Withholding Tax

Withholding

Withholding Tax

Withholding tax (WHT) is in other terms known as retention tax.

Retention tax is an income tax that is to be paid to the government through a tax collection agency, in this instance the Zambia Revenue Authority (ZRA). According to ZRA, Withholding Tax is not a tax but a means of collecting that tax and is applicable to rentals. This tax is paid by the payer (the tenant) of the income rather than by the recipient of the income (the landlord).

Rent

In layman’s terms rent can be viewed as a tenant’s regular payment to a landlord for the use of property or land. The property or land from whose rentals the Withholding Tax is deductible must be situated and located in Zambia.

Rate of Withholding Tax

The rate of Withholding Tax in Zambia is pegged at 15%. The tenant is responsible for deducting Withholding Tax from gross rentals on the date of accrual.

Who is Responsible For Remitting WHT

The tenant should remit the amount so deducted to the Zambia Revenue Authority. According to a statement from ZRA, “Although it is a primary responsibility of the tenant to withhold tax and remit to the ZRA, landlords may apply to the Commissioner-General for approval to receive gross rentals and account for the Witholding Tax on behalf of their tenants subject to the conditions that the Commissioner-General may prescribe.”

Landlord’s Obligations

  • Register for income tax and obtain a Taxpayer Identification Number (TPIN).
  • Provide their TPIN to the tenant.
  • Submit a provisional tax return (applicable to taxpayers registered for income tax)
  • Submit an annual income tax return making full declaration of the rental income and other income received during the year.

Tenant’s Obligations

  • Register for withholding tax and obtain a Taxpayer Identification Number (TPIN).
  • Submit, to the Commissioner-General, a withholding tax return within 14 days following the month of payment of the rentals.
  • Deduct and pay the withholding tax amount within 14 days following the month of deduction.
  • Give a copy of the receipt in respect of the payment and certificate of deduction to the landlord within 14 days of making the payment.

Additional Information

Conclusion of the year

Legally, it is required to submit their Income Tax Returns. These will contain all sources of income, including rental income.

The Withholding Tax deducted is taken into account before arriving at the final tax.

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