A shake up is expected in Zambia’s property market following the enactment of the Property Transfer Tax (Amendment) Act No. 27 of 2024 (PTT Act) on 1 January 2025.
The revised law introduces adjustments to tax rates on key asset transfers, provides a clearer legal framework for intellectual property (IP), and expands tax relief for foreclosed properties.
This article outlines the key changes within the evolving landscape of property transfer tax (PTT) and its implications for various business transactions.
Tax hike on land, shares, and exploration licences
One of the notable changes in the amendment is the increase in PTT from 5% to 8%. The new rate applies to land, shares, IP, and exploration licences. In practice, the increase in PTT will have some cost implications for different business activities, including the acquisition of land, transfer of shares, and mineral exploration.
This is the first increase in the PTT on land and shares in more than five years. The 2023 National Budget proposed a rise from 5% to 7.5% in the PTT on the sale or transfer of land, shares, and intellectual property, as well as the sale or transfer of mining rights owned by exploratory companies, but this proposal was never implemented.
Clarification of the IP framework
The PTT Act refines the definition of IP by directly linking patents, trade marks, copyright and industrial designs to their specific legislation. This change removes ambiguities and makes it easier for businesses and individuals to identify and protect their IP rights.
However, while the revised definition brings certainty, some emerging forms of IP, such as digital innovations, may not be fully covered under the current framework.
Tax relief for foreclosed property transfers
Previously, only financial service providers were allowed to calculate PTT based on the actual price received when selling foreclosed assets. The amendment extends this benefit to moneylenders and building societies, recognising that distressed assets are often sold below market value.
This change could encourage more activity in Zambia’s foreclosure market, attracting buyers looking for discounted property deals while ensuring fairer tax treatment for financial institutions.
Conclusion
Zambia’s legislative landscape with respect to property is gradually evolving, and while not usually an issue at the forefront of buyers’ minds, businesses wishing to invest in Zambia’s properties should seek tax and structuring advice at the outset of any transaction to ensure that they complete the purchase through the optimum ownership structure for them, based on their objectives and circumstances.
