Employer Tax Contributions

Tax Type	Rate	Base
PAYE (Pay As You Earn)	Progressive rates (0% - 37%)	Employee's taxable emoluments
NAPSA (National Pension Scheme Authority)	5% (Employer)	Employee's gross earnings, subject to a monthly ceiling (e.g., K8,541 for assessable earnings)
NHIMA (National Health Insurance Management Authority)	1% (Employer)	Employee's gross earnings or basic salary
Skills Development Levy (SDL)	0.5% (Employer)	Gross emoluments (excluding gratuities and redundancy packages)

Filing & Compliance

• PAYE, NAPSA, NHIMA, and Skills Development Levy contributions are due by the 10th of the month following the payroll month.
• Employers must deduct PAYE from employee earnings and remit to the Zambia Revenue Authority (ZRA).
• Employers are responsible for calculating and remitting both employer and employee portions for NAPSA and NHIMA.

In Zambia, employee tax deductions primarily revolve around the Pay As You Earn (PAYE) system, which encompasses various mandatory deductions.

PAYE (Pay As You Earn)

PAYE is the core tax deduction system for employees in Zambia. Employers calculate, deduct, and remit the tax to the Zambia Revenue Authority (ZRA). Emoluments subject to PAYE include:

• Salaries and wages
• Overtime pay
• Bonuses and profit sharing
• Fees, commissions, and allowances
• Leave pay
• Cash benefits (excluding specific exemptions like subsistence allowances)

The PAYE system uses progressive tax bands and rates, applied to the employee's total emoluments. While the specific tax bands and rates for 2025 are yet to be officially released, they are anticipated to be announced during the 2025 budget. Tax is calculated based on these bands, and the net pay disbursed to the employee is the gross pay less the calculated PAYE tax.

Other Deductions

Beyond PAYE, several other deductions may apply:

• NAPSA Contributions: Both employers and employees contribute 5% of the employee's earnings to the National Pension Scheme Authority (NAPSA), the public pension system.

• Other Statutory Deductions: While details are limited, the sources indicate other statutory deductions might exist. Further investigation may be necessary to ascertain these specific deductions.

Deductions Not Allowed

Certain expenses are specifically not deductible for employees under Zambian tax law:

• Alimony payments
• Mortgage interest expenses
• Zambian taxes paid on employment income

It's important to note that while business expenses are generally deductible for businesses, this test is difficult to meet for employee-incurred expenses.

Important Considerations for Employers

Employers have several key responsibilities regarding employee tax deductions:

• Accurate Calculation and Deduction: Employers must correctly calculate and deduct PAYE and other statutory deductions from each employee's emoluments.

• Timely Remittance: Deducted taxes must be remitted to ZRA promptly to comply with legal obligations.

• Annual PAYE Returns: Employers are required to submit annual PAYE returns to ZRA on the prescribed form at the end of each tax year.

Additional Information

Charitable contributions to organizations approved or owned by the Zambian government are deductible up to 15% of the taxable income.

When employing a person with a disability, a fixed deduction of ZMW 2,000 can be claimed.

This information is based on the latest available data as of February 5, 2025, and might be subject to changes based on updated regulations or official announcements. It's essential to verify the latest guidelines from the ZRA for the most current information.