On 22 December 2023, Zambia took a significant step in reshaping its fiscal landscape by enacting various amendment acts to implement the 2024 budget tax changes. The key highlights of these tax measures include:
- Income Tax Adjustments: Modified income tax brackets with a reduction in the top bracket rate from 37.5% to 37.0%.
- VAT Refund Extension: Extension of the period to claim a refund on VAT for eligible goods before the commencement of commercial operations from 4 to 7 years for hydroelectricity generation.
- Customs Duty Revisions:
- Removal of customs duty on machinery, equipment, and goods for geothermal energy activities.
- Expansion of the list of media, film, and music equipment with suspended customs duty for three years.
- Removal of customs duty on rolling stock (wagons and locomotives) to enhance railway operations.
- Removal of customs duty on machinery for petroleum exploration.
- Manufacturing Sector Incentives:
- Extension of the 2% local content allowance for value addition to sorghum and millet.
- Increased corporate income tax rate relief from 14.2% to 20% for the first five years for rural businesses (excluding mining).
- Removal of customs duty on motorcycles and tricycles for local assembly.
- Increase in customs duty on solar panels from 15% to 25%.
- Cotton Value Chain Incentives:
- 5-year tax holidays on profit for cotton seed producers and cotton ginning.
- 10-year tax holiday on profit from cotton spinning and thread weaving.
- Clean Energy and Climate Initiatives:
- Removal of customs duty on electric motorcycles, vehicles, buses, trucks, and related accessories.
- Reduction in excise duty on hybrid vehicles for persons’ transportation from 30% to 25%.
- Multi-Facility Economic Zones Support:
- Accelerated depreciation up to 100% for developers of Multi-Facility Economic Zones.
- Extension of customs duty incentives for developers for 5 years.
- Electronic Invoicing and Input VAT Deduction Rules:
- Introduction of a new electronic invoicing system.
- New rules for the deduction of input VAT, requiring specific documentation for suppliers.
- Mobile Money Transfer Levy:
- Introduction of a progressive levy on mobile money transfers between individuals, ranging from ZMW 0.08 to ZMW 1.80.
- Whistleblower Reward and Large Taxpayer Requirement:
- Modification of the Zambia Revenue Authority Act to implement a whistleblower reward in 2024.
- Modification of the Zambia Revenue Authority Act to implement a whistleblower incentive in 2024.
The provisions are generally effective from 1 January 2024.
