The Income Tax (Amendment) Act, 2019

Enactment
Income Tax (Amendment) [No. 15 of 2019 387
Title and
commencement
Cap. 323
Amendment
of section 2
Act No. 27
of 2010
Act No. 41
of 2016
An Act to amend the Income Tax Act. [27th December, 2019
ENACTED by the Parliament of Zambia. 1. (1) This Act may be cited as the Income Tax (Amendment)
Act, 2019, 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, 2020. 2. Section 2(1) of the principal Act is amended by the—
(a) deletion of the definition of “ farming ” and the
substitution therefor of the following definition:
“ farming ” means the cultivation of crops and plants,
raising of livestock or poultry, beekeeping and
rearing fish but excludes the letting of any
property or provision of a service ancillary to
farming; and
“ livestock ” has the meaning assigned to the word
under the Animal Health Act, 2010;; and
(b) insertion of the following definition in the appropriate
place in alphabetical order:
“ approved collective investment scheme ” means a
collective investment scheme approved under
the Securities Act, 2016;. GOVERNMENT OF ZAMBIA
ACT
No.

“ approved collective investment scheme ” means a
collective investment scheme approved under
the Securities Act, 2016;. GOVERNMENT OF ZAMBIA
ACT
No.

15 of 2019
Date of Assent: 27th Decembeer, 2019
Copies of this Act can be obtained from the Government Printer,
P.O. Box 30136, 10101 Lusaka. Prices K20.00 each.

Date of Assent: 27th Decembeer, 2019
Copies of this Act can be obtained from the Government Printer,
P.O. Box 30136, 10101 Lusaka. Prices K20.00 each.

3. Section 77(4) of the principal Act is amended by the deletion
of the words “ or section sixty-four ” and the substitution therefor
of the words “ section sixty-four or section sixty-fourA ”. 4. Section 78 of the principal Act is amended—
(a) in subsection (1), by the deletion of the words “ section
seventy-seven ” and the substitution therefor of the
words “ sections seventy-seven, eighty-one, eighty-one
A, eighty-two and eighty-two A ”; and
(b) in subsection (2), by the deletion of the words “ section
seventy-seven ” and the substitution therefor of the
words “ sections seventy-seven, eighty-one, eighty-one
A, eighty-two and eighty-two A. ”
5. Section 81 of the principal Act is amended by the insertion
of the following new subsection immediately after subsection (1A):
(1B) A person who fails to submit a return in accordance
with subsection (1A) is liable to pay a penalty of three
hundred and forty penalty units for each month or part
thereof during which that failure continues. 6.

ection (1A) is liable to pay a penalty of three
hundred and forty penalty units for each month or part
thereof during which that failure continues. 6.

Section 81A of the principal Act is amended by the insertion
of the following new subsection immediately after subsection (1A):
(1B) A person or partnership that fails to submit a return
under subsection (1A) is liable to pay a penalty of three
hundred and forty penalty units for each month or part
thereof during which that failure continues. 7. Section 82A (1)(b) of the principal Act is amended by the
insertion of the words “ other than interest payable to a bank or
financial institution licensed under the Banking and Financial
Services Act, 2017 ” immediately after the word “ Republic ”. 8. Section 97A of the principal Act is amended by the—
(a) deletion of subsection (1) and the substitution
therefor of the following:
(1) In this section —
“ actual conditions ” means conditions which
are made or imposed between any two
or more associated persons on their
commercial or financial relations;
“arm’s length conditions ” means conditions
or no conditions which would have been
388 No. 15 of 2019] Income Tax (Amendment)
Amendment
of section 77
Amendment
of section 78
Amendment
of section 81
Amendment
of section
81A
Amendment of
section 82A
Act No. 7 of
2017
Amendment
of section
97A

ection 77
Amendment
of section 78
Amendment
of section 81
Amendment
of section
81A
Amendment of
section 82A
Act No. 7 of
2017
Amendment
of section
97A

made or imposed if persons were not
associated with each other;
“equity holder ” means a person who—
(a) holds ordinary shares in the
company; or
(b) is a loan creditor of the
company in respect of a loan
other than a normal commercial
loan;
“ fixed rate preference shares ” for the
purposes of this Act and despite the
Companies Act, 2017, means shares
which—
(a) do not carry any conversion right
or rights to acquire any additional
shares or securities;
(b) do not carry any right to
dividends other than dividends
which—
(i) are of a fixed amount or at
a fixed rate per centum of
the nominal value of the
shares; and
(ii) represent no more than
reasonable commercial
return on the consideration
received by the company in
respect of the issue of
shares; and
(c) on payment, do not carry any
rights to an amount exceeding
the consideration;
“ loan creditor ” in relation to a company,
means a creditor in respect of any debt
incurred by the company—
(a) for any money borrowed or
capital assets acquired by the
company; or
Income Tax (Amendment) [No. 15 of 2019 389
Act No. 10
of 2017

by the company—
(a) for any money borrowed or
capital assets acquired by the
company; or
Income Tax (Amendment) [No. 15 of 2019 389
Act No. 10
of 2017

(b) in respect of any redeemable
loan capital issued by the
company;
except that a person carrying on the
business of banking is not for the
purposes of this Part, a loan creditor
in respect of any loan capital or debt
issued or incurred by the company for
money lent by that person in the
ordinary course of that business;
“ normal commercial loan ” means a loan—
(a) which does not carry any
conversion rights or rights to
acquire any additional shares or
securities;
(b) which does not entitle the loan
creditor to any amount by way
of interest which depends to any
extent on the results of the
company’s business or which
exceeds a reasonable
commercial return on the loan;
and
(c) in respect of which the loan
creditor is entitled, on
repayment, to an amount which
does not exceed the loan;
“ ordinary share ” means a share other than
a fixed rate preference share;
“ reference price ” means—
(a) the monthly average London
Metal Exchange cash price;
(b) the monthly average Metal
Bulletin 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
390 No.

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
390 No.

15 of 2019] Income Tax (Amendment)

15 of 2019] Income Tax (Amendment)

Commissioner-General to the
extent that the base metal price
or precious metal price is not
quoted on the London Metal
Exchange or Metal Bulletin;
“ related or associated persons ” include—
(a) parties connected directly or
indirectly through shareholding,
equity or partnerships;
(b) any joint venture owned or
operated jointly with an
unrelated person;
(c) connected persons;
(d) parties connected through direct
or indirect management control
and capital; or
(e) any existing arrangements,
whether in writing or not, that
benefit two or more entities
whose conditions are deemed
not to be at arm’s length;
“ relative ” has the meaning assigned to the
word in the Anti-Corruption Act, 2012;
“ security ” includes securities not creating
or evidencing a charge on assets, and
any—
(a) interest paid or payable by a
company on money advanced
without the issue of a security
for the advance; or
(b) other consideration given by a
company for the use of money
so advanced;
which is treated as if paid or payable
or given in respect of a security
issued for the advance by the
company; and
“ subsidiary ” has the meaning assigned to
the word in the Companies Act, 2017;
Act No. 3 of
2012
Act No.

y
issued for the advance by the
company; and
“ subsidiary ” has the meaning assigned to
the word in the Companies Act, 2017;
Act No. 3 of
2012
Act No.

10
of 2017
Income Tax (Amendment) [No. 15 of 2019 391

(b) deletion of subsection (11) and
the substitution therefor of the
following:
(11) Where a claim or credit is
given by virtue of any
agreement made under
section seventy-four for
foreign tax, within the
meaning of section seventy-
five, in computing the amount
of that credit—
(a) the foreign tax to be taken
into account as having been
paid or as being payable by
the claimant shall exclude
any amount of foreign tax
which would not have been
paid or payable if the
computation of the income
on which the foreign tax is
chargeable had, so far as
it includes income to which
the claim or amended claim
relates, been made on
arm’s length conditions;
and
(b) the amount of income to
be taken into account as
having been received by
the claimant and in respect
of which the claimant is or
may be given credit for
foreign tax shall be
determined, so far as it
includes income to which
the claim or amended claim
relates, on arm’s length
conditions.
(c) insertion of the following new
subsection immediately after
subsection (11):
392 No. 15 of 2019] Income Tax (Amendment)

n arm’s length
conditions.
(c) insertion of the following new
subsection immediately after
subsection (11):
392 No. 15 of 2019] Income Tax (Amendment)

(11A) For the purposes of
subsection (11), a claim shall
be made no later than twelve
months from the date of the
assessment.;
(d) deletion of subsections (13),
(14), (15), (16) and (17) and the
substitution therefor of the
following:
(13) Despite any other
provisions in this Act, for
any transaction for the
sale or purchase of base
metals or any substance
containing base metals or
precious metals, directly
or indirectly, between
related or associated
persons, the applicable
sale or purchase price of
those metals or
recoverable metals shall
be the reference price.
(14) The reference price may
be adjusted to take into
account any premiums or
discounts on account of
quality or grade of the
base or precious metals
sold or purchased.
(15) Where the base or
precious metal is sold by
a resident or a non-
resident person to a
related or associated
person who sells that
base or precious metal to
an unrelated person—
(a) the resident person or
non-resident person
shall, provide to the
Income Tax (Amendment) [No. 15 of 2019 393

precious metal to
an unrelated person—
(a) the resident person or
non-resident person
shall, provide to the
Income Tax (Amendment) [No. 15 of 2019 393

C o m m i s s i o n e r -
General on the
C o m m i s s i o n e r -
General’s request,
all third party sale
agreements and all
third party invoices
relating to that sale;
or
(b) if the sale by the
resident person or
non-resident person
to an unrelated
person involves no
further milling,
blending, treatment,
or refinement or
transformation to
the base or precious
metals and the
subsequent agreed
price is higher than
the reference price
as at the month the
base or precious
metal is sold by the
resident or the non-
resident person to a
related or associated
person, the agreed
price in that case
shall be the sale
price for the pur-
pose of computing
the seller’s taxable
income in the Repu-
blic.
(16) For the purposes
of determination of a
related or associated
person, two persons
are connected with
each other if —
394 No. 15 of 2019] Income Tax (Amendment)

purposes
of determination of a
related or associated
person, two persons
are connected with
each other if —
394 No. 15 of 2019] Income Tax (Amendment)

(a) one of them is an individual and
the other is that person’s spouse,
a relative of that person or of that
person’s spouse, or the spouse of
that relative; or
(b) one of them is a trustee of a settle-
ment and the other is—
(i) a person who, in relation
to that settle-ment, is a
settlor; or
(ii) a person who is connected
with a person falling
within subparagraph (i). 9. The Second Schedule to the principal Act is amended by
the insertion in paragraph 5(l) (L) of the word “ approved ”
immediately before the word “ collective ”. 10. The Fifth Schedule to the principal Act is amended in
paragraph 22(2) by the deletion of the words “ twenty five ” and
the substitution therefor of the word “ twenty ”. 11. The Charging Schedule to the principal Act is amended in
the proviso to paragraph 7 by the deletion of item (x) and the
substitution therefor of the following:
(x) tax required to be deducted from the payment of interest,
except interest on Treasury Bills and Government bonds
to a non-resident, shall be at the rate of twenty percent. 12.

ed from the payment of interest,
except interest on Treasury Bills and Government bonds
to a non-resident, shall be at the rate of twenty percent. 12.

The principal Act is amended by the deletion of the words
“ Lusaka Stock Exchange ” wherever it appears and the substitution
therefor of the words “ Lusaka Securities Exchange ”. Amendment
of Second
Schedule
Amendment
of Fifth
Schedule
Amendment
of Charging
Schedule
General
amendment
Income Tax (Amendment) [No. 15 of 2019 395

396