The Zambia Finland DTA

Signed on:                            3rd November 1978

Came into force on:            18th October 1985

Effective in Zambia on:      1st April 1986

Effective in Finland on:      1st January 1986

Definitions:

  1. Source Countrymeans the country where income is being derived
  2. Residence Countrymeans the country where the person who is deriving income is resident
  3. Permanent Establishmentmeans a fixed place of business which gives rise to income tax liability

Summary of the terms of the treaty:

Class of Income Taxation and profit determination rules
1. Income from immovable property
  • Source Country may tax
2. Business Profits
  • Source country may tax if permanent establishment exists, to the extent that the income is attributable to the permanent establishment
  • For taxation purposes, transactions between a permanent establishment and the parent establishment shall be priced at arm’s length
  • Profits of the permanent establishment may be determined on the basis of an apportionment of the total profits of the enterprise as per custom
3. Shipping and Air Transport
  • Country of effective management may tax, if profits are associated with international traffic
  •  Country of home harbor may tax if place of effective management is aboard a ship; or
  • Resident Country of owner of enterprise may tax if no such home harbor exists.
4. Associated or Related Businesses
  • Transfer Pricing adjustments may be made on transaction relating to the permanent establishment and its related establishments where if pricing is apparently not at arm’s length
5. Dividends
  • Residence Country may tax
  • Source Country may tax:
    • Up to 5% if owner is a company that owns at least 25% shares; or
    • Up to 15% in other cases.
  • If recipient carries on business through a permanent establishment, or performs independent personal services business in the Source Country, then the Source Country max tax
6. Interest
  • Residence Country may tax
  • Source Country may tax up 15%
  •  Interest will be exempt of recipient of income is a government or a government agency of a treaty state
  • For taxation purposes, interest rates between shall exceed open market rates.
7. Royalties
  • Residence Country may tax
  • Source Country may tax:
    • Up 5% on royalties for the use of, or the right to use, any copyright of any cinematograph films, and films or tapes for television or radio broadcasting
    • Up to 15% on royalties for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or any industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience
  • If recipient carries on business through a permanent establishment, or performs independent personal services business in the Source Country, then the Source Country max tax
  • For taxation purposes, royalties between shall exceed open market rates
8. Capital Gains
  • Source country may tax
  • Gains from the alienation of ships and aircraft operated in international traffic, and movable property pertaining to the operation of such ships and aircrafts may be taxed in the Country of effective management of the enterprise.
9. Independent Personal Services
  • Source Country may tax if:
    • Fixed base regularly available to a person is available in the Source Country
    • The person is present in the Source Country for 183 or more days in Source Country in a tax year.
10 Dependent Personal Services
  • Source Country may tax if employment is exercised in Source Country and if:
  • Person is in present in Source Country for a period up to 183 days or more
  • The remuneration is paid by an employer who resident of the Source Country or a Permanent Establishment or fixed base which the employer has in the Source Country
  • Country of effective management of enterprise may tax if remuneration is for employment exercised on international transport vessels.
11. Directors Fees
  • Source Country may tax
12. Artistes and Athletes
  • Source Country may tax,
13. Pensions
  • Pension or similar remuneration that is subject to tax in the Residence Country shall be exempt in the Source Country.
14. Government Service
  • Source Country may tax
15. Students
  • A student or business, technical, agricultural or forestry apprentice shall be exempt from tax if payments are coming from outside the country
  • A student at a university or other institution for higher education or a business, technical, agricultural or forestry apprentice who is present in a Treaty Country for a period not exceeding 365 days is two years shall be exempt from tax in that country
16. Other Income
  • Source Country may tax
17. Capital
  • Source Country may tax or Country of effective management in the case of Ships and Aircrafts

 

18. Personal Allowances.
  • Residents of the Treaty Countries may claim the same personal allowances, reliefs and reductions for the purposes of tax in either Treaty Countries.