Zambia

English Languages

19.6 million Population

ZMW Currency

3,8% (2024) GDP

Employment by Major Industries

21.2

Service sector

7.5

Industry

71.3

Agriculture

Country profile

Overview

The Republic of Zambia is a state in Southern Africa, bordered to the north by the Democratic Republic of the Congo and Tanzania, to the east by Malawi and Mozambique, to the south by Zimbabwe, Botswana, and Namibia, and to the west by Angola.

The capital is Lusaka, located in the south-central part of the country. The population is concentrated mainly around Lusaka in the south and the Copperbelt in the northwest. The population of Zambia is approximately 19.6 million, and the area is 752,618 km².

Most of Zambia is part of the high plateau of this part of Africa. The main relief features are located along river and rift valleys, some of which are filled with lakes. The most famous is Lake Tanganyika, located approximately 600 meters below the plateau. Zambia is divided into three main agro-ecological regions. The first region includes parts of the southwestern corner of the country and is the driest and most prone to drought. The second region covers the central part of the country and has little agricultural potential, being predominantly forested. The third region is in the northern part of the country, and its soil is generally highly weathered and leached, making them more favourable for crop cultivation.

Zambia is located in the tropical zone; its climate is favourable for settlement. More than one-tenth of the country has been set aside as forest reserve or protected forest areas and in all, some two-fifths of the country’s land is under protection.

Most Zambians speak Bantu languages ​​and are descended from peoples who practiced agriculture and metallurgy and settled the region over the past 2,000 years. After visits by European explorers in the 18th century, Zambia came under the control of the British South Africa Company in the late 19th century, and Northern Rhodesia officially became a British protectorate in 1924. Like most countries of the colonial period, Zambia was governed by an administration appointed from London. By 1964, British rule had radically transformed Zambia, turning it into an export-oriented economy with a focus on copper mining. The British built infrastructure (railways, cities), introduced the English language, Christianity, and an administrative system that united the various ethnic groups but simultaneously deepened social inequality.

October 24, 1964, Zambia became independent from Great Britain. In 2010, the World Bank named Zambia one of the most economically reformed countries in the world.

Real GDP growth for 2024 – 3.8%

https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=ZM&most_recent_value_desc=true

Country Calling Code: +260

Official languages

The official language in Zambia is English.

Currency

Zambia’s official currency is the Zambian kwacha (sign: K; code: ZMW). 

Political System

Zambia has a parliamentary democracy with a presidential system of government, with the president as both head of state and government.

Zambia is also a unitary republic, with the executive, legislative and judicial branches as autonomous branches of government. According to the constitution, the president, who is the head of state and commander-in-chief of the armed forces, is elected by universal adult suffrage for a maximum of two five-year terms. He has the power to appoint the vice-president, the chief justice of the Supreme Court and members of the High Court on the recommendation of the Judicial Service Commission. In the absence of the president, the vice-president acts as president. The president and members of parliament are elected to office, and the president appoints cabinet ministers from among the elected and appointed members of parliament.

Parliament, headed by the Speaker of the National Assembly, consists of 156 elected members and 10 members appointed by the president. The Supreme Court is the highest court of appeal and is headed by the Chief Justice. Zambia is a unitary republic, with the executive, legislative and judicial branches as autonomous branches of government. The executive branch is the president, who is assisted by a vice-president.

Elections are held every 5 years, during the second week of August of the election year. Zambia has a multi-party system, and the main political parties are the ruling United National Development Party, the Patriotic Front and the Democratic Party.

Options of Doing Business in Zambia for a foreign entity expanding abroad

Company

Subsidiary

Partnership

Independent Contractor

GEOR

https://zda.org.zm/e-services/

https://tradecouncil.org/country-guides/doing-business-with-zambia/

https://zambialii.org/akn/zm/act/2017/10/eng@2017-11-20

https://www.healyconsultants.com/zambia-company-registration/incorporation-steps/#:~:text=Healy%20Consultants%20then%20prepares%20and,intended%20business%20venture%20in%20Zambia;

Foreign companies looking to expand their business in Zambia have several business vehicles to choose from, depending on their operational needs, tax planning, and the level of liability protection they seek. The main business vehicles available for foreign companies in Zambia include:

  1. The Limited Liability Company (Ltd) is a flexible alternative, like US LLCs. It protects owners’ assets and limits each partner’s liability. Ltd needs a minimum of two founders but can have up to 50 members. t is suitable for small to medium-sized businesses.
  2. The Public company (PLC) is a more complex business structure, commonly used by larger businesses. It offers limited liability protection, where shareholders are only liable up to the amount of their investment. It requires a minimum of two shareholders and must have a board of directors.
  3. Partnership (GP) is a form of business where two or more persons carry on business together for the purpose of making profits. A partnership usually is a progression from a sole trader. Partnerships in Zambia can have unlimited liability, where each partner is personally responsible for the business’s debts.
  4. Subsidiary: In Zambia, foreign investors typically establish subsidiaries that align with their business objectives and the regulatory environment. A foreign parent company must incorporate it as a local entity under Zambia law, choosing between forms like Ltd or PLC.
  5. Branch Office: Some foreign companies choose to establish branch offices to carry out specific operations in Zambia. Branch offices are considered extensions of the parent company and are subject to their liabilities.
  6. Representative Office: Representative offices of foreign companies in Zambia are established to carry out specific, non-commercial activities on behalf of their parent companies. Representative offices cannot engage in direct business operations or generate revenue in Zambia. Their primary functions are promotional and market research.
  7. The Sole Proprietor is the simplest form of business. It is owned and operated by a single individual. The owner has unlimited liability, meaning their personal assets can be used to satisfy the business’s debts.
  8. GEOR (Global Employer of Record) – a B2B service provider that acts as the legal employer of workers on behalf of a business worldwide.

In Zambia, the setup and dissolution of companies by foreign investors are primarily governed by the following key legislative acts:

  • The Zambia Development Agency Act of 2006, which offers a wide range of incentives in the form of allowances, exemptions and concessions to companies.
  • The Public-Private Partnership Act of 2009 established a PPP Unit under the Ministry of Finance to promote and facilitate privately financed infrastructure projects and effective delivery of social services.
  • The Companies Act of 2017, which governs the registration of companies in Zambia
  • General incentives to investors in various sectors are provided in assorted legislation that governs the Zambia Revenue Authority (ZRA), including the Customs and Excise Act.
  • The Immigration and Deportation Act Cap 123, regulates the immigration into the country of expatriates, business migrants and tourists.

Limited Liability Company (Ltd)

Setting Up a Limited Liability Company (Ltd)

The process of setting up a Private Limited Liability Company in Zambia involves several steps that must comply with local regulations. The following outlines the process:

  1. Engage a Local Notary: Ltd must be established through a notarial deed, so the foreign investor must engage a local notary to draft and execute the incorporation documents. These include the Articles of Association, which outline the company’s purpose, governance structure, and operational rules. Ltd must have at least two members but can have up to 50 members.
  2. Select a Company Name: The proposed company name must be unique and comply with local requirements. The investor can check online the uniqueness. The clearance is done by the Patent And Companies Registration Agency (PACRA), an agency governed by the Patents and Companies Registration Agency Act (2010) and the Registration of Business Names (2011). It costs ZMW 83 (4 EUR) for name search and ZMW 166 (8 EUR) for name reservation (source: World Bank, Doing Business 2018). PACRA | Business Search.
  3. Define Share Capital: There is minimum capital requirement to form a Limited Liability Company in Zambia – 900 EUR (20000 ZMW). The company’s capital can be expressed in any currency and does not need to be fully paid up at the time of incorporation. The declaration of compliance (Companies Form 11) must be signed by the Commissioner of Oaths.
  1. Appoint Directors and Shareholders: Ltd in Zambia require a minimum of two directors, with at least half, or at least one for foreign-owned firms, needing to be residents. Foreign investors are allowed to incorporate a sole director company and register a fully owned local company without having any Zambian shareholders (The Companies Act, 2017).
  2. Register the Company in the Patent and Companies Registration Agency (PACRA) online. This process involves submitting the company’s incorporation articles, including details such as the company’s name, purpose, board of directors’ names and addresses, and share capital.
  3. Investors have to register with the Zambia Revenue Authority. All legal entities operating in Zambia are required to obtain a National Tax ID number to comply with tax obligations like paying taxes and filing returns. 
  4. Obtain a Business License: Companies obtain a Zambia Business License after applying for any additional sector-specific permits required for your business activity.
  5. Open a Corporate Bank Account: The Ltd can open a corporate bank account in Zambia to handle its financial transactions. This requires submitting the incorporation documents and proof of the company’s registration. In Zambia, all documentation must be apostilled to comply with the bank’s requirements. Once all the requested paperwork and documents have been checked and approved, the bank will send a notification of the account opening.
  6. Employment and Immigration Permits (if applicable): If Ltd intends to employ foreign staff, work permits, and residence permits must be obtained.
  7. Compliance with Ongoing Obligations: After incorporation, Ltd must comply with annual reporting, tax filings, and other regulatory requirements, including submitting financial statements as required by law.

Costs

Professional assistance for incorporation typically costs around EUR 2000.  Engaging a local notary to draft and execute incorporation documents ranges from EUR 500 to EUR 1,500. Obtaining the necessary licenses may cost approximately EUR 1000.

Timelines

The Ltd can be incorporated within 3-4 weeks. Obtaining a business license may take several weeks, depending on the complexity of the application and compliance with regulatory requirements. Creating the entire package of documents from scratch can take up to several months.

Closing of a Limited Liability Company (Ltd)

The process of closing Ltd in Zambia for foreign investors involves several legal and administrative steps to ensure compliance with local regulations. The key steps are as follows:

  1. Decision to Dissolve: The shareholders of Ltd. must pass a formal resolution to dissolve the company. This decision is typically made during a general meeting of shareholders and must comply with the company’s Articles of Association.
  2. Appointment of a Liquidator: Once the decision to dissolve is made, a liquidator must be appointed. The liquidator is responsible for managing the dissolution process, settling the company’s debts, and distributing any remaining assets to shareholders. In many cases, the company’s director acts as the liquidator.
  3. Notification to Authorities: An application for company de-registration (Companies Form 44) is filed to the Registrar under section 318 of the Companies Act No. 10 of 2017 by members of a company. The purpose of this form is to request the Registrar to struck off a company from the register for being dormant or defunct. 
  4. Publication of Dissolution: Upon receipt of the Company’s Form 44, the Registrar will cause it to be published in the Gazette or in a daily newspaper of general circulation in Zambia or other media notice of intention to deregister the company as requested. It will update the public register to reflect the company’s dissolution status.
  5. Settlement of Debts and Liabilities: The liquidator is responsible for settling all outstanding debts and liabilities. If the company’s assets are insufficient to cover its debts, the liquidator may initiate bankruptcy proceedings.
  6. Registry Filing: Final liquidation documents must be approved by shareholders and registered to close the entity formally.

Costs

Engaging a local notary to formalize the dissolution process is mandatory. Notary fees can vary but typically range from €300 to €500, depending on the complexity of the dissolution and the notary rates. Hiring legal advisors or accountants to assist with the dissolution process can incur additional costs, typically ranging from €1,000 to €2,000, based on the services required and the firm’s rates.

Timelines

In general, the entire process of dissolving a Ltd in Zambia can range from 3 to 6 months, depending on the company’s specific circumstances and the efficiency of the procedures followed.

Corporation (PLC)

Setting Up a Corporation (PLC)

The process of setting up a Zambia S.A. is relatively straightforward. Here is a step-by-step guide:

  1. Engage a Local Notary: PLC must be established through a notarial deed, so the foreign investor must engage a local notary to draft and execute the incorporation documents
  2. Choose a Name: The proposed company name must be unique and comply with local requirements. The investor can check online the uniqueness. The clearance is done by the Patent And Companies Registration Agency (PACRA), an agency governed by the Patents and Companies Registration Agency Act (2010) and the Registration of Business Names (2011). It costs ZMW 83 (4 EUR) for name search and ZMW 166 (8 EUR) for name reservation (source: World Bank, Doing Business 2018). PACRA | Business Search.
  3. Define Share Capital: There is minimum capital requirement to form a PLC in Zambia – 89 KEUR (2 000 000 ZMW). The declaration of compliance (Companies Form 11) must be signed by the Commissioner of Oaths.
  1. Appoint Directors and Shareholders: PLC in Zambia require a minimum of two directors, with at least half, or at least one for foreign-owned firms, needing to be residents. Foreign investors are allowed to incorporate a sole director company and register a fully owned local company without having any Zambian shareholders (The Companies Act, 2017).
  2. Register the Company in the Patent and Companies Registration Agency (PACRA) online. This process involves submitting the company’s incorporation articles, including details such as the company’s name, purpose, board of directors’ names and addresses, and share capital.
  3. Registering the Zambia PLC in the fiscal authorities as a company that do business in Zambia.
  4. Open a Bank Account (optional): To operate a Zambia PLC, it is necessary to have a bank account in Zambia.
  5. The Zambia PLC must maintain accounting records. These records must be done and seal by a licensed accountant, that not necessary must be from Zambia.  The resident agent must maintain copy of the balances. Balances must be submitted to the resident agent once a year.
  6. Obtain a Business License: Companies obtain a Zambia Business License after applying for any additional sector-specific permits required for your business activity.
  7. Employment and Immigration Permits (if applicable): If PLC intends to employ foreign staff, work permits, and residence permits must be obtained.
  8. Compliance with Ongoing Obligations: After incorporation, the PLC must comply with annual reporting, tax filings, and other regulatory requirements, including submitting financial statements as required by law.

Costs The cost to form a Zambia PLC typically starts around 90 KEUR for the initial registration, which includes government fees. Additional costs can arise for optional services like nominee shareholders, apostilled documents, and courier services. 

Timelines

Registering a Zambia PLC typically takes 3-7 weeks. The exact timeframe depends on factors like the chosen service provider, their efficiency, and any additional requirements for document legalization and courier delivery.

Closing of a Corporation (PLC)

The process of closing an PLC in Zambia for foreign investors involves several legal and administrative steps to ensure compliance with local regulations. The key steps are as follows:

  1. Decision to Dissolve: The shareholders of the PLC must pass a formal resolution to dissolve the company. This decision is typically made during a general meeting of shareholders and must comply with the company’s Articles of Association.
  1. Appointment of a Liquidator: Once the decision to dissolve is made, a liquidator must be appointed. The liquidator is responsible for managing the dissolution process, settling the company’s debts, and distributing any remaining assets to shareholders. In many cases, the company’s director acts as the liquidator.
  2. Notification to Authorities: An application for company de-registration (Companies Form 44) is filed to the Registrar under section 318 of the Companies Act No. 10 of 2017 by members of a company. The purpose of this form is to request the Registrar to struck off a company from the register for being dormant or defunct. 
  3. Publication of Dissolution: Upon receipt of the Company’s Form 44, the Registrar will cause it to be published in the Gazette or in a daily newspaper of general circulation in Zambia or other media notice of intention to deregister the company as requested. It will update the public register to reflect the company’s dissolution status.
  4. Settlement of Debts and Liabilities: The liquidator is responsible for settling all outstanding debts and liabilities. If the company’s assets are insufficient to cover its debts, the liquidator may initiate bankruptcy proceedings.
  5. Registry Filing: Final liquidation documents must be approved by shareholders and registered to close the entity formally.

Costs

Engaging a local notary to formalize the dissolution process is mandatory. Notary fees can vary but typically range from €300 to €500, depending on the complexity of the dissolution and the notary rates. Hiring legal advisors or accountants to assist with the dissolution process can incur additional costs, typically ranging from €1,000 to €2,000, based on the services required and the firm’s rates.

Timelines

In general, the entire process of dissolving PLC in Zambia can range from 3 to 6 months, depending on the company’s specific circumstances and the efficiency of the procedures followed.

A Subsidiary, a Branch and a Representative office

A Subsidiary

Setting up a Subsidiary

The most popular types of subsidiaries for foreign investors in Zambia are as follows:

  1. Private Limited Liability Company (Ltd): This is the most used structure for subsidiaries due to its flexibility, limited liability protection, and suitability for a variety of business activities. Foreign investors prefer Ltd because the liability of shareholders is limited to their contributions, and it requires minimal capital investment.
  2. Corporation (PLC): This structure is often chosen for larger businesses or subsidiaries that plan to raise capital through public offerings. The PLC offers limited liability to its shareholders and is designed for operations requiring significant investments.

These structures allow foreign investors to establish a legal presence in Zambia while catering to their operational, financial, and liability needs. The choice of subsidiary depends on the nature of the business, the scale of operations, and strategic objectives.

Please refer to the relevant parts of the text for the details of incorporating and dissolving, costs and timelines associated.

A Branch

Setting up a Branch

The process of setting up a branch in Zambia for a foreign company involves several steps to ensure compliance with local regulations. Below is an overview:

Authorization from the Parent Company: The foreign company must provide an official resolution or authorization from its board of directors or governing body to establish a branch in Zambia. This resolution should detail the purpose and scope of the branch’s operations.

Appointing a Local Representative: A local representative, who will act on behalf of the branch, must be appointed. This representative is responsible for ensuring compliance with local laws and managing administrative matters.

Preparation of Required Documents: The foreign company must prepare the following documents:

  • A notarized and apostilled copy of the parent company’s articles of incorporation or equivalent documents.
  • Proof of the appointment of the local representative.
  • A detailed description of the branch’s proposed activities in Zambia etc.

Registration with the PACRA: The foreign company must submit the required documents along with a completed registration form. A registration fee of approximately up to €50 applies.

Application for a Business License: The branch must apply for a business license to local authority. This process involves submitting the branch’s registration documents, a description of its intended activities, and the local representative’s details. The application process typically takes 4–6 weeks.

Tax Registration: The branch must register with the Tax Authority to obtain a National Tax ID. This is essential for complying with corporation, turnover, and other applicable taxes.

Opening a Bank Account: A corporate bank account must be opened in the branch’s name to facilitate business transactions. Banks may require the branch’s registration certificate, business license, and identification documents of the local representative.

Compliance with Employment and Immigration Laws (if applicable): If the branch plans to hire employees or bring in foreign staff, it must comply with Zambia’s labor laws and obtain necessary work or residency permits.

Begin Operations: Once all regulatory and administrative steps are complete, the branch is authorized to commence its operations in Zambia.

Costs

Approximately €3,000, depending on the complexity and professional services used.

Timelines

Registration takes 3–4 weeks after submission of documents. Application for a Business License takes 4–6 weeks more.

Closing a Branch

The process of closing a branch in Zambia for foreign investors involves a series of legal, administrative, and financial steps to ensure the branch is properly dissolved and compliant with local regulations. Below is an outline of the process:

  1. Decision to Close the Branch: The foreign company must make the formal decision to close its branch in Zambia. This decision is usually documented through a board resolution or other formal approval from the parent company’s governing body.
  2. Appointment of a Liquidator (if required): If necessary, a liquidator may be appointed to oversee the closure process. The liquidator is responsible for managing the distribution of assets, settling liabilities, and ensuring that all financial obligations are met.
  3. Notification to Authorities: An application for company de-registration (Companies Form 44) is filed to the Registrar under section 318 of the Companies Act No. 10 of 2017 by members of a company. The purpose of this form is to request the Registrar to struck off a company from the register for being dormant or defunct. 
  4. Publication of Dissolution: Upon receipt of the Company’s Form 44, the Registrar will cause it to be published in the Gazette or in a daily newspaper of general circulation in Zambia or other media notice of intention to deregister the company as requested. It will update the public register to reflect the company’s dissolution status.
  5. Settling Liabilities and Financial Obligations: Before the branch can be officially closed, all outstanding debts, contracts, and financial obligations must be settled. This includes paying off creditors, terminating employee contracts, and addressing any pending obligations.
  6. Tax Compliance: The branch must ensure that all taxes, including corporate taxes and other relevant duties, are fully paid.
  7. De-registering with the PACRA of Zambia: The required documents typically include the dissolution resolution, proof of identity of the authorized representative, and any other necessary paperwork.
  8. Cancelling Business Licenses: The branch must cancel its business license. This process ensures that the branch is no longer recognized as an operating entity in Zambia.
  9. Closing Bank Accounts: The branch must close any corporate bank accounts opened in Zambia. Any remaining funds in the accounts are distributed according to the terms of the liquidation or dissolution agreement, after settling all liabilities.
  10. Labor and Immigration Compliance: If the branch employs workers, it is necessary to comply with local labor laws and immigration regulations. This includes terminating work contracts and ensuring any work or residency permits for foreign employees are cancelled.
  11. Final Reporting: Once all legal, financial, and administrative tasks are completed, the liquidator or authorized representative will prepare a final report outlining the dissolution process.
  12. Formal Deregistration and Closure: The final step is the official deregistration of the branch with the PACRA and the completion of the closure process. The parent company will receive confirmation that the branch is officially closed and no longer recognized as an entity in Zambia.

Costs

The estimated costs are between €1,000 and €2,000, depending on the complexity of the closure and the services required.

Timelines

The deregistration process with the PACRA of Zambia typically takes 2-4 weeks after submission of the necessary documents. Obtaining tax clearance can take 2–4 weeks, depending on the tax authority’s workload and the complexity of the tax situation.

Preparing the final report and completing all administrative tasks can take 1–2 weeks after all liabilities are settled and deregistration processes are completed.

A Representative office

Setting up a Representative office

The process of setting up a representative office in Zambia for a foreign company involves completing several legal, regulatory, and administrative steps. It is worth noting that representative offices cannot engage in direct business transactions, banking, or other commercial activities within Zambia. Below is an outline of the process:

Approval from the Parent Company: The foreign company must issue a formal resolution or authorization to establish a representative office in Zambia. This document must outline the purpose and activities of the representative office, which should be limited to non-commercial functions such as marketing, promotion, or liaison activities.

Appointment of a Local Representative: The parent company must appoint a local representative to act as the point of contact for the representative office. This individual will handle compliance with local regulations and manage the office’s day-to-day administrative tasks.

Preparation of Required Documents: The foreign company must prepare and submit the following:

  • A notarized copy of its articles of incorporation or equivalent documents.
  • A resolution authorizing the establishment of the representative office.
  • Identification and authorization details for the local representative etc.

Registration with the PACRA: Since representative offices are non-commercial entities, their registration involves simpler documentation and fees compared to other business structures.

Tax Registration (if applicable): Although representative offices generally do not generate income locally, they may still need to register with the Zambia Tax Authority to confirm their tax-exempt status. This involves filing initial tax documents to clarify the office’s non-commercial nature.

Lease or Rental Agreement for Office Space: The representative office must secure a physical location in Zambia. A lease or rental agreement may be required as part of the registration or licensing process.

Compliance with Employment and Immigration Laws (if applicable): If the representative office employs local or foreign staff, it must comply with labor and immigration laws, including obtaining work permits and adhering to local employment regulations.

Commencement of Activities: Once all registration and administrative requirements are complete, the representative office can begin operations. Its activities must remain non-commercial, focusing on tasks such as market research, client liaison, or promotional activities for the parent company.

Costs

Estimated between €500 and €1,500, excluding office lease and operational expenses, depending on the use of professional services and the specifics of the business.

Timelines

Registration with the PACRA takes 3-4 weeks after submitting the necessary documents.

Closing a Representative office

The process of closing a representative office for a foreign company in Zambia involves completing several steps to ensure compliance with local laws and regulations. Below is an outline of the process:

  1. Decision to Close the Representative Office: The foreign parent company must formally decide to close the representative office. This decision should be documented in a resolution or board decision, outlining the reasons for closure and authorizing the necessary steps.
  2. Notification to Authorities: The parent company must notify the PACRA of Zambia of its intent to close the representative office. This involves submitting the closure resolution, along with identification documents and any forms required.
  3. Settlement of Financial Obligations: The representative office must ensure all financial obligations are settled. This includes paying outstanding bills, terminating service contracts, and ensuring any local debts are cleared.
  4. Tax Clearance: Although representative offices typically do not generate income, they must confirm their tax status with the Zambia Tax Authority. A tax clearance certificate may need to be obtained to confirm there are no outstanding tax liabilities.
  5. Termination of Lease or Rental Agreements: The office lease or rental agreement must be terminated according to the terms of the contract. Any associated costs or obligations, such as restoration fees, must be addressed.
  6. Employee Termination and Immigration Compliance: If the representative office employs staff, all employment contracts must be terminated in compliance with local labor laws. Work or residency permits for foreign employees must also be cancelled with the relevant immigration authorities.
  7. Submission of Final Report: A final report detailing the closure process, including confirmation of financial settlements, tax clearance, and license cancellations, must be prepared. This report may need to be submitted to relevant authorities.
  8. Deregistration of the Office: The final step involves deregistering the representative office with the PACRA of Zambia. Once the deregistration is complete, the office is no longer legally recognized in Zambia.

Costs

Estimated between €500 and €1,000, depending on the complexity of the closure and the services required.

Timelines

Approximately 2 to 4 months to complete the entire process, depending on factors such as lease obligations, employee termination, and tax clearance.

Partnership

Partnership (GP)

Setting Up a Partnership (GP)

Setting up a partnership in Zambia for foreign investors involves several key steps and legal requirements. Below is a general outline of the process:

1. Draft a Partnership Agreement: Draft a partnership agreement that outlines key aspects of the partnership, including the roles and responsibilities of each partner, capital contributions, profit and loss distribution, procedures for decision-making and dispute resolution, and exit clauses. While not legally required, it is strongly recommended to have the agreement notarized.

2. Select a Company Name: The proposed company name must be unique and comply with local requirements. The investor can check online the uniqueness. The clearance is done by the Patent And Companies Registration Agency (PACRA), an agency governed by the Patents and Companies Registration Agency Act (2010) and the Registration of Business Names (2011). It costs ZMW 83 (4 EUR) for name search and ZMW 166 (8 EUR) for name reservation (source: World Bank, Doing Business 2018). PACRA | Business Search.

3. Register the Company in the Patent and Companies Registration Agency (PACRA) online. This process involves submitting the company’s incorporation articles, including details such as the company’s name, purpose, board of directors’ names and addresses, and share capital.

4. Registering the Zambia GP in the fiscal authorities as a company that do business in Zambia.

  1. Open a Bank Account (optional): To operate a Zambia partnership, it is necessary to have a bank account in Zambia.
  2. The Zambia partnership must maintain accounting records. These records must be done and seal by a licensed accountant, that not necessary must be from Zambia.  The resident agent must maintain copy of the balances. Balances must be submitted to the resident agent once a year.
  3. Obtain a Business License: Companies obtain a Zambia Business License after applying for any additional sector-specific permits required for your business activity.
  4. Employment and Immigration Permits (if applicable): If the company intends to employ foreign staff, work permits and residence permits must be obtained.
  5. Compliance with Ongoing Obligations: After incorporation, the company must comply with annual reporting, tax filings, and other regulatory requirements, including submitting financial statements as required by law.

Costs

Legal or consultancy fees for drafting a Partnership agreement are €500–€1,500 (depending on whether it is notarized).

There are no direct costs for opening a bank account, but a minimum deposit may be required (varies by bank).

Timelines

It takes 2-4 weeks to register a partnership. Getting necessary licenses takes 4 – 6 weeks in average.

Closing a Partnership

The process of closing a partnership in Zambia for foreign investors involves several legal, administrative, and financial steps to ensure compliance with local regulations. Below is an outline of the process:

  1. Agreement Among Partners: Partners must agree to dissolve the partnership. This decision is usually formalized through a resolution or amendment to the partnership agreement. The partnership agreement often outlines the dissolution process, including partner approvals and the role of a liquidator.
  2. Appointment of a Liquidator (if required): If specified in the partnership agreement or deemed necessary, a liquidator is appointed to manage the dissolution process. The liquidator’s duties include settling debts, distributing remaining assets, and managing final legal and financial obligations.
  3. Notification to Authorities: An application for company de-registration (Companies Form 44) is filed to the Registrar under section 318 of the Companies Act No. 10 of 2017 by members of a company. The purpose of this form is to request the Registrar to struck off a company from the register for being dormant or defunct. 
  4. Publication of Dissolution: Upon receipt of the Company’s Form 44, the Registrar will cause it to be published in the Gazette or in a daily newspaper of general circulation in Zambia or other media notice of intention to deregister the company as requested. It will update the public register to reflect the company’s dissolution status.
  5. Settling Liabilities: All outstanding debts, obligations, and liabilities of the partnership must be settled. This includes paying off creditors, terminating contracts, and addressing any financial matters pending.
  6. Tax Clearance: The partnership must obtain tax clearance from the Zambia Tax Authority. This involves ensuring that all taxes, such as income tax, turnover tax, and payroll taxes, are fully paid. Tax audits may be conducted during this period.
  7. Distribution of Remaining Assets: After liabilities are settled, any remaining assets are distributed among the partners according to the terms of the partnership agreement or legal provisions.
  8. Final Reporting and Notification: The liquidator (if appointed) or the partners prepare a final report summarizing the dissolution process. This report is submitted to the relevant authorities.
  9. Cancellation of Business Licenses: The business license issued to the partnership must be formally cancelled.
  10. Closing Bank Accounts: Any bank accounts in the name of the partnership must be closed. Remaining funds are distributed to the partners after all financial obligations are met.
  11. Confirmation of Deregistration: Once all steps are completed, PACRA of Zambia issues confirmation of deregistration, officially closing the partnership.

Costs

The costs and timelines for closing a partnership in Zambia for foreign investors depend on the type of partnership, the complexity of its financial obligations, and whether professional assistance is required. Legal and consultancy fees for preparing dissolution documents and agreements typically range from €1000 to €1,500, while liquidator fees, if a liquidator is required, can range from €1,000 to €3,000.

Timelines

It takes approximately 2–4 months to complete the entire process.

Independent Contractor/ Sole Proprietor

Independent Contractor and Sole Proprietor

A sole proprietorship in Zambia is a business run by an individual. The liability is unlimited, which means that the owner is liable for all their assets and debts.

Conducting the sole proprietorship is easier than other business forms as there is only one decision-maker, and the actions can be taken instantly. The proprietorship is also more flexible to the changing environment, unlike large companies.

Honduran citizens can freely register as sole proprietorship, while residents with legal status may do so as long as their residency permits economic activity. Foreign nationals who are not residents must first obtain an immigration or work permit that specifically authorizes them to operate a business or engage in self-employed work before registering.

Setting Up as a Sole Proprietor in Zambia

The process of setting up as a sole proprietor in Zambia involves several steps to ensure compliance with local regulations. Below is an outline of the procedure:

  1. Determine the Nature of Business: The individual must first define the type of business activity they intend to pursue and confirm whether a business license is required.
  2. Choose a Business Name: The individual must select a trade name for their business, ensuring it is unique and does not conflict with existing registered names. This name must comply with Zambia’s naming regulations.
  3. Register a Sole Proprietor in the Patent and Companies Registration Agency (PACRA) online.
  1. Social Security Registration: If the business intends to hire employees or the sole proprietor is required to contribute to social security, they must register in Social Security Administration.
  2. Open a Business Bank Account: Opening a local business bank account is optional but recommended for managing business transactions and maintaining financial records.
  3. Lease or Secure a Business Location: If applicable, the sole proprietor must secure a lease for office or retail space and ensure compliance with regulations for the chosen business location.
  4. Comply with Additional Permits or Requirements: Depending on the nature of the business, additional permits may be required, such as environmental or health permits. These must be obtained before operations begin.
  5. Commence Operations: Once all registrations and licenses are complete, the sole proprietor can officially start operating their business in Zambia.

Costs

The registration fee is typically up to €10, depending on the business’s scope.

Timelines

This process typically takes 2-3 weeks, depending on the time required for obtaining a business license and completing registrations. It is advisable to consult with local professionals to ensure all legal requirements are met efficiently.

Employee Misclassification Risk

Employee misclassification is the practice of companies inappropriately classifying workers as independent contractors rather than employees to avoid costs and administrative burdens associated with the latter. Companies do this to save money on things like benefits, payroll taxes, and unemployment insurance. Employee misclassification refers to an employment situation in which either an employer or an employee intentionally misrepresents the true nature of their working relationship.

The distinction between independent contractors and full-time employees is important because it affects issues such as tax obligations, benefits, and labor laws. Here are some factors that can help distinguish between the two: 

1. Control over Work 

Does the company have the right to direct how, when, and where the worker does his or her job? If the worker is free from control and direction in carrying out the duties under the contract and in practice, then the worker is likely an independent contractor. At the same time, full-time employees typically have more control and are subject to the direction and control of their employer. 

2. Skill Level 

How much training was required for a position?  – The more training a company requires its employees to have, the less likely that company is going to hire an independent contractor. The skill level of an independent contractor is often directly related to the type of work they do, in that there’s a certain expectation that they have a more specialized level of expertise than a full-time employee. An independent contractor is hired with their specialized skills in mind, while a full-time employee is generally hired to perform a specific job function within your company. 

3. Financial Control & Tax Obligations 

Are the business aspects of a worker’s job controlled by an employer or are they in control of their own finances? Tax obligations are one of the major differences between independent contractors and full-time employees. Independent contractors are responsible for paying their own taxes, while employers are required to withhold taxes from the pay of full-time employees. 

4. Benefits 

Full-time employees are often eligible for benefits such as health insurance, retirement plans, and paid time off. When an employee is misclassified, that person may not have access to various benefits, such as health insurance and pension plans. Independent contractors are typically responsible for their own benefits and social security. 

5. Duration of Work 

Full-time employees are typically hired for a longer period of time, while independent contractors are often hired for specific projects or short-term work. 

6. Type of Relationship 

Is there a written contract or agreement that outlines what will be done and how much will be paid? When you treat someone as an independent contractor, they are not part of your company’s payroll. Rather, they operate as freelancers paid for their services—no matter how many hours they log in an average week. Independent contractors are often hired for specific projects or jobs that will end at some point and are not an ongoing source of work. In general, if a person does other work besides what you bring them in for (such as taking additional jobs from other employers or working independently), she’s more likely to be considered an independent contractor than a full-time employee. 

Zambia, like many jurisdictions, applies criteria to determine whether a worker is classified correctly as an employee or an independent contractor. Misclassification can lead to legal and financial consequences, such as back payment of wages, taxes, and penalties. While Zambia does not have a single statutory “employment misclassification test,” labor laws and practices often use the following factors to evaluate the nature of the working relationship:

Control and Supervision

  • If the hiring party exercises significant control over how, when, and where the work is performed, the worker is more likely to be classified as an employee.
  • Independent contractors typically retain autonomy over their work schedule and methods.

Economic Dependence

  • Workers who are economically dependent on a single hiring entity for their livelihood are more likely to be considered employees.
  • Independent contractors usually provide services to multiple clients and are financially independent.

Integration into Business

  • If the worker’s tasks are integral to the hiring party’s business operations, this suggests an employment relationship.
  • Independent contractors often perform specialized or ancillary tasks that are not core to the hiring company’s operations.

Provision of Tools and Equipment

  • If the hiring entity provides the tools, equipment, and materials for the work, the worker is more likely to be classified as an employee.
  • Independent contractors typically use their own tools and resources.

Exclusivity of Relationship

  • An exclusive working relationship strongly indicates employee status.
  • Independent contractors generally work with multiple clients simultaneously.

Contractual Agreement

  • The presence of a written employment contract or a service agreement can indicate the intended nature of the relationship.
  • However, the actual working conditions and practices take precedence over the terms of the contract in determining classification.

Payment Structure

  • Employees are often paid a regular wage or salary, while independent contractors are typically compensated per project, deliverable, or invoice.

Duration of Relationship

  • A long-term, continuous working relationship is characteristic of employment.
  • Independent contractors are usually engaged for specific projects or fixed terms.

Tax and Social Security Contributions

  • Employers are required to withhold taxes and make social security contributions for employees.
  • Independent contractors are responsible for their own tax filings and social security contributions.

Dependency on Employer Resources

  • If the worker depends on the employer’s infrastructure, such as office space or administrative support, they are more likely to be considered an employee.

How Global Employer of Record Can Help Address Worker Misclassification Risk? 

Global Employer of Record (EOR) service providers can help employers operating internationally address the risk of worker misclassification by providing expert guidance and support on compliance with local labor laws and regulations. Here are some ways that EOR service providers can help. 

1. Compliance with Local Laws in 190 Countries 

Global Employer of Record has expertise in local labor laws and regulations and can help employers ensure compliance with worker classification rules in different jurisdictions. They can guide whether a worker should be classified as an employee or an independent contractor. They can also assist with the necessary paperwork and documentation to ensure compliance. 

2. Worker Misclassification Risk Management 

Global EOR service providers can help employers manage the risks associated with worker misclassification by supporting tax compliance, workers’ compensation insurance, and other regulatory requirements. They can also help employers stay up-to-date with changes to labor laws and regulations in different countries. 

3. Flexibility 

A Global EOR can offer flexible employment solutions for international workers, such as short-term assignments, contract work, or permanent employment, depending on the needs of the employer and the worker. This flexibility can help employers manage their workforce more effectively while minimizing the risk of worker misclassification. 

4. Administrative Support 

A Global Employer of Record can handle administrative tasks related to employment, such as payroll processing, benefits administration, and compliance reporting. This can help employers focus on their core business activities while ensuring that their international workforce is managed effectively and compliantly. 

Global EOR can help employers navigate the complex and ever-changing landscape of worker classification laws and regulations across different jurisdictions. By leveraging the expertise and support of a Global EOR, employers can reduce the risk of worker misclassification and ensure compliance with local labor laws and regulations.

Permanent Establishment (PE) Risks

Permanent Establishment (PE) is a concept in international taxation that refers to a fixed place of business through which an enterprise carries out its business activities. A PE can be a branch, office, factory,  warehouse, or any other fixed place of business where the enterprise carries out its business activities, either wholly or partially. When an enterprise operates through a (Permanent Establishment) PE in a country other than its home country, it may become subject to the tax laws of that country.

This means that the income generated by a PE is potentially taxable in the country where the business is located and in the country where the business is incorporated. Only income attributable to local activity should be subject to local tax, which can be determined through a profit attribution exercise. However, consideration must also be given to whether there is an applicable double tax treaty between the two countries. If an enterprise is found to have a PE in a foreign country, it may be subject to tax on the profits earned in that country, as well as penalties and interest for failing to comply with the tax laws of that country. To avoid permanent establishment risk, enterprises must carefully assess their business activities in foreign countries and ensure that they do not create a fixed place of business or exceed the allowable time limit for employee presence in that country. They should also seek professional advice to understand the tax laws of foreign countries where they operate. 

An organization will have a permanent establishment (PE) if any of the following applies: 

  1. The business has a physical presence in a foreign country. 
  2. The business is regularly present through employees or agents. 
  3. A sale is made from a fixed place of business. 
  4. The business is engaged in continuous and systematic activities in the foreign country. 

If an enterprise wants to maintain direct control over everything from accounting procedures to staff management, it may choose to establish a foreign legal entity. This option allows the enterprise greater control over its operations in the foreign country, including hiring and managing employees, implementing its accounting procedures, and maintaining its banking relationships. However, establishing a foreign legal entity can be costly and time-consuming. In addition, it requires the enterprise to comply with the legal and regulatory requirements of the foreign country, which may differ significantly from those of the home country. 

Alternatively, an enterprise may choose to outsource some of its operations, except for managing assets and collecting profits. This option allows businesses to focus on their core competencies while outsourcing non-core activities to specialized service providers. 

Using a Global Employer of Record (EOR) can be an effective way for multinational employers to prevent or address Permanent Establishment (PE) risks. This third-party global employment solution enables compliance with local employment and tax laws while avoiding the establishment of a legal entity and taxable presence in the country.

PEO (Professional Employer Organization) / EOR (Employer of Records)

A Global Employer of Record 

A Global Employer of Record (GEOR) is a B2B service provider that acts as the legal employer of workers on behalf of a business worldwide. The GEOR takes on the responsibility of hiring and managing the employees, including handling payroll, benefits, taxes, and compliance with local labor laws and regulations across the globe. Essentially, a GEOR assumes the role of the employer of the workers in the target countries, while the business retains control over the work that the employees do. 

When a business engages a GEOR, it enters into an agreement with the GEOR that outlines the terms of the relationship, including the services to be provided, the fees to be paid, and the responsibilities of each party. The business typically provides the GEOR with information about the workers it wishes to hire, such as their job duties and compensation, and the GEOR handles the administrative and legal aspects of employing the workers. 

Below are some typical benefits for leveraging the Global EOR model: 

  1. Compliance:  GEOR ensures compliance with local labor laws and regulations in different countries and across jurisdictions. 
  2. Payroll Management: a reliable GEOR provides payroll management services that include tax management, social security, employee benefits, and payment processing. 
  3. Recruitment and Onboarding: GEORs can also manage the recruitment process for you, from sourcing candidates, conducting interviews, and managing the onboarding process. 
  4. Risk Management: Under GEOR, the client company has a reduced risk of exposure to employment-related claims and lawsuits in countries where they have no legal entity. 
  5. Flexibility: It offers flexibility for companies to expand or reduce their workforce in various countries, depending on their business needs. 
  6. Cultural Adaptation: GEORs provide support and guidance on cultural adaptation and local norms, which helps companies better navigate the unique HR complexities in different countries. 
  7. HR Back-Office Support: GEORs offer additional HR back-office support services that include employee handbooks, performance management, and termination support. 
  8. Expertise: GEORs bring expertise in global employment laws and regulations, with a team of local experts in various fields to ensure compliance and legal requirements are met for each employee. 

A GEOR can play a strategic role in advising businesses on which new markets to enter and how to test those markets. With their expertise and knowledge of local employment laws, regulations, and business practices across multiple jurisdictions, a GEOR can help businesses make informed decisions about which markets to prioritize and how to navigate the labour, tax, or immigration law complexities of entering those markets. 

For example, a GEOR can provide businesses with insights into local labor markets, such as talent availability, compensation levels, mandatory benefits, employer burden, ongoing tax intelligence, ongoing compliance intelligence, multi-country payroll budgeting, talent location intelligence, helping them identify the most promising markets to enter and develop a competitive hiring strategy to attract and retain top global talent. 

Additionally, a GEOR can advise businesses on the regulatory and compliance landscape in new markets, including local labor laws, employment tax regulations, and employment-related liabilities. This can help businesses avoid global payroll budgeting errors, mitigate permanent establishment, employee misclassification, and under-taxation risks and ensure compliance with local regulations, avoiding potential negative legal and financial consequences. A GEOR like Acumen International can take on all the responsibilities of hiring an employee for you, including the legal and bureaucratic hurdles, and manage the entire employment process. 

GEOR services can be highly beneficial for businesses expanding abroad, especially if they are looking to establish a presence in a new country quickly and cost-effectively. 

A GEOR can provide businesses with access to local networks and resources, including local vendors, service providers, and industry associations. This can help businesses build relationships and establish a presence in new markets more quickly and efficiently. By working with a GEOR, businesses can focus on their core operations and growth strategies, rather than getting bogged down in administrative and legal details. 

A Global Employer of Record (GEOR) can act as a temporary global employment vehicle for businesses exploring new markets or establishing a legal entity in a target country. By providing access to its in-country employment infrastructure, a GEOR can help ensure a smooth and successful transition to a new legal entity. 

International businesses without subsidiaries may also use this service if they hire only one employee abroad for specialized roles, such as business development managers who scout for new business opportunities in foreign markets or sales directors who manage sales teams working remotely from other countries.  

On the other hand, here are the services not included in GEOR solutions:  

  • Quality control of employees’ work and their promotion; 
  • Decisions regarding contract termination and compensation, except for legal document processing; 
  • Project management.

A company expanding into a new country may find that an GEOR is not the best solution for more than 15 employees. It may consider incorporating an entity and hiring local experts to help manage the payroll process. In that case, the GEOR may only be an interim solution to get employees hired quickly. 

Suppose you plan on hiring foreign workers to provide services or generate sales over $100,000 annually in any country. In that case, you should consider setting up an overseas subsidiary or branch office. Doing so will help to mitigate the risk of permanent establishment. 

Acumen International’s mission is to provide services that make the world a smaller place. It aims to help businesses of all sizes in any industry reach international growth and expansion through various services. 

Looking to hire employees quickly and efficiently in any of 190 countries? Acumen International can help with our Express Global Employment solution. Comprehensive Global EOR Service Portfolio of Acumen International supports employment cycle, guaranteeing compliance and 24/7 support at each of its’ steps: 

Recruitment: talent skilled in highly specialized areas, executive search, contingency workforce 

Global mobility: employee work visa and work permit sponsorship, dependent visa, visa extensions, application for a sponsor license for a foreign national, relocation assistance 

Checks: health, criminal record, background, education 

Onboarding: employee agreement drafting, compliant worker onboarding on your behalf, account setup in the payroll and HR systems, employee data entry and records maintenance, probation periods management 

Payroll administration: in-country registration with statutory bodies, day-to-day payroll management, pay slips with required frequency, accruals, allowances, 13th and 14th salary 

Working time and PTO processing: working hours, overtime, public holidays, annual leave, parental leave, sick leave, additional leave 

Benefits administration: health insurance, workers’ compensation, unemployment insurance, share plans for executives, bonuses and equipment provision, expenses reimbursement and business trips processing, dental treatment. 

Tax administration and reporting: employer and employee taxes and contributions, withholding tax, local tax payments and reporting to local authorities, end of financial year reporting. 

Offboarding: employment agreement termination, dismissal – by the employer, resignation – by the employee, termination by mutual agreement, notice period handling, final settlement and severance payment, de-registration with statutory bodies 

Get in touch with our team, follow the links below: 

https://expressglobalemployment.com/new-market-expansion/

https://expressglobalemployment.com/solutions/why-choose-our-solution/

Taxation

Taxes on corporate income

Value added tax or local sales taxes

Withholding tax

Employment related taxes 

Taxes on corporate income

The corporate income tax (СIT) is paid by resident and non-resident companies on their income.

Resident companies pay corporate tax on activities performed both in Zambia and abroad. Non-residents pay the tax only from profits earned in Zambia.

 The standard CIT rates are:

  • 30% for a resident company of its net taxable income.
  • 10% Farming and agro processing.
  • 15% Profits from public private partnership projects by special purpose vehicles (SPVs) for the first five years.

For small businesses unable to maintain detailed records for tax assessment, a base tax of ZMW 365 (16 EUR) per annum is levied, which is common among market traders. 

Payee

  • Non-individual persons or enterprises (Companies etc)

Due Date

  • Provisional tax payments are required to be made quarterly. The provisional tax liabilities must be based on the estimated taxable income for the current charge year.

Taxable

  • Profit is generally considered to be revenues minus deductible expenditures.

Filing

The CIT rules require taxpayers to submit provisional tax returns in the first quarter of each charge year. Where there is a change in forecast, a revised return may be submitted at the end of either the second, third, or fourth quarters of the charge year. 

Value added tax or local sales taxes

The general VAT rate is 16%. It applies to most goods and services.

Imported standard-rated goods are also subject to the 16% VAT upon entry into Zambia. For services supplied to Zambian customers by non-resident providers, where the services have not been taxed in the originating country, Zambian VAT applies. In such cases, the Zambian customer must account for the output VAT through a reverse-charge mechanism but is initially unable to reclaim the input VAT.

To facilitate input VAT recovery for Zambian customers receiving services from abroad, the foreign supplier may appoint a local tax agent. This agent is responsible for managing output VAT and issuing Zambian tax invoices, enabling the customer to claim input VAT credits.

Withholding tax

Payments of the following items of Zambian-source income may be subject to WHT. The relevant rates under domestic legislation are as follows: 

  • 15% on dividends to Zambian resident
  • 20% on dividends to non-Zambian resident
  • 15% management or consultancy fee to Zambian resident
  • 20% management or consultancy fee to non-Zambian resident
  • 15% on royalties on dividends to Zambian resident
  • 20% on royalties to non-Zambian resident

Employment related taxes

Employee taxes and contributions

Personal income tax

The personal income tax (PIT) is paid by residents and non-resident individuals on their income. The tax system in Zambia is based on a territorial concept of income. Citizens and residents are taxed on income earned from worldwide sources. Non-residents are taxed only on income from Zambia sources, and the tax on any type of income paid to a non-resident must be withheld by the payer.

Income is taxed under a scheduler system. Employment income, including most employment benefits, profits derived from the carrying on of a business by an individual, income from immovable property and the rights to which they are subject, income from moveable assets and

periodic allowances are taxable. Rates are progressive up to 37%.

The rates 

PIT is imposed on employment income per month at the following progressive tax rates: 

  • Income ranges up to ZMW 61,200 (2727 EUR): 0%
  • Income ranges from ZMW 61,201 (2728 EUR) to ZMW 85,200 (3797 EUR): 20%
  • Income ranges from ZMW 85,201 (3798 EUR) to ZMW 110,400 (4920 EUR): 30%
  • Income range above ZMW 110,400 (4920 EUR): 37 %.

The tax residence 

A tax resident is an individual who: 

  • has a place of business in Zambia, or 
  • has a place of residence permanently available to an individual’s family members, or 
  • is physically present in Zambia at least 183 days in any 12-month period 

Social security contributions (sickness, maternity and retirement pensions scheme)

Employers in Zambia are legally required to register with and remit monthly contributions to the National Health Insurance Management Authority (NHIMA), totalling 2% of an employee’s before-tax salary (1% from the employer, 1% from the employee). Registration must occur within 30 days of employment, with mandatory, updated payment processes (SmartPay) effective from 1st February 2026.

Tax treatment for non-residents 

Non-residents are subject to PIT and social security contributions at the same rates that apply to residents.  

Employer taxes and contributions

Social security contributions

In Zambia, employers contribute about 1% in payroll taxes, which typically cover social security, health care, and other statutory benefits.

Employment Regulation

Sources of labor law

Hiring

Working time & time off

Compensation & Benefits

Termination

https://www.parliament.gov.zm/sites/default/files/documents/acts/The%20Employment%20Code%20Act%20No.%203%20of%202019.pdf

Sources of employment law

The main sources of employment law in Zambia are as follows:  

  • the Constitution of the Zambia
  • the international convention(s) 
  • the employment legislation of Zambia
  • the company internal regulations 
  • the collective bargaining agreement(s) 
  • the employment agreement(s) 

The main employment legislation in Zambia includes:  

Industrial and Labour Relations Act, Chapter 269, 1993

Constitution of Zambia, 1991

Labor Code, 2019

Hiring of employees

Types of employment agreements

There are three main types of employment agreements in Zambia:  

  • Indefinite Contracts: These contracts are open-ended with no fixed end date and are the default type of employment in Zambia.
  • Fixed-Term Contracts: These contracts are for a specified period or project, typically up to 2 years. These contracts should be used only when the nature of the work justifies it.
  • Temporary Contracts: These may be used for seasonal or short-term work, but the employer must follow the rules set out in the Labor Code to avoid abuses.


Legislation: The Labor Code, Article 19.

Minimum provisions of the employment agreement

An individual employment contract in Zambia is a contract under which a natural person undertakes to perform tasks or provide personal services to another person, natural or legal, while being in permanent dependence or subordination to the latter and for remuneration.

A written employment contract usually must contain:

  • Employee name, nationality, age, sex, marital status, dependents, profession, and address
  • Employer name and any other relevant particulars
  • Work description
  • Type of contract and start date
  • Where the work will take place, working hours, and the wages and benefits provided by the employer
  • Place and date of the contract and signatures of the contracting parties

Where the terms of a written contract of employment change, the employer shall, with the consent of the employee, revise the contract to reflect the change and provide the employee with a copy of the revised contract of employment. An employer shall, where the employer terminates a written contract of employment, keep the contract for a period of five years after the termination

Legislation: The Labor Code, Article 23.

  • Minimum age

The law sets the minimum age for employment at 15 years.

Legislation: The Labor Code, Article 16.

Non-competition clause 

These clauses restrict an employee from working for a competitor or starting a competing business after leaving the company. Such clauses are not common in the Zambia and may fall under broader contractual principles rather than specific legislative provisions. Courts can annul or moderate non-compete clauses if they are deemed unreasonable or overly restrictive.

Written employment agreement

Where an employer engages an employee for a period of 6 months or more or for a number of working days equivalent to six months or more within a year, the contract of employment shall be in writing.

An employer shall, on engaging an employee, read and explain the terms of the contract of employment to the employee and the employee shall enter into the contract voluntarily and with full understanding of the terms of that contract.

An employee who consents to entering a contract of employment may indicate consent by either signing the contract or affixing, on the contract, a thumb or fingerprint in the presence of a person other than the employer.Legislation: The Labor Code, Article 22.

E-employment agreement

Electronic signatures are legally recognized in Zambia.  

Electronic signatures are legally recognized in Zambia under the Electronic Communications and Transactions Act (ECTA) of 2021, which provides a framework for secure digital, advanced, and standard e-signatures. Valid electronic signatures in Zambia can include symbols, voice, or data processes, ensuring they are admissible in court and cannot be denied legal effect solely due to their electronic form. 

Legislation: The Electronic Communications and Transactions Act, 2021.

Language requirement for employment agreement 

Employment agreements in Zambia must be in English or another language both parties can understand. Where an employee is illiterate or cannot understand the language in which the contract is written, or the provisions of the contract of employment, the employer shall have the contract attested and explained to the employee in a language that the employee understands. 

Legislation: The Labor Code, Article 22.

Hiring checks 

Medical check 

An employer may, prior to entering into a contract of employment with an employee, require the employee to be medically examined by a medical doctor for purposes of determining the fitness of the employee to undertake the work for which the employee is proposed to be employed.

A medical doctor shall, on medical examinations, prepare a duly signed medical certificate in respect of the medical examination, and send the duly signed medical certificate to both the prospective employer and employee.

An employer shall keep a confidential file containing the medical information. An employer shall not disclose information contained to any person in a confidential file, unless the employee to whom the information relates consents to that disclosure. 

Legislation: The Labor Code, Article 17.

Criminal background check

A criminal background check can be conducted with certain restrictions, subject to personal data protection laws.  

References and education background checks

References and education background checks are generally allowed, subject to personal data protection laws and privacy restrictions. Background checks, including references and educational verifications, are part of the due diligence process. These checks help verify an applicant’s background, ensuring they are of good character and have a clear history.

Probation period  

When the provision of a service requires a certain special skill or ability, a clause establishes a probationary period of up to 3 months. An employee on probation may terminate the contract of employment by giving the employer at least twenty-four hours’ notice of the termination.

Legislation: The Labor Code, Article 27.

Working time and time off

Regular working hours

A normal workday shall not exceed 8 hours per day and 48 hours per week.

An employer and an employee, other than a part-time employee, may agree that the employee works more than the stipulated 8 hours without added remuneration if the number of hours covered in a week does not exceed forty-eight hours or a lesser number of hours that may be specified in a contract of employment or collective agreement.

Legislation: The Labor Code, Article 74.

Overtime working hours

Overtime is compensated at a rate of 1.5 times (150%) the normal hourly rate.

Work performed on a public holiday or a weekly rest day is paid at double (200%) the normal hourly rate.

 Legislation: The Labor Code, Article 75.

Annual leave

An employee, other than a temporary or casual employee, who remains in continuous employment with the same employer for a period of twelve consecutive months shall be granted, during each subsequent period of twelve months while the employee remains in continuous employment, annual leave on full pay at a rate of at least 2 days per month.

An employer shall in consultation with an employee, at the beginning of each year prepare an annual leave plan specifying when the leave under this section is to be taken by employees in the undertaking.

Where an employer does not grant an employee leave, or an employer grants the employee leave less than the total leave, the employer shall pay the employee wages in respect of the leave still due at the end of the period of 12 consecutive months.

With the agreement of the employee, employer may pay wages to the employee in lieu of any annual leave due to the employee, and if any leave has been accumulated by an employee whose contract of employment has terminated or expired, the employer shall pay wages to the employee for the period of the accumulated leave.

Legislation: The Labor Code, Article 36.

Additional leave  

An employee is entitled to compassionate leave with full pay for a period of at least twelve days in a calendar year where that employee has:

  • lost a spouse, parent, child or dependent; or
  • a justifiable compassionate ground.

A female employee is entitled to one day’s absence from work each month without having to produce a medical certificate or give reason to the employer.

Legislation: The Labor Code, Article 39, 47.

Sick leave

An employee who is unable to perform that employee’s normal duties due to illness or injury not occasioned by the employee’s default shall notify the employer of the illness or injury and proceed on sick leave on production of a medical certificate from a health practitioner.

Sick leave is paid by the employer. The first 3 months of absence are paid in full, followed by 3 months of half pay.

Legislation: The Labor Code, Article 38.

Parental (maternity/ paternity) leave

Maternity leave

Mothers are entitled to 14 weeks of maternity leave. An additional 4 weeks is given in the event of multiple births. Women who have been employed with the same employer for 24 months are entitled to full pay from the Employer during this period. Following the maternity leave, the worker has the right to return to her prior job position or to a reasonably suitable alternative job role as long as the conditions are no less favourable.  After returning to work, the worker is entitled to 2 nursing breaks per day of 30 minutes each, or one break for 60 mins included within the regular daily working hours.

Legislation: The Labor Code, Article 41.

Paternity leave

Fathers are entitled to 5 continuous working days, paid at full salary by the employer. Eligibility is for those employed with the same employer for at least 12 months before birth. The leave should be used within seven days of the birth.

Legislation: The Labor Code, Article 46.

Parental leave

There is no statutory parental leave in Zambia.  

Public holidays

Public holidays which fall on a Sunday are moved the next Monday.

  • 1 January – New Year’s Day
  • 8 March – International Women’s Day
  • 12 March – Youth Day
  • 3 April – Good Friday
  • 4 April – Easter Saturday
  • 5 April – Easter Sunday
  • 6 April – Easter Monday
  • 28 April – Kenneth Kaunda Birthday
  • 1 May – Labour Day
  • 25 May – Africa Day
  • 6 July – Heroes’ Day
  • 7 July – Unity Day
  • 3 August – Farmers’ Day
  • 18 October – National Prayer Day
  • 24 October – Independence Day
  • 25 December – Christmas Day

Public holidays are not considered as vacation and are therefore extra free days for the employee.

Legislation: The Labor Code, Article 35.

Compensation

Statutory minimum salary

The minimum wage in Zambia varies by sector, with general workers receiving a minimum of ZMW 1,487.00 per month (66 EUR). For specific sectors special salary rates have been approved.

Detailed information by regions and industries at the link:

https://wageindicator.org/salary/minimum-wage/zambia

Legislation: The Labor Code, Article 98.

13, 14th salaries

In Zambia, 13th and 14th-month salaries are not statutory requirements under the Employment Code Act of 2019, meaning employers are not legally mandated to pay them. These payments, often referred to as a “13th cheque” or Christmas bonus, are discretionary and based on company policy or employment contracts. 

Bonuses

Employers in Zambia may offer discretionary or contractual bonuses to their employees. The provision of bonuses is a common practice.

Payroll frequency

The wages of every employee, regardless of the method of payment, must be paid at regular intervals: daily, weekly, biweekly or monthly. Delays in payment must be justified by force majeure.

The payroll cycle in Zambia is usually monthly, with employees being paid as stipulated in employment contract. 

An employer shall on the termination of a contract of employment, pay an employee all wages additional to basic pay including overtime pay and allowances on the date of termination of the contract of employment.

Legislation: The Labor Code, Article 66.

Salary currency

Employees in Zambia are paid in the ZMW.

Legislation: The Labor Code, Article 67.

Benefits

Mandatory benefits

Employees are provided with the following mandatory statutory benefits, which cover: 

  • sickness benefit
  • maternity benefit
  • employment injury benefits
  • disablement benefit
  • severance pays
  • social security benefits

Voluntary benefits

In addition to the mandatory statutory benefits, employers usually provide their employees with the following benefits: 

  • private health insurance 
  • education allowance 
  • food allowance 
  • participation in the company’s schemes (e.g., bonuses schemes), etc. 

Grounds for termination

Employment relations can be terminated: 

  • at the employer’s initiative 
  • at the employee’s initiative 
  • by mutual consent of the parties 
  • on expiry of a fixed-term employment agreement 
  • by the completion of the work covered by the contract
  • by the extension of any of the causes for contract suspension for a term exceeding the maximum authorized in the Labor Code, at the request of the employee

Employment relations can be terminated at the employer’s initiative based on the different grounds:

  • with notice 

Employment agreements of indefinite terms shall only be terminated after giving the minimum notice. The notice periods shall not be served on the employee while he is on leave. In Zambia, termination can occur for just causes such as economic, technical, or organizational reasons, serious misconduct, repeated misconduct, or force majeure.

  • without notice 

In Zambia, terminating employment without notice is possible where an employee is guilty of gross misconduct inconsistent with the express or implied conditions of the contract of employment. Where an employer summarily dismisses an employee without due notice or payment of wages in lieu of notice, the employer shall, within four days of the dismissal, submit to a labour officer in the district in which the employee was working, a written report of the circumstances leading to, and the reasons for, the dismissal.

Employment relations can be terminated at the employee’s initiative based on the following grounds: 

  • with notice 

In Zambia, termination can occur for just causes such as economic, technical, or organizational reasons, serious misconduct, repeated misconduct, or force majeure.

  • without notice 

In the Zambia employees can terminate an employment contract at their own initiative by immediately canceling the agreement during a probationary period.

Notice period

In Zambia, employment termination notice periods are primarily governed by the Employment Code Act No. 3 of 2019 and depend on the contract duration: 24 hours for contracts under one month, 14 days for 1–3 months, and 30 days for over 3 months. Notice must be in writing for contracts exceeding six months, with payment allowed in lieu of notice. 

Employment relations can be terminated by mutual consent of the parties, provided that the employee’s consent is documented in writing. 

Employment relations are terminated on the expiry date of the fixed-term employment agreement or when the project is ended. Fixed-term employment agreements are not subject to the requirements regarding advance notice and termination compensation. 

Legislation: The Labor Code, Articles 49-58.

Severance payment

In Zambia, severance pay is required for specific terminations. Key provisions include: 25% of total basic pay earned during a fixed-term contract, or 2 months’ basic pay for each completed year of service for redundancy or death in service. It is not generally paid for misconduct. 

Legislation: The Labor Code, Article 59.

Immigration procedure for expatriate employees

Permits to hire expatriate employees

In Zambia, the work permit system is typically administered by the Zambia Department of Immigration.

Here are some general types of work permits that might be available:

  • Temporary Employment Permit is issued to any business visitor who intends to remain in Zambia for a period exceeding thirty (30) days. The validity of the permit should not exceed six (6) months within a period of twelve (12) months.
  • Employment Permit is issued to a foreigner who enters the country to take up employment for a period exceeding six (06) months. It can be extended for periods up to a maximum of 10 years. It is issued to a foreigner who is:

1) Employed by the Government of Zambia or a statutory body.

2) Employed by the private sector, Non-Governmental Organisations (including a person employed as a volunteer) or a religious organization.

3) The spouse and children, over twenty-one years of a foreigner may be issued with Employment Permits if they are to be employed in the family business.

  • Investor’s Permit is issued to a foreigner (above the age of 18 years) intending to establish a business or invest in Zambia or who has established or invested in a business in Zambia or is joining an already existing company.
  • Residence Permit confers permanent residence to a holder and is issued to a foreigner who: has held an Employment Permit for a continuous period exceeding 10 years; is a dependant (who is 21 years old or below) of someone with a valid Residence Permit or an established resident; has held an Investor’s Permit for more than 3 years; has held a Spouse Permit for at least five 5 years; is a person (irrespective of age) born from a citizen; is a dependant of foreign origin under the care of a citizen; has intention to retire in Zambia and showing proof of sufficient funds (pension, irrevocable annuity, retirement account); and a holder of an Entry Permit (provided there are reasonable and justifiable grounds for the delayed change) etc.

The permit authorises the holder to enter and re-enter into and to remain within Zambia until the permit expires. However, if it is a first time application and the successful applicant requires a visa to enter Zambia, such a person is still required to apply for a visa to enter the country to collect the permit.

The employer is typically responsible for initiating the work permit process, and the process may involve submitting various documents, including a job offer, proof of qualifications, and possibly medical examinations.

Procedure & Timeline

The procedures and timelines for hiring expatriate employees in Zambia typically involve several steps.

However, it’s crucial to note that these processes can be subject to change, and it is recommended to check with the the Zambia Department of Immigration or seek advice from legal professionals for the most up-to-date information. Here’s a general outline of the procedure:

Procedure:

Job Offer: Letter from employer stating the following: type of employment, wages (daily, weekly, monthly); accepting responsibility for employees.

Permit Application:

  • The employer initiates permit application process.
  • The employer submits the necessary documents to the Zambia Department of Immigration

Document Submission:

  • The required documents may include the job offer, proof of the expatriate’s qualifications, and possibly medical examinations.

Review and Approval:

  • the Zambia Department of Immigration reviews the application.
  • If approved, the residence permit is issued.

Medical Examination: Some categories of workers may need to undergo a medical examination.

Security Clearance: Depending on the nature of the job, a security clearance may be required.

Issuance of Work Permit: Once all requirements are met, the work permit is issued.

Timeline:

The application must be submitted within the first 90 days of entering the country; if necessary, this period can be extended to another 30 days. Delays can complicate the process and lead to fines, so it is better not to leave them to the last minute.

Note:

  • Different categories of workers (e.g., regular employees, self-employed individuals, artists) may have specific requirements and procedures.
  • It’s important to stay informed about any changes in immigration and labor laws in Zambia.

Documents required for the application

The documents required to hire expatriate employees in Zambia can vary based on the type of employment and the specific circumstances.

However, here is a general list of documents that are commonly required during the work permit application process:

  • Covering letter from employer addressed to the Director General of Immigration
  • Employment contract or Letter of offer
  • Police clearance from country of residence
  • Curriculum Vitae
  • Registration certificate from the relevant professional body in Zambia (where required)
  • Certified copy of qualifications (academic, professional)
  • Copy of marriage and birth certificates (where available)
  • Certified copy of valid passport (bio data & last endorsement stamp for Zambia)
  • Certified Certificate of Share Capital and List of Directors
  • Copy of succession plan which shall include an understudy training program to be conducted by the foreign national to transfer knowledge and/or skills to the Zambian worker
  • A copy of the Certificate of Incorporation
  • In the case of Construction, Mining Sector, ICT, Engineering and other project-based engagements, a covering letter specifying the project on which the expatriate would be employed, copy of letter of award specifying completion date and value of project must be submitted
  • Original Press advertisements which have appeared in two leading newspapers in A5 size. Name of Newspaper and date of advert should be clearly visible on the press advert and outcome of selection exercise must also be submitted
  • One recent passport size photograph and
  • Prescribed fee.

Employment contract

An employment contract for a migrant worker in Zambia must be in writing and signed in triplicate, specifying health conditions, beneficiaries, repatriation, and jurisdiction for disputes. Furthermore, it must comply with current Zambia labor regulations and ILO international conventions. It is essential that employers ensure compliance with these regulations and with immigration and foreign law.

Costs

Payment of the appropriate fee for a residence permit is up to 20 000 ZMW (890 EUR).

Work visa

To legally arrival to Zambia for working purpose, a work visa is also required, which allows the right to stay in the country for the entire period of employment, but not more than the duration of its validity.

There are the following types of visas:

  • Business Visa: Short-term business activities (meetings, negotiations) up to 90 days. Key requirement – letter from employer/company, without work authorization.
  • Single Entry Visa – this type of Visa allows the holder to enter Zambia only once during the validity of the visa.
  • Specialized Professional Visa: Issued to professionals with specialized skills, such as engineers, healthcare workers, or educators, whose expertise is in demand within Zambia.

To apply for a Zambia’ visa, person typically needs the next documents:

  • passport
  • recent passport-size photo
  • copy of the employment contract from your sponsor
  • valid medical health screening report
  • employment contract etc.

The processing time of a Zambia visa differs from applicant to applicant. The estimated processing time is 10 business days. However, due to high demand and secondary checks, you might need to wait a little longer.

Zambia offers visas with a fee up to 50 USD (41 EUR). Fees are subject to change, so it’s best to verify the most current costs on the official source or at the port of entry.

https://www.zambiaimmigration.gov.zm/permit-types/#1551252939434-6acd31c6-6af4

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