According to the Companies Act No. 10 […]

According to the Companies Act No. 10 of 2017, no person can carry on business as a company, business name or incorporated entity in Zambia without registration with the Patents and Companies Registration Agency (PACRA), making registration the first legal gateway for any formal small and medium-sized enterprise (SME).

The Act also provides for incorporation, annual returns and other compliance requirements, meaning that business owners must meet ongoing obligations beyond simply registering their enterprises.

Meanwhile, further checks by the Zambian Business Times (ZBT) indicate that the Income Tax Act, Chapter 323, the Value Added Tax Act No. 4 of 2018 and the Customs and Excise Act establish tax obligations for businesses, including obtaining a Taxpayer Identification Number (TPIN) from the Zambia Revenue Authority (ZRA).

 Depending on their activities and eligibility, businesses must also comply with applicable Turnover Tax, Income Tax, Pay As You Earn (PAYE) and Value Added Tax (VAT) requirements, alongside relevant filing obligations and tax-clearance procedures. The Local Government Act No. 2 of 2019, the Public Health Act, Chapter 295, and fire-safety legislation also impose requirements on businesses operating within local authorities, including applicable business levies, health permits and fire-safety clearances.

However, speaking in an interview with ZBT, economic expert Salwindi Notulu said these requirements can mean additional costs and administrative work for SMEs, particularly where permits, inspections and renewals must be handled separately while businesses are still struggling to establish stable revenue.

 Notulu explained that the survival of SMEs depends on several challenges, including access to finance, tax knowledge, business management and their ability to compete with larger firms. “One of the biggest challenges is the failure to separate the business from the individual, because for most of our SMEs, the individual is the business, so any shock to the individual also becomes a shock to the business,” he said.

Notulu said access to affordable financing remains another major obstacle, arguing that high interest rates and funding criteria that does not always match the needs of small businesses can limit their ability to grow.

He added that although tax incentives might be available to some SMEs, a lack of awareness about the incentives and the requirements for accessing them can prevent businesses from benefiting.

“Most of our SMEs do not enjoy tax incentives, and sometimes it is because they lack knowledge that there are incentives they can apply for, depending on the turnover they generate,” said Notulu.

 The expert further said small businesses face an uphill task competing with larger companies because established firms can benefit from economies of scale, allowing them to spread operating costs across higher volumes of sales.

Notulu said the question of whether SMEs can survive goes beyond registration and compliance as it raises the need for accessible financing, practical business education and clearer guidance on regulatory obligations so that small enterprises can meet the law while building sustainable businesses.

Article by Philip Sinkala