When engaging in property transactions in Zambia, one common question arises: Who pays the property transfer tax? In this article, we will provide clear definitions and explanations to help you understand this aspect of real estate transactions.
Defining Property and Property Transfer Tax: In Zambia, property refers to any land, including buildings and additions made to or on the land at the time of transfer. Property Transfer Tax (PTT) is a tax imposed on the sale of property. The tax amount is a percentage of the realizable value, which is determined as the greater value between the free market value and the contract price.
Current Property Transfer Tax Rate: As per the Zambia Revenue Authority (ZRA), the current Property Transfer Tax rate stands at 5%. However, it is advisable to check the prevailing rates annually, as they may be subject to changes guided by the governing ministry.
Responsibility for Paying Property Transfer Tax: According to Zambian law, it is the vendor (seller) who is responsible for paying the Property Transfer Tax. The tax must be paid within 14 days from the date of assessment of the realizable value. The vendor provides a declaration in the PTT provisional return, which is used to assess the realizable value before the property transfer can take place. You can obtain the PTT provisional return form from ZRA tax offices or their web portal. The vendor is required to complete the return and submit additional documents to the ZRA.
Required Documents for Property Transfer Tax: During the process, certain documents are necessary, including:
- Tax Payer Identification Number (TPIN) for the seller
- Contract of sale between the seller and the buyer
- State consent to assign, obtained from the Ministry of Lands or City/Municipal Council
- Identity Cards/National Registration Cards (NRC) for both the seller and the buyer
- Certificate of Incorporation for companies
- Order of Appointment of Administrator in the case of transferring deceased persons’ estates
- Power of Attorney for vendors domiciled outside of Zambia, if applicable
- Valuation report for properties with a value exceeding ZMW500,000.00
Issuance of Tax Clearance Certificate: Once all the required documents are submitted and the Property Transfer Tax is paid in full, the ZRA issues a tax clearance certificate and a tax payment receipt. These documents are then submitted by the vendor to the Commissioner of Lands. This simple explanation of the process can be time-consuming, but fortunately, property conveyancing legal professionals can handle it for you. If you require assistance in this area, please feel free to get in touch.
Have Further Questions? If you have any additional questions or require further information, please leave them in the comment section below or contact us directly for inquiries and feedback.
