Business entities in Zambia
The most common way of doing business in Zambia is to set up a Zambian limited liability company (LLC). Alternatively, foreign entrepreneurs willing to raise capital in the country may choose to setup a Zambia Public Limited Company (PLC). Foreign companies can also register a branch office in Zambia or a representative office in they do not expect to conduct any commercial and productive operations.
The Zambian limited liability company
- A Zambia LLC is the entity most commonly used by investors starting a SME in Zambia. A LLC is required by law to have two shareholders and to appoint at least two directors who can be of any nationality. One of the directors must however be resident in Zambia;
- The minimum issued share capital required to complete Zambia company setup is US$1,000 (ZMK5 million).
The Zambian public limited company
- This business entity has the capacity to venture into any type of business in Zambia, including banking and financial services. To set up such type of business in Zambia, at least 2 shareholders and 2 directors of any nationality are necessary (like for a LLC, one of the directors must however be resident in Zambia. Set at US$10,000, the minimum of share capital for business setup in Zambia is higher than for the setup of limited liability company in Zambia;
- A Zambian public limited company is recommended for entrepreneurs looking to publicly list the company in the Zambia capital market. PLCs newly listed in the Lusaka Stock Exchange market enjoy a 1 year period of reduced corporate tax at 10%. Companies with local shareholders benefit from an even more advantageous 7% rate.
The Zambian branch office
- A branch of a foreign company is considered as a foreign entity in Zambia. The Zambian Companies Law allows 100% ownership of branches of foreign companies. The scope of operations for this entity will be defined by the branch’s parent company. All branches must appoint a resident director or manager to oversee to the affairs of the company’s activities in Zambia;
- Branches of foreign companies in Zambia are subject to the provisions of the Zambia Companies law. The branch is liable to corporate income tax and is required to submit audited annual financial reports and tax returns.
The Zambian representative office
Just like the other entities, a representative office can be 100% foreign owned. The entity is however not permitted to engage in direct sales nor productive activities within Zambia.
Different types of Zambian business entities
|How long to set the company up?||3 weeks||10 weeks||8 weeks||5 weeks|
|How long to open company bank account?||3 weeks||3 weeks||3 weeks||3 weeks|
|Minimum share capital?||US$1,000||US$10,000||US$0||US$0|
|File annual tax return?||Yes||Yes||Yes||No|
|Corporate bank account?||Barclays||Citibank||Standard Chartered||EcoBank|
|Does our Client need to travel?||No||No||No||No|
|Resident director/representative required?||Yes||Yes||Yes||Yes|
|Zambia shareholder required?||No||Yes||No||No|
|Minimum directors/representatives allowed?||2||2||1||1|
|Company secretary required?||No||No||No||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed?||Yes||Yes||Yes||Yes|
|Zambia corporate tax rate?||Variable||Variable||Variable||N/A|
|Annual financial statements required?||Yes||Yes||Yes||Yes|
|Statutory audit required?||No||Yes||Yes||Yes|
|Allowed to issue sales invoices in Zambia?||Yes||Yes||Yes||No|
|Allowed to sign contracts?||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||No|
|Can rent an office in Zambia?||Yes||Yes||Yes||Yes|
|Can buy Zambia property?||Yes||Yes||Yes||No|
|Can own equity in other Zambian companies?||Yes||Yes||Yes||No|
|Total Zambia business setup costs in Yr. 1||US$15,450||US$16,450||US$17,450||US$17,950|
|Subsequent annual costs (excl. accounting and tax fee)||US$3,850||US$4,850||US$5,850||US$6,150|
|Sample engagement fee invoice|