Business entity types & details

You can register different types of business entities in Zambia. Choosing the right entity is crucial as it affects your tax obligations, ability to raise capital, and regulatory burden.

Sole Proprietorship

A sole proprietorship might be your best fit if you are a solo entrepreneur looking to start a small business. It is the simplest and most common form of business entity, especially for those just getting started. As a sole proprietor, you are the sole owner and have complete control over your business decisions. This entity type requires minimal regulatory requirements, making it easy to set up and manage.

Partnership

A partnership is suitable for businesses with two or more owners who share profits, responsibilities, and liabilities. There are different types of partnerships, such as general and limited. In a general partnership, all partners manage the business and are personally liable for its debts. In a limited partnership, there are both general partners (who manage the company and have unlimited liability) and limited partners (who invest but do not manage the company and have limited liability). This structure allows for shared decision-making and resources, but it also means shared liability.

Limited Liability Company (LLC)

A Limited Liability Company combines the benefits of a corporation with those of a partnership or sole proprietorship. This business structure offers liability protection to its owners (members), meaning they are not personally liable for the company’s debts and liabilities. It is the most common structure for small to medium-sized enterprises because it provides flexibility in management and tax options. An LLC can have one or more members, and profits and losses can be divided among members without corporate taxes.

Public Limited Company (PLC)

A PLC is suitable for larger businesses that plan to raise capital by selling shares to the public. This type of entity is highly regulated and requires a minimum share capital and adherence to strict reporting and compliance standards. Shareholders own the company, and their liability is limited to their share investment.

Non-Governmental Organization (NGO)

An NGO is the appropriate structure if you aim to operate a non-profit entity that serves the public good. NGOs focus on various areas such as education, health, and community development. They do not distribute profits to members or directors but reinvest them in their mission. Registering as an NGO provides certain tax exemptions and access to funding opportunities from donors and international organizations.

Cooperatives

A cooperative is a business owned and operated by individuals for mutual benefit. Members share profits, decision-making responsibilities, and liabilities equally. This structure is suitable for the agriculture, retail, and housing sectors. Cooperatives aim to meet their members' common economic, social, and cultural needs through a jointly owned and democratically controlled enterprise.

Business Registration Requirements

1. Business name reservation
2. Incorporation form (Form 2)
3. Valid identification documents for directors/shareholders
4. Articles of Association
5. A minimum two shareholders and directors
6. Registered office address
7. Share capital declaration
8. ZRA Taxpayer Identification Number (TPIN)
9. NAPSA registration
10. Industry-specific business permits (if applicable)

Steps of Registering a Business

Step 1: Reserve Your Business Name

The first step in registering a business in Zambia is to reserve your desired business name. Name reservation ensures that your chosen name is unique and yet to be used. You can do this through the Patents and Companies Registration Agency (PACRA). Submit a business name reservation form and wait for confirmation of approval.

Step 2: Prepare Required Documents
Next, gather all necessary documents based on your chosen business structure. For a company, you will need a Certificate of Incorporation, Articles of Association, and details of directors and shareholders. If you are setting up a partnership, you will need a Partnership Agreement. Personal identification documents such as National Registration Cards or passports are registration requirements for sole proprietorships. Make sure you complete and notarize all documents if necessary.

Step 3: Register Your Business with PACRA

With your documents, you can officially register your business with PACRA. Registration involves submitting the approved business name, completing the relevant registration forms, and paying the registration fee. Once processed, PACRA will issue your business with a Certificate of Incorporation (for companies) or a Certificate of Registration (for sole proprietorships and partnerships).

Step 4: Obtain a Tax Identification Number (TPIN)

After registering your business, the next step is to register with the Zambia Revenue Authority (ZRA) to obtain a Tax Identification Number (TPIN). This is essential for tax purposes. Submit your Certificate of Incorporation to ZRA, complete the TPIN application form, and receive your TPIN.

Step 5: Register for Social Security
If your business will have employees, you need to register with the National Pension Scheme Authority (NAPSA). This involves submitting your Certificate of Incorporation to NAPSA, completing the registration forms, receiving a NAPSA registration number, and ensuring compliance with social security requirements.

Step 6: Pay the Business Levy

Before starting operations, you must pay a business levy to your local council, such as the Lusaka City Council. Visit the regional council office, submit your Certificate of Incorporation, and pay the required business levy fee. This step is crucial for obtaining the necessary clearance to operate legally.

Step 7: Register for Value Added Tax (VAT)

If your business’s annual turnover exceeds ZMK 800,000 ($31,329.98) in twelve months or ZMK 200,000 ($7,832.50) in three months, you must register for VAT with the ZRA. Submit your TPIN and Certificate of Incorporation, complete the VAT registration forms, and receive your VAT registration number.

Step 8: Obtain Necessary Licenses and Permits

Depending on the nature of your business, you may need additional licenses and permits. For example, food production or handling companies may require a health clearance and food hygiene license. Check with local authorities to determine which licenses and permits are necessary for your specific business type and ensure all approvals are in place before starting operations.

Step 9: Open a Business Bank Account

Once all legal requirements are met, the final step is to open a business bank account. A dedicated business account is essential for managing your finances efficiently. Choose a bank that fits your business needs, provide your Certificate of Incorporation and TPIN, complete the account opening forms, and deposit the initial amount required to activate the account.

Business Registration Requirements

1. Completed Company Registration Form
2. Certified copies of passport or identity documents
3. Proof of residence (foreign directors/shareholders)
4. Minimum capital requirement (varies by sector)
5. Zambian Investment Certificate (for certain sectors)
6. Taxpayer Identification Number (TPIN) for company and shareholders
7. Business Plan or Feasibility Study (in some cases)
8. Registered office address in Zambia
9. Zambian Employment Permits (for foreign employees)
10. Payment of registration fees

Steps of Business Registration

Step 1: Conduct thorough research about opportunities in Zambia. 

Step 2: Venture into a business form ideal for your objectives and capital share.

Step 3: Give your business a distinct name.

Step 4: Register and validate your brand name by visiting the Patents and Companies Registration Agency (PACRA).

Step 5: Complete the registration fees and send PACRA your company's Memorandum of Association Articles of Association, along with board and ownership Details.

Step 6: Provide a waiver document for the foreign directors. 

Step 7: Provide a copy of every manager's and shareholder's ID or passport as well as evidence of a registered office location

Step 8: Wait for PACRA to issue the Certificate of Incorporation.

Step 9: Get a Taxpayer Identification Number (TPIN) and VAT number by registering for taxation with the Zambia Revenue Authority (ZRA).

Step 10: Before starting activities, obtain the required permits and approvals.

Step 11: Open a Zambian business bank account for your company.

Annual filing documents & requirements

• Businesses in Zambia must file provisional tax returns, financial statements, and annual reports every year.
• Although the rate may vary for different sectors, businesses typically pay 30% corporate tax on their profits. Zambia does not impose a capital gains tax.
• Tax treatment is the same for a foreign-owned domestic branch and locally owned subsidiary. Nonetheless, a 20% withholding tax is assessed on profits remitted to the foreign mother business.
• Licenses for businesses need to be renewed yearly.
• Companies are required to make contributions to the National Pension Scheme Authority (NAPSA).
• Companies that employ foreign workers are required to renew their work permits and visas on a yearly basis in order to comply with immigration laws. 

Registering a business in Zambia is a crucial step toward your entrepreneurial success. Following this guide, you can navigate the registration process smoothly, from reserving your business name with PACRA to obtaining the necessary permits and licenses. 

Legal registration offers significant benefits, including government incentives, legal protections, and enhanced credibility. Understanding the steps and requirements will help you establish a solid foundation for your business in Zambia, whether a local entrepreneur or a foreign investor.

Frequently Asked Questions

 What documents are required to register a business in Zambia?

1. A completed business name reservation form.
2. Articles of Association.
3. Memorandum of Association.
4. Details of directors and shareholders.
5. Proof of Zambian residency is required for directors, and a waiver is required for foreign directors.
6. Personal identification documents (National Registration Cards or passports)

How long does the business registration process take in Zambia?

The business registration process in Zambia can vary, but it generally takes 7 to 14 days. The time frame depends on how quickly you can gather and submit the required documents and the processing time at the Patents and Companies Registration Agency (PACRA).

Can a foreigner fully own a business in Zambia?

According to the Zambian Companies Act of 2017, foreign investors can fully own a local company without requiring Zambian shareholders. This makes Zambia an attractive destination for international business ventures.

How much does it cost to register a business in Zambia?

The costs for registering a business in Zambia vary based on the type of business entity you are registering. Generally, you must pay for name reservations, registration forms, and processing fees at PACRA. Additional costs may include fees for notarizing documents and obtaining necessary licenses and permits.

Do I need to register for VAT if my business is small?

You need to register for Value Added Tax (VAT) if your business’s annual turnover exceeds ZMK 800,000 (approximately $31,329.98) in twelve months or ZMK 200,000 (roughly $7,832.50) in three months. Smaller businesses below these thresholds are not required to register for VAT but may choose to do so voluntarily.