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:
- Source Country means the country where income is being derived
- Residence Country means the country where the person who is deriving income is resident
- 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 |
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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
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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
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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
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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
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9. |
Capital Gains |
- Source country may tax if shares derive their value from immovable property that is situated in the source country
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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
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11. |
Directors Fees |
- Residence country may tax
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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 |
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14. |
Government Services |
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15. |
Students, Apprentices and Business Trainees |
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16. |
Other Income |
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17. |
Capital |
- Source country may tax capital income from immovable property
- Country of effective management may tax is transport business
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