PROPERTY TRANSFER TAX (PTT)

There are four categories of assets that qualify as property. They are all immovable
property, which means that PPT does not apply on the transfer of chattels.

Chattels
Chattels are tangible movable property. Most Implement s plant and machinery are
chattels.

Categories of property chargeable are

a) Any land in Zambia (including any building on that land)
b) Any building, structure or other improvements thereon
c) Any share issued by a company in Zambia that is not listed on the Lusaka
Stock Exchange (LuSe); all LuSe listed shares are therefore exempt from PPT
d) Any mining right or interest in a mining right
e) Intellectual property such as trademarks, patents and brands

This unit deals with property transfer tax (PPT) whose summary details are given
below:

1.1 PTT is governed by PTT act cap 340 of the laws of

Zambia

1.2 PTT is a relationship between the transferor and the

transferee

1.3 PTT is chargeable on any person who transfers

property to another person.

1.4 Property Transfer Tax on the transfers of mineral

processing and other mining related licenses at the
applicable rate of 10%

1.5 PTT rate is 5% of the realised value of the property

and the due date is the 14th day of the month
following the month in which the sale took place.

1.6 PTT applies only to immovable properties not

movable properties.eg land, buildings,
improvements, shares in companies etc

1.7 The transfer of property occurs when there is a

change in ownership by way of
a) disposal
b) part disposal (as in the case of shares) and
c) gift (in case of family members generally)

1.1 The realised value is the amount on which PPT is

charged. It is the price at which property is sold on
open market at the time of transfer .it is the higher
of:
a) the contract price or
b) the open market value.

In the case of shares the realised value is the higher

of:
a) the open market value and
b) the nominal value of the shares.
The shares listed on the stock exchange do not
attract the PTT.

1.2 For transfer of mining rights or an interest in

mining rights, the realisable value shall be the
higher of:
a) The actual price of the mining right or
interest in mining right at the time of the
transfer and
b) The value as determined by the
commissioner General.
Mining rights include:
a) A prospecting licence
b) A large-scale mining licence
c) A large-scale gemstone licence
d) A prospecting permit
e) A small-scale mining licence
f) A small-scale gemstone licence
g) An artisan’s mining right

1.3 Transfers to immediate family members do not

attract PTT unless there is consideration paid or
received. An immediate family member is either:
Spouse, own blood child, duly adopted child or step
child. This means such transfers will be treated as
having a Nil realisable value unless there is
consideration paid or received.
1.4 This also applies to intercompany transfers when
re-organisation is taking place, within but not to
outside group members.
1.5 There are also organisations that are exempt from
PTT such as
govt-central and local, foreign govts, UN agencies,
charitable organs, cooperative societies, approved
pension fund organs and political parties registered
under the society act.
1.6 Some transactions are also exempt from PTT such as any stock or
shares listed on the LuSE, TRANSFERS IN DEATH, ETC
1.7 The following are some of the current required documents in the
process;
 The Tax Payer Identification Number (TPIN) for the seller
 The Contract of sale (between the seller and the buyer)
 State consent to assign (obtained from the Ministry of Lands or
City / Municipal Council)
 The Identity Cards / National Registration Card (NRC) for both
the seller and the buyer
 Certificate of Incorporation in the case of a company
 Order of Appointment of Administrator in the case of transfer
of deceased person’s estates
 Power of Attorney for vendor domiciled outside of Zambia if
needed
 A valuation report for property in cases where property value
exceeds ZMW500,000.00
Once these are lodged and PTT is paid in full, the ZRA then issues
a tax clearance certificate and the tax payment receipt. These are
then lodged by the vendor to the Commissioner of Lands.

In case of shares:
Share transfer form 27, latest financial statements of the company where shares
are
held, share certificates and shareholders resolutions.

Example
Moono aged 65 has urgent need for services of a tax consultant on a number
of transfers he has made:
a) He had acquired a piece of land (8 hectares) 10 years ago in Kapiri Mposhi
at a cost of K10,000 from a Mr.Mvula. On 31/10/23 he decided to sell the
land to a Mr. Katapa of Lusaka East, at a new value of K250,000. His
children had no interest in farming.

b) BMC ltd is a company in which he was a shareholder of 40,000 shares

acquired on 31/8/1992 at a cost of K40 per share. The company is not
listed on the stock exchange. The company disposed of 80,000 shares
whose nominal value was K15 on 31/11/2023. The market value per
share was K12. The shares disposed did not affect the shares held by him.

c) Moono, transferred on 1/7/2023, 10,000 shares to his last-born daughter at

a cost of K20 per share. He also transfers 20,000 shares to his 60-year-old
wife at a cost of nil. He sold the remaining 10,000 shares to a close friend a
Mr. Benzu at market value of K28 per share. The nominal value of the
shares was K45.

d) The ministry of lands had repossessed a property in Kalomo and

sold it to him on 30/6/2023 at a cost of K55,000.

e) On 14/9/2023, Moono has transferred a House valued at K130,000 at nil

value to his son the third born in a family of 4 children and a cottage valued
at K40,000 to his nephew who paid K10,000 as consideration agreed upon.
The open market values of the two properties are K180,000 and K55,000 as
per the determination of government property valuers.
Required
a) Calculate the TOTAL PTT payable by Moono, For tax year 2023.
b) Calculate the PTT payable by BMC LTD, For tax year 2023.

SUGGESTED SOLUTION
a) The Total Property Transfer Tax payable by Moono is as follows:

K
1. K250,000 X 5% 12,500
2. K20 X10,000 X 5% 10,000
3. K45 X 10,000 X 5% 22,500
4. K55,000 X 5% 2,750
Total PTT payable 47,750

b) the property transfer tax payable by BMC LTD is:

K15 X80,000 X 5% K60,000.

Example
During the tax year 2023, Mayeya had the following transactions in capital assets:

1. On 2 March 2023, he sold two acres of land for K192,000, before deducting estate
agents’ fees of K5,000. He had originally purchased the land on 4 August 2007 for
K50,500.
2. On 29 April 2023 he sold his Ford Ranger motor van for K194,000. He had purchased
the motor van on 17 January 2017 for K267,000.

3. On 14 January 2023, he disposed of 5,000 K1 ordinary shares out of 15,000 shares he

holds in Eden Plc a LuSE listed company, when the shares were quoted at K3.50 per
share. He acquired the entire holding in April 2014 at a total cost of K30,000.

4. On 5 May 2023, he transferred 3,000 out of the 20,000, K1 ordinary shares he holds
in HVN Ltd, a private Ltd company, to his niece Charissa at nil consideration as a
wedding gift. On that date the shares were valued at K5.50 each using valuation
techniques approved by the Commissioner General. He acquired the shares 10 years
ago at a price of K3.20 per share.

5. On 14 May 2023, he bought 2,000 acres of arable land in Central Province at a

discounted price of K1,200,000, when the market value of the land was K1,350,000.

6. On 10 June 2023, he sold a residential house at a discounted price K250,000, the

Market value of the property on that date being K300,000. The property was acquired
in January 2007 at a cost of K90,000.

Required:
Explain using supporting computations the amount of any property transfer tax arising on
each of the above capital transactions during the tax year 2023.

Suggested Solution

1. Sale of Land
The realised value of land is the higher of its open market valuation and the agreed
contract price. The realised value of the commercial plot will therefore be K192,000.
Incidental costs of sale such as estate agents’ fees are not deductible for the purposes
of determining the realised value and the original purchase cost of the land is
irrelevant.

Property transfer tax arising was:

K192,000 x 5% = K9,600

2. Sale of Ford Ranger

No PTT will arise on the sale of the Ford Ranger as it is not chargeable property for
the purposes of Property Transfer Tax.

3. Sale of Shares in Eden Plc

Shares in a company that is listed on the LuSE is not chargeable property under the
Property Transfer Act and therefore, no property transfer tax will arise on the transfer
of the shares in Eden Plc.
4. Transfer of shares to niece
Property transfer tax will arise on the transfer of shares in HVN Ltd to his niece
because the company is not listed on the Lusaka Stock Exchange and the niece is not
a member of the immediate family.

The realised value of the shares is the higher of the nominal value of the shares and
their open market valuation.

The amount of PTT arising is:

(3,000 x K5.50) x 5% = K825

5. Purchase of Arable land

Property transfer tax is payable by the transferor of the property and not the
transferee. Therefore, no property transfer will be assessed on Mayeya on the
acquisition of the land being the transferee.

6. Sale of Residential House

Property transfer tax will arise on sale of the residential house. The realised value of
the house will be taken as its open market value and property transfer arising is:

K300,000 x 5% = K15,000