IncomeTax (Amendment) Act, 2020

This section adds definitions for “commodity royalty,” “purchase price,” and “royalty financing” to section 2 of the principal Act.

Jurisdiction: Zambia
Instrument: Act or statute
Citation: Act 20 of 2020
Version: Undated source snapshot
Language: en
Official source: View official record ↗

accounting agro-processing allowances amendment corporate tax currency denomination deductions definitions income tax income tax rates information requests interest expense legislative amendment licensing manufacturing membership registration mining and metals pricing professional certificates record production recordkeeping regulatory compliance royalties statutory text substitution tax assessments +5 more

Statute overview

About this statute

This section adds definitions for “commodity royalty,” “purchase price,” and “royalty financing” to section 2 of the principal Act. This section amends Section 6 of the principal Act by deleting subsection (2). This provision changes the interest deduction rules: a deduction may be allowed if the Commissioner-General is satisfied the borrowing was for qualifying business or income-producing use, and deductions are denied for gross interest expense above 30% of tax EBITDA. Section 34A(2) is changed by replacing the word “three” with “five”. This section says the principal Act is amended by inserting a new section immediately after section 34A.

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Provisions of IncomeTax (Amendment) Act, 2020

Showing 17 of 17

2
Section 2 (1) of the principal Act is amended by the insertion
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This section adds definitions for “commodity royalty,” “purchase price,” and “royalty financing” to section 2 of the principal Act.

2. Section 2 (1) of the principal Act is amended by the insertion of the following definitions in the appropriate places in alphabetical order: Amendment of section 2 “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;. Single copies of this Act may be obtained from the Government Printer, P.O. Box 30136, 10101 Lusaka, Price K12.00 each. 328 No. 20 of 2020] Income Tax (Amendment) Amendment of section 6 Amendment of section 29
3
Section 3
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This section amends Section 6 of the principal Act by deleting subsection (2).

3. Section 6 of the principal Act is amended by the deletion of subsection (2).
4
Section 4
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This provision changes the interest deduction rules: a deduction may be allowed if the Commissioner-General is satisfied the borrowing was for qualifying business or income-producing use, and deductions are denied for gross interest expense above 30% of tax EBITDA.

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. (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. Amendment of section 34A Insertion of new section 34B
5
Section 34A (2) of the principal Act is amended by the
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Section 34A(2) is changed by replacing the word “three” with “five”.

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
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This section says the principal Act is amended by inserting a new section immediately after section 34A.

6. The principal Act is amended by the insertion of the following new section immediately after section 34A. Income Tax (Amendment) [No. 20 of 2020 329 Local content allowance Amendment of section 43D Amendment of section 45B
34B
Section 34B
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A person carrying on agro-processing or manufacturing may claim a local content allowance of 2% for qualifying expenditure.

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
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Section 43D(2) is changed by replacing the word “one” with “two”.

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
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A regulatory body’s taxpayer-identification-number requirement starts on a date appointed by the Minister by statutory instrument.

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
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This provision repeals section 48 of the principal Act and replaces it with a new section.

9. The principal Act is amended by the repeal of section 48 and the substitution therefor of the following section:
48
Section 48
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The Commissioner-General may require a person to provide information needed for the Act, and requested records must be provided even if they are outside Zambia or held by a non-resident.

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. Repeal and replacement of section 48 Furnishing of information 330 No. 20 of 2020] Income Tax (Amendment) Amendment of section 55 (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
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This provision amends section 55 of the principal Act to require the listed books, accounts, documents, records, and other information to be kept in Zambian Kwacha, and it updates wording in subsection (4) to make clear the new subsection (1A) applies.

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”. Amendment of section 81B
11
Section 81B of the principal Act is amended by the insertion
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Some regulators cannot register, renew membership, or issue licences/certificates/permits unless the applicant produces a tax clearance certificate; the Minister may exempt a member, and students or those not carrying on business in the profession must not be required to produce one.

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. Amendment of section 82A
12
Section 82A of the principal Act is amended
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The Commissioner-General may determine a commodity royalty in certain financing arrangements, and a person or partnership that fails to deduct or withhold required tax on a payment to a non-resident must pay the unpaid amount.

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): Income Tax (Amendment) [No. 20 of 2020 331 (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
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The section replaces the definition of “reference price” with a tiered pricing rule based on London Metal Exchange prices, then Fastmarkets MB prices, then another approved metal exchange market if needed.

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: Amendment of section 97A “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
The Ninth Schedule to the principal Act is amended under
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This provision changes item (4) in Part III of the Ninth Schedule by replacing “10 percent of gross takings” with “25 percent of gross takings.”

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”.

Part

Part III in item (4) by the deletion of the words “10 percent of

15
The Charging Schedule to the principal Act is amended
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This section changes income tax amounts and rates in the Charging Schedule, including higher Kwacha thresholds and a 2021 maximum tax rate of 15% for income from accommodation and food services.

15. The Charging Schedule to the principal Act is amended in— Amendment of Ninth Schedule Amendment of Charging Schedule (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)— 332 No. 20 of 2020] Income Tax (Amendment) (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. General amendment

Part

Schedule

16
The principal Act is amended by the deletion of the words
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The principal Act is amended by replacing “Domestic Taxes Division” with “Authority” wherever those words appear.

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”.

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