Starting a Business in Zambia as a Foreigner
Starting a Business in Zambia as a Foreigner
Zambia At A Glance
Starting a Business in Zambia as a Foreigner – Zambia is a huge, landlocked, resource-rich country in the heart of Southern Africa with sparsely populated area. Eight nations (Angola, Botswana, the Democratic Republic of Congo, Malawi, Mozambique, Namibia, Tanzania, and Zimbabwe) share its border, providing an increased market for its goods. The current population of Zambia is 19,274,597. Zambia is ranked 85 among 190 economies in the ease of doing business, according to the econometric models, the Ease of Doing Business in Zambia is expected to trend around 85.00 in 2021 and 87.00 in 2022.
Reasons for Starting a Business in Zambia as a Foreigner
Zambia is an ideal investment location due to its central and hub location in the region, as well as a combination of the following key strengths:
- Economic climate that is favorable to investors
- Peaceful and a stable political system.
- Investors are guaranteed and secure because they have legal rights to full and market value compensation.
- Natural resources abound, providing excellent investment and trade opportunities.
- Private sector that is thriving
- enticing investment incentives
- Profits can be repatriated indefinitely.
- Internationally recognized banking, legal, and insurance services, as well as a stock exchange market, are all available.
- Duty-free access to markets in the region, wider Africa, the EU, and the United States
Where Do I Register Company In Zambia?
The Companies Act No. 24 of 2011, as implemented by the Patents and Companies Registration Agency, governs business registration in the Republic of Zambia (PACRA). PACRA is the starting point for all businesses.
Can A Foreigner Register A Company In Zambia?
All sectors in Zambia are open to foreign investors and no restrictions on the percentage of equity they might hold and foreign investors are entitled to various incentives
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). Investors commonly register their local firm as a limited liability company.
Company Registration Requirements in Zambia
Company resident / Local Company registration in Zambia
According to the Companies Act No. 24 of 2011 of the Laws of Zambia, one can incorporate a limited company by shares in the Republic of Zambia. The law requires a minimum of two shareholders and a maximum of 50 shareholders (as per articles of association) for one to incorporate a limited liability company by shares. The minimum required authorized capital for a private company stands at ZMK 15,000 ($1,500).
Documents and information required:
After successful name clearance procedure, the following forms are to be filled in and submitted to PACRA:
- Acceptance letter for name clearance
- Application for incorporation – Form 2
- Declaration of consent to act as a director or secretary – Form 5
- Declaration of compliance – Form 11
- Articles of association.
- For businesses registered after 2020, the TPIN is generated as soon as you finish the registration with PACRA. You should check your email for the credentials and log into ZRA account to complete your Registration
Non – resident Company/ Foreign Company / Branch company registration in Zambia
Because the law does not require an overseas company to establish a local presence, it can trade directly within Zambia. However, rather than trading through another entity, it may be necessary to establish a branch in order to increase the business’s credibility with its customers.
When an overseas company registers as a foreign company in Zambia, its branch operations are subject to Zambian law, including the Companies Act and tax laws.
Registration of a foreign company is governed by the Companies Act No. 24 of 2011 of the Laws of Zambia. The following document are required for company registration:
- Three preferred names of the proposed company
- A Description of the activities of the Business/ Company
- Certificate of Incorporation of the Main Company
- Copies of Travel Passport of all the directors
- Passport size photographs of all the directors
- Postal, Physical and e-mail address, telephone number and occupation of all directors of the proposed company
How is the Tax regime in Zambia?
The Tax Regime in Rwanda is Quite Straight forward with the Tax rate for personal Income ranging from 0 to 37.5 %, Corporation Tax is at 35% and Vat at 16%.
Are there any restrictions on the minimum and maximum number of members?
The Companies Act requires that a company has a minimum of two members and a maximum of 50.
Are there restrictions on the transfer of shares in private companies?
The Company’s Act does not provide for any restrictions on the transferability of shares. However, the articles can place restrictions on the transfer of shares if there is agreement in writing by all shareholders to that effect.
Are there restrictions on foreign ownership or occupation of real estate, or on foreign guarantees or security for ownership or occupation?
The Lands Act, Chapter 184 of the Laws of Zambia, places restrictions on foreign nationals’ ownership of land. In addition to non-Zambians who are permanent residents, only Zambian incorporated companies (with 75 percent of the shares held by Zambian nationals) can hold land. Investors who meet the requirements of the Zambia Development Agency Act may also acquire land during the term of their investment license.
There are, however, no restrictions on foreign nationals or foreign entities occupying land on a long lease.
Are grants or tax incentives available for companies establishing a company in Zambia’s jurisdiction?
Tax incentives are set out under the Zambia Development Agency Act (ZDA Act). The incentives are either fiscal or non-fiscal. New and existing projects undergoing modernization will both be considered provided that they meet the relevant investment thresholds.
Investors who invest not less than US$500,000 in a Multi Facility Economic Zone (MFEZ) or in a priority sector or product and invest in a rural enterprise under the ZDA Act, are entitled to the following fiscal incentives:
- 0% tax rate on dividends for five years from year of first declaration of dividends.
- 0% tax on profits for five years from the first year of operation for manufacturing projects in a rural area, MFEZ and Industrial Park.
- 0% import duty rate on capital goods, machinery (including specialized motor vehicles) for five years.
What prior approvals (for example, work permits, visas, and/or residency permits) do foreign nationals require to work in your jurisdiction?
Anyone who is not a Zambian citizen and wishes to work or establish a business in Zambia must adhere to the Immigration and Deportation Act, Chapter 123 of the Zambian Laws. The Chief Immigration Officer is in charge of administering and enforcing this Act. The Immigration and Deportation Act specifies the various types of permits that must be obtained based on an immigrant’s primary reason for entering the country. The Immigration and Deportation Act requires a foreign national seeking employment to apply for an employment permit with the Chief Immigration Officer.
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