The Zambia Revenue Authority on November 5 published an overview of tax measures in the Minister of Finance’s 2022 budget address delivered on October 29, including changes to the corporate income tax rate and amendments to transfer pricing regulations.
Corporate income tax provisions
The budget would reduce the general corporate income tax rate from 35% to 30%. For telecommunications companies, it would retain the higher 40% top marginal rate.
The budget would also make the mineral royalty levy deductible for corporate income tax purposes. The change is intended to enhance investment in the sector and align with international practices.
In continued pandemic-related relief for the hospitality sector, the 15% corporate income tax rate for hotels’ income from lodging and food services would be extended another year, through 2022.
To help with local job creation, the budget would also suspend corporate income tax for manufacturers of ceramic products.
With respect to interest deductions, the budget would increase the period for carrying forward disallowed interest deductions from five years to 10 years.
The budget would also introduce a 20% withholding tax on reinsurance placed with non-Zambian firms.
Transfer pricing provisions
The budget would introduce two new schedules for country-by-country reporting to align with international guidance. One of the new schedules would require listing constituent entities of a multinational group aggregated by tax jurisdiction. The other would require reporting additional information on the nature of activities of constituent entities.
In addition, changes to the regulations defining the threshold for country-by-country reporting would remove references to the threshold in euros (i.e., EUR 750 million) and instead only define a single threshold denominated in Kwacha (ZMW 4.795 billion).
The government also plans to introduce regulations prescribing the procedure for the submission of the country-by-country report.
Be the first to comment