Property taxation, capital gains tax, and mining rights tax in Zambia: Current performance and options for reform

The Government of Zambia has been undertaking series of tax reform measures since 2010 with the aim to broaden the tax base and increase revenue while promoting voluntary compliance by taxpayers. Among such measures relevant to this project include the increase in the property transfer rates from 3% to 5%; reform in the fiscal regime for mining companies, which entails reducing the capital allowances for mining from 100% expensing to 25% straight-line; and introducing a 10% property transfer tax on sales or transfers of mining rights.

This project designed an appropriate reform strategy (with a strong focus on the policy and administrative dimensions) that will aid the Zambia Revenue Authority (ZRA) in bringing the reform needed to increase revenues from capital gains taxes, property transfer taxes, and the taxation of immovable property, such that revenues contribute significantly to total revenues of central and local governments and GDP. The study also created a better understanding of what policies, regulatory and legal frameworks, tools, and instruments have been applied to the implementation of certain tax systems in Zambia.

The two main aims of the study were:

  1. To undertake a thorough analysis of the existing property taxation (including property/equity transfer tax, capital gains, and mining rights transfer tax system) in Zambia, identifying the major constraints and opportunities for improvement.
  2. Based on the analysis, design an appropriate reform strategy with focus on the policy and administrative dimensions and develop an actionable implementation strategy that the Zambia Revenue Authority will use to bring out the reform needed.