Zambia Botswana DTA

Signed on:                                 9th March 2015

Came into force on:             14th August 2015

Effective in Zambia on:      1st April 2016

Effective in Botswana on:  1st July 2016

Definitions:

  1. Source Country means the country where income is being derived
  2. Residence Country means the country where the person who is deriving income is resident
  3. Permanent Establishment means a fixed place of business which gives rise to income tax liability
Class of Income Taxation and profit determination rules
1. Immovable property
  • Source country may tax
2. Business Profits
  • Source country may tax if permanet establishment exists, to the extyent that the income is attributable to the permanent establishment
  • Royalties, Management consultancy fees, other fees from head office not deductible
  • Bank interest may be deducted
3. International Transport Services
  • Country of effective management may tax
  • I effective management is on a boat or ship, country of home harbor may tax
  • If no harbor exists, then residence country may tax
4. Associated or Related Businesses
  • Open market prices must be used for determination of profits
  • Transfer pricing adjustments may be made should where necessary
5. Dividends
  • Residence country may tax
  • Source Country may tax:
    • Up to 5% if recipient is a company that holds at least 25% shares in the company that is paying
    • Up to 7% if not
  • Source country may tax if payment is made from profits of a permanent establishment that is situated in source country
6. Interest
  • Residence country may tax
  • Source Country may tax up 10%
  • Exempt if recipient is government
  • Source country may tax if interest is associated with the permanent establishment in the source country
7. Royalties
  • Residence country may tax
  • Source Country up 10%
  • Exempt if recipient is government
  • Source country may tax if royalties are associated with the permanent establishment in the source country
8. Technical Fees
  • Residence country may tax
  • Source Country may tax up 10%
  • Exempt if recipient is government
  • Source country may tax if technical fees are associated with the permanent establishment in the source country
9. Capital Gains
  • Source country may tax if shares derive their value from immovable property that is situated in the source country
10. Employment
  • Source country may tax if employment is exercised in source country for e period exceeding 183 days in a tax year.
  • Resident country may tax in the case of international transport services
11. Directors Fees
  • Residence country may tax
12. Entertainers and Sports Persons
  • Source country may tax
  • Exempt if event is sponsored by other treaty country’s government or public funds
13. Pensions and annuities
  • Source country may tax
14. Government Services
  • Source country may tax
15. Students, Apprentices and Business Trainees
  • Exempt on source country
16. Other Income
  • Resident country may tax
17. Capital
  • Source country may tax capital income from immovable property
  • Country of effective management may tax is transport business