The Minister of Finance, Honourable Alexander B. Chikwanda, presented the Zambian 2014 National Budget on Friday 11 October 2013. Here we outline the some of the key international tax changes.

Introduction of a 15% withholding tax on branch profits repatriation

Previously, profit distributions by Zambian branches of foreign companies were not subject to withholding tax. The 2014 budget proposes to introduce a 15% withholding tax on profit distributions by Zambian branches to their foreign head offices.  It is expected that the imposition of withholding tax may take effect as early as 1 January 2014, we await further clarification on the timing.

The introduction of the withholding tax on branch profit repatriation aims to equalise the tax treatment between branches and subsidiaries.  The statutory rate of dividend withholding tax is 15%. In the case of a company, the dividend withholding tax may be reduced under the relevant double tax agreement.  However, for branches, no equivalent relief is available. Companies may now wish to revisit their existing corporate structure in Zambia.

Introduction of a 0.2% service charge on money transferred to a recipient within or outside Zambia

The 2014 budget introduced a monetary transfer service charge of 0.2% of the value transferred to a recipient within or outside Zambia.  The change will come into effect from 1 January 2014.

Download the highlights of the  2014 Zambian Budget Speech.

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