CHAPTER 323
INCOME TAX ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY AND INTERPRETATION

   1.   Short title

   2.   Interpretation

   3.   Repealed

   4.   Resident

   5.   Receipt of income

PART II
ADMINISTRATION

   6.   Appointment of staff

   7.   Officers and delegation of functions

   8.   Secrecy

   9.   Regulations

   10.   Records of assessment

   11.   Forms and notices

   12.   Notices and service

   13.   Repealed

PART III
CHARGE OF TAX

   14.   Charge of tax

   15.   Exemptions from tax

   15A.   Suspension and rebate of income tax

   16.   Chargeability of income that cannot be remitted on accrual

   17.   Classification of income

   18.   Income deemed within the Republic

   19.   Income deemed received

   20.   Repealed

   21.   Apportionment of gratuities and compensation for loss of office

   22.   Apportionment of income

   23.   Provisions relating to income from business

   24.   Provisions relating to income after cessation of business

   25.   Insurance business

   26.   Income of partner

   27.   Special provisions relating to deceased's estate and trusts

   28.   Income of non-resident air, sea or land transport business

PART IV
DEDUCTIONS

   29.   Deductions generally

   29A.   Foreign currency exchange gains and losses

   30.   Losses

   30A.   Indexation of losses

   31.   Transfer of losses

   32.   Losses prior to bankruptcy, etc

   33.   Capital allowances

   34.   Investment allowances

   34A.   Development allowance

   35.   Preliminary business expenses

   36.   Amount paid after cessation of business

   37.   Approved fund deductions

   37A.   Deduction for share option scheme

   38.   Technical education

   39.   Subscriptions

   40.   Repealed

   41.   Public benefit organisation

   42.   Repealed

   43.   Deduction for research

   43A.   Deduction for bad and doubtful debts

   43B.   Deduction for mineral royalty

   43C.   Repealed

   43D.   Deduction for employing person with disability

   43E.   Repealed

   44.   Case of no deduction

PART V
RETURNS AND ASSESSMENTS

   45.   Notice to Commissioner-General

   45A.   Duty to provide taxpayer identification number

   45B.   Taxpayer identification number required for certain transactions

   46.   Returns generally

   46A.   Provisional income tax

   46B.   Estimated provisional tax returns

   47.   Further provisions as to returns

   48.   Information generally

   48A   Disapplication of secrecy obligations

   49.   Statement of bank accounts, assets, etc.

   50.   Return of lodgers and inmates

   51.   Information as to business matters

   52.   Repealed

   53.   Public documents

   54.   Information as to companies

   55.   Accounts and records

   56.   Documents in support of returns

   57.   Examination by Commissioner-General

   58.   Production and preservation of books and documents

   59.   Repealed

   60.   Amount of dividends, interest or royalties to be included in income

   61.   Partnership returns

   62.   Business accounts

   62A.   Averaging of farming and fishing income

   63.   Commissioner-General's power to assess

   64.   Estimated assessments

   64A.   Standard assessment

   64B.   Repealed

   65.   Assessment rules

   66.   Taxpaying agents

   67.   Assessment of taxpaying agent

   68.   Right of taxpaying agent

   69.   Company's taxpaying agent

   70.   Errors in form

PART VI
PAY AS YOU EARN

   71.   Assessment, charge, collection and recovery

   72.   Assessment not always necessary

   73.   Priority on insolvency

PART VII
DOUBLE TAXATION RELIEF

   74.   Double taxation agreements and mutual assistance in tax matters

   75.   Double taxation relief

   76.   Unilateral double taxation relief

PART VIII
COLLECTION, RECOVERY, REFUND AND RELIEFS

   77.   When tax due and payable

   78.   Penalty for non-payment of tax

   78A.   Interest on overdue payments

   79.   Recovery and proceedings

   79A.   Recovery by distress

   79B.   Recovery through court

   79C.   Charge on land

   79D.   Recovery of partner's tax from partnership

   80.   Repealed

   81.   Deduction of tax from dividends

   81A.   Deduction of tax from payment made to non-resident contractor

   81AA.   Definition of permanent establishment

   81B.   Tax clearance certificate

   81C.   Advance tax on income in respect of imported goods

   82.   Deduction on tax from lump sum payments

   82A.   Deduction of tax from certain payments

   82B.   Definition of property

   83.   Property not in possession

   84.   Agent for payment of tax

   85.   Repealed

   86.   Liability where property alienated

   87.   Refunds in general

   88.   Refunds in cases of accumulated income

   89.   Refund or set-off of tax chargeable on a beneficiary

   90.   Refund or set-off of tax deducted from dividends, etc.

   90A.   Job credits

   90B.   Repealed

   91.   Error or mistake relief

   92.   Remission of Tax

   92A.   Reduction in tax for tax free zones

   93.   Tax less than K20,000 not payable

PART IX
AVOIDANCE

   94.   No set-off or refund where that is the object of change of ownership of shares in company

   95.   Transactions designed to avoid tax liability

   95A.   Repealed

   95B.   Inter-company shareholdings

   95C.   Repealed

   95D.   Loans to effective shareholders

   96.   Incurred loss not deductible in certain cases

   97.   Commissioner-General may avoid trust

   97A.   Transfer pricing

   97AA.   Special provisions where actual conditions include issuing security

   97B.   Non application of section 97A

   97C.   Provisions supplementary to section 97A

   97D.   Objections and appeals involving transfer pricing

PART X
OFFENCES AND PENALTIES

   98.   General penalty

   99.   Penalty for failure to comply with notice, etc.

   100.   Penalty for incorrect returns, etc.

   101.   Time limit

   102.   Penalty for fraudulent returns, etc.

   103.   Bodies corporate

   104.   Power to search and seize

   105.   Documents in evidence

PART XI
OBJECTIONS AND APPEALS

   106.   Assessments good until disproved

   107.   Establishment of Tax Appeal Court, its composition and powers

   108.   Objection to assessment

   109.   Appeal against assessment

   110.   Determination of appeals under Act 11 of 1998

   111.   Appeal to High Court and Supreme Court

   112.   Privacy of proceedings

   113.   Adjustment on successful objection or appeal

   114.   Appeals from Commissioner-General's discretion and determinations

   115.   Repealed

   115A.   Repealed

PART XII
REPEALS AND TRANSITIONAL PROVISIONS

   116.   Repeals

      FIRST SCHEDULE

      SECOND SCHEDULE

      THIRD SCHEDULE

      FOURTH SCHEDULE

      FIFTH SCHEDULE

      SIXTH SCHEDULE

      SEVENTH SCHEDULE

      EIGHT SCHEDULE

      NINTH SCHEDULE

      TENTH SCHEDULE

      CHARGING SCHEDULE

AN ACT

to provide for the taxation of incomes and matters connected therewith.

[1st April, 1966]

Act 32 of 1967,

Act 23 of 1968,

Act 11 of 1969,

Act 26 of 1970,

Act 27 of 1970,

Act 17 of 1971,

Act 16 of 1972,

Act 11 of 1973,

Act 14 of 1973,

Act 46 of 1973,

Act 11 of 1974,

Act 11 of 1975,

Act 14 of 1976,

Act 9 of 1977,

Act 9 of 1978,

Act 10 of 1979,

Act 19 of 1979,

Act 6 of 1980,

Act 10 of 1981,

Act 13 of 1981,

Act 12 of 1982,

Act 21 of 1982,

Act 11 of 1984,

Act 11 of 1985,

Act 8 of 1986,

Act 14 of 1987,

Act 17 of 1988,

Act 28 of 1988,

Act 33 of 1989,

Act 15 of 1990,

Act 29 of 1990,

Act 12 of 1991,

Act 11 of 1992,

Act 4 of 1993,

Act 13 of 1994,

Act 14 of 1994,

Act 2 of 1995,

Act 27 of 1995,

Act 7 of 1996,

Act 3 of 1997,

Act 9 of 1998,

Act 6 of 1999,

Act 4 of 2000,

Act 1 of 2001,

Act 8 of 2001,

Act 3 of 2002,

Act 3 of 2003,

Act 1 of 2004,

Act 1 of 2005,

Act 7 of 2006,

Act 4 of 2007,

Act 1 of 2008,

Act 1 of 2009,

Act 27 of 2009,

Act 49 of 2010,

Act 27 of 2011,

Act 10 of 2012,

Act 18 of 2013,

Act 7 of 2014.

[General Note— (1) Section 29 of the Act 6 of 1999 deleted the words "handicapped person" wherever they appeared and substituted them by the words "person with disability" w.e.f. 1 April 1999.

(2) Section 12 of the Act 4 of 2007 deleted the words "section 23 of the Mines and Minerals Act" wherever they appeared and substituted them by the words "section 25 of the Mines and Minerals Act.

(3) Section 13(a) of the Act 1 of 2009 deleted the words "Mines and Minerals Act" wherever they appeared and substituted them by the words "Mines and Minerals Development Act 2008".

Section 13(b) of the Act 1 of 2009 deleted the words "Small Enterprises Development Act" and substituted them by the words "Zambia Development Agency Act, 2006".

(4) Act 27 of 2009 deleted "charities", "charitable institution", and "charitiable institutions", wherever they appeared and substituted them with "public benefit organisation". .

(5) Section 7 of the Act 49 of 2010 deleted the words “Direct Taxes Division” wherever they appeared and substituted them by the words “Domestic Taxes Division”.]

PART I
PRELIMINARY AND INTERPRETATION

1.   Short title

This Act may be cited as the Income Tax Act.

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

"agro-processing" means subjecting any farming produce produced in Zambia to any process which materially changes the farming produce in substance, character or appearance thereby making it a food product, but does not include—

      (a)   processing of that farming produce into alcoholic and non-alcoholic beverages, sugar crystals, flour or maize meal; or

      (b)   further or additional processing of the farming produce by a third party;

[Ins by s 2(a) of Act 10 of 2012 w.e.f. 1 January 20131.]

“approved annuity contract” means a contract providing for the payment to an individual of a life annuity which has been approved by the Commissioner-General under the Fourth Schedule;

“approved fund” means—

      (a)   an approved pension fund;

      (b)   an approved annuity contract;

      (c)   any superannuation, pension, provident, widows' or orphans' fund established by law in the Republic;

      (d)   a pension fund approved before the enactment of this Act under either sub-section (1) or (2) of section 11 of the former Act;

“approved pension fund” means a pension fund or scheme which has been approved by the Commissioner-General under the Fourth Schedule;

“approved share option scheme” means a scheme that has been approved by the Commissioner-General, under the Eighth Schedule;

[Ins by s 2(b) of Act 3 of 2002 w.e.f. 1 April 20022.]

“assessable income” means the amount of a person's income liable to tax which may be included in an assessment and which remains after allowing the deductions, to which that person is entitled under the provisions of this Act;

“assessment” means the determination of an amount of tax which a person shall be liable to pay under the provisions of this Act;

“Authority” means the Zambia Revenue Authority established under the Zambia Revenue Authority Act;

[Ins by s 2 of Act 7 of 1996 w.e.f. 1 April 19963.]

“Bank” means a company that holds a banking licence granted under section 4 of the Banking and Financial Services Act;

[Ins by s 2(a) of Act 6 of 1999 w.e.f. 1 April 19994.]

“bankrupt's estate” means the property of a bankrupt vested by law in and under the control of the trustee in bankruptcy;

“bank subsidiary” means a company where more than fifty per centum of the voting shares of the company (except any qualifying director's shares) are owned directly or indirectly by a bank;

[Ins by s 2(a) of Act 4 of 2000 w.e.f. 1 April 20005.]

“base metal” means a non-precious metal that is either common or more chemically active, or both common and chemically active and includes iron, copper, nickel, aluminium, lead, zinc, tin, magnesium, cobalt, manganese, scandium, vanadium and chromium;

[Ins by s 2(a) of Act 7 of 2006 w.e.f. 1 April 20066.]

“basic salary” means the gross amount payable to an employee without any allowances;

“beneficiary”, in relation to a terminal benefit, means the individual to whom such benefit is payable;

"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;

[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 20147.]

“business” includes—

      (a)   any profession, vocation or trade;

      (b)   any adventure or concern in the nature of trade, whether singular or otherwise;

      (c)   manufacturing;

      (d)   farming;

      (e)   agro-processing; and

      (f)   hedging;

[Subs by s 2(b) of Act 10 of 2012 w.e.f. 1 January 20138.]

“charge year” means the year for which tax is charged, that is, the period of twelve months ending on the 31st December, and each succeeding such year:

Provided that for the year commencing on 1st April, 2012, and ending 31st December, 2012, the charge year shall be for a period of nine months.

[Subs by s 2(b) of Act 27 of 2011 w.e.f. 1 April 20129.]

“Charging Schedule” means the last Schedule to this Act, by which, tax credits and rates of tax are fixed;

[Am by s 2(b) of Act 6 of 1999 w.e.f. 1 April 199910.]

“child” includes a step-child, a lawfully adopted child, an illegitimate child and any child to whom an individual stands in place of a parent;

"collective investment scheme" means a collective investment scheme registered under the Securities Act;

[Ins by s 2(a) of Act 10 of 2012 w.e.f. 1 January 201311.]

“Commissioner-General” means the Commissioner-General appointed under the Zambia Revenue Authority Act;

[Ins by s 2 of Act 7 of 1996 w.e.f. 1 April 199612.]

“company” means any company incorporated or registered under any law in force in the Republic or elsewhere;

“date of enactment of this Act” means the 20th May, 1967, and “enactment of this Act” shall be construed accordingly;

“deceased's estate” means the estate of a deceased individual;

“dividend” means any amount distributed or credited as construed in sub-section (3) by a company to its shareholders;

[Am by s 2(a) of Act 4 of 2007 w.e.f. 1 April 200713.]

“effective shareholder”, in relation to a company, means a person who is the beneficial owner of or able to control, either alone or with the nominees of that person, five per centum or more of the issued share capital of or voting powers in such a company;

[Subs by s 2(a) of Act 9 of 1998 w.e.f. 1 April 199814; am by s 2(c) of Act 6 of 1999 w.e.f. 1 April 199915, s 2(b) of Act 4 of 2007 w.e.f. 1 April 200716.]

“electronic communications network” has the meaning assigned to it in the Information and Communication Technologies Act, 2009;

[Ins by s 2 of Act 49 of 2010 w.e.f. 1 April 201117.]

“electronic communications service” has the meaning assigned to it in the Information and Communication Technologies Act, 2009;

[Ins by s 2 of Act 49 of 2010 w.e.f. 1 April 201118.]

“emolument” means any salary, wage, overtime or leave pay, commission, fee, bonus, gratuity, benefit, advantage (whether or not that advantage is capable of being turned into money or money's worth), allowance, including inducement allowance, pension or annuity, paid, given, or granted in respect of any employment or office, wherever engaged in or held;

“employee”, in relation to an employer, means any individual who is paid, given or granted any emolument by that employer;

“employer”, in relation to an employee, means any person who or any partnership which pays, gives or grants any emoluments to that employee;

“farming” means any husbandry, pastoral, poultry, fish rearing, or agricultural activity and but excludes the letting of any property for any such purpose;

[Am by s 2(b) of Act 4 of 2000 w.e.f. 1 April 200019.]

"finance lease" means a lease of implements, machinery, or plant where—

      (i)   the term of the lease, including any period under an option to renew, is equal to or exceeds seventy-five per centum of the effective life of the leased implements, plants or machinery;

      (ii)   the lessee has an option to purchase the implements, plants or machinery at the expiration of the lease for a fixed or determinable price;

      (iii)   the estimated residual value of the implements, plant or machinery at the expiration of the lease term is less than twenty-five per centum of its fair market value at the commencement of the lease; or

      (iv)   the lessor does not retain the risks and rewards of ownership;

[Ins by s 2(d) of Act 4 of 2007 w.e.f. 1 April 200720; am by s 2(b) of Act 1 of 2008 w.e.f. 1 April 200821.]

“financial institution” means a person that holds a financial institution's licence granted under section 10 of the Banking and Financial Services Act;

[Ins by s 2(a) of Act 4 of 2000 w.e.f. 1 April 200022.]

[“former Zambia Consolidated Copper Mining Company” rep by s 2(a) of Act 7 of 2006 w.e.f. 1 April 200623.]

[“handicapped person” rep by s 2(e) of Act 6 of 1999 w.e.f. 1 April 199924.]

“hydro and thermo power generation" means the production of electrical energy using physical and non-physical sources of energy such as moving water, petroleum, coal, biomass and any other source of energy except wood;

[Ins by s 2(c) of Act 1 of 2009 w.e.f. 1 April 200925.]

“incapacitated person” means any child who has not attained the age of twenty-one years, person of unsound mind, lunatic, idiot or insane person;

“individual” means a natural person;

"industrial minerals" has the meaning assigned to it in the Mines and Minerals Development Act, 2008;

[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]

"industrial park" has the meaning assigned to it in the Zambia Development Agency Act, 2006;

[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 201426.]

“licensee” has the meaning assigned to it in the Information and Communication Technologies Act, 2009;

[Ins by s 2 of Act 49 of 2010 w.e.f. 1 April 201127.]

“local authority” means a City Council, District Council, Municipal Council or any other authority recognised as such under the Local Government Act.

“loss”, in relation to gains or profits, means the loss computed in like manner as gains or profits;

“lump sum payment” means—

      (a)   in relation to a beneficiary who was employed within the Republic throughout the period during which contributions were made, an amount equal to the terminal benefit received by him;

      (b)   in relation to a beneficiary who was not so employed, an amount that bears the same proportion to the terminal benefit received by him as the period of his employment within the Republic for which contributions were made bears to the total period of his employment for which contributions were made; and

      (c)   in relation to a beneficiary who is employed on pensionable terms, any amount received or accrued which is paid or payable by an employer upon cessation of employment, by way of compensation for leave due but not taken.

“management or consultant fee” means a payment in any form, other than an emolument, for or in respect of any creation, design, development, installation and maintenance of any information technology or solution, programme or system, administrative, consultative, managerial, technical, or any other service of a like nature;

[Subs by s 2(c) of Act 4 of 2007 w.e.f. 1 April 200728.]

“manufacturer” means a person carrying on the business of manufacturing;

“manufacturing” means subjecting any physical matter to any process which materially changes such material in substance, character or appearance, thereby making it an article after such process, and includes the assembly of motor vehicles and such other processes as the Commissioner-General may determine to be of a similar nature;

“mineral” has the meaning assigned to it in the Mines and Minerals Development Act, 2008;

[Subs by s 2(a) of Act 7 of 2014 w.e.f. 1 January 2015.]

"mineral processing" means the practice of beneficiating or liberating valuable minerals from their ores, concentrates, or any semi-processed substance belonging to or purchased from another person;

[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]

“mining operations” has the meaning assigned to it in the Mines and Minerals Development Act, 2008;

[Subs by s 2(a) of Act 7 of 2014 w.e.f. 1 January 201529.]

“minister” means the minister responsible for financial matters;

"multi-facility economic zone" has the meaning assigned to it in the Zambia Development Agency Act, 2006;

[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 201430.]

“nominee”, in relation to an individual, means—

      (a)   the spouse of the individual; or

      (b)   the child of the individual; or

      (c)   a person who holds shares in a company directly or indirectly on behalf of the individual; or

      (d)   a person who can be required to exercise or a person who can require the exercise of voting powers in the affairs of a company in accordance with directions of the individual;

unless the Commissioner-General determines that the spouse, child or other person is a person who can at all times exercise or require the exercise of voting powers in the affairs of the company otherwise than in accordance with the directions of the individual;

“non-traditional product” anything produced or manufactured in the Republic, excluding—

      (a)   minerals;

      (b)   electricity;

      (c)   services; or

      (d)   cotton lint exported without an export permit from the Minister responsible for commerce, trade and industry;

[Subs by s 2(b) of Act 1 of 2009 w.e.f. 1 April 200931.]

"open cast mining operations" has the meaning assigned to it in the Mines and Minerals Development Act, 2008;

[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]

"operating lease" means any lease of implements, machinery or plant, other than a finance lease.

[Ins by s 2(d) of Act 1 of 2008 w.e.f. 1 April 200832.]

“pensionable terms” means terms and conditions of employment under which an employee belongs to any approved pension fund operated by an employer for the benefit of his employee;

“person” includes any body of persons, corporate or otherwise, a corporation sole, a local or like authority, a deceased's estate, a bankrupt's estate and a trust, but does not include a partnership;

“person with disability” has the meaning assigned to it in the Persons with Disabilities Act, 2012;

[Subs by s 2(b) of Act 10 of 2012 w.e.f. 1 January 201333.]

"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;

[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 201434.]

"property linked unit" means a unit comprising a share and a debentyre in a company, where the share and debenture are linked together and cannot be disposed of independently of each other;

[Ins by s 2 of Act 18 of 2013 w.e.f. 1 January 201435.]

“prospecting and exploration operations” means—

      (a)   any operations for the purpose of searching for mineral deposits; or

      (b)   any operations for the purpose of defining the extent and determining the value of a mineral deposit;

"public benefit activity" means an activity listed in the Tenth Schedule to this Act and any other activity determined by the Minister, by notice in the Gazette, to be of a benevolent nature having regard to the needs, interest and well-being of the general public;

[Ins by s 2(c) of Act 1 of 2009 w.e.f. 1 April 200936.]

"public benefit organisation" means an organisation which is—

      (a)   a company limited by guarantee incorporated in the Republic under the Companies Act;

      (b)   a trust incorporated under the Land (Perpetual Succession) Act;

      (c)   an association registered under the Societies Act;

      (d)   an educational institution registered under the Education Act;

      (e)   a health institution registered under the Medical and Allied Professions Act;

      (f)   an amateur sporting association registered under the Sports Council of Zambia Act; or

      (g)   any association or organisation registered under the laws of Zambia;

exclusively established for the purpose of providing a public benefit activity.

[Ins by s 2(c) of Act 1 of 2009 w.e.f. 1 April 200937.]

“public entertainment fee” means a payment in any form other than an emolument to, on behalf of, or in respect of, any person or persons in partnership, including theatre, motion picture, radio or television artists, musicians, athletes or sports persons, in respect of those persons' personal activities in any entertainment, competition or similar activity within the Republic;

[Ins by s 2(a) of Act 4 of 2000 w.e.f. 1 April 200038.]

“registered insurer” means an insurer registered under Part II of the Insurance Act;

“retirement age” means the age specified in the rules of an approved fund as the age of retirement or, if no age is specified in the rules, fifty-five years of age;

“royalty” means a payment in any form received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films and tapes for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience;

“rural area” means any area which is not an area declared or deemed to have been declared an area of any city or municipality or township under the Local Government Act;

“rural enterprise” means—

      (a)   a manufacturing business which commenced on or after the 1st April, 1976;

      (b)   a hotel, motel or lodge which commenced on or after the 1st April, 1981; and which is located in a rural area.

“services” means any services provided in the normal course of business by a person engaged in any business activity specified in the Third Schedule;

“share option scheme” means a scheme that provides an option to an employee to acquire shares in the company that employs that employee or otherwise;

[Ins by s 2(b) of Act 3 of 2002 w.e.f. 1 April 200239.]

“tax” means the income tax charged by this Act;

“taxpayer identification number” means the National Registration Card Number or such other number as may be designated and issued by Commissioner-General to a taxpayer;

[Subs by s 2(a) of Act 3 of 2002 w.e.f. 1 April 200240.]

“terminal benefit” means the amount payable from a fund or scheme, approved as an approved fund or as a benefit fund or pension fund at any time under the law relating to the taxation of income in the Republic prior to the enactment of this Act to an individual who is or was a member of that fund or scheme, on cessation of employment, withdrawal from or the winding up of the fund or scheme, but does not include an amount received—

      (a)   by way of annuity;

      (b)   in respect of services; or

      (c)   on account of sickness or disability;

"underground mining operations" has the meaning assigned to it in the Mines and Minerals Development Act, 2008.

[Ins by s 2(b) of Act 7 of 2014 w.e.f. 1 January 2015.]

“whole time service director” means a director of a company who is required to devote substantially the whole of his time to the service of such company in a managerial or technical capacity and is not the beneficial owner of, or able to control alone or with his nominees, five per centum or more of the issued share capital of or voting powers in such company;

   (1A) Subject to sub-section (1B) where a provision of the Act refers, expressly or by implication, to a payment of a specified amount which is denominated in kwacha and the payment is made in another currency the amount of the payment, for purposes of that provision, shall be converted into kwacha at the appropriated rate published by the Bank of Zambia as at the end of the day on which the payment is due, irrespective of when the payment is actually made.

[S 2(1A) ins by s 2(f) of Act 6 of 1999 w.e.f. 1 April 199941.]

   (1B) Where the payment referred to in sub-section (1A) is a payment of interest and the borrower has borrowed the principal in the course of a business carried on by the borrower, the conversion required by sub-section (1A) shall, subject to any direction by the Commissioner-General, be calculated as at the end of each day on which the interest accrues, irrespective of when payment of the interest is due.

[S 2(1B) ins by s 2(f) of Act 6 of 1999 w.e.f. 1 April 199942.]

   (2) For the purposes of this Act, a beneficiary who was employed outside the Republic by the Government, or the Government of the former Federation, or a local authority or statutory corporation, during any period in which ordinary contributions were made, is, if he was resident outside the Republic only for the purpose of that employment, deemed to have been employed within the Republic during that period.

   (3) The reference in the definition of “dividend” to “amount distributed or credited” shall be read and construed—

      (a)   so as to include—

      (i)   in relation to a company that is being wound up or liquidated, any profits distributed, whether in cash or otherwise, other than those of a capital nature, earned before or during the winding up or liquidation;

      (ii)   in relation to a company that is not being wound up or liquidated, any profits distributed, whether in cash or otherwise, other than those of a capital nature, including the value of that element of any shares awarded to its shareholders which is redeemable or capable of redemption by conversion and any debentures or securities awarded to its shareholders by a company;

      (iii)   in the event of the partial reduction of the capital of a company, any cash or the value of any asset which is given to the shareholder in excess of the cash equivalent of the nominal value by which the shares of that shareholder are reduced; and

      (iv)   in the event of the reconstruction of a company, any cash or the value of any asset which is given to the shareholder in excess of the nominal value of the shares held by him before reconstruction;

      (b)   so as not to include any cash or the value of any asset given to a shareholder, to the extent to which the cash or the value of the said asset represents a reduction of the share premium account of the company.

   (4) Any reference in this Act to bankruptcy shall be construed in accordance with the provisions of the Bankruptcy Act, and “bankruptcy” shall be construed accordingly.

[S 2 am by Act 23 of 1968, 11 of 1969, 26 of 1970, 17 of 1971, 16 of 1972, 11 of 1973, 11 of 1975, 14 of 1976, 9 of 1977, 10 of 1979, 10 of 1981, 12 of 1982, 11 of 1984, 11 of 1985, 8 of 1986, 14 of 1987, 15 of 1990, 12 of 1991, 11 of 1992, 4 of 1993, 12 of 1994, 2 of 1995, 7 of 1996, 3 of 1977.]

3.   .…

[S 3 rep by s 3 of Act 7 of 1996 w.e.f. 1 April 199643.]

4.   Resident

   (1) An individual is, for the purposes of this Act, not treated as a resident in the Republic who is in the Republic for some temporary purpose only and not with any view or intent of establishing his residence therein, and who has not actually resided in the Republic at one time or several times for a period equal in the whole to one hundred and eighty-three days in any charge year, but if any such individual resides in the Republic for the aforesaid period he shall be treated as resident for that year.

   (2) …

[S 4(2) rep by s 3(a) of Act 4 of 2000 w.e.f. 1 April 200044.]

   (3) In this Act, a person other than an individual is resident in the Republic for any charge year if—

      (a)   the person is incorporated or formed under the laws of the Republic; or

      (b)   central management and control of the person's business or affairs are exercised in the Republic for that year.

[S 4 am by Act 11 of 1969; s 4(3) subs by s 3(b) of Act 4 of 2000 w.e.f. 1 April 200045; s 4(3)(b)am by s 2 of Act 1 of 2001 w.e.f. 1 April 200146.]

5.   Receipt of income

   (1) In this Act, income is received by a person when, in money or money's worth, or in the form of any advantage, whether or not that advantage is capable of being turned into money or money's worth, it is paid, given or granted to him, or it accrues to him or in his favour, or it is in any way due to him or held to his order or on his behalf, or it is in any way disposed of according to his order or in his favour, and the word “recipient” is construed accordingly.

   (2) For the purposes of this Act—

      (a)   a dividend shall be deemed to accrue to share or stock holders, in the case of a dividend paid by a company which is being wound up or liquidated, on the day the dividend is received as provided in sub-section (1), and in the case of a dividend paid by a company which is not being wound up or liquidated, on the day of the resolution declaring the dividend:

Provided that where the resolution states that the dividend is to be paid to share or stock holders registered on a day in the future, the dividend shall be deemed to accrue to the share or stock holders on that day in the future; and

[S 5(2)(a) proviso subs by s 3 of Act 6 of 1999 w.e.f. 1 April 199947.]

      (b)   a dividend accruing to a person which is deemed by virtue of any provision of this Act to be income of some other person shall be deemed to accrue to that other person on the day the dividend is by virtue of the provisions of paragraph (a) deemed to accrue.

[S 5 am by Act 23 of 1968, 11 of 1973, 10 of 1979.]

PART II
ADMINISTRATION

6.   Appointment of staff

   (1) The Commissioner-General shall be responsible for carrying out the provisions of this Act.

   (2) The Commissioner-General shall appoint staff of the Domestic Taxes Division of the Authority.

[S 6 subs by s 4 of Act 7 of 1996 w.e.f. 1 April 199648; s 6(2) am by s 7 of Act 49 of 2010 w.e.f. 1 April 201149.]

7.   Officers and delegation of functions

   (1) The Commissioner-General may delegate to any officer in the Domestic Taxes Division any power or duty by this Act conferred or imposed upon him, other than those conferred on him by section 104 and this power of delegation, and, save as especially provided by this Act, any decision made or any notice or communication issued or signed by any such officer may be amended or withdrawn by the Commissioner-General, or by the officer concerned, and shall, for the purposes of this Act, until it has been so withdrawn, be treated as having been made, issued or signed by the Commissioner-General.

   (2) Every officer appointed for the purposes of carrying out the provisions of this Act is under the Commissioner-General's direction and control, and shall perform such duties as may be required by the Commissioner-General.

   (3) The Commissioner-General may confer any of the functions of the Commissioner-General under this Act upon any person if that person consents; and that person shall perform those functions under the direction of the Commissioner-General.

[S 7(3) subs by s 3 of Act 1 of 2001 w.e.f. 1 April 200150.]

8.   Secrecy

   (1) Any individual who—

      (a)   is, or at any time has been, an officer appointed for the purpose of carrying out the provisions of this Act; or

      (b)   has at any time been given official access to documents or matters arising under this Act; or

      (c).   …

[S 8(1)(c) rep by s 6 of Act 7 of 1996 w.e.f. 1 April 199651.]

      (d)   is, or at any time has been, the Chairman, Deputy Chairman, Special Chairman, or an employee of the Tax Appeal Court or its successor;

[S 8(1)(d) am by s 5 of Act 4 of 2000 w.e.f. 1 April 200052.]

shall preserve and aid in preserving secrecy concerning the affairs of any person under this Act, save as the duty under this Act of that individual requires:

Provided that—

      (i)   the Commissioner-General may disclose any information, record or document to the Minister or to any public officer authorised by the Minister in writing and to the Director of Public Prosecutions when acting in exercise of his powers under the Anti-Corruption Commission Act;

      (ii)   any individual appointed for carrying out the provisions of this Act may disclose any information, record or document to the Auditor-General and any officer authorised by the Auditor-General;

      (iii)   no individual who is, or at any time has been, an officer appointed for the purpose of carrying out the provisions of this Act shall be required to produce in any court any document or to communicate to any court any information which has come into his possession or to his knowledge in the performance of his duties under this Act, except as may be necessary for the purpose of carrying out the provisions of this Act.

   (2) Any individual who is in contravention of sub-section (1) who uses or reveals any information, record or document disclosed to him in accordance with the proviso to sub-section (1) save as his official duties require shall be guilty of an offence punishable with imprisonment for a term not exceeding two years or with a fine not exceeding two hundred penalty units, or to both.

[S 8 am by Act 17 of 1971, 14 of 1973, 14 of 1976, 8 of 1986, 13 of 1994, 14 of 1994.]

9.   Regulations

The Minister may make regulations by statutory instrument in furtherance of and incidental to the provisions of this Act.

10.   Record of assessment

The Commissioner-General shall cause a record to be kept of every assessment made under this Act.

11.   Forms and notices

   (1) All forms required for the administration of this Act shall be as prescribed by the Commissioner-General from time to time.

   (2) Notices, forms, demands or other documents issued or given by the Commissioner-General under this Act may be signed by any officer authorised by the Commissioner-General in that behalf, and any such notice, form, demand or other document purporting to be signed by order of the Commissioner-General shall be as valid as if signed by the Commissioner-General.

   (3) …

[S 11 am by Act 26 of 1970; s 11(3) rep by s 7 of Act 7 of 1996 w.e.f. 1 April 199653.]

12.   Notices and service

   (1) References in this section to the giving of notice include any service of process under this Act.

   (2) Notice to any individual under this Act is given to him—

      (a)   at the time it is served on him personally or electronically; or

[S 12(2)(a) am by s 2(a) of Act 1 of 2004 w.e.f. 1 April 200454.]

      (b)   at the time it is left with some adult individual apparently living or occupying or employed at his last known abode, office or place of business; or

      (c)   unless the addressee proves to the contrary, ten days after it has been sent by post to his last known abode, or office, or to his postal address as notified by him to the Commissioner-General, or in care of his last known employer.

   (3) Notice is given to any company at the time it is given to that company's taxpaying agent (as determined in section 66) in the manner provided by sub-section (2), or at the time it is sent, in the case of a company incorporated in the Republic, to the registered office of the company, and in the case of a company incorporated outside the Republic, either to the individual authorised to accept service of process under the Companies Act at the address filed with the Registrar of Companies, or to the registered office of the company wherever it may be situated, or, in either case, to any premises in the Republic where the company is carrying on business.

   (4) Notice is given to any body corporate, other than a company, at the time it is given to the principal officer, secretary, accountant or manager in the Republic of such body corporate in a manner provided by sub-section (2), or at the time it is sent to the registered address, if any, of the said body corporate, or to any premises in the Republic where the said body corporate exercises any of its functions or powers.

   (5) Notice to the Commissioner-General under this Act is given to him—

      (a)   at the time it is served upon him personally, electronically or upon any officer of the Domestic Taxes Division duly authorised by the Commissioner-General to receive such notice; or

[S 12(5)(a) am by s 2(b) of Act 1 of 2004 w.e.f. 1 April 200455.]

      (b)   unless the Commissioner-General proves to the contrary, ten days after it has been sent by post addressed to the Commissioner-General or any officer of the Domestic Taxes Division duly authorised by the Commissioner-General to receive such notice.

[S 12(5) am by s 8 of Act 7 of 1996 w.e.f. 1 April 199656.]

   (6) In this section, the term “post” means registered or unregistered post.

   (7) Notice of any change in the place of abode or the postal address of any person receiving income assessable to tax shall be delivered in writing by that person to the Commissioner-General within thirty days of such change.

[S 12 am by Act 26 of 1970, 11 of 1975.]

13.   …

[S 13 rep by s 9 of Act 7 of 1996 w.e.f. 1 April 199657.]

PART III
CHARGE OF TAX

14.   Charge of tax

   (1) Subject to the provisions of this Act, tax shall be charged at the rates set out in the Charging Schedule for each charge year on the income received in that charge year—

[S 14(1) am by s 4(a) of Act 6 of 1999 w.e.f. 1 April 199958.]

      (a)   by every person from a source within or deemed to be within the Republic; and

      (b)   by any individual ordinarily resident in the Republic, or by every person, not being an individual, who is resident in the Republic, by way of interest and dividends from a source outside the Republic.

[S 14(1)(b) subs by s 3(a) of Act 9 of 1998 w.e.f. 1 April 199859.]

   (2) Subject to the other provisions of the Act, in the case of an individual, the amount of tax which, apart from this sub-section, would be charged in respect of any income received by that person in that charge year shall be reduced by the amount of the tax credit appropriate to such person for that charge year as specified in the Charging Schedule and that person shall be liable to pay tax for that charge year an amount equal to that reduced amount:

Provided that any assessment of that income shall—

      (a)   be for the whole amount of tax due before any tax credit; and

      (b)   show the amount due and payable after reduction by the amount of any credit due.

[S 14(2) subs by s 3(b) of Act 9 of 1998 w.e.f. 1 April 199860; am by s 4(b) of Act 6 of 1999 w.e.f. 1 April 199961.]

   (3) Any amount of tax payable before the application of a tax credit shall not be reduced below zero by the tax credit and the tax credit shall not give rise to a repayment of tax.

[S 14(3) subs by s 3(b) of Act 9 of 1998 w.e.f. 1 April 199862.]

   (4) The amount of a tax credit to which a person is entitled for any charge year shall not be allowed more than once against that person's income for that year.

[S 14(4) ins by s 3(b) of Act 9 of 1998 w.e.f. 1 April 199863.]

   (5) An individual shall not be entitled to a tax credit except—

      (a)   against income provided for under section 71 and if the tax credit is allowable in accordance with Regulations made under section; or

      (b)   against income declared in a return under section 46;

[S 14(5) ins by s 3(b) of Act 9 of 1998 w.e.f. 1 April 199864.]

   (6) The provisions of this Part, and of the First Schedule, relating to particular forms of income, are without prejudice to the generality of the charge of sub-section (1).

[S 14 am by Act 11 of 1969, 17 of 1971, 12 of 1982, 11 of 1992, 4 of 1993.]

15.   Exemptions from tax

   (1) There shall be exempt from tax the persons, funds, public benefit organisation and income declared to be exempt in the Second Schedule to the extent specified therein.

   (2) The Minister may, by statutory order, approve, for the purposes of exemption from tax, any person, agency, organisation or foundation, which may be so approved by him by order in the Gazette pursuant to the Second Schedule, and may, by like order, exempt from tax the income or emoluments of any person, agency, organisation or foundation which may be so exempted by him by order in the Gazette pursuant to the said Schedule, and may, at any time, by like order, revoke any such order:

Provided that the Minister shall have the power to make or revoke such orders retrospectively.

[S 15 am by Act 11 of 1969, 11 of 1973.]

15A.   Suspension and rebate of income tax

   (1) The Minister may by regulation—

      (a)   suspend or provide for the suspension of the whole or part of any income tax due and payable under this Act;

      (b)   grant or provide for the grant of a refund of the whole or any part of income tax payable under this act;

in such circumstances, subject to such conditions and to such extent, as may be provided by or determined under the regulation.

   (2) Regulations under this section suspending any payment of income tax or granting a rebate or refund may, if the Minister considers it expedient, be made with retrospective effect.

[S 15A am by Act 12 of 1991.]

16.   Chargeability of income that cannot be remitted on accrual

Where the Commissioner-General is satisfied that any income cannot be remitted to the Republic in the charge year in which it accrues, then he may, if the person chargeable to tax in respect of that income so requests, determine that income shall not be chargeable to tax in the charge year in which it accrues but that it shall be chargeable to tax in the charge year in which it may first be remitted to the Republic:

Provided that the tax chargeable on such income shall not exceed the tax that would have been charged on the income if it had been charged to tax in the charge year or years in which it accrued.

[S 16 am by Act 26 of 1970.]

17.   Classification of income

For the purposes of this Act, income includes, for any charge year—

      (a)   gains or profits from any business for whatever period of time carried on;

      (b)   emoluments;

      (c)   annuities;

      (d)   dividends;

      (e)   interest, charges and discounts;

      (f)   royalties, premiums or any like consideration for the use or occupation of any property;

      (g)   income from the letting of property; and

      (h)   the income as further classified in the First Schedule.

[S 17 am by Act 23 of 1968, 12 of 1982,14 of 1987.]

18.   Income deemed within the Republic

   (1) Income is deemed to be from a source within the Republic if that income—

      (a)   arises under any agreement made in the Republic for the sale of goods, irrespective of whether those goods have been or are to be delivered in the Republic;

      (b)   is remuneration from employment exercised or office held in the Republic or if it is received by virtue of any service rendered or work or labour done by a person or partnership in the carrying on in the Republic of any business, irrespective of whether payment is made outside the Republic, or by a person resident outside the Republic;

      (c)   is remuneration for services rendered outside the Republic to the Government or any statutory corporation if the person rendering the services is resident outside the Republic solely for that purpose;

      (d)   is a pension granted by a person wherever resident, irrespective of where the funds from which it is paid are situated, or where payment is made, except where the employment or office for which the pension is granted was wholly outside the Republic, and the emoluments were never charged to tax in the Republic;

      (e)   arises from interest incurred in the production of income or in the carrying on of a business in the Republic or paid directly or indirectly out of funds derived from within the Republic;

      (f)   arises from a royalty incurred in the production of income or in the carrying on of a business in the Republic or paid directly or indirectly out of funds derived from within the Republic;

      (g)   arises from the carriage, by a person who is not resident in the Republic, of passengers, mails, livestock or goods embarked, shipped or loaded in the Republic other than passengers embarking in transit through the Republic or mails, livestock or goods shipped or loaded on transhipment through the Republic;

[S 18(1)(g) am by s 3(a) of Act 27 of 2011 w.e.f. 1 April 201265.]

      (h)   arises from a management or consultant fee incurred in the production of income or in the carrying on of a business in the Republic and is received by a person or persons in partnership for a service other than such part thereof as is rendered by the person or persons in partnership in the carrying on of a business in the Republic; or

[S 18(1)(h) am by s 3(b) of Act 27 of 2011 w.e.f. 1 April 201266.]

      (i)   arises from a commission incurred in the production of income or in the carrying on of a business in the Republic, or paid directly or indirectly out of funds derived from within the Republic.

[S 18(1)(i) ins by s 3(c) of Act 27 of 2011 w.e.f. 1 April 201267.]

      (j)   income earned by a person resident in Zambia from the carriage of persons, mail, livestock or any other goods shipped or loaded outside Zambia to other destinations outside Zambia.

[S 18(1)(j) ins by s 3 of Act 7 of 2014 w.e.f. 1 January 2015.]

   (2) Where a business is carried on partly within and partly outside the Republic by a person to whom this sub-section applies or where such a person receives a share of the profits of a business carried on in partnership partly within and partly outside the Republic, the whole of the person's share of the profits of the business or partnership is deemed to have been received from a source within the Republic.

[S 18(2) and (4) rep and s 18(3) renumbered as s 18(2) by s 3 of Act 3 of 1997 w.e.f. 1 April 199768; am by s 4(a) of Act 9 of 1998 w.e.f. 1 April 199869, s 5 of Act 6 of 1999 w.e.f. 1 April 199970.]

   (3) Sub-section (3) shall apply to—

      (a)   any individual who is ordinarily resident in the Republic; and

      (b)   to any person, not being an individual, who is resident in the Republic.

[S 18 am by Act 23 of 1968, 26 of 1970, 17 of 1971, 16 of 1972; s 18(3) ins by s 4(b) of Act 9 of 1998 w.e.f. 1 April 199871.]

19.   Income deemed received

   (1) Where under the terms of any settlement and during the life of the settlor any income, or assets representing it, will or may become payable or applicable to or for the benefit of any child of the settlor and at the commencement of the charge year the child is unmarried and has not attained the age of twenty-one years, the income or assets representing it shall be deemed to be income of the settlor and, not income of any other person.

[S 19(1) rep and s 19(2) renumbered as s 19(1) by s 10 of Act 7 of 1996 w.e.f. 1 April 199672; am by s 5 of Act 9 of 1998 w.e.f. 1 April 199873.]

   (2) If and so long as the terms of any settlement are such that—

      (a)   any person has or may have power, whether immediately or in the future, and whether with or without the consent of any other person, to revoke or otherwise determine the settlement or any provision thereof; and

      (b)   in the event of the exercise of the power, the settlor or the wife or husband of the settlor will or may become beneficially entitled to the whole or any part of the property then comprised in the settlement, or of the income arising from the whole or any part of the property so comprised;

all income arising under the settlement from the property comprised in the settlement shall be deemed to be income of the settlor and, subject to the provisions of sub-section (1), not income of any other person:

Provided that this sub-section shall not apply by reason only that the settlor or the wife or husband of the settlor will or may become beneficially entitled to any income or property relating to the interest of any beneficiary under the settlement in the event that such beneficiary should pre-decease him.

[S 19(3) renumbered as s 19(2) by s 10(b) of Act 7 of 1996 w.e.f 1 April 199674.]

   (3) Where in any charge year the settlor or any relative of the settlor or any person under the direct or indirect control of the settlor or of any of his relatives, whether by borrowing or otherwise, makes use of any income arising or of any accumulated income which has arisen under a settlement to which he is not entitled thereunder, then the amount of such income or accumulated income so made use of shall be deemed to be income of the settlor for the charge year and not income of any other person.

[S 19(4) renumbered as s 19(3) by s 10(b) of Act 7 of 1996 w.e.f 1 April 199675.]

   (4) Where under the terms of any settlement to which this section applies any tax is charged on and paid by the person by whom the settlement is made, that person shall be entitled to recover from any trustee or other person to whom income is paid under the settlement the amount of the tax so paid, and for that purpose to require the Commissioner-General to furnish a certificate specifying the amount of tax so paid, and any certificate so furnished shall be conclusive evidence of the facts appearing therein.

[S 19(5) renumbered as s 19(4) by s 10(b) of Act 7 of 1996 w.e.f 1 April 199676.]

   (5) If any question arises as to the amount of any payment of income or as to any apportionment of income under this section, that question shall be decided by the Commissioner-General, whose direction thereon shall be final.

[S 19(6) renumbered as s 19(5) by s 10(b) of Act 7 of 1996 w.e.f 1 April 199677.]

   (6) This section applies to every settlement wheresoever it was made or entered into and whether it was made or entered into before or after the commencement of this Act and shall (where there is more than one settlor or more than one person who made the settlement) have effect in relation to each settlor as if he were the only settlor.

[S 19(7) renumbered as s 19(6) by s 10(b) of Act 7 of 1996 w.e.f 1 April 199678.]

   (7) In this section—

“settlement” includes any disposition, trust, covenant, agreement, whether reciprocal or collateral, arrangement or transfer of assets or income, but does not include—

      (i)   a settlement which in the opinion of the Commissioner-General is made for valuable and adequate consideration;

      (ii)   a settlement resulting from an order of a court;

      (iii)   any agreement made by an employer to pay to an employee or to the widow or any relative or dependent of such employee after his death such remuneration or pension or lump sum as the Commissioner-General may determine;

“settlor”, in relation to a settlement, includes any person by whom the settlement was made or entered into directly or indirectly, and any person who has provided or undertaken to provide funds or credit directly or indirectly for the purposes of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

[S 19 am by Act 11 of 1969; s 19(8) renumbered as s 19(7) by s 10(b) of Act 7 of 1996 w.e.f 1 April 199679.]

20   …

[S 20 rep by s 11 of Act 7 of 1996 w.e.f. 1 April 199680.]

21.   Apportionment of gratuities and compensation for loss of office

   (1) Where, upon the termination of a written contract of employment after minimum period of two years completed service thereunder or such lesser period as the Commissioner-General may, in his discretion, deem reasonable, income is received under the terms of the contract by any individual by way of gratuity, then such income shall be charged in the charge year in which it is received at the appropriate rates applicable thereto pursuant to the Charging Schedule:

[S 21(1) am by s 6(a) of Act 6 of 1999 w.e.f. 1 April 199981.]

Provided however that—

      (i)   any income received by way of gratuity in excess of twenty-five per centum of the basic salary earned during the period of employment to which such gratuity is related, shall, to the extent of such excess, be regarded and dealt with, for the purposes of this Act, as income received other than by way of gratuity;

      (ii)   any emoluments paid by way of gratuity by any company to any individual who is, or was at any time during the period of employment to which such gratuity is related, an effective shareholder of such company or who is, or was at any time a director of such company during the period of employment to which such gratuity is related, other than a whole time service director thereof, shall, for the purposes of this Act, be regarded and dealt with as income received by such individual other than by way of gratuity;

      (iii)   any emoluments paid by way of gratuity by an employer to an individual where the spouse of the individual, either alone or in partnership, is the employer of the individual shall, for the purposes of this Act, be regarded and dealt with as income received other than by way of gratuity;

      (iv)   any emoluments paid by way of gratuity by a company to an individual who or whose spouse is carrying on a business alone or in partnership and the services of the individual are provided to such a business by such company, shall for the purposes of this Act, be regarded and dealt with as income received other than by way of gratuity; and

      (v)   where the conditions of this sub-section are not complied with in respect of any emoluments paid to any individual by way of gratuity, such emoluments shall for the purposes of this Act, be regarded and dealt with as income received by such individual other than by way of gratuity.

   (2) Where, upon the termination of a contract of employment, income is received by an individual by way of compensation for leave due but not taken, such income, if the individual irrevocably so elects, shall be regarded as accruing, and as being paid, proportionately on the last day of each month over the period during which the leave would have been taken, commencing with the first day after the date of termination of contract.

   (3) Where, during the continuance of any employment, income by way of payment in advance for a leave period, is received by an individual proceeding on leave with the intention of resuming his employment at the termination of such leave period, such income shall be regarded as accruing and being paid proportionately on the last day of each month during the continuance of the period of leave.

   (4) Where, as the result of any law, judicial order or judgement or the acceptance by an employer of any independent award or of representations by recognised association of employees, income is received by an individual by way of arrears of income in respect of present or past employment, such income shall be regarded as having accrued and as having been paid during the years to which such arrears relate, whether charge years under this Act or years of assessment under any previous law.

   (5) Where, upon the termination of the services of any 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;

the first 35 kwacha of the total or aggregate income received, as applicable, shall be exempt from income tax.

[S 21 am by Act 11 of 1969, 16 of 1972,14 of 197 4, 14 of 1976, 14 of 1987, 29 of 1990,11 of 1992, 4 of 1993, 14 of 1994; s 21(5) subs by s 3 of Act 18 of 2013 w.e.f. 1 January 201482.]

22.   Apportionment of income

Where in the case of any business it is necessary in order to arrive at the income of the business for any charge year or other period to divide and apportion to specific periods the income for any period for which accounts have been made up or to aggregate such income or any apportioned parts thereof, it shall be lawful to make such a division and apportionment or aggregation, and any apportionment under this section shall be made in proportion to the number of days in the respective period, unless the Commissioner-General, having regard to any special circumstances, otherwise determines.

23.   Provisions relating to income from business

   (1) Where in computing gains or profits for any charge year any expenditure or loss has been deducted or a deduction in respect of any reserve or provision to meet any liability has been made, and in a later charge year the whole or part of the expenditure or loss is recovered, or the whole or part of the liability is released, or the retention in whole or in part of the reserve or provision has become unnecessary, then any amount so recovered or released or no longer required as a reserve or provision shall be deemed to be gains or profits of the charge year in which it is recovered or released or no longer required.

[S 23(1) proviso rep by s 6 of Act 9 of 1998 w.e.f. 1 April 199883.]

   (2) Any amount received under any insurance against loss of profits, or received by way of damages or compensation for loss of profits, shall be deemed to be gains or profits of the charge year in which it is received.

[S 23 am by Act 27 of 1970.]

24.   Provisions relating to income after cessation of business

Where any amount is received by any person after the cessation of his business which, if it had been received prior to the cessation, would have been included in the gains or profits from the business, then, to the extent to which that amount has not already been included in the gains or profits, that amount shall be income of such person for the charge year in which it is received.

25.   Insurance business

The gains or profits of an insurance business are ascertained in accordance with the provisions of the Third Schedule.

26.   Income of partner

Where a business is carried on by two or more persons in partnership, the income of any partner from the partnership for any period is the share to which he was entitled in that period, such income being ascertained in accordance with the provisions of this Act and that share shall be assessed and charged on him accordingly.

27.   Special provisions relating to deceased's estate and trusts

   (1) This section applies to the income of a trust or of a deceased's estate.

   (2) For the purposes of this Act, an amount received or forming part of the assets of a deceased's estate which became due and payable before the death of the deceased person and which the deceased person had a right to claim in his lifetime shall be treated as income received by the deceased person on the date the amount became due and payable if the amount would have been income of the deceased person had it been received by him in his lifetime.

   (3) An amount received by a deceased's estate which did not become payable before the death of the deceased person shall be income of the deceased's estate for the purposes of this Act if the amount would have been income of the deceased person had it been received or been deemed to have been received by him in his lifetime:

Provided that any income received by way of emoluments earned by the deceased person during his lifetime shall be deemed to be income received by the deceased person on the date of his death.

   (4) Where a beneficiary is entitled to the whole or part of the income of a trust or deceased's estate, the Commissioner-General may, instead of assessing and charging the whole or part of the income on the trustees or executor or administrator, determine that the income of the trust or deceased's estate attributable to the beneficiary's interest for any charge year or any amount paid out of the income of the trust or deceased's estate on behalf of the beneficiary in any charge year shall, for the purposes of this Act, be assessed and charged on the beneficiary as if it were his income.

[S 27 am by Act 23 of 1968, 14 of 1976.]

28.   Income of non-resident air, sea or land transport business

   (1) The income that is deemed under paragraph (g) of sub-section (1) of section 18 to be from a source within the Republic for any period shall be an amount bearing the same proportion to the amounts received in respect of the carriage of passengers, mails, livestock or goods embarked, shipped or loaded in the Republic as the total gains or profits of such business for the period bear to the total amount received for the period for the carriage of passengers, mails, livestock or goods.

   (2) The Commissioner-General may accept as evidence of the total gains or profits and total amount mentioned in sub-section (1), a certificate of such gains or profits and amount issued by or on behalf of any income tax authority which the Commissioner-General is satisfied computes the gains or profits of the business on a basis not materially different from that provided in this Act.

   (3) Where at the time of assessment, the provisions of sub-section (1) cannot for any reason be satisfactorily applied, the income from the Republic may be computed at such percentage of the full amount received which is attributable to the carriage of passengers, mails, livestock or goods embarked, shipped or loaded in the Republic as the Commissioner-General may determine.

   (4) Any person assessed under the terms of sub-section (3) in respect of any charge year may claim at any time within six years after the end of the charge year that his liability to tax be recomputed on the basis provided by sub-section (1)

[S 28 am by Act 11 of 1975, 14 of 1976, 9 of 1977, 10 of 1981, 11 of 1984.]

PART IV
DEDUCTIONS

29.   Deductions generally

   (1) Subject to the provisions of this Part—

      (a)   in ascertaining business gains or profits in any charge year, there shall be deducted the losses and expenditure, other than of a capital nature, incurred in that year wholly and exclusively for the purposes of the business; and

      (b)   in ascertaining 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:

Provided that on the amount payable by way of insertion upon 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, a deduction shall be allowed.

[S 29(1) proviso ins by s 2 of Act 3 of 2003 w.e.f. 1 April 200384.]

   (2) Only one deduction is allowed under this Act in respect of the same matter in any charge year:

Provided that any foreign currency exchange gains or losses of a bank of a capital nature shall not be assessable or deductible as the case may be in the charge year in which they are translated.

[S 29 am by Act 26 of 1970; s 29(2) proviso ins by s 4 of Act 3 of 2002 w.e.f. 1 April 200285.]

29A.   Foreign currency exchange gains and losses

   (1) Notwithstanding the provisions of section 29 or any other provisions of this Act, any foreign currency exchange gains or losses, other than those of a capital nature, shall be assessable or deductible, as the case may be, in the charge year in which such gains or losses are realised, that is to say, in the charge year in which the person or partnership concerned is required to pay the additional kwacha or is allowed a rebate or a reduction in settlement of a foreign debt or liability:

[S 29A(1) subs by s 7 of Act 6 of 1999 w.e.f. 1 April 199986.]

Provided that foreign exchange losses of a capital nature incurred on borrowing used for the building and construction of an industrial or commercial building shall be deductable.

[S 29A(1) proviso ins by s 3(a) of Act 3 of 2003 w.e.f. 1 April 200387.]

   (2) sub-section (1) shall not apply in case of a bank.

[S 29A(2) subs by s 7 of Act 6 of 1999 w.e.f. 1 April 199988.]

   (3) Where the accounts of a bank made up for the bank's accounting period ending in the charge year ending 31st March, 1999 recognise any foreign currency exchange gain or loss but that gain or loss is not realised within the meaning of sub-section (1) in that charge year, then the amount of that gain or loss shall be deemed to be a gain or loss of the business carried on by the bank assessable or deductible, as the case may be, in the charge year ending 31st March, 2000.

[S 29A(3) subs by s 6 of Act 4 of 2000 w.e.f. 1 April 200089.]

   (4) In this section “industrial building” and “commercial building” have the meaning assigned to them in the fifth schedule.

[S 29A(4) ins by s 3(b) of Act 3 of 2003 w.e.f. 1 April 200390.]

30.   Losses

   (1) Subject to the other provisions of this section, any loss incurred in a charge year on a source by a person, shall be deducted only from the income of the person from the same source as that in which the loss was incurred.

[S 30(1) am by s 13(a) of Act 7 of 1996 w.e.f. 1 April 199691.]

   (1A) …

[S 30(1A) rep by s 4(a) of Act 1 of 2009 w.e.f. 1 April 200992.]

   (2) Subject to the other provisions of this section, where a loss referred to in sub-section (1) exceeds the income of a person for the charge year in which the loss was incurred, the excess shall, as far as possible, be deducted from the income of the person from the same source as that in which the loss was incurred for the following charge year;

[S 30(2) am by s 4(a) of Act 3 of 1997 w.e.f. 1 April 199793.]

Provided that:

      (i)   in the case of any loss incurred by any person carrying on mining operations, the loss shall not be carried forward beyond ten subsequent charge years after the charge year in which the loss is incurred;

[S 30(2) proviso para (i) subs by s 3(b) of Act 1 of 2008 w.e.f. 1 April 200894.]

      (ii)   in the case of a loss incurred by a person carrying on hydro and thermo power generation, the loss shall not be carried forward beyond ten subsequent charge years after the charge year in which the loss was incurred;

[S 30(2) proviso para (ii) ins by s 4(b)(i) of Act 1 of 2009 w.e.f. 1 April 200995.]

      (iii)   in any other case, the loss shall not be carried forward beyond five subsequent years after the charge year in which the loss was incurred; and

[S 30(2) proviso para (ii) subs by s 7 of Act 9 of 1998 w.e.f. 1 April 199896; renumbered as proviso para (iii) by s 4(b)(ii) of Act 1 of 2009 w.e.f. 1 April 200997.]

      (iv)   losses brought forward as at 31st March, 1997, shall be deemed to have been incurred in the charge year ending 31st March, 1997.

[S 30(2) proviso para para (iii) ins by s 7 of Act 9 of 1998 w.e.f. 1 April 199898; renumbered as proviso para (iv) by s 4(b)(ii) of Act 1 of 2009 w.e.f. 1 April 200999.]

   (3) Where on the death of an individual his interest in a business passes to his spouse, any un-deducted loss attributable to such interest shall be deducted from the spouse's income from that business in accordance with the provisions of sub-section (2) .

   (4) …

[S 30 am by Act 11 of 1969, 11 of 1975,14 of 1976, 9 of 1977, 10 of 1981, 11 of 1984; s 30(4) rep by s 13(b) of Act 7 of 1996 w.e.f. 1 April 1996100.]

30A.   Indexation of losses

   (1) The losses to be deducted by a person carrying out any mining operations and keeping books of accounts in United States dollars under sub-section (3) of section 55 shall be indexed losses.

[S 30A(1) subs by s 4 of Act 27 of 2011 w.e.f. 1 April 2012101.]

   (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 exchange rate ruling on the last day of the preceding accounting year in which the loss is being claimed; and

R² is the Kwacha against the United States Dollar exchange rate to be used for this purpose on the last day of the accounting year in which the loss is being claimed.

The Kwacha against the United States Dollar exchange rate to be used for this purpose is the Bank of Zambia mid-rate at the end of the accounting period.

[S 30A ins by s 4 of Act 7 of 2006 w.e.f. 1 April 2006102.]

31.   Transfer of losses

If a company has incurred a loss on a source for the purposes of this Act and that company in this section called the old company) —

      (a)   was incorporated outside the Republic; and

      (b)   carried on its principal business within the Republic; and

      (c)   is about to be wound up voluntarily in its country of incorporation for the purposes of transferring the whole of its business and property wherever situate, to a company which has been or will be incorporated in the Republic (in this section called the new company) for the purposes of acquiring that trade and property and the only consideration for the transfer will be the issue to the members of the old company of shares in the new company in proportion to their shareholdings in the old company;

the new company after the transfer referred to in paragraph (c) shall be allowed the old company’s loss as deduction from income from the same source as that in which the old company’s loss was incurred to the extent that the loss has not been allowed as a deduction under this Act for any charge year and such loss shall be allowed in accordance with the provisions of section 30:

Provided that the combined period of loss carried forward for both the old and new companies shall not exceed five years.

[S 31 am by Act 14 of 1976, 14 of 1987; proviso ins by s 5 of Act 3 of 1997 w.e.f. 1 April 1997103.]

32.   Losses prior to bankruptcy, etc

   (1) Subject to the provisions of sub-section (2), no person may carry forward any loss incurred before he had been adjudged bankrupt.

   (2) Where any person has made a conveyance or assignment of his property for the benefit of his creditors, or has made an arrangement with them, or has entered into a composition with them which has been approved by the High Court pursuant to any Bankruptcy Act in force in the Republic, whereby the said person is released from his debts or from any proportion or part thereof, any loss incurred by him prior to his making of such conveyance, or assignment, or arrangement, or his entering into such composition, may be carried forward, reduced, however, pro tanto, by the amount of the debts released by or under the said conveyance, assignment, arrangement, or composition, as the case may be, and such loss shall be allowed in accordance with the provisions of section 30.

[S 32 am by Act 11 of 1969, 14 of 1976.]

33.   Capital allowances

   (1) Capital allowances are deducted in ascertaining the gains or profits of a business and the emoluments of any employment or office for each charge year—

      (a)   for buildings, implements, machinery and plant, and premiums, according to the provisions of Parts I to V inclusive of the Fifth Schedule;

      (b)   for capital expenditure in relation to mining operations, according to the provisions of Parts Ito VI inclusive of the Fifth Schedule; and

[S 33(1)(b) proviso rep by s 6 of Act 3 of 1997 w.e.f. 1 April 1997104.]

      (c)   for farm improvements and works, according to the provisions of the Sixth Schedule.

[S 33 renumbered as s 33(1) by s 5(a) of Act 7 of 2006 w.e.f. 1 April 2006105.]

   (2) The capital allowances to be claimed by a person carrying out any mining operations and keeping books of accounts in United States dollars under subsection (3) of section 55 shall be indexed capital allowances.

[S 33(2) subs by s 5 of Act 27 of 2011 w.e.f. 1 April 2012106.]

   (3) For the purposes of this section indexed capital allowances shall be computed as follows:

[1 + {(R²-R¹)/R¹}] × (Capital allowance)

Where:

R¹ is the Kwacha against the United States Dollar at the exchange rate ruling on the last day of the preceding accounting year in which the loss is being claimed; and

R² is the Kwacha against the United States Dollar at the exchange rate ruling on the last day of the accounting year in which the loss is being claimed.

The Kwacha against the United States Dollar exchange rate to be used for this purposes is the Bank of Zambia mid-rate at the end of the accounting period.

[S 33 am by Act 11 of 1969, 26 of 1970, 46 of 1973, 11 of 1975; s 33(3) ins by s 5(b) of Act 7 of 2006 w.e.f. 1 April 2006107.]

34.   Investment allowances

Where a person incurs capital expenditure on the construction of, addition to, or alteration of any industrial building, as defined in paragraph 1 of the Fifth Schedule, to be used by him for the purposes of his business as a manufacturer, an investment allowance of ten per centum of such expenditure shall be deducted in ascertaining the gains or profits of that business for the year in which the said building, addition or alteration is first used for the said purposes.

[S 34 am by Act 11 of 1969, 26 of 1970, 11 of 1985, 14 of 1987, 4 of 1993.]

34A.   Development allowance

   (1) Where a person incurs expenditure on the growing of rose flowers, tea, coffee, or banana plant or citrus fruit trees, or other similar plants or trees, an allowance (in this Act referred to as a development allowance) of ten per centum of such expenditure shall be deducted in ascertaining the gains or profits of that business for the charge year.

[S 34A(1) am by s 4 of Act 3 of 2003 w.e.f. 1 April 2003108.]

   (2) The development allowance referred to in sub-section (1) may, in the case of a person growing for the first time plants or trees referred to therein, be carried forward to the following charge years up to the first year of production, but in no case shall the development allowance in respect of more than three consecutive years be carried forward.

[S 34A am by Act 10 of 1981; s 34A(2) am by s 5 of Act 3 of 2002 w.e.f. 1 April 2002109.]

35.   Preliminary business expenses

A deduction is allowed in ascertaining the gains or profits of a business for the charge year in which that business commences, in respect of any expenditure that—

      (a)   was incurred within eighteen months before the commencement of the business; and

      (b)   would have been allowed as a deduction in ascertaining the gains or profits of the business after its commencement.

36.   Amount paid after cessation of business

Where any amount is paid by any person after the cessation of his business which, if it had been paid prior to the cessation, would have been deductible in computing his gains or profits from the business, then, to the extent to which that amount has not already been deducted in computing the gains or profits, it shall be deducted from his income for the charge year in which it is paid or, if he has not income in that charge year, from his income for the charge year in which the business ceased, and such deduction shall be made before deductions under sections 30, 31 and 32.

[S 36 am by Act 26 of 1970, s 8 of Act 4 of 2000 w.e.f. 1 April 2000110.]

37.   Approved fund deductions

   (1) A deduction shall, subject to the provisions of this sub-section and sub-section (12), be allowed in ascertaining deductions the income from emoluments of an employee for a charge year of any amount paid by the employee during that charge year by way of contribution to any approved fund including the National Pension Scheme Authority, if the fund to which the contribution is made continues to be an approved fund for that charge year:

Provided that no deduction shall be allowed under this sub-section in respect of any contribution other than a contribution —

(a)   which is not a contribution in arrear, in this sub-section referred to as a current contribution; or

(b)   which is a special lump sum contribution allowed to be deducted under and in accordance with sub-section (2).

   (2) A contribution paid by an employee—

(a)   in respect of services rendered by the employee, while resident in the Republic, to that employee’s employer prior to the date of the employee becoming a member of the approved fund to which the contribution is paid; or

(b)   in respect of a period when the employee was resident and employed in the Republic prior to the date of the employee becoming a member of a fund within paragraph (c) of the definition of approved fund or a fund approved under paragraph 5 of the Fourth Schedule to which the contribution is paid;

in order that the employee may qualify for benefits under the approved fund to which the contribution is paid in respect of such prior services or period shall be a special lump sum contribution and shall, for the purposes of sub-section (1), be treated as a current contribution for the charge year or current contributions for the charge years, in such amounts as the Commissioner-General may direct.

   (3) The deduction to be allowed to an employee for a charge year in respect of the employee’s current contributions to approved pension funds shall not exceed—

(a)   fifteen per centum of the employee’s income from emoluments liable to tax which have been received for that charge year from any employer who established, adhered to or continued the said approved pension fund, the fifteen per centum to be calculated before any deduction under this sub-section; or

(b)   three thousand and sixty kwacha; whichever is the less.

[S 37(3)(b) am by s 3 of Act 10 of 2012 w.e.f. 1 January 2013111.]

   (4) The total deductions to be allowed to an employee for a charge year in respect of current contributions to an approved fund within the meaning of paragraph (c) of the definition of approved fund and a fund approved under paragraph 5 of the Fourth Schedule, shall not exceed fifteen per centum of the income from emoluments of the employee liable to tax before allowing any deduction under this sub-section for that charge year or three thousand and sixty kwacha, whichever is the less.

[S 37(4) am by s 3 of Act 10 of 2012 w.e.f. 1 January 2013112.]

   (5) The total of the deduction to be allowed for a charge year under sub-sections (3) and (4) shall not exceed fifteen per centum of the income from emoluments of the employee liable to tax before allowing any deduction under this sub-section for that charge year or three thousand and sixty kwacha, whichever is the less, and in any case shall not exceed the assessable income of the employee for the charge year before allowing the deductions under this sub-section, sub-section (9) and sections 30, 32, 36 and 41.

[S 37(5) am by s 3 of Act 10 of 2012 w.e.f. 1 January 2013113.]

   (6) A deduction shall, subject to the provisions of this sub-section, be allowed in ascertaining the gains or profits of an employer for a charge year of any amount paid during that charge year by the employer by way of contribution to an approved fund established for the benefit of the employees, including an approved fund within the meaning of paragraph (c) of the definition of approved fund and a fund approved under paragraph 5 of the Fourth Schedule, if the fund to which the contribution is made continues to be an approved fund for that charge year:

Provided that no deduction shall be allowed under this sub-section in respect of any contribution other than a contribution—

(a)   which is not a contribution in arrear, in this sub-section referred to as a current contribution: or

(b)   which is a special lump sum contribution which is allowed to be deducted under and in accordance with sub-section (7).

   (7) A contribution paid by an employer—

(a)   in respect of services rendered to the employer by an employee prior to the date of the employee becoming a member of the approved fund to which the contribution is paid in order that the employee may qualify for benefits under that approved fund in respect of such prior services; or

(b)   for any other reason approved by the Commissioner-General; shall be a special lump sum contribution and shall be treated as a current contribution for such charge year or as current contributions for such charge years and in such amounts as the Commissioner-General may direct.

   (8) The deduction to be allowed for a charge year in respect of current contributions to an approved fund other than a fund approved under sub-section (1) of section 11 of the former Act shall not exceed twenty per centum of the emoluments liable to tax received from the employer in that charge year by each employee in respect of whom the contributions are paid.

   (9) A deduction shall, subject to the provisions of this sub-section and sub-section (12), be allowed from the income of an individual for a charge year of any amount paid by the individual during that charge year by way of a premium payable under an approved annuity contract if the pension fund to which the contribution is paid or the annuity contract under which the premium is paid continues to be an approved fund for that charge year and such deduction shall be deducted from the income of an individual before deductions under sections 30, 32, 36 and 41.

   (10) The deduction to be allowed for a charge year under this sub-section shall not exceed three thousand and sixty kwacha or the assessable income of the individual for the charge year before allowing the deduction under this sub-section and a deduction under sections 30, 32, 36 and 41, whichever is the less, except that in the case of an individual who is not resident in the Republic, the deduction shall not exceed an amount equal to the contribution or premium paid, multiplied by the fraction of that individual’s assessable income over the individual’s world income.

[S 37(10) am by s 3 of Act 10 of 2012 w.e.f. 1 January 2013114.]

   (11) For the purposes of sub-section (10) “world income” in relation to any person, means the total amount of that person’s income from all sources, excluding the income which is chargeable to tax but which the Commissioner-General is precluded from including in an assessment, the amount of income from each source being substantiated to the satisfaction of the Commissioner-General.

   (12) The total of all deductions to be allowed to an individual under sub-sections (1), (2), (3), (4), (5), (9) and (10) for a charge year shall not exceed three thousand and sixty kwacha or the assessable income of that individual for that charge year before allowing the deductions under sections 30, 32, 36 and 41, whichever is the less.

[S 37 subs by s 5 of Act 1 of 2009 w.e.f. 1 April 2009115; s 37(12) am by s 3 of Act 10 of 2012 w.e.f. 1 January 2013116.]

37A.   Deduction for share option scheme

A deduction shall be allowed in ascertaining the gains or profits of an employer for a charge year of any amount incurred by the employer in the establishment or in the administration of an approved share option scheme for that charge year.

[S 37A ins by s 6 of Act 3 of 2002 w.e.f. 1 April 2002117.]

38.   Technical education

A deduction shall be allowed in ascertaining the gains or profits of a business for any payment made for the purposes of technical education relating to that business or for the purposes of obtaining further experience, training or qualifications, relating to that business:

Provided that no deduction shall be allowed under this section in respect of any payment made—

      (a)   on behalf of an individual who is related by blood or marriage to the person making the payment, or to a person who is able to control directly or indirectly the person making the payment;

      (b)   in pursuance of an agreement or undertaking to the effect that the person making the payment will receive any reciprocal benefit for such payment where made on behalf of an individual who is related by blood or marriage to any other party to that agreement or undertaking.

[S 38 am by Act 26 of 1970.]

39.   Subscriptions

A deduction is allowed in ascertaining the gains or profits of a business or the emoluments of any employment or office for any subscription paid by a person in respect of his membership of a trade, technical or professional association which is related to his business, employment or office.

40.   …

[S 40 rep by s 7 of Act 3 of 1997 w.e.f. 1 April 1997118.]

41.   Public benefit organisation

   (1) Subject to the other provisions of this section, an amount paid by a person during a charge year to a public benefit organisation shall be deducted from the income of that person for that charge year if—

      (a)   the payment is in money or money's worth;

      (b)   the payment is made for no consideration;

      (c)   subject to sub-sections (2) and (3), the Minister approves the public benefit organisation to which the payment is made:

Provided that an approval by the Minister may be given retrospectively; or

      (d)   the payment is made to a public benefit organisation that is owned by the Government.

   (2) Where a public benefit organisation is owned by the Government, the organisation shall not require the Minister's approval.

   (3) The Minister may withdraw an approval given under paragraph (c) of sub-section (1), if the public benefit organisation—

      (a)   is not exclusively providing a public benefit activity;

      (b)   submits false information in the organisation's application to the Minister for approval as a public benefit organisation; or

      (c)   uses resources for a purpose other than that provided for in the organisation's objectives.

   (4) A deduction in the charge year under this section shall be allowed before a deduction under sections 30, 31, 32 and 36 and shall not exceed fifteen per centum of the assessable income of a person for that charge year.

[S 41 subs by s 6 of Act 1 of 2009 w.e.f. 1 April 2009119.]

42.   …

[S 42 rep by s 8 of Act 3 of 1997 w.e.f 1 April 1997120.]

43.   Deduction for research

   (1) A deduction is allowed in ascertaining the gains or profits of a business of any expenditure, not being expenditure of a capital nature, incurred by the business during a charge year on experiments or research relating to the business.

   (2) A deduction is allowed in ascertaining the gains or profits of a business for any contribution to a scientific or educational society or institution or other like body of a public character approved by the Commissioner-General where a condition of the contribution is that it must be utilised by the society, institution or body, as the case may be, solely for the purposes of industrial research or scientific experimental work connected with the business.

43A.   Deduction for bad and doubtful debts

   (1) A deduction shall be allowed in ascertaining the income from any source for debts to the extent that the debts have been included in the income from that source and to the extent that they are proved to the satisfaction of the Commissioner-General to be bad or likely to become bad and, where there is no income from that source for the charge year for which such deduction is due that deduction shall be deemed to be a loss under section 30.

[S 43A(1) subs by s 9 of Act 6 of 1999 w.e.f. 1 April 1999121.]

   (2) Where a deduction has been allowed under sub-section (1) in respect of any debt, and in the subsequent charge year part or all the debt is recovered, the amount of the recovery or, where less, the total deductions allowed in one or more charge years in respect of that debt, shall be assessable in the charge year in which the recovery is received:

Provided that where recoveries are effected in more than one charge year, the total amount assessable in each charge year after the first such charge year shall not exceed the amount of the recovery in that later year or, where less, the total of the deductions previously allowed less any recoveries assessable in previous charge years.

[S 43A(2) subs by s 9 of Act 6 of 1999 w.e.f. 1 April 1999122; am by s 5 of Act 1 of 2001 w.e.f. 1 April 2001123.]

   (3) Where a claim for a deduction is made under sub-section (1) by a bank, bank subsidiary or financial institution, sub-section (1) shall apply subject to the following:

      (a)   the words “to the extent that the debts have been included in the income from that source” in that sub-section shall not apply; and

      (b)   the maximum deduction for any debt falling within the classifications set out under the Banking and Financial Services Act shall not exceed the prescribed level of provisioning for the debt required by theBank of Zambia under the Banking and Financial ServicesAct, less the value of security or collateral pledged against the debt.

[S 43A(3) ins by s 9 of Act 4 of 2000 w.e.f. 1 April 2000124; s 43A(3)(b) subs by s 4 of Act 7 of 2014 w.e.f. 1 January 2015.]

43B.   Deduction for mineral royalty

   (1) A deduction shall be allowed in ascertaining gains or profits of a business of any mineral royalty payable and paid for a charge year in pursuance of the provisions of section 66 of the Mines and Minerals Development Act.

   (2) This section shall not apply to any royalty payable and paid for any charge year prior to the charge year ending 31st March 2000.

[S 43B ins by s 10 of Act 6 of 1999 w.e.f. 1 April 1999125.]

43C. …

[S 43C rep by s 4 of Act 49 of 2010 w.e.f. 1 April 2011126.]

43D.   Deduction for employing person with disability

   (1) A deduction shall be allowed in ascertaining the gains or profits of a business in respect of each person with disability who has been employed full-time by such business for the whole or substantial part of the charge year for which the deduction is claimed.

   (2) The amount of the deduction referred to in sub-section (1) shall be one thousand kwacha.

[S 43D am by Act 11 of 1985, 4 of 1993; s 43D(2) am by s 16 of Act 7 of 1996 w.e.f. 1 April 1996127, s 8(b) of Act 3 of 2002 w.e.f. 1 April 2002128, s 5 of Act 1 of 2008 w.e.f. 1 April 2008129.]

43E.   …

[S 43E rep by s 17 of Act 7 of 1996 w.e.f. 1 April 1996130.]

44.   Case of no deduction

No deduction is made in respect of any of the following matters—

      (a)   the cost incurred by an individual in the maintenance of himself, his family or establishment, or which is a domestic or personal expense.

[S 44(a) am by s 5(a) of Act 3 of 2003 w.e.f. 1 April 2003131.]

      (b)   any loss or expense which is recoverable under any insurance contract or indemnity;

      (c)   capital expenditure or loss of capital, other than loss of stock in trade, unless specifically permitted under this Act;

      (d)   any payment to a pension or superannuation fund or scheme or premium payable under an annuity contract, except such payments as are allowed under section 37;

      (e)   any tax or penalty chargeable under this Act;

      (f)   …

[S 44(f) rep by s 8(a) of Act 9 of 1998 w.e.f. 1 April 1998132.]

      (g)   any amount which would be deductible in ascertaining the income from a source or from income which the Commissioner-General is prohibited from including in any assessment under the provisos to sub-section (1) of section 63;

      (h)   any expenditure incurred or capital asset employed, whether directly or indirectly, in the provision of entertainment, hospitality or gifts of any kind:

Provided that this paragraph shall not apply to—

      (i)   any expenditure incurred or capital asset employed in the provision of anything which it is the purpose of a person's business to provide and which is provided in the ordinary course of that business for payment or for the purpose of advertising to the public generally without payment;

      (ii)   …

[S 44(h) proviso para (ii) rep by Act 11 of 1992.]

      (iii)   any expenditure incurred in the provision of a gift to any person consisting of an article incorporating a conspicuous advertisement for the donor the cost of which to the donor, taken together with the cost to him of any other such articles given by him to that person in the same charge year, does not exceed one hundred kwacha;

[S 44(h) proviso para (iii) am by s 8(b) of Act 9 of 1998 w.e.f. 1 April 1998133, s 6 of Act 1 of 2008 w.e.f. 1 April 2008134.]

      (i)   any amount incurred by the employer in the establishment or administration of a share option scheme, except such amounts as are allowed under section 37A.

[S 44(i) ins by s 9 of Act 3 of 2002 w.e.f. 1 April 2002135.]

      (j)   …

[S 44(j) rep by s 9 of Act 3 of 1997 w.e.f. 1 April 1997136.]

      (k)   …

[S 44(k) rep by Act 4 of 1993.]

      (l)   the cost of any benefit or advantage not capable of being turned into money or money's worth that is provided to employees, subject to such directions as shall be issued by the Commissioner-General;

[S 44(l) am by s 8(c) of Act 9 of 1998 w.e.f. 1 April 1998137; s 10(a) of Act 4 of 2000 w.e.f. 1 April 2000138.]

      (m)   any copper price participation payment or cobalt price participation payment:

Provided that a deduction shall be allowed to Konkola Copper Mines Plc and Mopani Mines Plc in respect of any payments made pursuant to cobalt price participation and copper price participation agreements between Konkola Copper Mines Plc or Mopani Copper Mines Plc and Zambia Consolidated Copper Mines Limited;

[S 44(m) subs by s 4 of Act 1 of 2005 w.e.f. 1 April 2005139.]

      (n)   incidental costs of obtaining finance such as commitment and guarantee fees, commissions and any other incidental cost of a similar nature; and

[S 44(n) ins by s 5(c) of Act 3 of 2003 w.e.f. 1 April 2003140.]

      (o)   any levy payable under the Medical Levy Act.

[S 44 am by Act 26 of 1970, 27 of 1970, 17 of 1971, 11 of 1973, 11 of 1975, 14 of 1976, 10 of 1981, 14 of 1987, 11 of 1992, 4 of 1993, 2 of 1995; s 44(o) ins by s 5(c) of Act 3 of 2003 w.e.f. 1 April 2003141.]

PART V
RETURNS AND ASSESSMENTS

45.   Notice to Commissioner-General

Every person within thirty days from first receiving income liable to tax under this Act shall give written notice accordingly to the Commissioner-General.

[S 45 am by Act 26 of 1970.]

45A.   Duty to provide taxpayer identification number

   (1) Every person shall provide his taxpayer identification number with all forms, notices, certificates, documents, and other communications submitted to the Commissioner-General under this Act.

   (2) Any person carrying on any business in partnership shall provide the taxpayer identification number of every partner with all documents, forms, notices, certificates, and other communications submitted to the Commissioner-General under this Act.

   (3) Every person making payments for which it is required to submit to the Commissioner-General a return, notice, form, certificate, or other such document under sections 50, 52, 71, 80, 81, 81A, 82, or 95D of this Act shall furnish to the Commissioner-General on or along with that document the taxpayer identification numbers for all persons to whom the payments have been made.

   (4) This section shall have effect irrespective of the charge year to which the forms, notices, certificates, documents and other communications referred to in sub-section (1) to (3) pertain.

   (5) For the purposes of sub-section (1), “person” includes a partnership.

[S 45A am by Act 11 of 1992; s 45A(5) ins by s 7 of Act 1 of 2008 w.e.f. 1 April 2008142.]

45B.   Taxpayer identification number required for certain transactions

   (1)The institutions listed in column 1 of this sub-section shall require a taxpayer identification number from any person, applying for anything listed, or engaged in the types of transactions listed, whichever is applicable, in column 2 of this section.

Column 1

Column 2

InstitutionType of Transaction
Commissioner of LandsRegistration of titles
Registrar of Motor VehiclesRegistration and transfer of motor vehicles
Ministry of CommerceImport licensing and trade licensing
Zambia Electricity Supply Corporation LimitedPayment of deposit for power connection

[S 45B(1) am by s 9 of Act 9 of 1998 w.e.f. 1 April 1998143, s 6 of Act 27 of 2011 w.e.f. 1 April 2012144.]

   (2) Each institution listed in column 1 of sub-section (1) shall avail the Commissioner-General or his authorised agent access to the documents, forms, notices, certificates, and other communications in which a tax-payer identification number is required to be used under sub-section (1):

Provided that such access shall be as is necessary to assist in the enforcement of the tax laws.

   (3) Any person, including a person carrying on any business in partnership, who is required under sub-section (1) to furnish a tax-payer identification number and who furnishes a false number shall be guilty of an offence under this Act.

[S 45B am by Act 4 of 1993.]

46.   Returns generally

   (1) Every person liable to tax for any charge year, other than an individual whose income consists entirely of emoluments within the provisions of Part VI (which relates to Pay As You Earn), shall furnish to the Commissioner-General a return of income and such particulars as may be required for the purposes of ascertaining the income chargeable, if any, and the tax liability due, if any under this Act.

   (2) The return required under this section shall—

      (a)   contain a statement of the person's income liable to tax, including income deemed under this Act to be the income of the person in respect of whom the return is submitted but excluding any income which cannot be assessed by virtue of the proviso to sub-section (1) of section 63;

[S 46(2)(a) am by s 10(a)(i) of Act 9 of 1998 w.e.f. 1 April 1998145.]

      (b)   contain a computation, by or on behalf of the person liable to tax, of the amount of tax due based on rates of tax applicable for such charge year and, in the case of an individual, any deductions, and tax credit to which he is entitled;

[S 46(2)(b) am by s 10(a)(ii) of Act 9 of 1998 w.e.f. 1 April 1998146, s 10(a) of Act 3 of 2002 w.e.f. 1 April 2002147.]

      (c)   include a declaration by such person, or by the person in whose name he is assessable, that such return includes a full statement of income liable to tax and a proper computation of tax due for such charge year; and

[S 46(2)(c) am by s 10(b) of Act 3 of 2002 w.e.f. 1 April 2002148.]

      (d)   be designated in kwacha.

[S 46(2)(d) ins by s 10(c) of Act 3 of 2002 w.e.f. 1 April 2002149.]

   (3) The return referred to in sub-section (1) shall be furnished to the Commissioner-General not later than 30th June following the end of the charge year.

[S 46(3) am by s 7 of Act 27 of 2011 w.e.f. 1 April 2012150.]

   (4) A return referred to in subsection (1) shall be lodged electronically.

[S 46(4) ins by s 5(a) of Act 7 of 2014 w.e.f. 1 January 2015.]

   (5) Where a person fails to submit a return on, or before, the date provided under sub-section (3), there shall be charged a penalty of—

      (a)   in the case of an individual, one thousand penalty units per month or part thereof; or

[S 46(4)(a) am by s 5(a) of Act 1 of 2005 w.e.f. 1 April 2005151.]

      (b)   in the case of a company, two thousand penalty units per month or part thereof:

[S 46(4)(b) am by s 5(b) of Act 1 of 2005 w.e.f. 1 April 2005152.]

Provided that the Commissioner-General may in his discretion remit the whole or part of any such penalty.

[S 46(4) subs by s 10 of Act 3 of 1997 w.e.f. 1 April 1997153; proviso subs by s 10(b) of Act 9 of 1998 w.e.f. 1 April 1998154; s 46(4) renumbered as s 46(5) by s 5(b) of Act 7 of 2014 w.e.f. 1 January 2015.]

   (5) …

[S 46(5) rep by s 7 of Act 1 of 2009 w.e.f. 1 April 2009155.]

   (6) …

[S 46(6) rep by s 7 of Act 1 of 2009 w.e.f. 1 April 2009156.]

   (7) …

[S 46(7) rep by s 7 of Act 1 of 2009 w.e.f. 1 April 2009157.]

   (8) …

[S 46 am by Act 11 of 1992, 13 of 1994, 2 of 1995; s 46(8) rep by s 7 of Act 1 of 2009 w.e.f. 1 April 2009158.]

46A.   Provisional income tax

   (1) Without prejudice to the requirement under section 46, every person, including an individual whose income consists entirely of emoluments within the provisions of Part VI which relates to (Pay As You Earn), shall submit in accordance with this section a return of provisional income and tax for any charge year:

[S 46A(1) am by s 11(a) of Act 9 of 1998 w.e.f. 1 April 1998159.]

Provided that an individual who does not expect to receive assessable income (other than emoluments within the provisions of Part VI in excess of the amount specified in subparagraph (c) of paragraph 2 of the Charging Schedule for such charge year need not submit such return.

[S 46A(1) proviso am by s 18 of Act 7 of 1996, s 11(b) of Act 9 of 1998 w.e.f. 1 April 1998160, s 11(a) of Act 6 of 1999 w.e.f. 1 April 1999161, s 11 of Act 4 of 2000 w.e.f. 1 April 2000162, s 6(a) of Act 1 of 2001 w.e.f. 1 April 2001163, s 11(a) of Act 3 of 2002 w.e.f. 1 April 2002164, s 4 of Act 18 of 2013 w.e.f. 1 January, 2014This Ac shall come into operation on 1st January, 2014, and shall have effect in relation to the charge of tax for the charge year which ends on 31st December, and in relation to each subsequent charge year.')">164a]

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