## Pay as You Earn Calculator – Zambia

Update (January 25, 2017): I have updated calculator to reflect 2017 tax bands and NAPSA ceilings.

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 (%)
3,300.00 and Below0%
3,300.01 – 4,100.0025%
4,100.01 – 6,200.0030%
6,200.00 and Above37.5%

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 a proportion of statutory deductions are removed before the tax calculation—the amount deducted is either 15% of total statutory contributions or ZMW 255.00, whichever is the minimum. 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 Statutory Contributions (Mandatory statutory contribution)
Amount (ZMW)
Gross Income4,000.00
Max. Allowed Deduction255.00
Taxable Amount3,745.00
• STEP 2: Compute Tax Deductions (Using taxable input from STEP 1 as input)
Tax (ZMW)
Initial 3,300 will be taxed at 0%0
Next 445 of your remaining amount will be taxed at 25%111.25
Next 0 of your remaining amount will be taxed at 30%0
Balance of your remaining amount will be taxed at 37.5%0
Total Tax payable111.25
• STEP 3: Compute Take Home
Amount (ZMW)
Gross Pay4,000.00
NAPSA (5% of Gross Pay with Ceiling of ZMW 894.61)200.00
PAYE111.25
Take Home3,688.75

References

Categories: Zambia
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• Phiri

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• Beyard Mututa

Wel, the new tax band seems extremely impresive and i believe will lead to more money in the pocket. On the contrary, it means reduction of the most needed government revenue – ‘prima facie’, but new tax measures have been put in place to suplement the created gap. More effort to be directed at bringing on board the majority of the zambian people in the informal sector who are not taxed! I strongly support the new government’s policies and I hope it will not divert from them.

• AM

My more money in the pocket is only 6.3%, I am not that excited.

• @36ada401386c4c846c6d9e0475e7426b:disqus Its better than nothing 😉 Its a step in the right direction.

• Lewis Chola

Hi Lighton

If the tax threshold has been increased from 1m to 2m, doesnt mean that our net pays will go up by 1m?? Please explain if this is not the case

• @55737a7f13c960ef20843f838be66cd0:disqus sorry I took long. No it does not mean that net pays will go up by 1m –the thresholds are not linear. The calculation is done in bands. It does, however, mean that your net pay will increase; the factor at which it will increase largely depends on your gross pay.
I hope this helps.

• Mwamba

Dear Langton, Thanks for this good work of piece, it made my life very easy.  One more issue, could you please advise how the NAPSA is calculated, or better still insert a ka formular . Keep it up and indeed job well done

• @ac1560b3d94ef6c2b727e65a74f0cb71:disqus I’ve updated the post with a section that pretty much explains how they go about deducting your gross pay. They basically systematically deduct your gross pay in clusters after removing your NAPSA contributions. Let me know if the steps still don’t make sense –I’ve never been very good at explaining concepts :(I hope this helps.

• Pretty Woman

hlep calculate for me my net pay. Gross is K3.8m

• @pretty_woman:disqus Your net pay should be ZMK 3,167,000. I hope this helps.

• Pretty Woman

thank you but i want to know % of Napsa. Please break it down for me like you did with the K4m above

• @pretty_woman:disqus NAPSA is apparently rated at 5% [1] and so your computations would be as follows:

Basic Pay – 3,800,000
NAPSA – 190,000
PAYE – 443,000
Net Income/Take Home – 3,167,000

Could you confirm if the computations are correct? The only way I can verify my computations is by using my old payslips –latest one is from February, 2011. In theory, the computations above should be correct.

• Pretty Woman

Thank you. Good day

• CWM

Good day Lighton, Thank you for this blog, i have a few questions that i hope you can help me understand(1) i have noticed that my payslip has a different PAYE it goes up every month should this be or is this right? (2)My Napsa deductions are is this the correct deduction?

• @CHILLZM:disqus Good to know you found the post helpful. See my comments below.

(1) As far as I know, in theory, the only time PAYE should go up is if either your employers gave you a salary increment or if get additional variable allowance… e.g. overtime or overnight allowance or something… these additional income streams would effectively increase your basic pay and thus your PAYE as well… my guess is you sometime get allowances and as far as my knowledge of Zambia goes, its mostly overtime…

(2) NAPSA employee contributions are financed at a standard rate of 5% [1]. However, you should note that this amount is deducted from your total basic salary before computation of PAYE.

What are your thoughts on this? Does this make any sense? Send me an email and I’ll help with the computations –I won’t tell anyone ;). I hope this helps.

• cwm

Lighton, good evening, i sent you an email with attachments kindly let me know what you think.

• joshua

I get 1,500,000 but i am tax. What should i do.

• @46ce057b341a127167f11b277ed2fe04:disqus I would strongly suggest that you make a claim and apply for a tax refund for April, May and June 2012. However, you should not mistake PAYE for NAPSA deductions… NAPSA will still be deducted from the 1,500,000

• John

Hi Lighton , good work u r doing.What is the PAYE and Napsa amounts do you pay on gross pay of 8,045,054.74, and
Is there a % on pension?

• Annie

Good Day. how can South Africans working in Zambia claim back their PAYE / tax on their salaries? pls respond to aquamarinecreations@gmail.com

• Christian

Hey hi, good work you got here, but help me break this down my gross K 4,360,000.
Awaiting.

• Hello there, working with the standard 5% NAPSA deduction, the breakdown is as follows. I hope this helps

Gross -> 4,360,000
NAPSA -> 218,000 [5% of gross]

Taxable Amount -> 4,142,000.00
PAYE -> 602,600.00
Total Tax Due -> 820,600.00
Net Income -> 3,539,400.00

• Sunny

This is some good stuff

• I am wondering how you got to find yourself here Lwele 🙂 Still waiting for that phone call…

• Ken

I think its high time l found a mentor! Big up to Mr. Phiri. Ken – kennedysinyinza@yahoo.com

• tizee

If you sell your leave days how should the TAX it? does it full in an allowance u add to your basic pay or it can be taxed on its on

• It’s still income and so you would have to add it to the Basic Pay. The only strands you exclude are statutory contributions…

• vishnu

Can you please guide me in a calculation where i need to get net pay as 6993.So what is the basic and deductions.

• @disqus_pCA7sIdJwm:disqus Terribly sorry for the delay. It appears I missed a lot of comments. You would need a basic of ZMW 9,113.46

Basic Pay ….. ZMW 9,113.46
NAPSA ……… ZMW 255.00
Tax …………… ZMW 1,865.46

• kay

• kaps

• @disqus_BE70mgkf3R:disqus Missed your comment. Hope it’s NOT too late, but your Take Home, effective April 1 2014, is ZMW 4,261.5

• Silvester mbazima

FANTASTIC IMPROVEMENT BY ZRA

• @silvestermbazima:disqus It’s actually the PF Government NOT ZRA 🙂 ZRA is only there to implement policy 😉

• George

• Take Home ….. ZMW 2,854

• brenda

my gross is 9, 500 help me find my net pay

• Net Pay ….. ZMW 7,244.25

• brenda

• ZMW 7,244.25

• clive

my gross 6582, what is my net?

• Net Income ….. ZMW 5,347.55

• promco

say for instance in april 2014 my salary is 13375.33 what will Paye be and net?

• PAYE ………….. ZMW 3,357.12

Net Income ….. ZMW 9,763.21

• promco

if ones salary in april2014 is 2158.65 what will net be?

• Net Pay will be ZMW 1,903.65. The only deduction would be NAPSA contributions (ZMW 255.00)

• promco

if my gross is k36042 what will be paye in april2014 be?

• With that amount, your PAYE will be ZMW 11,290.45

• BWALYA

Hi my gross pay is 3600 please with the 2014 tax band help me to compute my net pay

• @disqus_5bIyqSfUn8:disqus Sorry for the delay… missed your comment.

NAPSA: ………. ZMW 255.00
PAYE Tax: ……. ZMW 86.25
Net Pay: ………. ZMW 3,345.00

I hope this helps.

• Bwalya G

Mr Phiri say something about the kr255 .00 Napsa figure what percentage are you using to come up with that?

• @disqus_5bIyqSfUn8:disqus To the best of my knowledge, the current allowable deduction for NAPSA is ZMW 255.00 or 15% of Basic Pay–whichever is lower. Using ZMW 3,600.00 as an example 15% would be ZMW 540 making ZMW 255.00 lower.
Please let me know if the computations don’t correspond to what’s on your payslip so we can figure out why…

• Wellington Bwalya

basic pay 1368 pliz help calculate gratutity for a 2 yrs contract and any tax
Thanks!

• @Wellington Bwalya:disqus
Missed your comment; with that amount, you are within the ‘Tax Free
Threshold’ and so the only deduction would come from NAPSA–ZMW 205.20.

Deduction/Month ………. ZMW 205.20
Net Pay/Month ………….. ZMW 1,162.80

To the best of my knowledge, gratuity conditions are company specific–I cannot help compute it without more details… I’d advise that you go through your contract to figure that out.

• Kenneth KALUBA

Much as your tax calculator is highly appreciated and is used to calculate our PAYE, another formula could have been set, but, where there`s NAPSA you use LASF to help those who contribute to LASF, Kaluba Kenneth

• @Kenneth KALUBA
Thank you for this. If I understand your concern, I believe I implicitly took that into account. That’s the reason I have the third field (Statutory Contributions). For instance, if say you make a monthly contribution to the Local Authorities Superannuation Fund and input that amount in that field, you should get the desired result(s). NAPSA is mandatory while these auxiliary contributions are optional and vary with different employers. Let me know if this does NOT give the desired result so we can work on it.

• MBwalya

How much tax for a basic of 15000

• MBwalya

NAPSA ………. ZMW 255.00
PAYE ………… ZMW 3,925.75
Net Income … ZMW 10,819.25

You could also experiment more with the PAYE calculator on the page. I hope this helps.

• Andy

Hi Lighton. This cannt be correct Put in your calculatoe and the values will differ.

• Hello @Andy. Thank you for this. Indeed it is different. The results differ because I made a change on November 3, 2014—you will notice that example in post has changed as well—to align computations with the most recent NAPSA 2014 Ceilings [1].
You will have noticed that I am now using a maximum ceiling value of ZMW 792.05.

I would really appreciate it if you could let me know if the current computations are now in line with the figure(s) on your payslip—this is the only way I would be able to make appropriate changes.

• Eliana C. Siwila

My BASIC PAY IS 2000
AND I GET COMMISSION FROM SALES I MAKE, DO I NEED TO PAY TAX ON COMMISSION?

• Eliana Chisha Siwila

My BASIC PAY IS 2000
AND I GET COMMISSION FROM SALES I MAKE, DO I NEED TO PAY TAX ON COMMISSION?

• @elianachishasiwila:disqus By law, yes. All cash benefits paid in the form of allowances are taxable.

• joe

Hi,
This is how i understand the payroll. correct me if am wrong.
Basic pay K4,000
Napsa allowable K255
Taxable amount K3,745
Total tax K186.25
At this stage do we stil charge 5% of the K4,000 and deduct it from
the K4,000. Joe

• @joe Yes, you are correct, except for the 5% part—I am actually struggling to make out where the 5% is coming from.

• Enala

Yes 5% is the napsa that is deducted from the employee based on the basic pay. it is the first thing that you compute

• @disqus_lG5MVNW71T:disqus; Thank you for this.

• Oliver

please help me calculate for my net gratuity my annual income is 29800 and gratuity term was 5 years

• @Oliver According the latest ZRA practice note (No. 1/2014) [1], if the ZMW 29,800 is your qualifying gratuity, it will NOT be taxed and you should get that entire amount.

Use that money wisely brother ;^)

• galamukani

• @galamukani Your net pay will be ZMW 7,829.25. You can see a detailed breakdown of your gross income using the form in the post.

• galamukani

Thank you very much but how do i access the breakdown calculations?

• @galamukani In the post above, when you enter the ZMK 10,400 into to the field ‘Basic Pay’ the form will automatically compute relevant values. Using the ZMK 10,400 value, the following are the corresponding results

NAPSA ……………………. ZMW 255
Taxable Amount ………. ZMW 10,145.00
Total Tax Deductions … ZMW 2,315.75
Net Income ………………. ZMW 7,829.25

• John Ndhlovu

Hello Mr. Phiri! With a basic of K 29,516.02 what would be the net pay if NAPSA is 792.05. And is it supposed to be this amount for NAPSA?

• Hello MR. @johnndhlovu:disqus ! A million thank you for this. I just updated the calculator to reflect the latest 2014 Ceilings [1].

With that basic salary, the computations would be as follows:
NAPSA …….. ZMW 792.05
NET ………… ZMW 19,905.58

If you could help confirm that these figures match with those on your payslip, I’d really appreciate it. Then I could make appropriate changes if required—I rarely get feedback from people using this calculator.

Thank you again.

• Mwape kangwa

• @Mwape Kangwa, You could use the form above 🙂 Your breakdown is as follows

NAPSA …… ZMW 625
PAYE ……… ZMW 2,921.25
NET ……….. ZMW 8,953.75

• maggie

please help my gross pay is 1800.00 how much is napsa gross pay ytd, taxable ytd,freepay ytd

• @maggie That gross amount falls within the tax exception band—see above. Using the form, you could easily extrapolate the values by multiplying by 12.

NAPSA ……….. ZMW 90 (YTD: ZMW 1,080)
Taxable ………. ZMW 1,710.00 (YTD: ZMW 20,520)
Take Home …. ZMW 1,710.00 (YTD: ZMW 20,520)

• OZC~Chronicles

how do you calculate statutory deductions for expatriate hires? Example indian hire USD 4700 net pay

• @ozcchronicles:disqus Statutory deductions for all employees (local and otherwise) is done exactly the same way [1]—as above, unless if company expatriate will be working for is an international company.

You deduct 5% from empoyee, but remit 10% to NAPSA [2].

I am not very sure how earnings in foreign currency are handled, however, seeing as everything is quoted in ZMW on the NAPSA Website [3], I would imagine you would have to convert employee’s gross salary into its equivalent ZMW value before computing statutory deductions. That said, you would have to contact NAPSA to find out the specifics.

I hope this helps?

• Jeff

Are temporal employees getting less than 3000 subject to PAYE

• @Jeff No, ZMW 3,000 is within tax exception band—anything less than ZMW 3k, after statutory contributions are deducted, is non-taxable.

• rich

what is the total maximum napsa contribution

• @rich The total maximum NAPSA contribution is ZMW 1,584.10, with employee and employer split up contribution evenly; implying that an employee is currently required to pay up to a maximum of ZMW ZMW 792.05.

Please see this [1] memorandum for details.

• Mr B

Hello Mr Lighton…I might not have understood your formula well but i think there is an error in the third slab (3,800.01 to 5900 @ 30%). I think it should be (3,800.01 to 6700 @ 30%). The 30% tax is K2900 as to my understanding..

• Mr B

Ok, I understood K5900…i checked it out through one of the ref…apologies…

• Glad it all makes sense now.

• mr michael

hello mr Lighton… am failing to under stand some thing. i have a gross pay of 10500 hence my napsa is 525 right? the remaining amount is 9975 of which the first 3000 is not taxed. meaning my taxable amount is 6975. of which 35% of that is 2441.25 if use my calculator, but am getting a different figure as compared to the calculator above when i punch in 10500. why the difference? please enlighten me as to why. thank you

• Hello @mr michael… Tax is computed in bands; that taxable amount (ZMW 9,975) is broken down and appropriate deductions made to applicable bands. Here is how…

STEP#1: 3000@ 0% (ZMW 0 tax) leaving 6975
STEP#2: 799,99 (3000.01 to 3800.00)@ 25% (ZMW 200 tax) leaving 6175.01
STEP#3: 2099.99 (3800.01 to 5900.00)@ 30% (ZMW 630 tax) leaving 4075.02
STEP#4: 4075.02@ 35% (ZMW 1426.26)

Total tax: (200 + 630 + 1426.26) => ZMW 2256.26

I hope this helps.

• Enala

also remember that the only allowable pension is 255, so if your napsa is 525 you still have to calculate the tax on the figure above 255

• @disqus_lG5MVNW71T:disqus; Actually, this is currently no longer the case. There is only a prescribed ceiling. See quote from the NAPSA Website [1].

2. Presently the monthly contribution rate is pegged at 10 percent of a worker’s gross monthly earnings subject to the prevailing contribution ceiling in the calendar year in which the worker earned the income. The contribution ceiling is revised annually and the revision takes effect from January of each year.

• Jacob Chisola

Hi Mr. Phiri,help me understand,my gross pay is 9,000.00,Napsa is 450.00.My Paye as calculated for me by the accountant is 1,825.75 and my net pay is 6,724.25.If i follow your formula, my Paye is 1,757.5 and my net is 6,792.5.I have seen that he removes a 255.00 from the gross pay before doing the computation and he tells me that this is a constant.My other question is on Napsa and Paye on the Gratuity,Is this supposed to be deducted.

• Hello Mr. @Jacob Chisola, Firstly, thank you very much for your comment, it is people like you that make it possible for content here to be up to date; I am also glad you seem determined to follow this up and get to the bottom of things…

1. To the best of my knowledge, the formula above is accurate; you can in fact compare it with the 2015 official NAPSA Social Security Contributions Table (see Page 9 of 26) [1].
* Are you able to share detailed breakdown of your deductions—if possible, kindly send this information through as soon as you can? Perhaps there might be something I omitted from the calculator about…
* Could it be that you have a company policy that mandates all employee to subscribe to a trust fund?
* I would follow this up with your accountant if I were you… point him to the latest 2015 Contribution Ceiling [2]. Of course, I would be VERY interested in hearing what comes out of your next interaction with your accountant.

2. Yes, NAPSA (see Page 1 of 26) [1] & PAYE [3] is applicable on emoluments; this is inclusive of gratuity earnings.

I hope this helps.

• Jacob Chisola

Thank you Mr.Phiri,I will get back to you after i have a discussion with him.There is no trust fund to which we contribute.
Regards
Jacob.

• lisa phiri

Dear Sir,
My name is Lisa.my basic pay is k5,962 housing k1,789 and transport k500.i am meant to receive gratuity of one month salary how much should I get and what tax will I pay as PAYE and what amount will I pay as NAPSA ?I will really appreciate your help.
Regards
lisa

My name is Phiri:)
1. You will get a total of ZMW 7,838.45 (see explaination and links below)
* No tax on that amount—it is within the 0% band
* NAPSA will be computed normally—ZMW 412.55
2. You will pay ZMW 0.00 as PAYE
* Qualifying gratuity is within 0% band
3. NAPSA will be ZMW 412.55

## A few things to note about taxation on gratuity:
1. There are two qualifying gratuity bands. Please see latest practice notes [1]
* First ZMW 36,000.00@ 0%
* Above ZMW 36,000.00@ 25%
2. Qualifying gratuity is defined as follows:
* contract duration not less than two years
* gratuity amount NOT more than 25% of basic salary during employment period

• Newton

Hi
This is great work Mr Phiri.I have a question,if i contribute to my an in house pension scheme(e.g 5% of my gross pay and my employer contributes 10%) does my contribution fall under statutory contribution?

• @Newton; Yes! if the in-house pension scheme is a registered legal entity—which is almost always the case—the 5% falls under statutory contributions; 5% will be deducted from gross, together with NAPSA, before PAYE is computed.

• Newton

Thanks Lighton

• Newton

I just had a thought,is there a ceiling to private pension contribution?This is related to my earlier post.What would be my net pay if my salary is 20,000 ZMW with me contributing 10% to private pension scheme?

• @Newton; Indeed there is—the current ceiling is ZMW 1860.00. The ‘Approved Fund’ deductions are detailed in PART IV of ITA [1]; the 2009 ITA amendment [2]—the latest ammendment I have access to—ascribes a cap of ‘fifteen per centum’ of emoluments or ZMW 1860 (rebased!), whichever is less.

Your Net pay would ZMW 14,368.47—it would be computed as follows:
* NAPSA deduction: ZMW 796.20
* Private pension: ZMW 1,860.00 *** (10% of your gross is over ceiling…)
* Taxable amount: ZMW 17,343.80
* PAYE deduction: ZMW 4,835.33
* Net income: ZMW 14,368.47

Are you certain you are contributing 10% to the private pension fund or could it be the case that you are contributing 5%, with the other 5% contributed by your employer?

• Newton

Yes I am certain its 10% and employer contributes 20%.Thanks again

• You have a very considerate employer 🙂 The closest I ever came was 5% contribution towards a company registered trust fund—my then employer contributed an equivalent 5%…

• Kristine

Hi, what qualifying gratuity means? Who is qualifying for it? What shortest period of work can gratuity be paid?

• @Kristine;
1. What is qualifying gratuity mean?
Qualifying gratuity is defined [1, 2] as one that meets the following conditions:
* Paid upon termination of a written contract
* Contract duration is NOT less than two years
* Is NOT more than 25% of the basic salary earned during period of employment

2. Who is qualifying for it?
* Anyone whose employment contract meets the three conditions above

3. What is shortest period of work can gratuity be paid?
* The minimum period is two years

[1] See latest ZRA practice notes
[2] http://goo.gl/f5spij

• @disqus_jX7QCRqSSp:disqus; @Newton pointed out [1] a flaw in my response to your last question (What is the shortest period of work can gratuity be paid?). I misrepresented your question because I assumed all your questions were linked to ‘Qualifying Gratuity’.

The two year minimum period is ONLY applicable to Qualifying Gratuity. There is no prescribed minimum period after which gratuity can be paid. This is NOT specified in the Employment Act [2] and is thus left at the discretion of the employer.

• CWSimusokwe

what is the standared calculation for leave days

• @CWSimusokwe; Cash in lieu of leave are added to the salary and taxed normally under PAYE using the tax tables applicable to the month such payments accrues to the employee.

• Joe

Hi, my comment is in line with the earlier blogger named Newton. You have mentioned the amount of ZMW 1,860.were is this amount coming from??

• Hello, @Joe. This is detailed in the Income Tax (amendment ) Act No. 1 of 2009 [1], albeit there could be recent acts superseding this; I have found none thus far. Incidentally, background information on this is in PART IV of the original ITA [2]—you might want to take a look at it if you need to understand this more.

On page 4 of the amendment, pay particular attention to the verbatim text below:

(3) The deduction to be allowed to an employee for a charge year in respect of the employee’s current contributions to approved pension funds shall not exceed—
(a) fifteen per centum of the employee’s income from emoluments liable to tax which have been received for that charge year from any employer who established, adhered to or continued the said approved pension fund, the fifteen per centum to be calculated before any deduction under this subsection; or
(b) one million, eight hundred and sixty thousand Kwacha; whichever is the less.

• Newton

Hi Lighton,
I was reading your response to Kristine,Isn’t gratuity paid on pro rata basis if the some one leaves an organisation before contract period elapses(e.g served LESS THAN 2 years) ?Though I know some organizations do state in the contracts how one qualifies for gratuity,however others are silent.

• Hello @Newton, thank you for this.

I literally misrepresented what @disqus_jX7QCRqSSp:disqus was trying to find out in question #3. I made the assumption all her questions were centred around ‘Qualifying Gratuity’—which is where the two years came from… I have since edited my reply on @Kristine’s comment..

Whether gratuity is paid upon completion of one’s contract or let alone on a pro rata basis is left at the discretion of an employer, and as you rightly pointed out, this is usually indicated in one’s employment contract.

Incidentally, the Employment Act [1] is silent about gratuity. An employer can legally decide NOT to pay gratuity; apply a standard percentage; or use a fixed amount.

• Sharon

Does an employee get charged fringe benefit tax on interest free loans from an employer?

• james

what is qualifying gratuity? I have worked for 22 months on a 24 months contract is my gratuity qualifying on not?

• stone

Hi there. my basic pay is 5000 and allowances are at 2750.
am on a two year contract. talk to me…help me to calculate my PAYE as my payslip has some mistakes (also noted by the company accountant for 2 months now). I’ll really appreciate.. From Stone

• Hello @stone; please see breakdown below.

* Gross pay: ZMW 7,750.00 (basic pay+allowances)
* NAPSA deduction: ZMW 387.50
* Taxable amount: ZMW 7,362.50
* PAYE: ZMW 1,341.88
* Net income: ZMW 6,020.63

• stone

cheers mate.

• Raphael Zulu

hi Lighton,I would like to know by what % is payee calculated,e.g Payee for 7750 is 1341.88. please help because if i calculate 35% of 7750 it gives me 2712.5

• @Raphael Zulu; PAYE is computed deductively, in bands. Your approach—applying that 35% of ZMW 7,750.00—assumes that the entire amount is taxable, neglecting the fact that:
1. NAPSA MUST be deducted before applying tax bands
2. Taxable amount MUST be segmented into applicable individual tax bands

Here is how it ought to be done.

## STEP #1: Compute NAPSA
* 5% of Gross amount (5% of ZMW 7750.00)
* NAPSA deduction: ZMW 387.50

## STEP #2: Compute taxable amount
* Gross amount less NAPSA (ZMW 7750.00 – ZMW 387.50)
* Taxable amount: ZMW 7362.50

## STEP #3: Compute PAYE by applying individual tax bands
The ZMW 7,362.50 is split into
* (Band #1: 0000.00 – 3000.00) ZMW 3,000.00@ 0% -> ZMW 0.00
* (Band #2: 3000.01 – 3800.00) ZMW 799.99@ 25% -> ZMW 199.9975
* (Band #3: 3800.01 – 5900.00) ZMW 2099.99@ 30% -> ZMW 629,997
* (Band #4: 5900.01 – 7362.50) ZMW 1462.49@ 35% -> ZMW 511.8715
* Total PAYE = (Band1 + Band2 + Band3 + Band4) = ZMW 1341.866

• @Raphael Zulu; One more minor issue:
* The ZMW 0.01 (One Ngwee) difference is as a result of round off errors 🙂
The script tied to the form above rounds off figures at every point.

• Patrick MFD

Good morning Sir,thank you for facilitating our understanding on the tax bands and others.
i just wanna find out : Does the same taxation applicable for overtime? Regards.!

• @Patrick MFD; Yes overtime allowances are also taxable. Incidentally, the latest ZRA—PRACTICE NOTE No.1/2015 [1] has a section with earnings that are exempt from taxation; see excerpt below.

20.1 EMOLUMENTS THAT ARE NOT SUBJECT TO PAYE

The following emoluments are exempt or otherwise not chargeable to income tax and, consequently, need not be included in the taxable emoluments.

(i) Ex – Gratia Payments: A voluntary, non – contractual, non – obligatory payment made by an employer to the spouse, child or dependant of a deceased employee is exempt (Paragraph 7 (t) of the 2 Schedule to Income Tax Act).
(ii) Medical Expenses: Medical expenses paid or incurred by an employer on behalf of an employee or refunds of actual medical expenses incurred by an employee are exempt (Statutory Instrument No. 104 of 1996).
(iii) Funeral Expenses: Funeral expenses paid or incurred by an employer on behalf of an employee are exempt (Statutory Instrument No. 104 of 1996).
(iv) Sitting Allowances for Councillors: Payments by Local Authorities to Councillors as Sitting Allowances are exempt [Paragraph 7(s) of the 2 Schedule to Income Tax Act].
(v) Labour Day Awards Labour Day awards paid to employees either in cash or in kind are non-taxable.

• Sandra K

Good afternoon Sir, what is the formula for calculating gratuity according to Zambian Laws?

• Good evening Madam 🙂 To the best of my knowledge, there is no prescribed formula for computing gratuity; there is in fact no mention of gratuity in the Employment Act [1]. That being said, it is not uncommon for most companies/organisation in Zambia to ascribe a percentage on an employee’s final basic pay& cumulate this to total duration of contract; or, alternatively, ascribe an amount equivalent to fixed number of months.

If you are, however, interested in understanding how PAYE is computed on gratuity, please go through earlier threads here [2] and here [3]. You might also just want to go through the latest ZRA practice notes [4]

I hope this helps.

• Sanddra K

Thank you very much for your response.

• Namonda Mulumemui

Good evening Mr Phiri Kindly assist how does one compute leave days for a person who worked for two years without taking their leave?

• Namonda Mulumemui;

The only reference I have been able to find on this is the “THE MINIMUM WAGES AND CONDITIONS OF EMPLOYMENT ACT” [1, 2]—see quote below for details.

5. An employer shall grant leave of absence on full pay to an employee at the rate of two days per month, subject to, and in accordance with, the following conditions:
(a) except on termination of the employee’s service, an employee shall be entitled to leave only on the completion of six months’ continuous service with that employer;
(b) paid public holidays and Sundays shall not be included when computing such period of leave; and
(c) the employer shall have the right to give reasonable consideration to the exigencies and interests of the business of the employer in agreeing to the dates when such leave may be taken.

• Mr k

Mr Phiri i get gross pay 5500 how much should my net pay be

• Hello @Mr k;
Your Net pay should be ZMW 4,597.50

• Collins

Mr Phiri. are professional subcsriptions to e.g ZICA, LAZ deductible under PAYE? Can be deduct these items when calculating their net pay?

• @Collins; Terribly sorry for the long delay, it has been a busy year…

Assuming ZICA and LAZ deductions are towards an ‘Approved Fund’, then yes, you deduct before applying tax. That being said, you would have to find out from ZICA and LAZ if this is the case.

You might also want to take a look at the Income Tax Act [1]

• Gerald Phiri

Morning mr phiri, if i am offered a net pay of 4000, how do i gross it up to get my gross taking into account Napsa and the graduated bands?

• Hello Gerald Phiri; Terribly sorry for the delay but, hopefully, this will help someone else out there.

Your gross would have to be ZMW 4601.504511278.
We could easily do this by working our way up by adding statutory contributions and PAYEE deductions. Here is a FUN way of doing it using simultaneous equations 🙂

Here is what we know
* Net is ZMW 4000.00
* We also know through deduction that Net of ZMW 4000.00 should lie in ‘3800.01 – 5900.00’ band; this could easily be deduced by applying taxation to 3800.00—upper bound of ‘3000.01 – 3800.00’ band
* NAPSA = 5% of Gross
* Net = Gross – NAPSA – PAYEE

Let Gross = y
Let NAPSA = x

NAPSA = 0.05y

PAYEE = 0.25 (799,99) + 0.3 [(y-x-3000) – 799,99]

= 199,9975 + 0.3 (y-x-3000) – 239,997
= 199,9975 + 0.3y – 0.3x – 900 – 239,997
= −939,9995 + 0.3y – 0.3x

Net = Gross – NAPSA – PAYEE
4000 = y – x – [-939,9995 + 0.3y – 0.3x]
4000 = y – x + 939.9995 – 0.3y + 0.3x
4000 – 939.9995 = y – 0.3y + 0.3x – x
3060.0005 = 0.7y – 0.7x
3060.0005 = 0.7y – 0.7(0.05y)
3060.0005 = 0.7y – 0.035y
3060.0005 = 0.665y
4601.504511278 = y

Gross = ZMW 4,601.50

• brian

hi mr phiri, i want to know the law that guides on how gratuity is calculated not how is taxed?

• Hello brian;
* Your employers would normally explicitly indicate how gratuity will be computed in your employment contract. You might want to find out from Human Resources on specifics.

* The details of how tax on gratuity is computed are in ZRA Practice notes [1]. Be sure to check the last one in case of any changes. That being said, this is how tax on gratuity is currently computed.

STEP 1: Compute ‘Qualifying Gratuity of emoluments’
* Note that one of the conditions for ‘Qualifying Gratuity’ is a cap of “25% of Basic Pay earner during period of employment”. So in your case, 25% of your 35% is ‘Qualifying Gratuity’
STEP 1a: Apply Qualifying Gratuity Bands—First 36,000@ 0% and Remainder@ 25%

STEP 2: Compute ‘Non-qualifying Gratuity of emoluments’
STEP 2a: Add Non-qualifying Gratuity emoluments to normal emoluments at the time of getting Gratuity—this will include all your allowances
STEP 2b: Apply normal taxation from total amount in STEP 2a

• Mwiya

Hi. How do you gross up an net amount, taking into account Napsa?

• @Mwiya;
You could brute force your way up or use some basic Algebra :). Someone asked a similar question [1]. Here is how we worked our way up using an example of a Net amount of 4000…

Here is what we know
* Net is ZMW 4000.00
* We also know through deduction that Net of ZMW 4000.00 should lie in ‘3800.01 – 5900.00’ band; this could easily be deduced by applying taxation to 3800.00—upper bound of ‘3000.01 – 3800.00’ band

* NAPSA = 5% of Gross
* Net = Gross – NAPSA – PAYEE

Let Gross = y
Let NAPSA = x

NAPSA = 0.05y

PAYEE = 0.25 (799,99) + 0.3 [(y-x-3000) – 799,99]
= 199,9975 + 0.3 (y-x-3000) – 239,997
= 199,9975 + 0.3y – 0.3x – 900 – 239,997
= −939,9995 + 0.3y – 0.3x

Net = Gross – NAPSA – PAYEE
4000 = y – x – [-939,9995 + 0.3y – 0.3x]
4000 = y – x + 939.9995 – 0.3y + 0.3x
4000 – 939.9995 = y – 0.3y + 0.3x – x
3060.0005 = 0.7y – 0.7x
3060.0005 = 0.7y – 0.7(0.05y)
3060.0005 = 0.7y – 0.035y
3060.0005 = 0.665y
4601.504511278 = y

Gross = ZMW 4,601.50

• moji

This is to answer Sandra’s question regarding Gratuity in Zambia. We write our Employee’s contracts for every two years and gratuity is calculated as 25% of the contract and paid at the end of contract. No gratuity for misconduct, resignation, and probation period.

• @moji;
Thank you so much for sharing this.

• moji

Mr Phiri: It is true that expat working in Zambia have to pay taxes in Zambia. Is there a way to go around this?

• Hello @moji;

It is true. The only way to go about it is if you legally fall within the the ‘Foreign Exemptions’ clause. See Income Tax Act—Page 90—[1] for details

PART II

FOREIGN EXEMPTIONS

3. There shall be exempt from tax-
(a) the emoluments of any individual payable in respect of any office which he holds in the Republic as an official of any foreign government, if such individual is resident in the Republic solely for the purpose of carrying out the duties of his said office;
(b) the emoluments of any domestic or private servant of any individual referred to in sub-paragraph (a) payable in respect of domestic or private services rendered or to be rendered by such servant to such individual, if such servant is not a Zambian citizen and is resident in the Republic solely for the purpose of rendering the said services;
(c) the emoluments payable to any individual who is not a Zambian citizen and who is temporarily employed in the Republic in connection with any technical assistance scheme provided by any foreign country, any international organisation, or agency, any foreign foundation or any foreign organisation, if the exemption of such emoluments or such part of the emoluments as may be specified is authorised under the terms of an agreement entered into by the government of such foreign country, international organisation or agency, foreign foundation or foreign organisation with the Government of the Republic;
(d) the emoluments of any individual in respect of service with any international organisation or any agency of a foreign government or any foreign foundation or organisation, which organisation, agency or foundation is approved by the Minister by order in the Gazette and such individual is not a Zambian citizen and is resident in the Republic solely for the purpose of rendering the said service or secondment to any Zambia organisation, agency, or foundation.

4. There shall be exempt from tax such income of-
(a) any international organisation;
(b) any agency of a foreign government;
(c) any foreign foundation or organisation;

• james

I have worked for 22 months on a 24 months contact is my gratuity qualifying or non qualifying?

• Hello @disqus_ELNdbfi2gV:disqus; Comment came too late I suppose—have been busy these last couple of weeks. Perhaps this will help someone in a similar situation…

This is definitely ‘Non-qualifying’.

Qualifying Gratuity is defined as “One that meets the following conditions:”
(i) is paid upon the termination of a written contract
(ii) the contract duration is not less than two years; and
(iii) is not more than 25% of the basic salary earned during the period of employment…

• Susan

Good afternoon Mr. Phiri, am on a year year contract and i get bonus every month depending on business. i wanted to find out if i still qualify for gratuity.

• Hello @Susan;
Your employers dictate whether or not you qualify for gratuity. This is normally explicitly stated in your employment contract. If you could specify the conditions therein, we would be able to help compute how much you will get at the end of your contract.

• Susan

Sorry meant two years contract.

• Manj

hi if some one from other nationality work in zambia and he gets 2250 USD monthly then how much is the tax he has to pay for USD 2250 on monthly basis?

• @nandish_v:disqus; The current rate of exchange is applied on your gross earnings to convert it into Kwacha and tax subsequently computed.

Using today’s exchange rate of 1 USD = ZMW 7.79, your gross earnings would amount to ZMW 17,527.47
* PAYE on that would be ZMW 4,620.94 (~USD 593.19)

• Kennedy Lumbwa Mtonga

With the following data
Basic pay: k50 357(annual)
Housing Allowance: k1230.77(monthly)
Transport Allowance: k615.38(monthly)

I have no trouble computing net pay, thanks to you, but a the clause stating “that i will be entitled to gratuity of 35% of my salary at the end of the three years contract” is what i may need you to shed light on. What would be the standard way to calculate the gratuity?

• Hello Kennedy Lumbwa Mtonga; Took long for me to respond—sorry; I have been busy these last few months. Your case is interesting, albeit unique…

The ‘35% of my salary’ statement is slightly ambiguous—it could mean either of two things:

1. 35% of the cumulative total basic pay at the end of your contract; this is the likely case
2. 35% of monthly basic pay at the end of your contract

That being said, it is likely the first case—cumulative total. In addition, in all the two instances, I imagine the 35% will be applied to the last Basic Pay you would have been entitled to at the end of your contract; I am assuming you will get salary increments during the duration of your contract here…

The standard way [1] of computing gratuity would be as follows:

STEP 1: Compute ‘Qualifying Gratuity of emoluments’
* Note that one of the conditions for ‘Qualifying Gratuity’ is a cap of “25% of Basic Pay earner during period of employment”. So in your case, 25% of your 35% is ‘Qualifying Gratuity’

STEP 1a: Apply Qualifying Gratuity Bands—First 36,000@ 0% and Remainder@ 25%

STEP 2: Compute ‘Non-qualifying Gratuity of emoluments’
* In your case, this is 10%—remember 25% is ‘Qyalifying Gratuity’

STEP 2a: Add Non-qualifying Gratuity emoluments to normal emoluments at the time of getting Gratuity—this will include all your allowances

STEP 2b: Apply normal taxation from total amount in STEP 2a

For each of the two possible cases, assuming your salary remains at its current static value of ZMW 4,196.42, your gratuity would be computed as follows:

## Case I: 35% of cumulative basic pay at end of contract
* Cumulative total salary: ZMW 151,071.00 (4196.42 * 36 months)
* Gratuity: ZMW 52,874.85 (35% of cumulative total salary)

* Qualifying gratuity (25%): ZMW 37,767.75
* Band 1@ 0%: ZMW 0.00
* Band 2@ 25%: ZMW 441.94 (25% of remaining 1,767.75)
* Tax deductions: ZMW 441.94
* Net income: ZMW 37, 325.81 (ZMW 36, 000.00 + 1, 325.81)
* Non-qualifying gratuity (10%): ZMW 15,107.10
* This will be added to your salary and normal taxation paid
* i.e. (ZMW 15,107.10 + ZMW 4,196.42 + 1,230.77 + 615.38) = ZMW 21,149.67
* Tax deduction: ZMW 5,888.71
* Net income: ZMW 14,464.76

* You would get a total Net income of ZMW 51,790.57

## Case II: 35% of basic pay at end end of contract
* Gratuity: ZMW 1, 468.75 (35% of Basic Pay)

* Qualifying gratuity (25%): ZMW 1,049.11
* Band 1@ 0%: 0
* Band 2@ 25%: 0
* Tax deductions: 0
* Net income: ZMW 1,049.11
* Non-qualifying gratuity (10%): ZMW 419.64
* This will be added to your salary and normal taxation applied
* i.e. (ZMW 419.64 + ZMW 4,196.42 + ZMW 1,230.77 + ZMW 615.38) = ZMW 6,462.21
* Tax deductions: ZMW 913.68
* Net income: ZMW 5,225.41

* You would get a total Net amount of ZMW 6,274.52

I hope this helps. Please do ping me if you spot an anomaly or if you need us to discuss this further.

• kennedy lumbwa mtonga

Thank you so much. Very accurate even by confirmation with my superiors. Lastly, on legal note, are allowances such as housing and transport supposed to be taxed together with or alongside the basic pay?

• @kennedylumbwamtonga:disqus; Yes, housing& transport allowances—and any other allowances for that matter—, are considered emoluments, and are thus taxed together with Basic Pay.

The most commonly exempt items are contributions towards Trust Funds—in your company has one set up for employees.

You can get a sense of earnings exempt from tax in the latest ZRA practice notes [1], and the next time you have time to spend, you could always go through the Income Tax Act [2].

• Kennedy Lumbwa Mtonga

Just as another incentive, kindly add a gratuity tax calculator also.just to enable us to get a sense of the NET gratuity which i understand is also subject to tax.

• @kennedylumbwamtonga:disqus; Thank you for this. I will most certainly work on it—especially that there have been some queries on this in the last couple of months.

• Kennedy Lumbwa Mtonga

In a nutshell, imagining yourself in my position, having your knowledge, how much gratuity would i get.Please keep up the good work.

• Hello again @kennedylumbwamtonga:disqus

This would depend on whether the 35% is applied to cumulative total of your salary or the last salary in the month your contract ends. See computation in your previous comment [1] below.

## Case I: 35% of cumulative basic pay at end of contract
* You would get ZMW 51,790.57

## Case II: 35% of basic pay at end end of contract
* You would get ZMW 6,274.52

I hope this helps.

• Ernest sibanda

How is Taxable pay calculated i thought we should use the 255 ceiling. what does the ceiling of 255 mean

• @Ernest Sibanda; No! The 255 is no longer applicable. The current social security ceiling is “the lowest level of earnings on which no contribution to the scheme is computed”[1]—this is presently ZMW 15,924.00; the maximum contribution one can make is thus ZMW 796.20.

• Els

Mr. Phiri i think the ceiling of ZMW 255 is something different then the ceiling of the maxium contribution to Napsa. The 255 is the maxium amount you can deduct to calculate your taxable pay. Check out the zra website it’s still mentioned or maybe i’m wrong and I have missed the message that the ceiling of 255 is really no longer applicable. cheers

• @Els; NAPSA ceilings are dynamic. If you could help with the link to the ZRA page you are referring to, it would help clarify this–I imagine the page is out of date though.

* For the period January 1 2015–December 31 2015, the monthly ceiling is ZMW 15,924.00, effectively yielding a maximum contribution of ZMW 796.20.
* Please the 2015 Social Contribution Tables from NAPSA [1] to get a sense of how this is done; pay particular attention to the section of the spreadsheet with:

The Social Security Ceiling in effect through out any year is equal to four times the National Average Monthly Earnings computed by the Central Statistical Office for the second quarter of the previous year.

I hope this helps

• JJ

Mr.Phiri

I have taken the trouble to investigate your advise; and wish to advise that your calculations are wrong. You need to re – programme your calculator for tax purposes.-PAYE. You need to get your facts correctly and advise accordingly before mis-informing the public. I took your advise as gospel thruth and now i look LIKE….!!!! with my employer. The ZMW 255 is still applicable and it is of benefit to us. NAPSA- to appreciate those that pay the contribution went ahead and decided to give us an incentive of the 255 which is not subject to tax.

This is what i was given from a reliable audit firm.

:find attached the 2016 Budget highlights compiled by KPMG Zambia. Please refer to page 19 and 23 (Section 4: Domestic Taxes) regarding the NAPSA TAX Allowable deduction amounting to ZMW255 which has remained the same. It is the maximum amount for pension contributions that is allowed to be deducted from the gross pay before computing PAYE as required by ZRA. Please note that this is not the same as the NAPSA Contribution of 5% or the maximum NAPSA Contribution of ZMW796.20 which is required by NAPSA. Kindly note this information is up to date.
Calculated as follows: if your gross earnings is ZMW 20,000 as an example. Your first deduct the ZMW 255 . Then the balance is what is subjected to PAYE. This what ZRA will tax you.
Thereafter, once you get the TAX -PAYE . You finally deduct your PAYE and the max ceiling Napsa of 796.2 from your gross of ZMW 20,000.
I hope its clear….finally i would like to confirm that the ZRA website page is still valid. GOOD NIGHT.

• godfrey

• @godfrey:disqus; Sorry I took so long, but I just responded to your other message.

• luwi

els thank you so much. that’s how I also know it. first 15% of gross or 255 to arrive at the taxable amount… I think there is some misunderstanding btn the 15% and the 5% napsa contribution

• Clay

Thanks boss you helped me lots

• Inonge

Wow, you have made my life a whole lot easier! Was thinking about the tax bands and the easiest way to go about them. Now i can just put in the digits and Voila, its all done!!!!!! #allsmiles#thanks

• Godfrey

My son just started work, his salary is 30,000. how do you calculate NAPSA and what is the tax. thank you

• @Godfrey;
## NAPSA
* You son’s salary is above the ceiling and so he shall contribute the maximum allowable amount—ZMW 796.20

## Tax
* His salary is in upper tax band and so his salary will be broken all four band rates applied accordingly

### NAPSA deduction
* ZMW 796.20 will be deducted from his ZMW 30,000.00 before tax is applied
* Taxable amount will thus be ZMW 29,203.80

### Band 1—ZMW 0 – ZMW 3,000.00
* ZMW 3,000.00 will not be taxed
* Tax in this band is thus ZMW 0.00
* This leaves ZMW 26,203.8

### Band 2—ZMW 3,000.01 – ZMW 3,800.00
* ZMW 799.99 of the remaining ZMW 26.203.80 is taxed at 25%
* Tax in this band is thus ZMW 199.9975
* This leaves ZMW 25,403.81

### Band 3—ZMW 3,800.01 – ZMW 5,900.00
* ZMW 2099.99 of the remaining ZMW 25,403.81 is taxed at 30%
* Tax in this band is thus ZMW 629.997
* This leaves ZMW 23,303.82

### Band 4—ZMW 5,900.01 – Infinity
* The remaining ZMW 23,303.82 is taxed at 35%
* Tax in this band is thus ZMW 8,156.337

Total tax is thus ZMW 8,986.3315

• godfrey

Mr. Phiri…

What’s the TAX allowable napsa deduction, i.e. the
amount deducted from gross pay before the calculation of PAYE?

Some Audit firms advised the following:
example: you 20,000 gross ….less 255 Napsa then balance of
19745 a contribution of 796.20 NAPSA is deducted again.
Where in the NAPSA act/Law does it state this. Now puzzled.

• Mr. @godfrey;
* Presently, amount deducted from gross pay before the calculation of PAYE is 5% with a maximum contribution of ZMW 796.20.
* The NAPSA deduction is only done once and so for a gross of ZMW 20,000.00 ONLY ZMW 796.20 should be deducted.

Please see the current (2015) NAPSA Social Security Contributions Tables [1] for official/authentic deductions

Please pay particular attention to “4.0 Statistics”

I hope this helps.

• godfrey

Mr.Phiri
I visited ZRA advise Centre…I saw a gentleman by the name of Mr.Mutukwa. He mentioned that you deduct 255 first as this the chargeable amount before PAYE. His getting it from the ZRA web site: https://zra.org.zm – under PAYE. On the very site – see calculator ( other e-services). I think ZRA website needs to be updated , otherwise it will continue to cause confusion. But how to I get hold of you….please contact me on my email, I would like to speak with you.

• lubi Kalimina

Mr Phiri Sir, The calculator is failing to give me answers at gross pay of K 15,924.00

• @lubikalimina:disqus; Thank you very much for bringing this to my attention.
There was a minor bug with the code—a logical error as a result of an ‘if’ condition. This has now been fixed.

• Ruddgal

Dear Mr Phiri,
Some enlightenment on how hardship allowances are taxed would be great. The first instance where the allowance is added to the salary is clear for me as it will be taxed as PAYE. What would be the case if this allowance is given in voucher form (shopping voucher from one retailer). what kind of tax will this incur and at what point?

• Hello Ruddgal; Terribly sorry for the delay. This is the part of the year I am usually busy.

I do not have an exact answer for your question about ‘shopping vouchers’, so my response comes with a disclaimer…
* Oddly enough, the ITA is vague on that.
* That being said, the Practice Notes [1] do have information on this and from what I gather
1) Gifting is NOT allowed with the exception of when “employer provides entertainment or hospitality for employees during e.g. on Christmas”
2) When gifting does occur, it is exempt from taxation.

21 TAX TREATMENT OF CERTAIN EXPENSES.
21.1 EXPENSES INCURRED ON ENTERTAINMENT, HOSPITALITYAND GIFTS
Expenses incurred on entertainment, hospitality and gifts are not allowable, subject to the following exceptions:
:
c) Where an employer provides entertainment or hospitality for employees, e.g. meals, accommodation etc on business trips or a Christmas party for employees;
:
Note:
i) Employees receiving entertainment allowances would be taxed under PAYE and the amount would be disallowable to the employer.
ii) Where an employer defrays entertainment expenses directly, the cost would be disallowable to the employer but there would be no charge on the employee unless the normal rules as to benefits apply.

• Mathambo Mtine

Evening Mr Phiri. Could you kindly include a calculator that can help with the computation of gratuity.

• @mathambomtine:disqus; Thank you for this. I will work towards this; seeing as I have had a number of individuals request for this.

• Hello @disqus_6ABPFOPlNn:disqus ; Thank you for this—most appreciated.

First, I am terribly sorry for taking this long to respond; I have been preoccupied these last couple of days. More importantly, sorry for the ‘confusion’ with the computations—I should probably put up a disclaimer.

## Current State of Calculator
The input parameters for computing figures in calculator come from two sources:

1) Sample payslips& user feedback
* In the past, I have had a handful of individuals share their payslips as a way to verify figures computed by calculator scripts. Please see sample payslip here [1]. This has proven accurate until now. I believe you are the second, if not third individual to flag this—again, thank you for this.
* The feedback I have gotten was largely been overwhelmingly positive and so I naturally assumed the script was flawless.

2) Salvaged documentation from ‘authentic’ sources
a) Income Tax Act
* The ‘SECOND SCHEDULE – Exemptions’ section in the Income Tax Act [2] has a subsection with income exempted from taxation.
b) ZRA Practice Notes
* Practice notes have summaries on PAYE [4]
c) ZRA Income Tax PAYE templates
* See ‘PAYE Direct Payment Return’ e-Form on ZRA Website [5]

* See ‘Income Tax PAYE Monthly P-16’ e-Form on ZRA Website [5]

## Conflicting Information from ZRA
1) FAQ Page [6]
* I am aware of PAYE items on FAQ page [6], however, taking those aspects into account resulted into inconsistencies with sample payslip figures I have worked with in the past

2) PAYE Page [7]
* At some point, the scripts I use did take into account the ‘255 or 15%—whichever is less’ aspect. I, however, dropped it due to discrepancies with sample payslips I looked at. Furthermore, it is evident, by looking at the taxation bands on the page [7], that this information is outdated

3) Calculator
* The calculator you refer to computes tax on ‘chargeable income’ and so cannot be used to make a comparion with the calculator on this page.

## Next Steps
* I shall leave the calculator in its present state until correct input parameters are sourced
* I shall attempt to ping ZRA to verify PAYE computation steps
* I will set up a form, in an attempt to crowdsource additional figures from as many people as possible. Hopefully, we should get a clear picture regarding
* I will attempt to have more individuals share sample payslips to see if that helps

Again, thank you so much for raising the flag.

• Dennis H. Nyekele

This is very resourceful Mr Phiri.

• Bridget Musonda

Mr phiri kindly calculate for me how much tax is removed from a basic pay of k6300.18

• Hello Bridget, ZMW 859.81

• Bridget Musonda

Thanx Mr phiri, so what’s the take home amount after removing Napsa

• NAPSA contribution: ZMW 315.01
Taxable amount: ZMW 5,125.36
Total tax deductions: ZMW 859.81
Net income: ZMW 5,125.36

• Twaambo Nchimmba

mmmmm Mr Phiri
My calculation according to your Tax bands for taxable income is not the same as yours.
Basic Pay 6300.18 (Which in this case is also gross)
Less Allowable deduction of 255
This gives you K6045.18 as your taxable income.
Napsa 5% 315.009
Paye 880.813
Summary
Gross Pay 6,300.18
Napsa (315.01)
Paye (880.81)
Net Pay 5,104.36
Kindly advise where I am wrong.

• Kunda mwansa

hey calculate for me tax amount if my gross is k 6049.59

• ZMW 784.13

• Kunda mwansa

Hey, could you calculate for me the tax on that gross K 12000

• Total tax would be ZMW 2,755.00
* You might want to use calculator in post for detailed breakdown.

• Clement Mwala Siamga

Knock Knock!! Mr. Phiri? Thank you for a greenlight gentleman.

Kindly calculate for me the tax on that gross (k7905.1) and indicate the net pay.

• Clement Mwala Siamga

NAPSA inclusive…

• Anuveer parmar

HI i have entered into a employment with a group in zambia. They had agreed to pay me 2500 USD as monthly pay sunjected to zambian tax laws. could you please suggest me how much would be my net pay after tax deductions.

• Sainet Phiri

Brilliant idea Mr Phiri. These tax issues are usually confussing. Thank you for the initiative. Kindly help with Mr Anuveer Parmar’s question. I am in a similar situation. Kingly help with the calculations

• TAMARA

HI MR PHIRI, KINDLY NEED YOUR HELP, WHAT IS MY TAKE HOME WITH GROSS SALARY OF K 9100

• Ma R Io

hi mr phiri pliz calculate my tax;
basic pay= k2000
house allowance=k600
normal overtime= k1,225.70
double overtime= k 1,288.41
total =k5,114.11

• Lewis Zimba

Hi Mr Phiri, is it possible you can send me an excel basis paye tax calculator. if possible kindly send it to me on this email address, lewis_zimba@yahoo.co.uk. Regards

• Benson M Tembo

Hello Lighton, am inspired by your great work. Kindly send me the paye calculator in word form for 2017. kindly send to bensonmtembo@gmail.com

• Musonda Silvin

Mr Phiri, Is PAYE inclusive of VAT

• Alexander Dube

Mr Phiri. I do not see how your calculator caters for the following condition:

Statutory deductions (contributions to an allowable Pension Scheme, e.g.
NAPSA) up to K255.00 or the actual 15% of the gross salary, whichever
is lower.

• Joseph Chandika

Mr Phiri, Help me with this ambiguity. How should gratuity be calculated, is based on the basic salary or gross salary? Gross meaning basic + housing + transport = total. What does the law say the newly signed one in 2016? If possible mention the CAP n the constitution. Thanks

• Joseph Chandika

I have noticed an normally, I need to consult my payslip first

• Nobby Mapoma

Hi Mr. Phiri, I would like to know how the Terminal Pay was calculated in 2013. For example if one got K18,000.

• Francis Sakala

Mr. Phiri,
Firstly, I would like to appreciate you devotion in sharing information and calculator for PAYE. For years, it has assist many including myself in the calculation.
I d like further assistance on the calculation of gratuity under the current regime and in the light of the new constitution provisions. Lets say your basic pay is K22,000 gross and transport allowance is K5,000 gratuity of 25% per Annam.

• Obvious

Hello Mr. Phiri,

My Basic Pay is K2,725.00
Housing Allowance K1,362.50
Lunch Allowance K425.00
Transport Allowance K817.50
Other Allowances K2,365.30
GROSS TOTAL K7,695.30

Please assist me with the deductions and my net pay at the end of the day for the current tax band

Thank you so much

• Sylvia

Just want clarification on NAPSA. for example Mr. Mono has a monthly salary of 8414 and he is on contract for two year at the end of the contract he will be paid gratuity at 17% basic pay. The gratuity is paid together with his monthly salary in the month his contract ends. monthly Napsa is 420.70 what will be the NAPSa payable by Mr. Mono. If the salary and the gratuity are run separately how is the NAPSA issue handled.

• Appreciative

Thanks for this, very useful.

• Jonijo

Much Appreciated Chief!

• DonzP

How would I calculate the PAYE on a salary of \$6000, the employees will be paid in dollars. Would I have to convert to ZMK on that specific pay date, calculate the PAYE and then reconvert to \$ to pay? Or is there a way I can do the calculation in \$?

• Keddies

I just joined a zimbabwean company that has set up office in zambia, they have a contract saying , Basic Pay \$300, Transport allowance \$100
how best can i account for this salary? do we have to make deductions here in zambia? because they say the office in zambia is more like a branch office, meaning head office is the zimbabwe office.

• Theo36

Dear Mr Phiri, thank you for this calculator. My employer first subtracts K255, then calculates PAYE on the remainder and then deducts K843.97 for NAPSA. I think this is wrong and have tried to discuss it with them but they keep defending their calculation. What do you think?

• Lucky

Your employers calculations are correct. To get the taxable amount you need to deduct K255 from your gross pay as the NAPSA exempt amount. The difference is the taxable amount for PAYE purposes. The maximum amount i.e. 5% NAPSA anyone should pay for 2016 should be K843.97 or less.

• @chibesapensulo:disqus Sorry for the delay. You are right, AFAIK, this is wrong. The ceilings are revised every year and I would advise that you (a) ask your employer’s HR department for clarification by referring to the 2016 memo [1]. NAPSA also has a ‘NAPSA contribution calculator’ on their Website [2]—you will notice that the deductions are based on a maximum ceiling: if you earn more than ZMW 16,879.44, you are suppose to pay ZMW 843.97, otherwise, you pay 0.05% of your gross earnings.

I hope this helps.

• Cee

Hi Lighton, when is the next update, taking into account the 2017 budget changes

• Hello and happy new year! I generally update it a week before the end of the first month of the new year, however, I just updated it. That being said, I will only have a chance to verify it over the weekend.

• Musunga Mwansa Emmanuel

KINDLY ADVISE HOW GRATUITY IS CALCULATED FOR ONE WHOSE HAD A 1 YEAR CONTRACT?

• @Mwapoleni:disqus;
There is presently NO LAW that mandates employers to pay gratuity and so it is left at the desecration of the employer. The calculation is thus determined by employers, and in most cases explicitly included in the employment contract. If it not in your employment contract, you would have to find out from your employer (HR department).
That being said, some common approaches I know in Zambia include:
(a) N% x (total months served x Gross Pay)—N ranges from 15%, 20% or even 25%.
(b) 3 months x Gross Pay
(c) 1 month x Gross Pay
(d) No gratuity

Incidentally, the last organisation I worked for when I was last in Zambia used approach (a).

FUN FACT: The President of the Republic of Zambia previously used to get 25% of total cumulative emoluments—salary and allowances—but now gets 100% gratuity

A person who has held the office of
President shall, upon the expiration of a term of office
or upon ceasing to be President, be paid a gratuity
equal to one hundred percent of the aggregate amount
of emoluments paid or payable to the person in respect
of the period spent in office.

• Musunga Mwansa Emmanuel

thank you

• Lawrence Hanschar

How is non qualifying gratuity tax calculated?

• @lawrencehanschar:disqus;
The most recent Zambia Revenue Authority Practice Notes—PRACTICE NOTES NO. 1/2016—says:

Non – qualifying gratuity is added to the salary for the month in which it is
paid and taxed with reference to the appropriate PAYE tax table.

• Chifundo

Mr Phiri, have you adjust the NAPSA to reflect the ceiling for 2017? I have noticed that the taxable amount your formula gives is after deducting the whole NAPSA amount even if it is more than 255. i thought the NAPSA exempt portion is only 255.

• have you adjust the NAPSA to reflect the ceiling for 2017?

Yes, we updated the calculator the moment you asked about it. Thank you for the reminder.

I have noticed that the taxable amount your formula gives is after deducting the whole NAPSA amount even if it is more than 255. i thought the NAPSA exempt portion is only 255.

Thank you very much for bringing this to our attention, although I do believe a few individuals did bring it up in the past.
You are correct: statutory exempt portion is ZMW 255.00 or 15%, withever is less. There was a slight bug with the script which has now been hopefully fixed.

• Mwaba M

Yes Mr Phiri from step 2 were do you get 745 as the remaining and in step 3 were do you get paye as 125.

• @mwabam:disqus;
Thank you very much for pointing this out. Even though we had updated the calculator, we neglected to make corresponding updates to the post contents. Please do let us know if the steps now make sense.

• Nimit

Hi Mr Phiri,

If a figure of 2000 is put in as the basic on your calculator (5% Napsa of this is K100.00), but on your calculator, the maximum deductible contribution is coming to K255. Shouldn’t this only be the case when the 5% napsa contribution is above K255?

• Thank you for this.
In the calculator, although the maxium allowed deductions is included even for Gross Pays less than ZMW 3300.00, e.g. the ZMW 2000.00 example you used, this does not affect the final computation. You will notice the the PAYE is still ZMW 0.00. It has been included merely to highlight how the maximum allowed deduction is calculated.

Incidentally, the 5% and 255.00 are computed independentally.
* The NAPSA contribution (5% with ceiling of ZMW 894.61 ), including the equivalent employer portion, is given back to the contributor at retirement or after incapacitation.
* The maximum allowed contribution (15% of Gross Pay or 255.00, whichever is lower) is the amount removed from the total Gross Pay, before computing PAYE.
:
:
Imagine a situation where an employee
(a) gets paid a Gross Pay of ZMW 10,000.00
(b) contributes ZMW 500.00 to a pension fund X besides NAPSA (This is very common by the way. When I worked for Celtel/ZAIN/Airtel there was an employee Trust Fund all employees were mandated to contribute towards.)

The maximum allowed deducation for this employee would be computed as follows:

STEP 1: calculate NAPSA
ZMW 500.00 (5% of ZMW 10,000.00)

STEP 2: compute total statutory contributions
ZMW 500.00 (NAPSA + pension fund X)

STEP 3: compute maximum allowed deduction
ZMW 255.00 (15% of ZMW 10,000.00 or 255.00, whichever is lower)

• Musunga Mwansa

Hi Mr phiri
could you include how to calculate the net for an employee exempt from Napsa. Like people above 55 years i think.
Much appreciated

• Yvonne Chungu

I recently joined an Indian company and my contract only states my net income of K5000. I started work on the 5 January 2017. They have a policy of paying or giving their employees an advance on the 15th of each month, and as such I was given K500 against my salary. They also ONLY pay in cash – no transfers or cheques??? However at the end of the month I received a salary of K3833. When I queried this I was told it was probably rata for having started on the 5th of Jan less the K500. Could you kindly confirm this and send me a draft of what my payslip would like?

• disqus_mibzWJKt0c

it was correct infact they over paid you by K23

• silvester

If my basic pay is K8,000.00 medical allowance is K2000.00.transport allowance is K750.00, Housing Allowance K800.00 what would may take home pay?

• disqus_mibzWJKt0c

YOU WILL TAKE HOME K8,231.88

• Karen van Deventer

How di I as a South African citizen claim tax back from Zambia which was deducted from my salary every month for over a year now? And how do I claim NAPSA as well?

Tax is paid by all workers in Zambia either foreign or nationals.However you can claim your pension scheme contributions,submit all proof of deductions of the NAPSA contribution eg payslips and they’ll reimburse you

• Mwiya Liywalii

Can you make a provision for entering salary advances?

• Cee

Hey Lighton, this is a great tool that people really use, have you thought of developing a similar tool to calculate the cost of duty for motor vehicles and other goods depending on categorisation, this could even be done inconjunction with ZRA

• lucky chishimba

Hi Mr Phiri wanted to know my net income, for example my basic is 3000,housing allowance 1051 company transport 460,lunch allowance 345,stat transport 106, subsistence 196 and graduity for one complete year 3000, then given anual leave the previous month march 1538 what should be my net income for april

• Mwaka Kamwendo

• Chabu Mushibi

K8444, your gratuity will be in its entirety while you will/got 5444 from the salary and allowances and acrued leave pay.

• Ellison Jimmy Gondwe

This is good and its very helpful thank you so much

• Bernard Musukuma

• Mwaka Kamwendo

Mr phiri kindly help me I would love to know which allowances are not taxable as at 2017

• Gabriel Kandusa

great work, all perfect

• MUSANIVUTE MBEWE

Nice app. Job welldone

• Ankeet Sinha

I hear NAPSA has become compulsory for non Zambia employees working there. Also that they cannot get it if they leave the country within say 2 years and have to be there till they are 55 years to collect it. Is this true?

• H Kaushik

Hi, If my monthly salary is 45800 ZMW in Zambia then what will be the in hand salary after all tax deduction.

29300

• E.I.G

Hello Guys do we have contracts in Zambia without Gratuity and they run for 3 years??

• MWAPE JOHNSON

how to fill PAYE form and INCOME TAX RETURN FORM

• MWAPE JOHNSON

please me show how to fill this two forms