Update #4 (May 7, 2016): I have updated calculator to reflect the NAPSA 2016 ceilings.
Update #3 (January 26, 2015): I have updated calculator to reflect the NAPSA 2015 ceilings.
Update #2 (November 3, 2014): I have updated calculator to reflect the NAPSA 2014 ceilings.
Update #1 (August 1, 2014): I have updated post with 2014 tax bands; changed to new Kwacha ISO code& replaced embedded spreadsheet with interactive HTML form.
There has been a lot of hype [1, 2, 3] about Zambia’s supposedly “Pro-Poor” 2012 budget… and rightfully so –it is perhaps the one most significant piece of evidence linking the Patriotic Front [4] to their Socialist agenda. The one thing everyone seems to be talking about though is the new PAYE Tax bands; and effective April 1, 2012 the new personal tax rates in Zambia be as depicted in table below.
TL;DR
I have set up a PAYE tax calculator below that can be used to compute the PAYE tax when inputed with specific figures. Feel free to replace the required input values with your own. Please leave a comment if you have a suggestion or if you notice an anomaly.
Income Tax Bands
| Income Tax Bands (ZMW) | Tax Rates (%) |
|---|---|
| 3,000.00 and Below | 0% |
| 3,000.01 - 3,800.00 | 25% |
| 3,800.01 – 5,900.00 | 30% |
| 5,900.00 and Above | 35% |
ZRA Tax Computation Guide
The constitution of Zambia—under the PAYE system—mandates employers to deduct gross payments using the following variables
- Total gross pay
- Tax bands
- Statutory deductions (e.g. NAPSA)
A key thing to bare in mind is that all statutory deductions are removed before the tax calculation. For instance if my greedy employers pay me ZMW 4,000.00 every month then the tax calculations would be as follows:
- STEP 1: Deduct NAPSA (mandatory statutory contribution)
| Amount (ZMW) | |
|---|---|
| Gross Income | 4,000.00 |
| NAPSA Deduction | 200.00 (5%) |
| Taxable Amount | 3,800.00 |
- STEP 2: Compute Tax Deductions
| Tax (ZMW) | |
|---|---|
| Initial 3,000 will be taxed at 0% | 0 |
| Next 745 of your remaining amount will be taxed at 25% | 200.00 |
| Next 0 of your remaining amount will be taxed at 30% | 0 |
| Balance of your remaining amount will be taxed at 35% | 0 |
| Total Tax payable | 200,00 |
- STEP 3: Compute Take Home
| Amount (ZMW) | |
|---|---|
| Gross Pay | 4,000.00 |
| NAPSA | 200.00 |
| PAYE | 200.00 |
| Take Home | 3,600.00 |
More money in your pockets????
References
[1] https://www.facebook.com/groups/149657968431200/
[2] http://www.lusakatimes.com/2011/11/11/2012-full-budget-address-speech-finance-minster-alexander-chikwanda/
[3] http://www.zambianwatchdog.com/archives/26116
[4] http://www.patriotic-front.com/
[5] http://www.mlss.gov.zm/upload/SI/SI%20general.pdf
