by David Kamailo 
The Zambia Revenue Authority (ZRA) has announced increases to both Property Transfer Tax and Rental Income Tax, effective from 1st January 2025. This marks the first change to rental income tax since its introduction in 2022, signalling a potential shift in the government’s revenue collection strategy.
Key Changes:
- Property Transfer Tax: This tax, applied to sales of land, buildings, and shares, has increased from 5% to 8%. This means that for every K100,000 of a property’s value, the transfer tax will now be K8,000, up from K5,000.
- Rental Income Tax: Landlords earning above K800,000 annually in rental income will now face a higher tax rate, rising from 12.5% to 16%. This change only affects those in the higher income bracket, while the 4% rate remains for those earning K800,000 or less.
Implications for Sellers, Buyers, Landlords, and Renters:
- Sellers: May need to adjust asking prices to accommodate the increased transfer tax, potentially impacting property values.
- Buyers: Should factor in the higher transfer tax when budgeting for property purchases, increasing the overall cost of acquisition.
- Landlords (High Income): Will see a reduction in net rental income due to the higher tax rate, potentially influencing rental prices.
- Renters: May face increased rental costs as landlords pass on the increased tax burden, particularly in the higher-end rental market.
Tips for Navigating the Changes:
- Sellers and Buyers: Consult with real estate professionals and legal advisors to understand the full implications of the increased property transfer tax and negotiate accordingly.
- Landlords: Ensure accurate record-keeping of rental income and expenses to facilitate tax compliance. Explore options for optimizing tax liabilities within legal frameworks.
- Renters: Engage in open communication with landlords regarding potential rent adjustments and seek clarification on how the tax changes may affect existing lease agreements.
ZRA’s Role in Rental Income Tax:
It’s important to remember that the ZRA views rental income tax as the landlord’s responsibility. While tenants may be appointed as agents for tax collection in some cases, the ultimate liability lies with the landlord. Landlords are obligated to register with ZRA, obtain a Taxpayer Identification Number (TPIN), and submit monthly returns along with tax payments within 14 days of receiving rental income.
Looking Ahead:
These tax increases may signal a broader trend towards increased taxation on property and rental income in Zambia. Staying informed about tax regulations and proactively managing finances will be crucial for all stakeholders in the property market.
For information, please contact ZRA:
Call Centre: 4111
Email: [email protected]
Website: www.zra.org.zm
David Kamailo
CEO
Manyumba Properties Ltd.
