The Income Tax (Amendment) Act, 2018

An Act to amend the Income Tax Act. [26th December, 2018
ENACTED by the Parliament of Zambia. 1. (1) This Act may be cited as the Income Tax (Amendment)
Act, 2018, 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, 2019. 2. Section 29 of the principal Act is amended by the—
(a) deletion of subsection 1(a) and the substitution therefor
of the following:
(a) in ascertaining 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, except that
a deduction shall not be allowed on gross
interest expense that exceeds thirty percent
of the tax earnings before interest, tax,
depreciation and amortisation; and
(b) insertion of the following new subsections immediately
after subsection (2):
(3) Despite subsection (1) (a), interest,
including disallowed interest, is subject to the
deduction of withholding tax in accordance with
section 82A. Enactment
Short title
and
commence-
ment
Income Tax (Amendment) [No. 17 of 2018 319
Cap.

deduction of withholding tax in accordance with
section 82A. Enactment
Short title
and
commence-
ment
Income Tax (Amendment) [No. 17 of 2018 319
Cap.

323
Amendment
of section
29
GOVERNMENT OF ZAMBIA
ACT
No. 17 of 2018
Date of Assent: 23rd December, 2018
Single copies of this Act may be obtained from the Government Printer,
P.O. Box 30136, 10101 Lusaka, Price K16.00 each.

of Assent: 23rd December, 2018
Single copies of this Act may be obtained from the Government Printer,
P.O. Box 30136, 10101 Lusaka, Price K16.00 each.

(4) Interest on which a deduction is not
allowed under this section may be carried forward
and treated as incurred during the next charge year,
except that interest shall not—
(a) exceed thirty percent of
the tax earnings before
interest, tax, deprecia-
tion and amortisation;
and
(b) be carried forward for
more than five years. (5) Section 97A applies to interest which is
allowable as a deduction under this section or which
would, but for this section, be allowable as a
deduction. (6) This section does not apply to an institution
registered under the Banking and Financial
ServicesAct, 2017, the Pension Scheme Regulation
Act, or the Insurance Act, 1997.

t apply to an institution
registered under the Banking and Financial
ServicesAct, 2017, the Pension Scheme Regulation
Act, or the Insurance Act, 1997.

(7) For the purposes of this section—
“ gross interest expense ” means
the interest paid or accrued by a
business in a charge year;
“ interest ” includes interest on
all forms of debt, payments that
are economically equivalent to
interest and expenses incurred in
connection with the raising of
finance to the extent that the
incidental costs of raising finance
are not covered by section 44(n);
and
“ tax earnings before interest, tax,
depreciation and amortisation ”
means the sum of taxable income,
gross interest expense, deprecia-
tion and amortisation. Cap. 255
Act No. 7
of 2017
Act No. 27
of 1997
Income Tax (Amendment)320 No. 17 of 2018]

come,
gross interest expense, deprecia-
tion and amortisation. Cap. 255
Act No. 7
of 2017
Act No. 27
of 1997
Income Tax (Amendment)320 No. 17 of 2018]

3. Section 30A of the principal Act is amended by the deletion
of subsection (2) and the substitution therefor of the following:
(2) For the purposes of this section indexed losses shall be
computed as follows:
[1 + (R2-R1)/R1] x loss brought forward
Where: R1 is the Kwacha against the United States
dollar at the average exchange rate for the accounting
year preceding the accounting year in which the loss is
being claimed; and
R2 is the Kwacha against the United States dollar at
the average exchange rate for the accounting year in
which the loss is being claimed. (3) The Kwacha against the United States dollar exchange
rate to be used for the purpose of subsection (2) is the
average Bank of Zambia mid-rate for the relevant
accounting years. 4.

States dollar exchange
rate to be used for the purpose of subsection (2) is the
average Bank of Zambia mid-rate for the relevant
accounting years. 4.

Section 33 of the principal Act is amended by the deletion
of subsection (3) and the substitution therefor of the following:
(3) For the purposes of this section indexed capital
allowances shall be computed as follows:
[1 + (R2 - R1)/R1] x capital allowance]
Where: R1 is the Kwacha against the United States
dollar at the average exchange rate for the accounting
year preceding the accounting year in which the capital
allowance is being claimed; and
R2 is the Kwacha against the United States dollar at
the average exchange rate for the accounting year in
which the capital allowance is being claimed. (4) The Kwacha against the United States dollar exchange
rate to be used for the purpose of subsection (3) is the
average Bank of Zambia mid-rate for the relevant
accounting years. (5) Despite the other provisions of this Act, a capital
allowance granted under this section shall be granted for a
charge year irrespective of the period covered by the
accounts being assessed. Amendment
of section
30A
Amendment
of section
33
Income Tax (Amendment) [No. 17 of 2018 321

tive of the period covered by the
accounts being assessed. Amendment
of section
30A
Amendment
of section
33
Income Tax (Amendment) [No. 17 of 2018 321

5. The principal Act is amended by the repeal of section 43B. 6. Section 44 of the principal Act is amended by the repeal
of paragraph (o) and the substitution therefor of the following:
(o) provision for a contingent employee cost that is not paid
out to the employee in the charge year; and
(p) mineral royalty payable under the Mines and Minerals
Development Act, 2015. 7. Section 55 of the principal Act is amended—
(a) in subsection (1), by the deletion of the words “ books
and accounts ” and the substitution therefor of the words
“ books, accounts, documents, records and other
information ”;
(b) by the insertion of the following new subsection
immediately after subsection (1):
(2) Despite subsection (1), businesses covered by
Part IX shall retain books, accounts, documents, records
and other information relating to the business for ten
years from the date of the last entry in those books,
accounts, documents, records and that other
information.;
(c) by the renumbering of subsections (2), (3) and (4) as
subsections (3), (4) and (5) respectively; and
(d) by the deletion of the figure “ (3) ”in subsection (5) and
the substitution therefor of the figure “ (4) ”. 8.

(3), (4) and (5) respectively; and
(d) by the deletion of the figure “ (3) ”in subsection (5) and
the substitution therefor of the figure “ (4) ”. 8.

Section 64A of the principal Act is amended by the—
(a) insertion of the following new subsections immediately
after subsection (2):
(3) The Commissioner-General may make a standard
assessment requiring a person carrying on the business of
betting and gaming to pay a presumptive tax as set out in
Part III of the Ninth Schedule. (4) The Commissioner-General may appoint a person as
an agent to withhold turnover tax before making any
payments for the supply of goods or services. Repeal of
section 43B
Amendment
of section 44
Amendment
of section 55
Amendment
of section
64A
Act. No. 11
of 2015
Income Tax (Amendment)322 No. 17 of 2018]

of
section 43B
Amendment
of section 44
Amendment
of section 55
Amendment
of section
64A
Act. No. 11
of 2015
Income Tax (Amendment)322 No. 17 of 2018]

(b) renumbering of subsection (3) as subsection (5). 9. Section 65 of the principal Act is amended by the—
(a) deletion of subsection (2) and the substitution therefor of
the following:
(2) Subject to subsection (3), an assessment
shall not be made for a charge year after six years
from the end of that charge year. (3) Despite subsection (2), an assessment may
be made for a charge year after six years from the
end of that charge year—
(a) in cases of fraud or wilful default; or
(b) for the purposes of—
(i) sections 21, 88, 91, 97A, 97B,
97C, 97D or 113, except that an
assessment for the purposes of
sections 97A, 97B, 97C and 97D
shall not be made after ten years
from the end of that charge year;
(ii) part VII;
(iii) paragraph 25 of the Fifth
Schedule; or
(iv) granting tax credits as provided
in the Charging Schedule.; and
(b) renumbering of subsections (3) and (4) as subsections
(4) and (5) respectively. 10. The principal Act is amended by the repeal of section
97AA. 11. Section 97C (7) of the principal Act is amended by the
deletion of the words “ ten thousand ” and the substitution therefor
of the words “ eighty million ”. 12.

C (7) of the principal Act is amended by the
deletion of the words “ ten thousand ” and the substitution therefor
of the words “ eighty million ”. 12.

Section 100 (1) (e) of the principal Act is amended by
the—
(a) insertion of the following new subparagraph immediately
after subparagraph (ii):
Repeal of
section
97AA
Amendment
of section
65
Amendment
of section
97C
Amendment
section 100
Income Tax (Amendment) [No. 17 of 2018 323

ragraph (ii):
Repeal of
section
97AA
Amendment
of section
65
Amendment
of section
97C
Amendment
section 100
Income Tax (Amendment) [No. 17 of 2018 323

(iii) in relation to a person liable to pay skills
development levy in accordance with the Skills
Development Levy Act, 2016—
(A) in the case of negligence, zero point
two five percent of the amount;
(B) in the case of wilful default, zero point
five percent of the amount; and
(C) in the case of fraud, zero point seven
five percent of the amount;
of any income omitted or understated,
in consequence of such failure,
incorrect return, information or
submission.; and
(b) renumbering of subparagraph (iii) as subparagraph (iv). 13.

ted,
in consequence of such failure,
incorrect return, information or
submission.; and
(b) renumbering of subparagraph (iii) as subparagraph (iv). 13.

The Second Schedule to the principal Act is amended—
(a) by the deletion of paragraph 6 (1) and the substitution
therefor of the following:
(1) There is exempt from tax the income
of a public benefit organisation established for
the promotion of religion or education, or for
the relief of poverty or other distress, if—
(a) in relation to the people of the
Republic, the income may not be
expended for any other purpose;
and
(b) the Minister has approved the
exemption from tax the income of
that public benefit organisation.;
and
(b) in paragraph 6 (2), by the deletion
of the comma and the words “
body or persons or trust ”
immediately after the word “
organisation ”. 14. The Third Schedule to the principal Act is amended by
the deletion of paragraph 3. 15. The Fifth Schedule to the principal Act is amended—
(a) in paragraph 19, by the insertion of the following new
definition in the appropriate place:
Amendment
of Second
Schedule
Amendment
of Third
Schedule
Amendment
of Fifth
Schedule
Act No 46
of 2016
Income Tax (Amendment)324 No. 17 of 2018]

lace:
Amendment
of Second
Schedule
Amendment
of Third
Schedule
Amendment
of Fifth
Schedule
Act No 46
of 2016
Income Tax (Amendment)324 No. 17 of 2018]

“ non-contiguous ” means not one despite touching or
sharing a common border;
(b) by the deletion of paragraph 22A; and
(c) in paragraph 23 (1), by the deletion of the words “ not
contiguous ” and the substitution therefor of the word
“non-contiguous ”. 16. The Ninth Schedule to the principal Act is amended by the
deletion of Part II and the substitution therefor of Parts II and III
set out in the Appendix. 17.

nth Schedule to the principal Act is amended by the
deletion of Part II and the substitution therefor of Parts II and III
set out in the Appendix. 17.

The Charging Schedule to the principal Act is amended—
(a) in paragraph 3 (1) (g), by the deletion of the figure “ 6
“and the substitution therefor of the figure “ 6 (2) ”;
(b) in paragraph 5, by the—
(i) deletion of subparagraph (c) and the substitution
therefor of the following:
(c) the maximum rate of tax on income the
Commissioner-General determines as
originating from the export of non-
traditional products is fifteen percent,
except that where the Commissioner-
General determines income as
originating from the export of non-
traditional products from farming or
agro-processing, the maximum rate of
tax on that income is ten percent;; and
(ii) insertion of the following new subparagraph
immediately after subparagraph (e):
(f) the maximum rate of tax on income
received by a company, from the
manufacture of products made out of
copper cathodes, is fifteen percent per
annum.;
(c) in paragraph 6 (1)—
(i) by the insertion of the words “ payable to
residents ” immediately after the word “
dividends ” in item (a); and
(ii) by the deletion of item (b) and the substitution
therefor of the following:
Amendment
of Ninth
Schedule
Amendment
of Charging
Schedule
Income Tax (Amendment) [No.

ion of item (b) and the substitution
therefor of the following:
Amendment
of Ninth
Schedule
Amendment
of Charging
Schedule
Income Tax (Amendment) [No.

17 of 2018 325

(b) the rate of twenty percent for—
(i) dividends payable to non-
residents; and
(ii) payments to non-resident
contractors;;
(d) in paragraph 6A, by the deletion of the word “ fifteen ”
and the substitution therefor of the word “ twenty ”;
and
(e) in the proviso to paragraph 7, by the insertion of the
following new item immediately after item (ix):
(x) tax required to be deducted from the
payment of interest to a non resident shall be at the
rate of twenty percent.
APPENDIX
(Section 17)
PART II
TAX ON TURNOVER
Turnover per annum Tax Rate
K800,000 or below 4 percent
PART III
TAX ON BETTING AND GAMING
Type of Game Monthly Tax Rate or Monthly
Tax Amount
1. Casino Live Games 20 percent of gross takings
2. Casino Machine Games 35 percent of gross takings
3. Lottery Winnings 35 percent of net proceeds
4. Betting 10 percent of gross takings
5. Gaming:
(a) Slot Machines (Bonanza) K250 per machine
(b) Gaming Machines
(Limited Pay Out) K500 per machine
NOTES:
1. “ Net proceeds ” means the gross proceeds less sums paid
out for the prizes
2. “ Gross takings ” means the total amount staked by players
less winnings payable
Income Tax (Amendment)326 No. 17 of 2018]