Unveiling the Hidden Tax Hikes: Zambia Faces Economic Shockwaves



IN A MOVE that has caught many by surprise, several significant tax changes have been introduced outside the official 2025 Budget framework. These changes, which were neither highlighted by the Zambia Revenue Authority (ZRA), the Zambia Institute for Policy Analysis and Research (ZIPAR), nor the Ministry of Finance, have sparked widespread concern among citizens and businesses alike.

The recent tax adjustments are believed to stem from the second supplementary budget or emergency revisions to the National Borrowing Plan. This follows a special session of Parliament convened by Speaker Nelly Mutti to deliberate on the Planning and Budgeting Committee’s report regarding the Revised Annual Borrowing Plan for 2024.

Key Tax Changes Unveiled

  1. Property Transfer Tax: The tax on the sale of land, buildings, and shares has surged from 5% to 8%.
  2. Rental Income Tax: Individuals earning rental income above K800,000 annually will now pay 16%, up from the previous 12.5%.
  3. Turnover Tax: The turnover tax rate has increased from 4% to 5%.
  4. Expanded Turnover Tax Threshold: The threshold for turnover tax has been raised to K5 million from K800,000 annually, relegating more businesses to this tax regime instead of income tax.
  5. Potential Dual Taxation: Without a Statutory Instrument (SI) to align the VAT registration threshold to K5 million, businesses could find themselves liable for both VAT and turnover tax simultaneously.
  6. Mobile Money Levy: A levy on bank-to-wallet transfers may come into effect unless the Minister of Finance issues an SI to exempt such transactions, compelling banks to account for and remit this tax to ZRA.

These tax hikes come at a time when Zambia is grappling with severe economic challenges, including climate change impacts, persistent load-shedding, inflationary pressures, and resource constraints. The 2025 national budget, themed "Building Resilience for Inclusive Growth and Improved Livelihoods," aimed to achieve a 6.6% GDP growth rate through investments in mining, agriculture, and infrastructure. Additionally, it sought to address the energy deficit by increasing renewable energy sources, reduce inflation to 6-8%, and maintain a budget deficit of 3.1% of GDP.

However, these ambitious targets have faltered under the weight of an underperforming economy. Inflation remains stubbornly high, economic growth has stagnated, and the burden of new taxes threatens to deepen financial struggles for individuals and businesses.

Critics argue that these tax measures, introduced without public discourse or prior announcement, undermine the principles of transparency and inclusivity in governance. Many are questioning whether the government’s approach to addressing resource constraints is sustainable or equitable.

As the nation braces for the ripple effects of these tax changes, the focus remains on how the government will balance fiscal discipline with the need to foster economic growth and alleviate the burden on its citizens.


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