How to start a company in Zambia as a foreigner

Starting a business in Zambia can be a rewarding venture, but before diving into your entrepreneurial journey, it’s essential to navigate the process of company registration.

Whether you’re launching a startup, expanding an existing business, or exploring new market opportunities, understanding the steps to legally register your company is the first key to unlocking your business success.

Fortunately, Zambia’s government has streamlined the registration process, making it easier than ever to officially establish your business and set it on the growth path.

In this blog, we’ll guide you through the essential steps of company registration in Zambia, from selecting your business structure to obtaining crucial permits, so you can confidently take the first step toward building your dream business.

1. Choose your business structure

Before registering your company, the first step is to determine the type of business structure that best suits your goals, operations, and long-term plans. Each structure has distinct advantages and responsibilities, and choosing the right one is crucial for your business’s success.

• Private Limited Company (Ltd). This is the most common structure for small and medium businesses in Zambia. It allows for limited liability, meaning shareholders are only responsible for the company’s debts up to the amount they’ve invested in the business. This structure is ideal for those who want to protect their assets while still having full control over the business. It also allows for flexibility in ownership and management.
• Public Limited Company (PLC). Best suited for larger businesses, a PLC allows for the sale of shares to the public, which can help raise significant capital. It typically requires a higher level of regulatory compliance and has more shareholders. This structure is perfect for companies looking to expand and operate on a larger scale or those planning to list on the stock exchange.
• Partnership. In a partnership, two or more individuals come together to form a business and share the profits, losses, and liabilities. This is often a preferred structure for small businesses or professional services. However, unlike limited companies, partners have joint and several liabilities, meaning they are personally responsible for the business’s debts and obligations.
• Sole Proprietorship. This structure involves a single individual who owns and operates the business. The owner has full control but also bears unlimited liability, meaning personal assets could be at risk if the business faces financial difficulties. It’s an excellent choice for freelancers or small business owners who prefer to run a business alone and without the complexity of formal registration processes.

2. Reserve your company name

After deciding on your business structure, the next step is to choose a unique name for your company. This is crucial as it establishes your brand identity and ensures that your company name is distinct and not already in use.

• Online Name Reservation. The process of reserving a name is straightforward. You can visit the official website of the Zambia Development Agency (ZDA) or PACRA (Patents and Companies Registration Agency) to search for available names. If your desired name is available, you can reserve it through their online portal.
• How to Reserve. You’ll need to use the PACRA e-Registry system, which allows you to easily submit a name reservation request online. There’s a small fee associated with this step. Once your name is approved, you’ll receive a certificate confirming your name reservation. This certificate is essential for moving forward with your company registration.

3. Register your Company Online with PACRA: Essential for foreigners starting a Business in Zambia

Once your business name is reserved, the next step is to officially register your company with PACRA, Zambia’s main body for business registration.

• PACRA Registration Portal: The registration process is conducted through PACRA’s e-Registry system. This online platform makes it simple to complete the registration without needing to visit their offices in person.
• Required Information: During the registration process, you’ll need to provide detailed information about your business:
  • Business name and structure (Private Limited, Public Limited, etc.).
  • Personal details of directors and shareholders (name, nationality, address).
  • The registered office address for the business.
  • The shareholding structure, including the number of shares and their value.
  • Proof of your business activities, outlining the nature of your business.
• Documents Required: Some of the essential documents include:
  • Company Name Reservation Certificate (received after reserving your business name).
  • ID copies of directors and shareholders.
  • Proof of address for directors and shareholders.
  • Constitution or Articles of Association (for Private Limited Companies).
• Fees: Keep in mind that there are registration fees which vary depending on your company type. Be sure to check PACRA’s fee schedule or a local business consultant to understand the costs involved.

4. Register for a Tax Identification Number (TPIN)

After successfully registering your company with PACRA, the next step is to apply for a Tax Identification Number (TPIN) with the Zambia Revenue Authority (ZRA). The TPIN is essential for fulfilling your tax obligations and will also be required when you open a business bank account.

• Online Application: The TPIN can be obtained through ZRA’s online portal, making this step quick and convenient. The TPIN ensures that your business complies with Zambia’s tax regulations and allows you to manage tax payments effectively.

5. Obtain a business permit and other Licenses (if applicable): How foreigners can comply in Zambia

Depending on the nature of your business, you may need to apply for additional permits or licenses. For example, businesses in sectors such as food, healthcare, or finance are often subject to industry-specific regulations.

• Business permits: You can obtain a business permit from the Zambia Development Agency (ZDA). This permit is required for most businesses, though some industries may require further licenses from specialized regulatory bodies.
• Sector-specific licenses: If your business operates in a regulated sector, it’s important to consult the relevant authority to ensure compliance. For example, food businesses might need permits from the Food and Drugs Authority (FDA), while financial businesses need approval from the Bank of Zambia.

6. Register for NAPSA (National Pension Scheme Authority): Necessary for foreigners starting a company in Zambia

If you plan to hire employees, registering with NAPSA (the National Pension Scheme Authority) is mandatory. This ensures that your employees receive pension benefits and other social security protections.

• Online Registration: The process of registering with NAPSA can also be completed online. This step is critical for maintaining legal compliance with Zambia’s employment laws.

7. Open a business bank account: Key to managing your business finances in Zambia

To manage your business finances effectively, it’s essential to open a business bank account. This will separate your finances from your company’s financial activities and streamline payments and tax reporting.

• Requirements: Typically, you’ll need:
  • A copy of your company registration certificate.
  • Your TPIN.
  • Proof of identification (such as an ID card or passport of the directors).
  • Proof of company address. Make sure the bank account is registered under your company name as per the PACRA records.

8. Ongoing compliance: Essential for foreigners to stay legal in Zambia

Once your company is successfully registered, you’ll need to ensure compliance with ongoing legal and regulatory requirements.

• Annual Returns: PACRA requires that you file annual returns to maintain your company’s active status. Failure to do so may lead to penalties or deregistration.
• Tax Reporting: Stay up-to-date with any tax filings and payments required by the Zambia Revenue Authority (ZRA). Timely tax compliance is crucial to avoid penalties.
• Company Record Updates: Keep your business records up to date, especially in the case of any changes in your company’s structure, shareholders, or directors. This information should be updated with PACRA and other relevant authorities.

Conclusion

By following these steps, you can establish your business in Zambia with ease, ensuring that you meet all legal requirements and set a solid foundation for growth and success.

Online Registration Portal Links:

• PACRA e-Registry Portal: https://www.pacra.org.zm
• Zambia Revenue Authority (ZRA) Portal: https://www.zra.org.zm
• Zambia Development Agency (ZDA): https://www.zda.org.zm

FAQs: Answers for foreigners interested in starting a company in Zambia

• Can a foreigner register a company in Zambia online? Yes, foreigners can register a company in Zambia online and own 100% shares fully. You register through the Patents and Companies Registration Agency (PACRA).
• What types of companies can a foreigner register in Zambia? Foreigners can register a Limited Liability Company (LLC), which is the most common type of business entity, or other company types such as a branch of a foreign company.
• What are the requirements for a foreigner to register a company in Zambia? Key requirements include having at least one Zambian director, proof of identity (passport for foreigners), company name reservation, and a registered office address in Zambia.
• What is the minimum capital requirement for foreigners registering a company in Zambia? The minimum capital requirement varies, but for most businesses, the minimum share capital is ZMW 5,000 (Zambian Kwacha). However, some sectors may require more.
• How long does it take to register a company in Zambia? Company registration in Zambia can take between 3-7 days, provided all you correctly submit all the documents
• What are the fees for registering a company online in Zambia? The fees for company registration depend on the type of company, the number of shareholders, and the company’s authorized capital. Generally, registration fees start at ZMW 300 and can increase based on the company’s share capital.
• Do I need a local partner to register a company in Zambia? You need at least one local (Zambian) director to register a company in Zambia. However, there are certain exceptions for specific sectors like mining or high-level investments.
• Can I open a business bank account as a foreigner in Zambia? Yes, after registering your company, you can open a business bank account in Zambia. You will need to present your company’s registration documents and personal identification.
• Is it necessary to have a physical office in Zambia to register a company? You must provide a physical registered office address in Zambia as part of the registration process. PACRA will use this address for correspondence.
• What are the tax obligations for foreign-owned companies in Zambia? Foreign-owned companies are subject to the same tax laws as local businesses in Zambia. This includes corporate income tax, VAT, PAYE (Pay As You Earn), and other applicable taxes.