Income Tax (Amendment), 2020

An Act to amend the Income Tax Act. [18th December, 2020
ENACTED by the Parliament of Zambia. 1. (1) This Act may be cited as the IncomeTax (Amendment)
Act, 2020, and shall be read as one with the Income Tax Act, in
this Act referred to as the principal Act. (2) This Act shall come into operation on 1st January, 2021. (3) Despite subsection (2), section 81B (4A) shall come into
operation on a date that the Minister may appoint by statutory
instrument. 2.

uary, 2021. (3) Despite subsection (2), section 81B (4A) shall come into
operation on a date that the Minister may appoint by statutory
instrument. 2.

Section 2 (1) of the principal Act is amended by the insertion
of the following definitions in the appropriate places in alphabetical
order:
“commodity royalty” means an amount paid by a person
resident in the Republic to a non-resident that is computed
by reference to the production, profit, or to the value of
production from a mineral deposit or other natural resource
in the Republic payable under royalty financing but
excludes the repayment of the purchase price for the
commodity royalty;
“purchase price” is the amount paid by a non-resident to a
person resident in the Republic in return for future payments
of commodity royalty; and
“royalty financing” means a financing agreement or
arrangement where a purchase price is made and includes
an arrangement of a similar nature;. Enactment
Income Tax (Amendment) [No. 20 of 2020 327
Short title
and
commence-1
ment
Cap. 323
Amendment
of section 2
GOVERNMENT OF ZAMBIA
ACT
No. 20 of 2020
Date of Assent: 18th December, 2020
Single copies of this Act may be obtained from the Government Printer,
P.O. Box 30136, 10101 Lusaka, Price K12.00 each.

of Assent: 18th December, 2020
Single copies of this Act may be obtained from the Government Printer,
P.O. Box 30136, 10101 Lusaka, Price K12.00 each.

3. Section 6 of the principal Act is amended by the deletion
of subsection (2). 4. Section 29 of the principal Act is amended by the—
(a) deletion of subsection (1) and the substitution therefor of
the following:
(1) Subject to the other provisions of this Part in
ascertaining—
(a) business gains or profits in a 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) 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.; and
(b) insertion of the following new subsections immediately
after subsection (1):
(1A) Despite subsection(1), a deduction shall be
allowed on the amount payable by way of interest on 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.

l
is satisfied that the loan or advance was obtained for capital
employed wholly and exclusively for business purposes or
in the production of income.

(1B) Despite any other provisions of this Act, in
ascertaining business gains or profits in a charge year a
deduction shall not be allowed on gross interest expense
that exceeds thirty percent of the tax earnings before
interest, tax, depreciation and amortisation. 5. Section 34A (2) of the principal Act is amended by the
deletion of the word “three”and the substitution therefor of the
word “five”. 6. The principal Act is amended by the insertion of the following
new section immediately after section 34A. 328 No. 20 of 2020] Income Tax (Amendment)
Amendment
of section 6
Amendment
of section 29
Amendment
of section
34A
Insertion of
new section
34B

n 34A. 328 No. 20 of 2020] Income Tax (Amendment)
Amendment
of section 6
Amendment
of section 29
Amendment
of section
34A
Insertion of
new section
34B

34B. (1) Despite section 29, where a person
carrying on agro-processing or manufacturing incurs in a
charge year, expenditure, other than expenditure of a capital
nature on the growing or purchase of a prescribed
agricultural product, a local content allowance of two
percent of the expenditure shall be deducted in ascertaining
the gains or profits of that business for the charge year. (2) The prescribed agricultural product referred to
under subsection (1) shall be grown within the Republic. (3) For purposes of this section, the local content
allowance shall be claimed in each year that the expenditure
is incurred but not exceeding three charge years. 7. Section 43D (2) of the principal Act is amended by the
deletion of the word “one” and the substitution therefor of the word
“two”. 8.

charge years. 7. Section 43D (2) of the principal Act is amended by the
deletion of the word “one” and the substitution therefor of the word
“two”. 8.

Section 45B of the principal Act is amended by the insertion —
(a) in columns 1 and 2 of the following:
COLUMN 1 COLUMN 2
INSTITUTION TYPE OF TRANSACTION
regulatory bodies registration, renewal or issuance
of a licence, practicing certificate,
permit or similar document; and
(b) of the following new subsection immediately after
subsection (1):
(1A) The requirement for a taxpayer identification
number by a regulatory body under subsection (1) shall
come into operation on a date that the Minister may appoint
by statutory instrument. 9. The principal Act is amended by the repeal of section 48
and the substitution therefor of the following section:
48. (1) The Commissioner-General may request a person
to furnish to the Commissioner-General information,
whether relating to the affairs of that person or any other
person that the Commissioner-General determines is
necessary for the purposes of this Act. Local
content
allowance
Amendment
of section
43D
Amendment
of section
45B
Repeal and
replacement
of section 48
Furnishing
of
information
Income Tax (Amendment) [No. 20 of 2020 329

ment
of section
43D
Amendment
of section
45B
Repeal and
replacement
of section 48
Furnishing
of
information
Income Tax (Amendment) [No. 20 of 2020 329

(2) A record requested under this section shall be provided
despite the record being outside the Republic or held by a person
who is not a resident of the Republic. (3) A person who fails to provide records requested by the
Commissioner-General under subsection (1), including records
requested pursuant to Part IX, shall be barred from using that record
to challenge an assessment or determination, in a court or tribunal. 10. Section 55 of the principal Act is amended—
(a) by the insertion of the following new subsection
immediately after subsection (1):
(1A) The books, accounts documents, records and
other information referred to in subsection (1) shall be kept
in Zambian Kwacha.; and
(b) in subsection (4), by the deletion of the words “A person
carrying” and the substitution therefor of the words
“Despite subsection (1A), a person carrying”. 11.

ion (4), by the deletion of the words “A person
carrying” and the substitution therefor of the words
“Despite subsection (1A), a person carrying”. 11.

Section 81B of the principal Act is amended by the insertion
of the following new subsections, immediately after subsection (4):
(4A) A person, institution or authority empowered
by an Act of Parliament to regulate its members shall not
register or renew membership or issue a licence, practicing
certificate, permit or similar document unless the applicant
produces a tax clearance certificate. (4B) Despite subsection (4A), a person, institution or
authority under subsection (4A) shall not require a tax
clearance certificate from an applicant that falls under the
category of a student or an applicant that is not carrying
on business relating to the profession. (4C) Despite subsection (4A), the Minister may
exempt a member from the requirement under subsection
(4A) as prescribed. 12. Section 82A of the principal Act is amended—
(a) in subsection (1), by the insertion of the following new
paragraph immediately after paragraph (h):
(i) a commodity royalty.;
(b) by the insertion of the following new subsection
immediately after subsection (1):
Amendment
of section
81B
Amendment
of section
82A
Amendment
of section 55
330 No. 20 of 2020] Income Tax (Amendment)

immediately after subsection (1):
Amendment
of section
81B
Amendment
of section
82A
Amendment
of section 55
330 No. 20 of 2020] Income Tax (Amendment)

(1A) The Commissioner-General may determine the
commodity royalty under subsection (1)(i) where the
financing agreement or arrangement does not state what
constitutes the repayment of the purchase price.; and
(c) by the insertion of the following new subsection
immediately after subsection (9):
(10) Where a person or partnership fails to deduct
or withhold tax as required by this section, section 81 and
section 81A, on a payment to a non-resident, that person
or partnership shall be liable to pay the amount of tax
which has not been deducted or withheld. 13. Section 97A(1) of the principal Act is amended by the
deletion of the definition of “reference price” and the substitution
therefor of the following:
“reference price” means—
(a) the monthly average London Metal Exchange cash
price;
(b) the monthly average Fastmarkets MB cash price to
the extent that the base metal or precious metal price
is not quoted on the London Metal Exchange; or
(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 Fastmarkets MB;. 14.

mmissioner-
General to the extent that the base metal price or
precious metal price is not quoted on the London Metal
Exchange or Fastmarkets MB;. 14.

The Ninth Schedule to the principal Act is amended under
Part III in item (4) by the deletion of the words “10 percent of
gross takings” and the substitution therefor of the words “25 percent
of gross takings”. 15. The Charging Schedule to the principal Act is amended
in—
(a) Part I, paragraph 1(1)(b), by the deletion of the words
“three thousand Kwacha” and the substitution therefor
of the words “six thousand Kwacha”;
(b) in Part II, paragraph 2(1)—
Amendment
of section
97A
Amendment
of Ninth
Schedule
Amendment
of Charging
Schedule
Income Tax (Amendment) [No. 20 of 2020 331

art II, paragraph 2(1)—
Amendment
of section
97A
Amendment
of Ninth
Schedule
Amendment
of Charging
Schedule
Income Tax (Amendment) [No. 20 of 2020 331

(i) in item (c), by the deletion of the words “thirty-
nine thousand six hundred Kwacha” and the
substitution therefor of the words “forty-eight
thousand Kwacha”;
(ii) by the deletion of item (d) and the substitution
therefor of the following:
(d) on the balance of so much of an
individual’s income as exceeds forty-
eight thousand Kwacha but does not
exceed fifty-seven thousand six
hundred Kwacha at the rate of twenty-
five percent per annum;
(iii) by the deletion of item (e) and the substitution
therefor of the following:
(e) on the balance of so much of an
individual’s income as exceeds fifty-
seven thousand six hundred Kwacha
but does not exceed eighty-two
thousand eight hundred Kwacha at the
rate of thirty percent per annum; and
(iv) in item (f), by the deletion of the words “seventy-
four thousand four hundred Kwacha” and the
substitution therefor of the words “eighty-two
thousand eight hundred Kwacha”; and
(c) in Part II, paragraph 5, by the insertion of the following
new item immediately after item (f):
(g) the maximum rate of tax for the charge year 2021 on
income received by a person providing accommodation
and food services is fifteen percent. 16.

(g) the maximum rate of tax for the charge year 2021 on
income received by a person providing accommodation
and food services is fifteen percent. 16.

The principal Act is amended by the deletion of the words
“Domestic Taxes Division” wherever the words appear and the
substitution therefor of the word “Authority”. 332 No. 20 of 2020] Income Tax (Amendment)
General
amendment