turnover tax threshold raised

The maximum turnover threshold for the turnover tax regime has increased from ZMW 800,000 to ZMW 5 million. This includes taxpayers operating in the gig economy. However, the VAT registration threshold remains at ZMW 800,000. Taxpayers with turnover between ZMW 800,000 and ZMW 5 million must register for both turnover tax and VAT, while those exceeding ZMW 5 million must register for income tax and VAT.

Withholding tax on winnings cut permanently
The withholding tax on winnings from gaming, lotteries, and betting has been permanently reduced from 20% to 15%, confirming the temporary rate applied in 2023 and 2024.

Mobile money levy doubled
The levy on mobile money transfers between individuals has doubled, with progressive rates now ranging from ZMW 0.16 to ZMW 3.60. The previous legislation was repealed and replaced to implement the new rates.

VAT thresholds adjusted for currency change

VAT thresholds were updated to reflect the 2013 currency redenomination from ZMK to ZMW (1,000:1). The taxable supply threshold for promotional goods is now ZMW 100 (previously ZMK 100,000), and the turnover threshold for submitting VAT returns every six months is ZMW 200,000 (previously ZMK 200,000,000).

Excise duties increased
Excise duties have been raised on various items, including certain non-alcoholic beverages, bottled mineral waters, cigars, cigarettes, water pipe tobacco, other tobacco products and substitutes, and different fuels.

Advance income tax introduced
A 15% Advance Income Tax (AIT) now applies to foreign remittances over USD 2,000 and to commercial exports made without a valid tax clearance certificate. AIT is not a final tax and may be credited against other tax liabilities or refunded if no liability exists.

Loss offset limited across all sectors
The allowable offset for carried forward tax losses has been reduced from 100% to 50% of taxable income across all sectors. Previously, this 50% limitation applied only to the mining sector.