The Zambia Development Agency (ZDA) wishes to inform the public and the business community that investment incentives outlined in the Investment, Trade and Business Development (ITBD) Act No. 18 of 2022 are available to both local and foreign investors who meet the prescribed eligibility criteria.
As part of the Government’s commitment to fostering a competitive and inclusive investment environment, the ITBD Act introduced a more supportive framework for local investor participation, while maintaining strong incentives to attract foreign direct investment.
To stimulate increased local investment and empower Zambian-owned businesses, the minimum investment threshold for 100 percent locally owned investments operating in priority sectors was significantly reduced from USD 500,000 to USD 50,000.
This reduction aims to remove barriers for Zambian investors and ensure equitable access to incentives that support business growth, industrialisation, and job creation.
On the other hand, the investment threshold for foreign investors to access the same incentives as a local investor was increased from USD 500,000 to USD 1 million.
Meanwhile, to encourage strategic partnerships between local and foreign investors, the following investment thresholds apply for joint ventures:
- Citizen-Owned Company (50.1% Zambian shareholding) – USD 100,000
- Citizen Empowered Company (25.1% to 50% Zambian shareholding) – USD 150,000
- Citizen Influenced (5% to 25% Zambian shareholding) – USD 500,000
The following incentives apply to both local and foreign investors in the priority sectors:
General Tax Incentives
- Customs duty exemption for a period of five (5) years in respect of machinery and equipment, other than spare parts for use in a priority sector;
- Depreciation on a straight-line basis on wear and tear at an accelerated rate not exceeding one hundred (100) percent in respect of any new implement, plant, or machinery; and
- VAT deferment on gazetted equipment and machinery
Incentives in the SEZ
- Developers of SEZ
- Customs duty exemption for five (5) years in respect of machinery and equipment used for the development of a Multi-Facility Economic Zone (MFEZ) or Industrial Park;
- Depreciation on a straight-line basis on wear and tear at an accelerated rate not exceeding one hundred (100) percent in respect of any new implement, plant, or machinery; and
- Zero VAT on Goods imported by a developer for the purposes of developing infrastructure in a Multi-Facility Economic Zone (MFEZ) or Industrial Park.
- Operators/Tenants
- Customs duty exemption for a period of five (5) years in respect of machinery and equipment, other than spare parts for use in a priority sector;
- Depreciation on a straight-line basis on wear and tear at an accelerated rate not exceeding one hundred (100) percent in respect of any new implement, plant, or machinery;
- Zero percent tax on dividends declared on profits made on exports from the first year of commencement of works, for companies in a Multi-Facility Economic Zone or Industrial Park, for a period of 10 years; and
- For years 11 to 13 only 50 percent of profits to be taxed and;
- For years 14 and 15, only 75 percent of profits to be taxed
- Zero percent tax on profits made on exports from the first year of commencement of works, for companies in a Multi-Facility Economic Zone or Industrial Park, for a period of 10 years.
- Zero percent Corporate Income Tax charged on profits arising from local sales of corn starch for the 2023 – 2033 charge years.
Conditions for 10 years Corporate Income Tax for Operators in SEZ as provided for under the Income Tax Act
- The company must be registered with the ZDA, both local and foreign.
- The company must invest in the Manufacturing sector; and
- The company must be export-oriented as the CIT is on profits and dividends from exports.
Expansion Incentives
- The ZDA also supports expansion projects by recommending incentives for such expansions as enshrined in the ITBD (Amendment) Act, 2024.
Some Specific Sector Incentives outside the ZDA’s Jurisdiction
Energy Sector
- Customs duty exemption on equipment and machinery inclusive of electrical transmission and distributioninfrastructure;
- Standard CIT of 30%;
- Reduced rate on dividends declared by a business enterprise approved by the Zambia Development Agency and carrying on electricity generation;
- VAT Intending Trader – Companies in energy sector (Hydro Power Projects) may claim VAT incurred on their inputs before they commence trading activities for a duration of 10 years
Mining Sector
- Loss carry-forward provisions for mining companies – 10 years;
- Capital allowances and sector-specific deductions – 50% processing, 20% mining;
- Withholding tax on dividends 0%;
- VAT relief on exports of copper cathodes SI 69 of 2014; and
- Other incentives already reduce effective tax burden, e.g., input VAT claims, zero rating capital equipment in schedule 2
Non-Fiscal Incentives
- Facilitation of Investors Permits with the Immigration Department on behalf of the shareholders of the company;
- Facilitation of recommendation letters for employment permits for expatriates;
- Facilitation of meetings with other government stakeholders;
- Resolution of challenges through aftercare provision; and
- Facilitation of access to the market, among others.
Commenting on social media conversations on investment incentives, ZDA Director General Albert Halwampa emphasised that the criteria for incentives are based strictly on project viability, sector alignment, investment thresholds, location, and compliance with national regulations.
“Zambia’s investment environment is anchored on inclusivity and competitiveness. We encourage both local and foreign investors to take advantage of the incentives available if they meet the established requirements,” Mr. Halwampa stated.
The ZDA remains committed to fostering an enabling environment for sustainable investment, supporting local investors’ growth, and attracting high-quality foreign direct investment that contributes to national development.
