Laws of Zambia Active 2013The Income Tax (Amendment) 2013
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Income Tax (Amendment) [No. 18 of 2013 309
GOVERNMENT OF ZAMBIA
ACT
No. 18 of 2013
Date of Assent: 20th December, 2013
An Act to amend the Income Tax Act
[ 20th December, 2013
ENACTED by the Parliament of Zambia
1. (1) This Act may be cited as the Income Tax (Amendment) Enactment
Act, 2013, and shall be read as one with the Income Tax Act, in Short title
this Act referred to as the principal Act. and
commencement
(2) This Act shall come into operation on 1st January, 2014, Cap. 323
and shall have effect in relation to the charge of tax for the charge
year which ends on 31st December, 2014, and in relation to each
subsequent charge year.
ll have effect in relation to the charge of tax for the charge
year which ends on 31st December, 2014, and in relation to each
subsequent charge year.
2. Section two of the principal Act is amended in subsection (1) Amendment
by the insertion, in the appropriate places, of the following new of section 2
definitions:
“branch profits” means the profits of a foreign company
derived from the operation of its business within the
Republic which are not re-invested in the Republic;
“industrial park” has the meaning assigned to it in the Zambia
Development Agency Act, 2006; Act No. 11 of
2006
“multi- facility economic zone” has the meaning assigned to it
in the Zambia Development Agency Act, 2006; Act No. 11 of
2006
“property loan stock company” means a company listed on
the Lusaka Stock Exchange which is involved in real estate
investment and development and has a capital structure
that consists of property linked units; and
aka Stock Exchange which is involved in real estate
investment and development and has a capital structure
that consists of property linked units; and
_________________________
Single copies of this Act may be obtained from the Government Printer,
P.O. Box 30136, 10101 Lusaka, Price K 5.00 each.
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310 No. 18 of 2013] Income Tax (Amendment)
“property linked unit” means a unit comprising a share and a
debenture in a company, where the share and debenture
are linked together and cannot be disposed of independently
of each other.
Amendment 3. Section twenty-one of the principal Act is amended by the
of section 21 deletion of subsection (5) and the substitution therefor of the
following:
(5) Where, upon the termination of the services of an
individual in an office or employment, income is received by
way of—
(a) compensation for loss of office or employment;
or
(b) repatriation allowance or severance pay, on
termination by reason of redundancy, early
retirement, normal retirement or death;
termination by reason of redundancy, early
retirement, normal retirement or death;
the first thirty-five thousand Kwacha of the total or aggregate
income received, as applicable, shall be exempt from income
tax.
Amendment 4. Section forty-six A of the principal Act is amended in the
of section 46A proviso to subsection (1) by the deletion of the words “one thousand
nine hundred and twenty Kwacha” and the substitution therefor of
the words “the amount specified in subparagraph (c) of paragraph
2 of the Charging Schedule.”
r of
the words “the amount specified in subparagraph (c) of paragraph
2 of the Charging Schedule.”
Insertion of 5. The principal Act is amended by the insertion, immediately
new section after section forty-eight of the following new section:
48A
Disapplication 48A. (1) Subject to subsection (2), the provisions of this
of secrecy Act shall have effect notwithstanding any obligation as to
obligations secrecy or other restriction on the disclosure of information
Cap. 387 imposed under the Banking and Financial Services Act, the
Cap. 44 Evidence (Bankers’ Books) Act, the Accountants Act, 2008
Act No. 13 and the Legal Practitioners Act in respect of information
of 2008 required by the Commissioner-General for the purposes of
Cap. 39 this Act.
(2) Subsection (1) shall not apply to information received
from, or obtained on, a client by a legal practitioner—
(a) in the course of ascertaining or receiving
instructions from a client; or
(a) in the course of ascertaining or receiving
instructions from a client; or
(b) in defending or representing a client, or concerning
judicial, administrative, arbitration or mediation
proceedings, including advice on instituting or
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avoiding proceedings, whether such information
is received or obtained before, during or after
such proceedings.
6. Section sixty-three of the principal Act is amended in sub-
section (1) by the insertion, immediately after paragraph (vii), of
the following new paragraphs:
(viii) income from gaming, lotteries and betting from which
tax in respect of that charge year has been deducted under
section eighty-two A; and
(ix) income from letting of property from which tax in respect
of that charge year has been deducted under section
eighty-two A.
7. Section seventy-eight of the principal Act is amended in
subsection (1) by the deletion of paragraph (b) and the substitution
therefor of the following:
(b) within the period of the notice of assessment during which
the tax assessed is due;
agraph (b) and the substitution
therefor of the following:
(b) within the period of the notice of assessment during which
the tax assessed is due;
8. Section seventy-nine C of the principal Act is amended by
the deletion in subsection (1) of the words "without registration
that may be required under any law relating to the registration of
charges upon land".
9. Section eighty-two A of the principal Act is amended by—
(a) the deletion of subsection (1) and the substitution therefor
of the following:
(1) Subject to the provisions of this section, a
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;
(c) rent from a source within the Republic;
(d) commissions, other than commissions received
by an individual whose income is from
employment or office;
(e) a public entertainment fee to, or on behalf of, a
person or persons in partnership not resident in
the Republic;
Income Tax (Amendment) [No. 18 of 2013 311
Amendment
of section 63
Amendment
of section 78
Amendment
of section
79C
Amendment
of section
82A
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312 No. 18 of 2013] Income Tax (Amendment)
section 63
Amendment
of section 78
Amendment
of section
79C
Amendment
of section
82A
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312 No. 18 of 2013] Income Tax (Amendment)
(f) commission deemed under section eighteen to
be from a source within the Republic; or
(g) winnings from gaming, lotteries and betting;
irrespective of whether the payment is made outside the Republic
shall, before making any other deduction, deduct tax from the
payment referred to in paragraphs (a), (b), (c), (d), (e), (f) and (g)
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.
(2) A person or partnership to whom subsection (1) applies shall
account for tax as if the 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, except that—
(a) this section shall not apply to interest payable
on a bill of exchange drawn for one hundred
and eighty days or less;
that—
(a) this section shall not apply to interest payable
on a bill of exchange drawn for one hundred
and eighty days or less;
(b) the payment of an amount in excess of the
original issue price for any treasury bill or similar
financial instrument sold at a discount from face
value which shall be deemed for the purposes
of this section to be payment of interest when
the treasury bill or any other similar financial
instrument is presented for redemption or
rediscount;
(c) the Commissioner-General may determine that
the provisions of paragraph (b) or (d) of
subsection (1) shall not apply in any particular
case and shall, in writing, notify the person or
partnership concerned that the provisions of
paragraph (b) or (d) of subsection (1), as
applicable, shall not apply to such person or
partnership to the extent and to the period
specified in such notification; and
(d) in the case of paragraph (b) of subsection (1),
the direction to be issued under paragraph (c)
shall only be for interest arising from a property
linked unit of a property loan stock company.;
and
er paragraph (c)
shall only be for interest arising from a property
linked unit of a property loan stock company.;
and
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Income Tax (Amendment) [No. 18 of 2013 313
(b) the re-numbering of of subsections (2), (3), (4), (5), (6),
(7) and (8) as subsections (3), (4), (5), (6), (7), (8) and
(9) respectively.
10. Section ninety-five of the principal Act is amended by the
Amendment
of section 95
insertion, immediately after subsection (3), of the following new
subsection:
(4) For the purposes of determining liability to tax under
subsection (1), the Commissioner-General may—
(a) re-characterise a transaction or an element of a
transaction that was entered into as a tax avoidance
scheme; and
(b) re-characterise a transaction the form of which does
not reflect the substance.
a
transaction that was entered into as a tax avoidance
scheme; and
(b) re-characterise a transaction the form of which does
not reflect the substance.
11. Section ninety-seven A of the principal Act is amended by
the deletion of subsection (2) and the substitution therefor of the
Amendment
of section
97A following:
(2) This section shall apply where a taxpayer engages in
one or more commercial or financial transactions with an
associated person and the actual conditions made or imposed
in that transaction or transactions are different from the arm’s
length conditions and there is, except for this section, a
reduction in amount of income taken into account in computing
the income of one of the 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”.
ction (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”.
12. Section ninety-seven C of the principal Act is amended by
Amendment
Deletion of subsections (4) to (7) and the substitution therefor
of section
97C of the following:
(4) For the purposes of section ninety-seven A and ninety-
seven B, a person is associated with another if—
(a) the person participates directly or indirectly in the
management, control or capital of the other; or
(b) the persons participate directly or indirectly in the
management, control or capital of both of them.
(5) 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—
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314 No. 18 of 2013] Income Tax (Amendment)
(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
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.
(6) The Minister may, by statutory instrument, prescribe—
(a) the direct and indirect participation in the
management, control or capital of a person and
different provision that may be made in relation to
different cases or different classes of each case;
(b) the determination of whether the conditions of a
controlled transaction under subsection (3) of section
ninety-seven A are consistent with the arm’s length
conditions and the quantum of any adjustment made
to the income of the first person or the second person
in relation to subsections (3) and (4) of section ninety-
seven A; and
rst person or the second person
in relation to subsections (3) and (4) of section ninety-
seven A; and
(c) documentation rules in relation to section ninety-
seven A that specify the information and documents
required to be kept by a person in relation to section
ninety-seven A and penalties for non-compliance of
the Regulations.
(7) Regulations under this section may create offences
punishable with a fine not exceeding ten thousand penalty
units for a failure to comply with the provisions of the
Regulations.
e with a fine not exceeding ten thousand penalty
units for a failure to comply with the provisions of the
Regulations.
(c) documentation rules in relation to section ninety-
seven A that specify the information and documents
required to be kept by a person in relation to section
ninety-seven A and penalties for non-compliance of
the Regulations.
(7) Regulations under this section may create offences
punishable with a fine not exceeding ten thousand penalty
units for a failure to comply with the provisions of the
Regulations. Amendment 13.
units for a failure to comply with the provisions of the
Regulations. Amendment 13.
The First Schedule to the principal Act is amended by the—
of
First (a) deletion of paragraph 8 and the substitution therefor of
Schedule the following:
8) Income includes the difference between the market value
of the shares at the date of exercise of the share options
and the option price or the gross sale proceeds or
proceeds from sale of options in respect of shares allotted,
reserved, vested or acquired by an individual in terms of
a share option scheme net of any amount paid for the
acquisition or exercise of the shares or options by the
individual concerned, and shares or options sold shall be
deemed to be the shares or options longest held, except
that the relief afforded by subsection (5) of section
options longest held, except
that the relief afforded by subsection (5) of section
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Income Tax (Amendment) [No. 18 of 2013 315
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.;
and
(b) insertion, immediately after paragraph 9, of the following
new paragraph:
(10) Income includes benefits arising
from gaming, betting and lottery
winnings.
14. The Second Schedule to the principal Act is amended by the—
(a) insertion, immediately after clause (h) of sub-paragraph
(2) of paragraph 5, of the following new clause:
(c) Millennium Challenge Account Zambia (MCA-
Zambia) and any implementing entity appointed
under the Millennium Challenge Compact Act,
2013; and
(b) deletion in paragraph 7, of clauses (p), (u) and (aa).
15. The Fifth Schedule to the principal Act is amended in
paragraph 4A by the insertion immediately after the words “person of
operating in” of the words “a priority sector or in respect of a
priority product”.
16. The Charging Schedule to the principal Act is amended by
the—
(a) deletion in sub-paragraph (1) of paragraph 2 in—
spect of a
priority product”.
16. The Charging Schedule to the principal Act is amended by
the—
(a) deletion in sub-paragraph (1) of paragraph 2 in—
(i) item (c) of the words “twenty-six thousand four
hundred kwacha” and the substitution therefor
of the words “thirty-six thousand kwacha”;
(ii) item (d) of the words “twenty-six thousand four
hundred kwacha” and “thirty-six thousand
kwacha” and the substitution therefor of the
words “thirty-six thousand kwacha” and “forty-
five thousand six hundred kwacha”,
respectively; and
(iii) item (e) of the words “thirty-six thousand
kwacha” and the substitution therefor of the
words “forty-five thousand six hundred
kwacha”;
Amendment
of Second
Schedule
Act No. 6 of
2013
Amendment
of Fifth
Schedule
Amendment
of Charging
Schedule
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316 No. 18 of 2013] Income Tax (Amendment)
(b) deletion of clauses (e), (f) and (g) in paragraph 5 and the
substitution therefor of the following:
Income Tax (Amendment)
(b) deletion of clauses (e), (f) and (g) in paragraph 5 and the
substitution therefor of the following:
(e) on the income of a rural business enterprise or
business enterprise in a priority sector operating
in a multifacility economic zone or an industrial
park tax shall be charged at zero percent for a
period of five years starting from the year of
commencement of operations of the approved
investment;
(f) tax to be deducted from any dividend declared
by a rural business enterprise or business
enterprise in a priority sector operating in a
multifacility economic zone or an industrial park
shall be at the rate of zero percent per annum
for a period of five years starting from the year
of commencement of operations of the
approved investment;
(c) deletion of sub-paragraph (1) of paragraph 6 and the
substitution therefor of the following:
(1) Tax required to be deducted from any payment
made under section eighty-one and section eighty-one A shall be
deducted at—
(a) the rate of fifteen percent for
dividends;
ty-one and section eighty-one A shall be
deducted at—
(a) the rate of fifteen percent for
dividends;
(b) the rate of twenty percent for
payments to non-resident contractors;
(c) 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
(d) the rate of zero percent per annum
for any dividends paid by any person
carrying on mining operations.;
(d) insertion, immediately after paragraph 6, of the following
new paragraph:
Tax on profit 6A. Tax required to be deducted from a payment or
distributions distribution of branch profits shall be at the rate
of fifteen percent.; and
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Income Tax (Amendment) [No. 18 of 2013 317
stribution of branch profits shall be at the rate
of fifteen percent.; and
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Income Tax (Amendment) [No. 18 of 2013 317
(e) insertion in the proviso to paragraph 7 of the following
new clauses:
(vi) tax required to be deducted from the payment
of commissions to a non-resident deemed under
section eighteen to be from a source within the
Republic shall be at the rate of twenty percent;
(vii) tax required to be deducted from the payment
of public entertainment fees shall be at the rate
of twenty percent;
(viii) tax required to be deducted from the payment
of winnings from gaming, lotteries and betting
shall be at the rate of twenty percent; and
(ix) tax required to be deducted from the payment
of rent shall be at the rate of ten percent.Have questions about this law?
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