Making it more taxing to do business

The Zambian government has instituted a number of measures that increase the cost of doing business in the country. According to the Standard Bank Africa Trade Barometer fifth edition, the tax changes are perceived as contradicting the nation’s long-term industrial objectives. The introduction of a 1% Minimum Alternative Tax (MAT) in August 2025 via the Income Tax (Amendment) Act No 10 of 2025 raised the fiscal burden on diversified trade, according to the barometer. The tax is a levy of 1%, charged on the total annual turnover by all large-scale companies and partnerships. Small-scale businesses with an annual turnover of K5 million ($255 661) or less are exempted. Enacted via the Income Tax (Amendment) Act of 2024 and effective from January 1, 2025, the Zambian government also increased income tax rates on non-traditional exports and value addition to copper cathodes to 20% (up from 15%) as part of a medium-term goal to unify the corporate tax regime, according to PKF Financial Consulting Services Zambia. Compliance challenges continue after the introduction of the mandatory Smart Invoice system, which, from July 1, 2024, required electronic invoices with fiscal signatures for all sales to combat VAT fraud and enhance revenue. The system generates electronic invoices with a unique fiscal signature and QR code, transmitting data to the Zambia Revenue Authority (ZRA) in real-time – when it is working. In March, economist Kelvin Chisanga warned that system disruptions at the ZRA were creating operational challenges for businesses across the country. “While Zambia has made progress in digitalising tax administration, this situation highlights the importance of strengthening system resilience and ensuring stable digital infrastructure within critical public institutions to support business continuity and efficient revenue administration,” he said. In another move, from January 1, 2025, ZRA levied a 15% advance income tax (AIT) on exports of goods and remittances of funds exceeding $2 000, targeting exporters without a valid Tax Clearance Certificate (TCC). Other major changes introduced by the 2025 budget include a 1% turnover tax for companies with high revenue but low profitability, and higher rates on cigarettes, alcohol and non-alcoholic beverages, according to PwC. They were enacted on August 19. Cargo flows are being affected by the Zambia Border Development Strategy 2025– 2029, launched in April 2025. It is a comprehensive roadmap launched by the Ministry of Commerce, Trade and Industry (MCTI) to transform Zambia into a regional logistics hub. In its pilot project at the Nakonde border between Zambia and Tanzania, traffic has been affected by infrastructure upgrades and the installation of a modern X-ray cargo scanner. ER