By Cecilia Chiluba/Zambia/Lusaka
Zambia’s total tax expenditures rebounded in 2024 after a sharp decline in 2023, with the recovery largely driven by measures aimed at attracting investment and promoting sectoral growth.
According to the 2024 Tax Expenditure Report released by Ministry of Finance and National Planning, incentives classified under “Attracting Investment Broadly” surged by K2.15 billion in 2024, while those focused on “Encouraging Growth of a Sector” rose by K1.82 billion.
“Together, these two categories accounted for the bulk of tax expenditures during the year, underscoring Government’s continued reliance on fiscal incentives to stimulate economic activity,” the report states.
Tax expenditures had fallen significantly in 2023 across major tax heads. Import and export duty-related expenditures declined by 61 percent between 2022 and 2023, dropping from K10.5 billion to K4.1 billion.
However, they recovered strongly to K8.2 billion in 2024. Similarly, corporate income tax (CIT) expenditures fell by 62 percent in 2023 before rebounding to K2.8 billion in 2024, although this remained below levels recorded in 2021 and 2022.
Excise-related tax expenditures recorded notable growth, increasing by 43 percent between 2023 and 2024, while withholding tax exemptions contributed K146 million in 2024.
The Report further indicates that businesses continued to be the primary beneficiaries of tax expenditures, accounting for between 82 and 88 percent of the total. Business-related tax expenditures peaked at K15.0 billion in 2022, declined sharply to K5.8 billion in 2023, and later surged by 96 percent to K11.5 billion in 2024.
Further, tax expenditures benefiting charities and development institutions remained relatively stable at between K1.2 billion and K1.5 billion annually, representing about 12 percent of the total in 2024.
In contrast, tax expenditures accruing directly to individuals remained negligible, consistently accounting for less than 0.2 percent of the total, mainly through personal income tax (PIT) provisions.
By sector, manufacturing continued to dominate, accounting for the largest share of tax expenditures.
The sector’s tax expenditures reached K13.2 billion in 2022 before declining by 78 percent to K2.9 billion in 2023, then recovering to K5.7 billion in 2024.
Mining and quarrying also recorded a significant increase, rising from K2.3 billion in 2023 to K4.9 billion in 2024.
Human health and social work activities remained stable at between K1.3 billion and K1.5 billion per year, while all other sectors individually accounted for less than 5 percent of total tax expenditures.
Overall, the data show that Zambia’s tax expenditure framework remains heavily focused on promoting investment and supporting sectoral growth, with secondary emphasis on welfare and export promotion.
