INCOME TAX ACT: INDEX TO SUBSIDIARY LEGISLATION - 2
Income Tax (Transfer Pricing) Regulations
Income Tax (Foreign Organisations) (Approval and Exemption) Order, 2001
Income Tax (Foreign Organisation) (Approval and Exemption) Order
Income Tax (Zambia Electronic Clearing House Limited) (Approval and Exemption) Order
Income Tax (Tax Clearance) (Exemption) Regulations, 2006
Income Tax (Advance Tax) (Exemption) Regulation
Income Tax (Foreign Personnel) (Approval and Exemption) Order, 2007
Income Tax (Foreign Personnel) (Approval and Exemption) Order, 2008
Income Tax (Foreign Organisations) (Approval and Exemption) Order, 2009
Income Tax (Turnover Tax) Regulations
Income Tax (Tazama Petroleum Products Company Limited) (Approval and Exemption) Order
Income Tax (Sino-Metals Leach Zambia Limited) (Rebate) Regulations
Income Tax (Double Taxation Relief) (Taxes on Income) (People's Republic of China) Order
Income Tax (Tax Clearance) (Exemption) Regulations, 2011
Income Tax (China-Africa Development Fund) (Approval and Exemption) Order
Income Tax (Foreign Personnel) (Approval and Exemption) Order
Income Tax (Foreign Personnel) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Mauritius) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Seychelles) Order
Income Tax (Pay as You Earn) Regulations
Income Tax (European Investment Bank) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Botswana) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Ireland) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Netherlands) Order
Income Tax (Agence Française De Development and PROPARCO) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Kingdom of Norway) Order
Income Tax (Overseas Private Investment Corporation) (Approval and Exemption) Order
Income Tax (African Management Services Company) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (The Kingdom of Morocco) Order
Income Tax (Tax Agent) (Terms and Conditions) Regulations
Income Tax (Konoike Construction Company Limited) (Approval and Exemption) Order
Income Tax (Royal Haskoning DHV (PTY) Limited) (Approval and Exemption) Order
Income Tax (Remission) (Ndola Lime Company Limited) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (The Swiss Confederation) Order
Income Tax (John Snow Health Zambia Limited) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (United Arab Emirates) Order
INCOME TAX (TRANSFER PRICING) REGULATIONS
[Section 97D(4), (6)]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Provisions supplementary to section 97C(3)
4. Participation in management control or capital of person
5. Direct participants
6. Indirect participants
7. Major participants
8. Meaning of ‘connected person’ and other expressions
9. Joinder of second taxpayer in certain appeals
10. Determination of arm's length principle
11. Comparability
12. Transfer pricing methods
13. Choice of transfer pricing method
14. Selection of tested party
15. Evaluation of person's combined controlled transactions
16. Arm's length range
17. Services between associated persons
18. Transactions involving intangible property
19. Corresponding adjustments
20. Consistency with Organisation for Economic Cooperation and Development
21. Provision of documentation on controlled transaction
22. Maintenance of information
23. Request for information
SI 20 of 2000,
SI 24 of 2018,
SI 107 of 2021.
These Regulation may be cited as the Income Tax (Transfer Pricing) Regulations.
In these Regulations, unless the context otherwise requires—
"Appeals Regulations" means the Revenue Appeals Tribunal Regulations, 1998;
"appropriate allocation method" means a method that allocates total group cost among members of a group in a way that is proportional to the benefits or expected benefits to each member of the group;
[Ins by reg 2(a) of SI 24 of 2018.]
"arm’s length conditions" has the meaning assigned to the term in the Act;
[Ins by reg 2(a) of SI 24 of 2018.]
"associated person" has the meaning assigned to the word under section 97C of the Act;
[Ins by reg 2(a) of SI 24 of 2018.]
"Commissioner-General" has the meaning assigned to the word in the Zambia Revenue Authority Act;
[Ins by reg 2(a) of SI 24 of 2018.]
"comparable transactions" means transactions that are comparable in accordance with regulation 11;
[Ins by reg 2(a) of SI 24 of 2018.]
"comparable uncontrolled price method" means the method which consists of comparing the price charged for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction;
[Ins by reg 2(a) of SI 24 of 2018.]
"comparability factors" means factors specified in regulation 11;
[Ins by reg 2(a) of SI 24 of 2018.]
"controlled transaction" is a transaction between associated persons;
[Ins by reg 2(a) of SI 24 of 2018.]
"cost contributions arrangement" means an arrangement among persons to—
(a) share the costs and risks of developing, producing or obtaining assets, services or rights; and
(b) determine the nature and extent of the interests of each participant in the results of the activity of developing, producing or obtaining the assets, services or rights;
[Ins by reg 2(a) of SI 24 of 2018.]
"cost plus method" means the method which consists of comparing the mark up on those costs directly and indirectly incurred in the supply of property or services in a controlled transaction with the mark up on those costs directly and indirectly incurred in the supply of property or services in a comparable uncontrolled transaction;
[Ins by reg 2(a) of SI 24 of 2018.]
"financial indicator" means in relation to the—
(a) comparable uncontrolled price method, the price;
(b) cost plus method, the mark up on costs;
(c) resale price method, the resale margin;
(d) transaction net margin method, the net profit margin; and
(e) transactional profit split method, the division of the operating profit and loss;
[Ins by reg 2(a) of SI 24 of 2018.]
"information" includes a document and electronic information;
[Ins by reg 2(a) of SI 24 of 2018.]
"low value added service" means a service that—
(a) is not provided by any member of the group to unrelated customers;
(b) does not use or create valuable intangible property; and
(c) does not involve the assumption, control or creation of significant risks;
[Ins by reg 2(a) of SI 24 of 2018.]
"multi-national enterprise" means a business entity that is part of a multi-national enterprise group;
[Ins by reg 2(a) of SI 24 of 2018.]
"multi-national enterprise group" means a group of associated business entities established in two or more countries;
[Ins by reg 2(a) of SI 24 of 2018.]
"resale price method" means the method which consists of comparing the resale margin that a purchaser of property in a controlled transaction earns from reselling that property in an uncontrolled transaction with the resale margin that is earned in comparable uncontrolled purchase and resale transactions;
[Ins by reg 2(a) of SI 24 of 2018.]
"total group costs" means the direct and indirect costs incurred by connected persons in providing the service to members of the group of companies to which a Zambia taxpayer belongs;
[Ins by reg 2(a) of SI 24 of 2018.]
"transactional net margin method" means the method which consists of comparing the net profit margin relative to an appropriate base which includes costs, sales, assets that a person achieves in a controlled transaction with the net profit margin relative to the same base achieved in comparable uncontrolled transactions;
[Ins by reg 2(a) of SI 24 of 2018.]
"transactional profit split method" means the method which consists of allocating to each associated person participating in a controlled transaction the portion of common profit (or loss) derived from such transaction that an independent person would expect to earn from engaging in a comparable uncontrolled transaction;
[Ins by reg 2(a) of SI 24 of 2018.]
"uncontrolled transaction" is transaction between independent persons; and
[Ins by reg 2(a) of SI 24 of 2018.]
"Unit Trust" has the meaning assigned to it by section 72 of the Security Act.
3. Provisions supplementary to section 97C(3)
(1) In sub-section (3) of section 97C, and in this regulation, any reference to an arrangement or agreement includes a reference—
(a) to a transaction an understanding and mutual practice; and
(b) to an arrangement or agreement whether or not it is, or is intended to be, legally enforceable.
(2) For the purpose of sub-section (3) of section 97C, a series of arrangements shall not be prevented from being regarded as a series of arrangements by means of which conditions have been made or imposed as between any two persons by reason of either or both of the following matters:
(a) that there is no arrangement in the series to which both those persons are parties; and
(b) that there is one or more arrangements in the series to which neither of those persons is a party.
4. Participation in management control or capital of person
For the purposes of section 97C, a person participates directly or indirectly in the management, control or capital of a second person at a particular time if, and only if, the first person is at that time—
(a) a direct participant in the second person within the meaning of regulation 5; or
(b) an indirect participant in the second person within the meaning of regulation 6 or 7.
(1) A person is a direct participant in a second person at any time if at that time that second person is a body corporate or partnership controlled by the first person.
(2) For the purpose of sub-regulation (1) ‘control’—
(a) in relation to a body corporate, means the powers of a person to secure—
(i) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate; or
(ii) by virtue of any powers conferred by the articles of association of other body corporate;
that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person; and
(b) in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.
(1) A person in an indirect participant in a second person at a particular time if the first person would be taken to be a direct participant in the second person at that time if the rights and powers attributed to the first person included all the rights and powers specified in sub-regulation (2).
(2) The rights and powers to be attributed as specified in sub-regulation referred to as the potential participant, are—
(a) rights and powers which the potential participant—
(i) is entitled to acquire at a future date; or
(ii) will, at a future date, become entitled to acquire;
(b) rights and powers of other persons to the extent that they are right or powers in accordance with sub-regulation (3);
(c) rights and powers of any other person with whom the potential participant is connected; and
(d) rights and powers which for the purpose of sub-regulation (1) would be attributed to another person with whom the potential participant is connected, if that connected person were himself the potential participant.
(3) For the purpose of sub-regulation (2) the rights and powers of any person are in accordance with this regulation to the extent that—
(a) they are required, or may be required, to be exercised on behalf of, under the direction of, or for the benefit of, the potential participant; and
(b) where a loan has been made by one person to another they are not confined to rights an powers conferred in relation to property of the borrower by the terms of any security relating to the loan.
(4) In paragraph (b) to (d) of sub-regulation (2) and sub-regulation (3), the references to a person’s rights and powers include references to any power which the person—
(a) is entitled to acquire at a future date; or
(b) will, at a future date, become entitled to acquire.
(5) In paragraph (d) of sub-regulation (2), the reference to rights and powers which would be attributed to a connected person if the connected person were the indirect participant includes a reference to rights and powers which, by applying that sub-regulation wherever one person is connected with another, would be so attributed to the connected person through a number of person each of whom is connected with at least one of the others.
(1) A person is an indirect participant in a second person at a particular time if the first person is, at that time, a major participant in the second person, in this regulation referred to as the subordinate, and the subordinate is a body corporate or partnership.
(2) For the purposes of this regulation a person is a major participant in the subordinate at a particular time if at that time—
(a) that person together with another person controls the subordinate; and
(b) those two person each has interests, rights and powers representing at least 40 per cent of the holding, rights and powers in respect of which they, taken together, control the subordinate:
Provided that any question whether paragraph (a) or (b) is satisfied for any two persons shall be determined after attributing to an indirect participant for the purpose of sub-regulation (1) of regulation 6.
(3) For the purpose of sub-regulation (2) ‘control’ has the meaning assigned to it in regulation 5.
8. Meaning of ‘connected person’ and other expressions
(1) For the purposes of regulation 6, two person connected with each other if—
(a) one of them is an individual and the other is that person’s spouse, a relative of that person or of that person’s spouse, or the spouse of such a relative; or
(b) one of them is a trustee of a settlement and the other is—
(i) a person who in relation to that settlement is a settler; or
(ii) a person who is connected with a person falling within sub-paragraph (i).
(2) for the purpose of sub-regulation (1)—
"relative" means a brother, sister, ancestor or lineal descendant; and
"settlement" and "settler" have the meaning assigned to them in section 19 disregarding paragraph (ii) of that section.
(3) References in regulations 4 to 7—
(a) to rights and powers of a person; or
(b) to rights and powers which a person is or will become entitled to acquire.
Include references to rights or powers which are exercisable by that person, or when acquired by that person will be exercisable, only jointly with one or more other persons.
(4) Regulation 4 to 7 and this regulation shall be effected as if—
(a) a unit trust were a company that is a body corporate;
(b) the rights of the participants in the unit trust were shares in the company that the trust is deemed to be;
(c) rights and powers of a person in the capacity of a person entitled to act for the purposes of the unit trust were rights and powers of the unit trust; and
(d) provision made or imposed as between any person in such a capacity and another person were made or imposed as between the unit trust and that other person.
9. Joinder of second taxpayer in certain appeals
(1) This regulation applies where a person, in this regulation referred to as ‘the appellant’, appeals against an assessment to the Revenue Appeals Tribunal and the ground or one of the grounds of the appeal relates to the question whether section 97A applies in relation to any computation relevant to the assessment or whether any computation has made in accordance with that section, and in this regulation that computation is referred to as the relevant computation.
(2) Where the appellant is the first taxpayer in relation to the relevant computation, the person who is the second taxpayer in relation to that computation may be joined as a party to the appeal.
(3) For the purposes of this regulation any reference to the first taxpayer or the second taxpayer shall be construed in accordance with section 97A.
(4) Where the grounds of appeal or one of them is that sub-section (2) of section 97A does not apply in relation to the relevant computation, sub-section (2) of section 97A shall be deemed to apply in determining whether any person is the first taxpayer or second taxpayer in relation to that computation for the purposes of this regulation, but not for the purposes of any appeal.
(5) A second taxpayer shall only be joined as a party to an appeal, so far as the appeal concerns the computation in relation to which that person is the second taxpayer, if that person gives notice, referred to in this regulation as a joinder notice, complying with sub-regulations (8) and (9) within 30 days of the date on which the appellant gave notice of appeal to the Registrar of the Revenue Appeals Tribunal.
(6) The second taxpayer shall give a copy of the joinder notice to the Commissioner General and to the appellant within seven days of the date the notice is given to the Registrar.
(7) The Appeals Regulations shall apply to a joinder notice or a notice purporting to be a joinder notice and to the second taxpayer as they apply in relation of appeal lodged or purporting to be lodged in accordance with regulation 6 of the Appeals Regulations and to the appellant, however described, subject to the following provisions:
(a) regulation 6 of the Appeals Regulations shall not apply;
(b) the Registrar shall not be required to copy the joinder notice to the Commissioner General under sub-regulation (1) of regulation 7 of the Appeals Regulations;
(c) regulation 12 of the Appeals Regulations shall apply to the copy of the joinder notice required by sub-regulation (6) in addition to the joinder notice itself;
(d) where the appellant has appealed against the assessment on more than one ground—
(i) sub-regulation (1) of regulation 8 of the Appeals Regulations shall apply in relation to the second taxpayer’s joinder notice separately from its application to the appellant’s appeal so that the Commissioner General shall lodge, in accordance with sub-regulation (1) or regulation 8, a separate statement of case in response to the joinder notice;
(ii) the Commissioner General and the first taxpayer may produce a separate list of documents to the Registrar for the purposes of sub-regulation (1) of regulation 10 of the Appeals Regulations within seven days of being given the second taxpayer’s joinder notice, and where such a list is produced, the Registrar shall copy that list, instead of the other list, to the second taxpayer in accordance with sub-regulation (2) of regulation 10.
(8) A joinder notice given by a person complies with this sub-regulation if—
(a) it states the name and address of that person;
(b) it identifies the appellant in the appeal to which that person wishes to be joined;
(c) it identifies the assessment and the computation in relation to which that person is the second taxpayer; and
(d) it states the grounds on which the second taxpayer appeals against the assessment, so far as the assessment relates to that computation.
(9) For the purposes of paragraph (a) of sub-regulation (8) the address to be given by the second taxpayer is—
(a) if the second taxpayer carries on a business—
(i) the address of the second taxpayer’s principal place of business in Zambia; or
(ii) if there is no such place, the address of the second taxpayer’s principal place of business outside Zambia; or
(b) if the second taxpayer does not carry on a business—
(i) the address of the second taxpayer’s only or main residence in Zambia; or
(ii) if there is no such place, the address of the second taxpayer’s only or main residence outside Zambia;
and if sub-paragraph (ii) of paragraph (a) or sub-paragraph (ii) of paragraph (b) applies, the joinder notice shall include the name of a person by whom and an address at which service of documents may be effected in Zambia for the purposes of the appeal.
10. Determination of arm's length principle
The Commissioner-General shall cause the determination of whether the conditions of a controlled transaction are consistent with the arm’s length principle specified in section 97A(1) of the Act and the quantum of any adjustment made under section 97A(3) of the Act, in accordance with the provisions of these Regulations.
[Reg 10 ins by reg 3 of SI 24 of 2018; am by reg 2 of SI 107 of 2021.]
(1) An uncontrolled transaction is comparable to a controlled transaction within the meaning of section 97A(1) of the Act when—
[Reg 11(1) am by reg 3 of SI 107 of 2021.]
(a) there are no significant differences between that uncontrolled transaction and a controlled transaction that could materially affect the financial indicator being examined under the appropriate transfer pricing method; or
(b) such differences exist, if a reasonably accurate adjustment is made to the relevant financial indicator of the controlled transaction in order to eliminate the effects of those differences on the comparison.
(2) The Commissioner-General, in causing to be determined whether two or more transactions are comparable, shall consider the following factors to the extent that they are economically relevant to the facts and circumstances of the transactions—
(a) the characteristics of the property or services transferred or supplied;
(b) the functions undertaken by each person with respect to the transactions while taking into account assets used and risks assumed;
(c) the contractual terms of the transactions;
(d) the economic circumstances in which the transactions take place; and
(e) the business strategies pursued by the person and associated person in relation to those transactions.
[Reg 11 ins by reg 3 of SI 24 of 2018.]
(1) The Commissioner-General shall cause to be determined the arm’s length remuneration of a controlled transaction by applying the most appropriate transfer pricing method to the circumstances of the case.
(2) The Commissioner-General shall cause to be selected the most appropriate transfer pricing method from among the approved transfer pricing methods set out in sub-regulation (3), taking into consideration the—
(a) respective strengths and weaknesses of the methods in the circumstance of the case;
(b) appropriateness of the approved transfer pricing method, having regard to the nature of the controlled transaction, determined through an analysis of the functions undertaken by each person in that controlled transaction and taking into account assets used and risks assumed;
(c) availability of reliable information needed to apply the selected transfer pricing method or other transfer pricing methods; and
(d) degree of comparability between controlled and uncontrolled transactions, including the reliability of comparability adjustments, if any, that may be required to eliminate differences between them.
(3) For the purposes of sub-regulation (1), the following transfer pricing methods may be used—
(a) comparable uncontrolled price method;
(b) resale price method;
(c) cost plus method;
(d) transactional net margin method; or
(e) transactional profit split method.
(4) When it is possible to determine an arm’s length remuneration for some of the functions performed by the associated persons in connection with the transaction using one of the approved methods described in sub-regulations (3)(a), (b), (c) or (d), the transactional profit split method shall be applied based on the common residual profit that results once such functions are so remunerated.
(5) The Commissioner-General shall, cause the determination where, taking account of the criteria described in sub-regulation (1), the comparable uncontrolled price method under sub-regulation (3)(b), (c), (d) or (e) can be applied with equal reliability, of arm’s length conditions to be made using the comparable uncontrolled price method.
(6) The Commissioner-General shall, where, taking account of the criteria described in sub-regulation (2), the methods under sub-regulation (3)(a), (b) or (c) and the methods under sub-regulation (3)(d) and (e) can be applied with equal reliability, cause the determination of arm’s length conditions to be made using any of the methods under sub-regulation (3)(a), (b) or (c).
[Reg 12 ins by reg 3 of SI 24 of 2018.]
13. Choice of transfer pricing method
(1) A person may choose only one method to determine the arm’s length remuneration for a given controlled transaction.
(2) A person may apply a transfer pricing method other than the methods under regulation 12(3) where that person can establish that—
(a) none of the methods can be reasonably applied to determine arm’s length conditions for the controlled transaction; and
(b) such other method yields a result consistent with that which would be achieved by independent persons engaging in comparable uncontrolled transactions under comparable circumstances.
(3) A person may apply in writing to the Commissioner-General for use of a method other than those under regulation 12(3), and where the Commissioner-General is satisfied, the Commissioner-General shall grant approval.
(4) The Commissioner-General’s examination of whether the conditions of a person’s controlled transactions are consistent with the arm’s length principle shall be based on the transfer pricing method applied by that person where that person has used a transfer pricing method which satisfies the provisions of this Regulation, to establish the remuneration of a controlled transaction.
(5) The application of the comparable uncontrolled price method shall in relation to transactions involving the acquisition of new or used assets by persons from connected persons not resident in Zambia, require—
(a) the invoice payment for the acquisition of the asset;
(b) proof of when the asset was purchased from an independent third party; and
(c) delivery notice.
(6) The Commissioner-General shall in the case of a used asset, require the subsequent application of the decline in value already amortised since the asset was purchased, as allowed under accounting principles generally accepted in Zambia.
(7) Despite sub-regulations (5) and (6), a technical appraisal may be performed by a third-party expert not employed by the company providing details of the characteristics, scope and other conditions considered in the appraisal, for the purposes of this Regulation—
(a) where an asset is sold in a different state from the one in which it was purchased, excepting ordinary wear and tear;
(b) where there is no third-party invoice; or
(c) in the case of an asset built or assembled using a number of components with several invoices.
[Reg 13 ins by reg 3 of SI 24 of 2018.]
(1) A person shall when applying a cost plus, resale price or transactional net margin method provided under regulation 12(3), select a party, referred to as the "tested party", to the transaction in respect of which a financial indicator, markup on costs, gross margin, or net profit indicator, is tested under the most appropriate transfer pricing method under the circumstances.
(2) A person shall select the tested party in a manner consistent with the functional analysis of the transaction.
(3) A tested party is the party in respect of which—
(a) a transfer pricing method may be applied in the most reliable manner;
(b) the most reliable comparables can be found; and
(c) has the less complex functions.
(4) The Commissioner-General shall, require the financial information on the tested party in addition to the information under sub-regulation (14), irrespective of whether the tested party is a domestic or foreign entity where the most appropriate transfer pricing method in the circumstances of the case, is determined following the provisions of sub-regulation (6) is a one-sided method.
(5) A person shall where the most appropriate method is a cost plus, resale price or transactional net margin method and the tested party is the foreign entity, require sufficient information to be able to reliably apply the selected method to the foreign tested party and to enable a review by the Commissioner-General of the application of the method to the foreign tested party.
[Reg 14 ins by reg 3 of SI 24 of 2018.]
15. Evaluation of person’s combined controlled transactions
If a person carries out, under the same or similar circumstances, two or more controlled transactions that are economically closely linked to one another or form a continuum that cannot reliably be analysed separately, those transactions may be combined to—
(a) perform the comparability analysis provided under regulation 11; and
(b) apply the transfer pricing methods provided in regulation 12.
[Reg 15 ins by reg 3 of SI 24 of 2018.]
(1) For the purposes of these Regulations, an arm’s length range is a range of relevant financial indicator figures including prices, margins or profit shares produced by the application of the most appropriate transfer pricing method as provided under regulation 12, to a number of uncontrolled transactions, each of which is relatively equally comparable to the controlled transaction based on a comparability analysis conducted in accordance with regulation 11, except that in some cases, not all comparable transactions examined will have a relatively equal degree of comparability.
(2) A controlled transaction, or a set of transactions that are combined under regulation 15, shall not be subject to an adjustment under section 97A of the Act where the relevant financial indicator derived from the controlled transaction or set of transactions and being tested under the appropriate transfer pricing method is within the arm’s length range.
(3) Where it is possible to determine that an uncontrolled transaction has a lesser degree of comparability than another, those transactions shall be eliminated.
(4) Where every effort has been made to exclude points that have a lesser degree of comparability, and what is arrived at is a range of figures for which it is considered, given the process used for selecting comparables and limitations in information available on comparables, that some comparability defects remain that cannot be identified or quantified, those transactions shall not be adjusted.
(5) In the cases referred to in sub-regulation (4), where the range includes a sizeable number of observations, a person shall use the interquartile range to enhance the reliability of the analysis.
(6) The Commissioner-General shall, where the relevant financial indicator derived from a controlled transaction, or from a set of controlled transactions that are combined under regulation 13, falls outside the arm’s length range, adjust the indicator pursuant to section 97A(3), and that adjustment shall be to a point in the arm’s length range that best reflects the circumstances of the case.
(7) Despite sub-regulation (6), the Commissioner-General may, in the absence of persuasive evidence for the selection of a particular point in the range, select the midpoint in the range.
[Reg 16 ins by reg 3 of SI 24 of 2018.]
17. Services between associated persons
(1) A service charge between associated persons shall be considered consistent with the arm’s length principle where—
(a) it is charged for a service that is actually rendered;
(b) the service provided or rendered was expected to provide the recipient of the service with economic or commercial value to enhance the recipient’s commercial position;
(c) it is charged for a service that an independent person in comparable circumstances would have been willing to pay for if performed for it by an independent person, or would have performed inhouse for itself; and
(d) the amount of the charge corresponds to that which would have been agreed between independent persons for comparable services in comparable circumstances.
(2) A service charge made to a person shall not be consistent with the arm’s length principle where it is made by an associated person solely because of the shareholder’s ownership interest in one or more other group members, including for any of the following costs incurred or activities undertaken by that associated person—
(a) costs or activities relating to the juridical structure of the parent company of that person, such as meetings of shareholders of the parent, issuing of shares in the parent company and costs of the parent company’s supervisory board;
(b) costs or activities relating to reporting requirements of the parent company of that person, including the consolidation of reports; and
(c) costs or activities related to raising funds for the acquisition of participations, unless those participations are directly or indirectly acquired by that person and the acquisition benefits or is expected to benefit that first-mentioned person.
(3) Subject to the provisions of regulation 15, a person shall, where it is possible to identify specific services provided by that person to an associated person, determine whether the service charge is consistent with the arm’s length principle for each specific service.
(4) Where a service is rendered by a person to various associated persons jointly and it is not possible to identify a specific service provided to each of them, the total service charge shall be allocated among the associated persons that benefit or expect to benefit from the services in accordance with a reasonable allocation criteria under these Regulations.
(5) For the purpose of sub-regulation (4), allocation criteria shall be viewed as reasonable where they are based on a variable or variables that—
(a) take into account the nature of the services, the circumstances under which they are provided and the benefits obtained or that were expected to be obtained by the persons for which the services are intended;
(b) relate exclusively to uncontrolled transactions; and
(c) are capable of being measured in a reasonably reliable manner.
(6) An amount charged for the provision of a low value added service between connected persons shall be considered as arm’s length if—
(a) the amount is based on an allocation to each person that receives a low value added service of the total group costs of providing the services;
(b) the allocation of these costs is based on an appropriate allocation method;
(c) the cost plus method is applied to these costs; and
(d) the markup on these costs is five per cent.
[Reg 17 ins by reg 3 of SI 24 of 2018.]
18. Transactions involving intangible property
(1) The determination of arm’s length conditions for controlled transactions involving licenses, sales or other transfers of intangible property between associated persons shall take into account both the perspective of the transferor of the property and the perspective of the transferee, including the pricing at which a comparable independent enterprise would be willing to transfer the property and the value and usefulness of the intangible property to the transferee in its business.
(2) A person shall, in applying the provisions of regulation 11 to a transaction involving the license, sale or other transfer of intangible property, consider any special factors relevant to the comparability of the controlled and uncontrolled transactions, including—
(a) the expected benefits from the intangible property;
(b) the commercial alternatives otherwise available to the acquirer or licensee derived from the intangible property;
(c) any geographic limitations on the exercise of rights to the intangible property;
(d) the exclusive or non-exclusive character of the rights transferred; and
(e) whether the transferee has the right to participate in further developments of the intangible property by the transferor.
(3) For the purposes of this regulation—
"intangible property" includes any property which is not a physical or a financial asset, and is capable of being owned or controlled for use in commercial activities and includes patent, invention, secret formula or process, design, model, plan, trademarks, know-how, or marketing intangibles.
[Reg 18 ins by reg 3 of SI 24 of 2018.]
(1) The Commissioner-General shall, after a request is made by a person, examine the consistency of an adjustment with the arm’s length principle of section 97A(2) of the Act, consulting as necessary with the competent authority of the other country where—
(a) an adjustment to the conditions of transactions between any person and an associated person is made or proposed by a tax administration in a country other than Zambia;
(b) the adjustment results in the taxation in that other country of an amount of profits on which the person has already been charged tax in Zambia; and
(c) the country making or proposing the adjustment has a tax treaty with Zambia that reflects an intention to provide for the relief of economic double taxation.
(2) The Commissioner-General shall, if the adjustment proposed or made by the other country is consistent with the arm’s length principle both in principle and as regards the amount, make a corresponding adjustment to the amount of the tax charged in Zambia to that person on those profits, in order to eliminate the economic double taxation that would result from the inclusion of the same profits in the taxable income of both the person and the associated person.
(3) For purposes of this regulation—
"economic double taxation" means the taxation of the same income twice in the hands of two different taxpayers.
[Reg 19 ins by reg 3 of SI 24 of 2018.]
20. Consistency with Organisation for Economic Cooperation and Development
(1) These Regulations shall be construed in a manner consistent with—
(a) the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations as supplemented and updated from time to time; and
(b) the United Nations (UN) Practical Manual on Transfer Pricing for Developing Countries as supplemented and updated from time to time.
(2) Where there is any inconsistency between the Act, these Regulations and the OECD Guidelines or the UN manual referred to in this regulation, the Act and these Regulations shall prevail to the extent of the inconsistency.
[Reg 20 ins by reg 3 of SI 24 of 2018.]
21. Provision of documentation on controlled transaction
(1) A person participating in a controlled transaction shall prepare on an annual basis and have in place contemporaneous documentation that verifies that the conditions in its controlled transactions for the relevant tax year are consistent with the arm’s length principle.
(2) This regulation does not apply to a person whose annual turnover is below twenty million Kwacha in any charge year.
(3) The threshold referred to in sub-regulation (2) shall not apply to a multi-national enterprise.
(4) The contemporaneous documentation referred to in sub-regulation (1) shall include records and documents that describe—
(a) the controlled transaction, including the nature, terms and price of each controlled transaction, details of property transferred or services provided and the quantum and the value of each respective transaction;
(b) the identity of associated persons involved in each controlled transaction and the relationship with the associated person;
(c) a detailed comparability analysis of the person and associated person with respect to each documented category of controlled transaction, including the functions performed, risks borne, tangible and intangible assets used, and any changes made compared to prior years;
(d) the details of other controlled transactions that directly or indirectly affect the pricing of the subject controlled transaction;
(e) a record of the economic forecasts, budgets or other financial estimates prepared by the person for that person’s business as a whole, or separately for each division or product that may have a bearing on a controlled transaction;
(f) uncontrolled transactions and information on financial indicators for unrelated parties relied on in the transfer pricing analysis, including a description of the comparables search methodology, a record of the nature, terms and conditions relating to any uncontrolled transaction with unrelated parties relied upon in the transfer pricing analysis;
(g) the details of any comparability adjustments performed indicating whether they have been performed on the tested party on the comparable uncontrolled transaction or both;
(h) the transfer pricing methods considered in determining the arm’s length price in relation to each transaction or class of transaction, the method selected as the most appropriate method why that method was selected and how that method was applied in each controlled transaction;
(i) which associated person is selected as the tested party and an explanation for the choice of the tested party;
(j) a summary of financial information used and the assumptions made in applying the transfer pricing methodology;
(k) the reasons for performing a multiyear analysis, where applicable;
(l) the assumptions, policies and price negotiations, if any, which have critically affected the determination of the arm’s length price;
(m) details of the adjustments, if any, made to the transfer price to align it with arm’s length price and consequent adjustment made to the total income for tax purposes;
(n) the reasons for concluding that the controlled transactions were conducted on an arm’s length basis based on the application of the selected transfer pricing method;
(o) information and allocation schedules showing how the financial data used in applying the transfer pricing method may be tied to the annual financial statements of the taxpayer;
(p) summarised schedules of relevant financial data for comparables used in the analysis; and
(q) any other information including information relating to the associated person that may be relevant for determination of the arm’s length price.
(5) The records and documents referred to in sub-regulation (3) shall be provided to the Commissioner-General upon request.
(6) For the purposes of this regulation—
"contemporaneous documentation" means documentation which is generated when a person is developing or implementing a controlled transaction.
[Reg 21 ins by reg 3 of SI 24 of 2018.]
22. Maintenance of information
(1) A person who engages in a controlled transaction shall maintain information in respect of the transaction, the associated person and the transfer pricing method used.
(2) The information maintained under sub-regulation (1) shall include—
(a) a description of the management structure of the local entity to which local management reports are sent and the geographical location of senior executives;
(b) a profile of the multi-national group which the person is a part of and the name, address, legal status and country of tax residence of each of the persons comprised in the group with which controlled transactions have been made and the details pertaining to the ownership of the companies;
(c) a detailed description of the business of the person, the industry in which that person operates and the business of associated persons with whom that person has controlled transactions; and
(d) a statement on whether the person has been involved in or affected by business restructuring or intangible transfers in the current or immediate past year and explanation of aspects of the transactions affecting that person.
(3) The information kept under sub-regulation (2) shall be prepared by the due date of the annual return submission, but shall not be submitted with that return.
(4) The information maintained under sub-regulation (1) shall include—
(a) a chart illustrating the multi-national enterprise’s legal and ownership structure and the geographical location of operating entities comprising that enterprise;
(b) general written description of the multi-national enterprise’s business including—
(i) important drivers of business profit;
(ii) the supply chain for the group’s five largest product or service offerings by turnover and any other products or services accounting for more than five per cent of group turnover;
(iii) important service arrangements between members of the multi-national enterprise group, other than research and development services, including a description of the capabilities of the principal locations providing important services, and the transfer pricing policies for allocating services costs and determining prices to be paid for intragroup services;
(iv) the main geographic markets for the group’s products and services that are referred to in regulation 6(2)(b);
(v) a brief functional analysis of the principal contributions to value creation by individual entities within the group, including key functions performed, important risks assumed and important assets used; and
(vi) important business restructuring transactions, acquisitions and divestitures that occur during a financial year;
(c) a genera
(d) a list of intangibles or groups of intangibles of the multi-national enterprise group that are important for transfer pricing purposes and which entities legally own them;
(e) a list of important agreements among identified associated persons related to intangibles, including cost contribution arrangements, principal research service agreements and licence agreements;
(f) a general description of the group’s transfer pricing policies related to research and development and intangibles;
(g) a general description of any important transfers of interests in intangibles among associated persons during the fiscal year concerned, including the entities, countries, and compensation involved;
(h) a general description of how the group is financed, including important financing arrangements with unrelated lenders;
(i) the identification of any members of the group that provide a central financing function for the group, including the country under which laws the entity is organised and the place of effective management of such entities;
(j) a general description of the multi-national entity group’s general transfer pricing policies related to financing arrangements between associated enterprises;
(k) the group’s annual consolidated financial statement for the financial year concerned if otherwise prepared for financial reporting, regulatory, internal management, tax or other purposes; and
[Reg 22 ins by reg 3 of SI 24 of 2018.]
(1) The Commissioner-General may, by notice in writing, request a person to submit the information kept for purposes of these Regulations.
(2) A person shall, within 30 days from the date of issue of the notice referred to in sub-regulation (1), provide the information to the Commissioner-General.
(3) Where a document required for purposes of these Regulations is not in English, the person required to submit it shall, at the person’s own expense, produce a translation in English, prepared and certified by a translator before a Notary Public.
(4) A person who fails to furnish any information to the Commissioner-General upon receipt of a notice under sub-regulation (1), commits an offence and is liable, upon conviction, to the penalties specified in the Act.
(5) The obligation of a taxpayer to provide documentation is without prejudice to the power of the Commissioner-General to request additional information that in the course of audit procedures the Commissioner-General considers necessary to carry out the Commissioner-General’s functions.
[Reg 23 ins by reg 3 of SI 24 of 2018.]
INCOME TAX (FOREIGN ORGANISATIONS) (APPROVAL AND EXEMPTION) ORDER, 2001
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 66 of 2001.
This Order may be cited as the Income Tax (Foreign Organisations) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule to this Order, the European Investment Bank is hereby approved for the purposes of exemption from tax.
The income and emoluments of the foreign organisation approved in paragraph 2 of this order accruing under the Agreement described in Schedule to this Order shall be exempt from tax under sub-paragraph (b) of paragraph 4 in Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Finance Contract between Barclays Bank of Zambia Limited, Indo-Zambia Bank Limited, Industrial Credit Company Limited, Stanbic Bank Zambia Limited and ULC Zambia Limited (Borrowers) on the one part and European Investment Bank (as Lender) on the other part, for a loan facility ("credit") in the amount of eight million Euros (ECU 8,000,000) under the Mining Sector Diversification Programme financed by the 8th European Development Fund (SYSMIN funds).
INCOME TAX (FOREIGN ORGANISATION) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 100 of 2001.
This Order may be cited as the Income Tax (Foreign Organisation) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule to this Order, the European Investment Bank is hereby approved for the purpose of exemption from tax.
The income and emoluments of the foreign organisation approved in paragraph 2 of this Order accruing under the Agreement described in the Schedule to this Order shall be exempt from tax under sub-paragraph (b) of paragraph 4 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Finance contract between African Banking Corporation Zambia Limited Barclays Bank of Zambia Limited, Indo-Zambia Bank Limited, Industrial Credit Company Limited, Stanbic Bank Zambia Limited and Standard Chartered Bank Zambia plc (as Borrowers) on the one part and the European Investment Bank (as Lender) on the other part, for a loan facility ("credit") in the amount of 20 million Euros (ECU 20,000,000) under the Capital Investment Line Global Loan II A (CIL II) of the Lome Convention.
INCOME TAX (ZAMBIA ELECTRONIC CLEARING HOUSE LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval and exemption from tax
SI 55 of 2004.
This Order may be cited as the Income Tax (Zambia Electronic Clearing House Limited) (Approval and Exemption) Order.
2. Approval and exemption from tax
(1) The Zambia Electronic Clearing House Limited is hereby approved for the purpose of exemption from tax.
(2) The income of the company approved in sub-paragraph (1) shall be exempt from tax under sub-paragraph (2) of paragraph 5 of Part III of the Second Schedule to the Act.
INCOME TAX (TAX CLEARANCE) (EXEMPTION) REGULATIONS, 2006
[section 81B]
Arrangement of Regulations
Regulation
1. Title
2. Exemption of goods or services from the requirement to produce a tax clearance certificate
3. Exemption of agricultural products from the requirement to produce a tax clearance certificate
4. Revocation of S.I. No. 5 and 23 of 2006
SI 40 of 2006.
These Regulations may be cited as the Income Tax (Tax Clearance) (Exemption) Regulations.*
2. Exemption of goods or services from the requirement to produce a tax clearance certificate
Where goods or services of a value not exceeding 2,00,000 kwacha per transaction are supplied by any person or partnership, no tax clearance certificate shall be required.
3. Exemption of agricultural products from the requirement to produce a tax clearance certificate
Notwithstanding regulation 2, where agricultural products of a value not exceeding one million, five hundred thousand kwacha per transaction are supplied by any person or partnership, no tax clearance certificate shall be required.
4. Revocation of S.I. No. 5 and 23 of 2006
The Income Tax (Withholding Tax) (Exemption) Regulations are hereby revoked.
INCOME TAX (ADVANCE TAX) (EXEMPTION) REGULATIONS
[Section 81C]
Arrangement of Regulations
Regulation
1. Title
2. Exemptions from advance tax
SI 29 of 2007.
These Regulations may be cited as the Income Tax (Advance Tax) (Exemption) Regulations.*
2. Exemptions from advance tax
The persons, partnerships and organisations set out in the Schedule to these Regulations shall be exempt from paying advance tax.
[Regulation 2]
EXEMPT PERSONS, PARTNERSHIPS AND ORGANISATIONS
1. Government Ministries.
2. Any organisation whose income is exempt from tax under paragraph 4 of Part II of the Second Schedule to the Income Tax Act.
3. Any Organisation whose income is exempt from tax under paragraph 5 of Part III of the Second a Schedule to the Income Tax Act.
4. Any charitable institution or body of persons or trust whose income is exempt from tax under sub-paragraph (1) of paragraph 6 of Part III of the Second Schedule to the Income Tax Act.
5. Any other person or partnership importing goods for commercial purposes provided that, that person or partnership has—
(a) a valid tax clearance certificate; and
(b) a taxpayer identification number (TPIN) issued by the Commissioner-General.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER, 2007
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign personnel
3. Exemption from tax
SI 94 of 2007.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.
2. Approval of foreign personnel
With respect to the Agreement described in the Schedule to this Order, any income received by expatriate staff of the Centre for infectious Disease Research in Zambia is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph 2 shall be exempt from tax pursuant to sub-paragraph (c) of paragraph 3 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the University of Alabama at Birmingham through the Centre for Infectious Disease Research in Zambia and the Ministry of Health on behalf of the Republic of Zambia dated 20th June, 2005, regarding the provisions of AIDS prevention and treatment services, and other health care services, to the people of Zambia.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER, 2008
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign personnel
3. Exemption from tax
SI 82 of 2008.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.
2. Approval of foreign personnel
With respect to the Agreement described in the Schedule to this Order, any income received by expatriate staff employed under the Danish Waster Sector Programme Support, Zambia 2006-2010, is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph (2) shall be exempt from tax pursuant to sub-paragraph (c) of paragraphs (3) of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the Government of the Kingdom of Denmark and the Minister of Finance and National Planning on behalf of the Government of the Republic of Zambia dated 22nd December, 2005, regarding Danish assistance to the Waster Sector Programme Support, Zambia, 2006-2010.
INCOME TAX (FOREIGN ORGANISATIONS) (APPROVAL AND EXEMPTION) ORDER, 2009
[section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval and exemption from tax
SI 2 of 2009.
This Order may be cited as the Income Tax (Foreign Organisations) (Approval and Exemption) Order.
2. Approval and exemption from tax
(1) The following Organisations are hereby approved for the purpose of exemption from tax—
(a) the African Development bank; and
(b) the African Export Import Bank.
(2) The Income of the institutions approved in paragraph (2) of this Order shall be exempt from tax under sub-paragraph (5) of paragraph 5 of part III of the Second Schedule to the Act.
INCOME TAX (TURNOVER TAX) REGULATIONS
[Section 64A]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Notification of receipt of income
4. Payment and refund of turnover tax
5. Assessment of turnover tax
6. Change from income tax to turnover tax or vice versa
7. Returns
8. Retention of records liability
9. Cessation of liability to pay turnover tax
10. Penalties
SI 47 of 2009,
SI 75 of 2009,
SI 95 of 2013,
SI 70 of 2014,
SI 108 of 2021.
These Regulations may be cited as the Income Tax (Turnover Tax) Regulations.
In these Regulations, unless the context otherwise requires—
"income tax month" means any calendar month of a respective charge year;
[Ins by reg 2(a) of SI 75 of 2009.]
"return" means a return under Regulation 7; and
[Am by reg 2(b) of SI 75 of 2009.]
"turnover" includes gross earnings, income, revenue, takings, yield or proceeds, but does not include interest, royalties or dividends.
[Subs by reg 2 of SI 108 of 2021.]
3. Notification of receipt of income
A person liable to pay turnover tax under sub-section (2) of section 64A of the Act shall, within 30 days of receipt of any income, notify the Commissioner-General of the receipt of the income.
[Reg 3 subs by reg 3 of SI 75 of 2009.]
4. Payment and refund of turnover tax
(1)Turnover tax shall be due and payable on the 14th day of the month following the end of the income tax month or within such other period as the Commissioner-General may, in a particular case, determine.
(2) Where the Commissioner-General determines that a person has paid an amount in excess of the turnover tax due, the Commissioner-General shall cause the excess to be refunded to the person.
(1)The Commissioner-General may make an assessment in respect of the person liable to pay turnover tax at the end of the charge year.
(2) Notwithstanding sub-regulation (1), the Commissioner-General may make an assessment in respect of the person liable to pay turnover tax, before the end of the charge year if—
(a) the Commissioner-General has reasonable grounds to believe that the person is about to leave the Republic; and
(b) a return has not been submitted by the person.
6. Change from income tax to turnover tax or vice versa
A change by any person from income tax to turnover tax, or vice versa, shall take effect at the beginning of the charge year or on such other date as the Commissioner-General, by notice determine.
(1) A person liable to pay turnover tax for any charge year shall furnish, to the Commissioner-General, a return of turnover and such particulars as may be required for the purposes of ascertaining the turnover chargeable, and the tax liable due, under the Act
(2) A return of turnover for purposes of sub-regulation (1) may be submitted manually within five days from the end of the income tax month to which it relates.
[Reg 7(2) subs by reg 2 of 95 of 2013, reg 3 of SI 70 of 2014.]
(3) An electronic return shall be lodged within 14 days from the end of the income tax month to which it relates.
[Reg 7(3) subs by reg 3 of SI 70 of 2014.]
8. Retention of records liability
(1) A person shall retain, in the English language, records relating to the business carried on by the person, as may be required by the Commissioner-General to determine the person's turnover tax.
(2) The records under sub-regulation (1) shall be retained for a period of six years from the date of issue of each particular record.
9. Cessation of liability to pay turnover tax
A person shall cease to be liable to pay turnover tax under the following circumstances—
(a) if the person is adjudged bankrupt;
(b) in the case of a sole proprietor, upon the death of the person;
(c) upon the winding up of the person's business; or
(d) any other circumstances as may be determine by the Commissioner-General
A person who contravenes these Regulations commits and offence and is liable to the penalties provided for under the Act.
[Regulation 7(2)]
[Form to be completed in triplicate]
Zambia Revenue Authority
Domestic Taxes Division
INCOME TAX ACT
The Income Tax (Turnover Tax) Regulations, 2009
TURNOVER TAX RETURN
FULL NAMES OF TAXPAYER | PERIOD |
POSTAL ADDRESS | TPIN |
PHYSICAL ADDRESS | ACCOUNT NO. |
SOURCE OF INCOME
(e.g.: farming, manufacturing, rental etc)
AMOUNT OF TURNOVER IN KWACHA
SOURCE 1 | K |
SOURCE 2 | K |
SOURCE 3 | K |
SOURCE 4 | K |
SOURCE 5 | K |
SOURCE 6 | K |
WITHHOLDING TA DEDUCTED
(To be completed in month 12)
TOTAL WITHHOLDING TAX DEDUCTED K
DECLARATION
I declare that the information given is true and correct
Name:…………………………………. Capacity………………………………..
Signature………………………………. Date:…………………………………….
FOR OFFICIAL USE ONLY
DATE RECEIVED | CHEQUE No. | AMOUNT K…………............. |
OFFICIAL NAME | OFFICE'S SIGNATURE | RECEIPT No………………… |
INCOME TAX (TAZAMA PETROLEUM PRODUCTS COMPANY LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 14]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval and exemption from tax
SI 12 of 2010.
This Order may be cited as the Income Tax (Tazama Petroleum Products Company Limited) (Approval and Exemption) Order.
2. Approval and exemption from tax
(1) The Tazama Petroleum Products Company Limited is hereby approved for the purpose of exemption from tax.
(2) The Income of the company approved in sub-paragraph (1) shall be exempt from tax under sub-paragraph 5 of paragraph 5 of Part III of the Second Schedule to the Act.
INCOME TAX (SINO-METALS LEACH ZAMBIA LIMITED) (REBATE) REGULATIONS
[Section 15A]
Arrangement of Regulations
Regulation
1. Title
2. Effective date
3. Rebate of income tax
SI 43 of 2010.
These Regulations may be cited as the Income Tax (Sino-Metals Leach Zambia Limited) (Rebate) Regulations.
These Regulations shall be deemed to have come into effect on 1st April, 2005.
The Minister hereby grants a rebate of the income tax payable, in respect of the operations of Sino-Metals Leach Zambia Limited, for the charge years covering the period from 1st April, 2005, to 31st March, 2009.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (PEOPLE'S REPUBLIC OF CHINA) ORDER
[Section 76]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 81 of 2010.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (People's Republic of China) Order.*
It is hereby declared that the Agreement, the text of which is set out in the schedule to this Order, being an Agreement relating to relief from double taxation on income made between the Government of the Republic of Zambia and the Government of the People's Republic of China shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of Zambia and the Government of the People's Republic of China.
Desiring to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on income
(hereinafter referred to as "the Agreement").
ARTICLE 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or its local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which the Agreement shall apply are in particular:
(a) in Zambia:
(i) the income tax (hereinafter referred to as "Zambian tax");
(b) in China:
(i) the individual income tax;
(ii) the enterprise income tax; (hereinafter referred to as "Chinese tax").
4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement to, or in place of, the existing taxes. The competent authorities of the Contracting states shall notify each other of any significant changes which have been made in their taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires—
(a) the term "Zambia" means the Republic of Zambia; or any area within which Zambia, in accordance with International Law, may exercise sovereign right or jurisdiction;
(b) the term "China" means the Peoples Republic of China, when used in geographical sense, means all the territory of the Peoples Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply, and any area beyond its territorial sea, within which the Peoples Republic of China has sovereign rights of exploration for and exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with international law and its internal law:
(c) the term "person" includes an individual, a company and any other body of persons;
(d) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(e) the term "enterprise" applies to the carrying on of any business;
(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State,
(h) the term "competent authority" means, in the case of Zambia, the Commissioner-General of the Zambian Revenue Authority or the authorised representative, and in the case of China, the State Administration of Taxation or its authorised representative;
(i) the term "national" in relation to a Contracting State means
(ii) any individual possessing the nationality of a Contracting State; and
(iii) any legal person, partnership or association deriving its status as such form the laws in force in a Contracting State; and
(j) the term "business" includes the performance of professional services and of other activities of an independent character.
2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires,
have the meaning which it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the
applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of effective management or any other criterion of a similar nature, and also includes that State and any local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States,
he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither of them. he shall be deemed to be a resident only of the State of which he is a national; and
(d) if he is a national or both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a
resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources.
3. The term "permanent establishment" likewise encompasses:
(a) a building site, or construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities last more than 9 months;
(b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged for such purpose, but only if activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods aggregating more than 183 days within any 12 month period.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e),
provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting in a Contracting State on behalf of an enterprise of the other Contracting State, and has, and habitually exercises, in that Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that Contracting State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
3. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic particularly include:
(a) profits from the rental on a bareboat basis of ships or aircraft; and
(b) profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise. Where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.
4. The provisions of paragraphs 1, 2 and 3 of this Article shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management. Control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises. but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting state includes in the profits of an enterprise of that state and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned state if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the dividends. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to, or on loans guaranteed or insured by, the Government or a local authority, the Central Bank or any financial institution wholly owned by the Government of the other Contracting State shall be exempt from tax in the first-mentioned State.
4. The "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with Which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematography films, or films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2, shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains from the alienation of ships or aircraft operated in international traffic by an enterprise of a Contracting State, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Contracting State.
4. Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.
5. Gains from the alienation of any property, other than that referred to in paragraphs 1 to 4, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. lf the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal year concerned;
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State, may be taxed in that Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 15
DIRECTORS' FEES
Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 16
ARTISTES AND SPORTSMEN
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the first-mentioned Contracting State or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
ARTICLE 17
PENSIONS
1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, pensions paid and other similar payments made by the Government of a Contracting State or a local authority thereof under a public welfare scheme of the social security system of that State shall be taxable only in that State.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority, shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that state; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.
(b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.
ARTICLE 19
STUDENT, APPRENTICES AND BUSINESS TRAINEES
A student, or business apprentice who is present in a Contracting State solely for the purpose of the students or business apprentices education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the purposes of the students or business apprentices maintenance, education or training.
ARTICLE 20
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right of property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
ARTICLE 21
METHODS FOR ELIMINATION OF DOUBLE TAXATION
1. In Zambia, double taxation shall be eliminated as follows:
In Zambia, where a resident of Zambia derives income from China which may be taxed in China in accordance with the provisions of this Agreement, the amount of the tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
2. In China, in accordance with the provisions of the law of China, double taxation shall be eliminated as follows:
(a) Where a resident of China derives income from Zambia, the amount of tax on that income payable in Zambia in accordance with the provisions of this Agreement may be credited against the Chinese tax imposed on that resident. The amount of the credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China.
(b) Where the income derived from Zambia is dividend paid by a company which is a resident of Zambia to a company which is a resident of China and which owns not less than 10 per cent of the shares of the company paying the dividend, the credit shall take into account the tax paid to Zambia by the company paying the dividend in respect of its income.
ARTICLE 22
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
5. The provisions of the Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
ARTICLE 23
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic lav, of those States, present his case to the competent authority of the Contracting State of which he is a resident or if his case comes under paragraph 1 of Article 22, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavor to resolve by mutual Agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of paragraphs 2 and 3. When it seems advisable for reaching an agreement, representatives of the competent authorities of the Contracting States may meet together for an oral exchange of opinions.
ARTICLE 24
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States or their local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (order public).
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
ARTICLE 25
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
ARTICLE 26
ENTRY INTO FORCE
This Agreement shall enter into force on the thirtieth day of the latter of the notification through which the Contracting States shall notify each other that the internal legal procedures for the entry into force of this Agreement have been complied with and its provisions shall have effect with respect to income derived during the taxable years beginning on or after the first day of January next following that in which this Agreement enters into force.
ARTICLE 27
TERMINATION
This Agreement shall continue in effect indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give written notice of termination to the other Contracting State through the diplomatic channels. In such event, this Agreement shall cease to have effect with respect to income derived during the taxable years beginning on or after the first day of January in the calendar year next following that in which the notice of termination is given
INCOME TAX (TAX CLEARANCE) (EXEMPTION) REGULATIONS, 2011
[Section 81B]
Arrangement of Regulations
Regulation
1. Title
2. Exemption of goods or services from production of tax clearance certificate
3. Exemption
SI 33 of 2011.
These Regulations may be cited as the Income Tax (Tax Clearance) (Exemption) Regulations.
2. Exemption of goods or services from production of tax clearance certificate
A tax clearance certificate shall not be required where goods or services of a value not exceeding 2,00,000 kwacha per transaction are supplied by any person or partnership.
Notwithstanding regulation 2, a tax clearance certificate shall not be required where agricultural products of a value not exceeding 10 million kwacha per transaction are supplied by any person or partnership.
INCOME TAX (CHINA-AFRICA DEVELOPMENT FUND) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 34 of 2011.
This Order may be cited as the Income Tax (China-Africa Development Fund) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule, China-Africa Development Fund is hereby approved for the purpose of exemption from tax.
The income of the organisation approved in paragraph 2 shall be exempt from tax pursuant to sub-paragraph (5) of paragraph 5 of Part III of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between China-Africa Development Fund and the Government of the Republic of Zambia dated 10th January, 2011 regarding the establishment of the regional representative office of China-Africa Development Fund.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign personnel
3. Exemption from tax
SI 35 of 2011.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.*
2. Approval of foreign personnel
With respect to the Agreement described in the Schedule, any income received by the expatriate staff of China-Africa Development Fund is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph 2 shall be exempt from tax pursuant to sub-paragraph (c) of paragraph 3 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the China-Africa Development Fund and the Government of the Republic of Zambia dated 10th January, 2011 regarding the establishment of the regional representative office of China-Africa Development Fund.
INCOME TAX (SECRETARIAT OF THE INTERNATIONAL CONFERENCE ON THE GREAT LAKES REGION CENTRE) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 66 of 2011.
This Order may be cited as the Tax (Secretariat of the International Conference on the Great Lakes Region Centre) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule the Secretariat of the International Conference on the Great Lakes Region Centre is hereby approved for the purpose of exemption from tax.
The income of the organisation approved in paragraph 2, accruing under the Agreement described in the Schedule, shall be exempt from tax pursuant to sub-paragraph (5) of paragraph 5 of Part III of the Second Schedule to that Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the Secretariat of the International Conference on the Great Lakes Region Centre and the Government of the Republic of Zambia through the Ministry of Finance and National Planning, dated 24th March, 2011, regarding the establishment of the head office of the Secretariat of the International Conference on the Great Lakes Region Centre.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of personnel emoluments
3. Exemption from tax
SI 67 of 2011.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.*
2. Approval of personnel emoluments
With respect to the Agreement described in the Schedule, any income received by expatriate staff of the Secretariat of the International Conference on the Great Lakes Region, Zambia Head Office, is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph 2 shall be exempted form tax pursuant to sub-paragraph (c) of paragraph 3 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Agreement between the Secretariat of the International Conference on the Great Lakes Region, and the Government of the Republic of Zambia through the Ministry of Finance and National Planning, dated 24th March, 2011, regarding the establishment of the head office of the Secretariat of the International Conference on the Great Lakes Region in the Republic of Zambia.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (REPUBLIC OF MAURITIUS) ORDER
[Section 76]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 105 of 2011.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Mauritius) Order.
It is hereby declared that the Agreement, the text of which is set out in the Schedule, being an Agreement relating to the relief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of Mauritius shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
Agreement between the government of the Republic of Zambia and the government of the Republic of Mauritius for the avoidance of Double Taxation and the prevention of fiscal evasion with respect to taxes on income.
The Government of the Republic of Zambia and the Government of the Republic of Mauritius.
Desiring to promote and strengthen the economic relations between the two countries through the avoidance of double taxation with respect to taxes on income, Have agreed as follows.
ARTICLE 1
PERSON COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income.
3. The existing taxes to which the Agreement shall apply are in particular:
(a) in Mauritius, the income tax; (hereinafter referred to as "Mauritius tax")
(b) in Zambia—
(i) the income Tax;
(ii) the mineral royalty; and
(iii) the personal levy (hereinafter referred to as "Zambian tax")
4. This Agreement shall apply also to any other taxes of a substantially similar character which are imposed by either Contracting State after the date of signature of this Agreement in addition to, or in place of, the existing taxes.
5. The competent authorities of the Contracting States shall notify each other of changes which have been made in their respective taxation laws, and if it seems desirable to amend any Article of this Agreement, without affecting the general principles thereof, the necessary amendments may be made by mutual consent by means of an Exchange of Notes.
ARTICLE 3
GENERAL DEFINITIONS
1. In this Agreement, unless the context otherwise requires:
(a) the term "Mauritius" means the Republic of Mauritius and includes:
(i) all the territories and island which, in accordance with the laws of Mauritius constitute the State of Mauritius;
(ii) the territorial sea of Mauritius; and
(iii) any area outside the territorial sea of Mauritius which in accordance with international law has been or may hereafter be designated, under the laws of Mauritius, as an area, including the Continental Shelf, within which the rights of Mauritius with respect to the sea, the sea bed and sub soil and their natural resources may be exercised;
(b) the term "Zambia": means the Republic of Zambia or any area within which Zambia, in accordance with international law, may exercise sovereign rights or jurisdiction;
(c) the terms "a Contracting State" and the other "Contracting State" means the Mauritius or Zambia, as the context requires;
(d) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;
(e) the term "competent authority" means
(i) in Mauritius, the Commissioner of Income Tax or his authorised representative; and
(ii) in Zambia, the Commissioner General of the Zambia Revenue Authority or his authorised representative;
(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" means respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(g) the term "international traffic" means any transport by a ship, aircraft or rail or road transport vehicle operated by an enterprise which has its place of effective management in a Contracting State, except when the ship, aircraft or rail or road transport vehicle is operated solely between places in the other Contracting State;
(h) the term "national" means any individual having the citizenship of a Contracting State any legal person, partnership (societe) or association deriving its status as such from the laws in force in a Contracting State;
(i) the term "person" includes an individual, a company, a trust and any other body of persons which is treated as an entity for tax purposes; and
(j) the term "tax" means Mauritius tax or Zambian tax, as the context requires.
2. As regard the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature and also includes that State and any local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then this status shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him. If he as a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interest cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, he shall be deemed to be a resident solely of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise if wholly or partly carried on.
2. The term "permanent establishment" shall include:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a warehouse, in relation to a person providing storage facilities for others;
(g) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and
(h) an installation or structure used for the exploration for natural resources.
3. The term "permanent establishment" likewise encompasses a building site or a construction, installation or assembly project, or supervisory activities in connection therewith only if the site, project or activity, lasts more than 9 months.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of proceeding by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise; and
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person acting in a Contracting State on behalf of an enterprise of the other Contracting State (Other than an agent of an independent status to whom paragraph 6 applies of this Article applies) notwithstanding that he has no fixed place of business in the first mentioned State shall be deemed to be a permanent establishment in that State if he has, and habitually exercises, a general authority in the first mentioned State to conclude contracts in the name of the enterprise, unless his activities are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FORM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property, including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraph 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purpose of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, but this does not include any expenses which, under the law of that State would not be allowed to be deducted by an enterprise of that State.
4. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase of that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
INTERNATIONAL TRAFFIC
1. Profits of an enterprise from the operation or rental of ships, aircraft or rail or road transport vehicles in international traffic and rental of containers and related equipment which is incidental to the operation ships, aircraft, rail or road transport vehicles in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
2. If the place of effective management of a shipping enterprise is abroad a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat, or, if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISE
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprise had been those which would have been made between independent enterprise, then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States if necessary consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividend if the beneficial owner is a company which holds at least 25 per cent of the capital of the company paying the dividends; or
(b) 15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in the other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 13, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the government of the other Contracting State or local authority thereof, the Central Bank of the other Contracting State, or any agency wholly owned by that Government or local authority shall be exempt from tax in the first mentioned Contracting State. The competent authorities of the Contracting States may determine by mutual agreement any other government institutions to which this paragraph may apply.
4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article. The term "interest" shall not include any item which is treated as a dividend under the provisions of Article 10 of this Agreement.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 13, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then, such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or mode, computer programme, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 13, as the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 13
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 14
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 15, 16, 17, 18 and 19 salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal year concerned, and
(b) the remuneration is paid by, or no behalf of an employer who is not a resident of the others State, and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or rail or road transport vehicle operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 15
DIRECTOR’S FEES
Director’s fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 16
ENTERTAINERS AND ATHLETES
1. Notwithstanding the provisions of Articles 13 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 13, and 14, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3. Notwithstanding the provisions of paragraphs 1 and 2, income derived from activities, referred to in paragraph 1, performed under a cultural agreement or arrangement between Contracting States shall be exempt from tax in the Contracting State in which the activities are exercised if the visit to that State is wholly or substantially supported by funds of either Contracting State, a local authority or public institution thereof.
ARTICLE 17
PENSIONS AND ANNUITIES
1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration and annuities arising in a Contracting State and paid in consideration of past employment to a resident of the other Contracting State, shall be taxable only in that other State.
2. The term "annuity" means a stated sum payable periodically at stated time during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
3. Notwithstanding the provisions of paragraph 1 pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a local authority thereof shall be taxable only in that State.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a local authority or statutory body thereof to an individual in respect of services rendered to that State or subdivision or authority or body shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any person paid by, or out of funds created by, a Contracting State or a local authority or statutory body thereof to an individual in respect of services rendered to that State or authority or body shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a local authority or statutory body thereof.
ARTICLE 19
PROFESSORS AND TEACHERS
1. Notwithstanding the provisions of Article 14, a professor or teacher who makes a temporary visit to one of the Contracting States for a period not exceeding two years for the purpose of teaching or carrying out research at a university, college, school or other educational institution in that State and who is, or immediately before such visit was, a resident of the other Contracting State shall, in respect of remuneration for such teaching or research, be exempt from tax in the first mentioned State, provided that such remuneration is derived by him from outside that State.
2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but wholly or mainly for the private benefit of a specific persons or person.
ARTICLE 20
STUDENT, APPRENTICES AND BUSINESS TRAINEES
A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first mentioned State on payments received from outside that first mentioned State for the purposes of the student’s maintenance, education or training.
ARTICLE 21
OTHER INCOME
1. Subject to the provisions of paragraph 2 of this Article, items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraphs 1 shall not apply to income if the receipt of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and a right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 13, as the case may be, shall apply.
ARTICLE 22
ELIMINATION OF DOUBLE TAXATION
Double Taxation shall be eliminated as follows:
1. In the case of Mauritius:
(a) Where a resident of Mauritius derives income from Zambia the amount of tax on that income payable in Zambia in accordance with the provisions of this Agreement may be credited against the Mauritius tax imposed on that resident.
(b) Where a company which is a resident of Zambia pays a dividend to a resident of Mauritius who controls, directly or indirectly, at least 5% of the capital of the company paying the dividend, the credit shall take into account (in addition to any Zambian tax for which credit may be allowed under the provisions of sub paragraph (a) of this paragraph) the Zambian tax payable by the first mentioned company in respect of the profits out of which such dividends is paid.
Provided that any credit allowed under sub paragraph (a) and (b) shall not exceed the Mauritius tax (as computed before allowing any such credit), which is appropriate to the profits or income derived from sources within Zambia.
2. In the case of Zambia:
(a) Where a resident of Zambia derives income from Mauritius which may be taxed in Mauritius in accordance with the provisions of the Agreement, the amount of the foreign tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
3. For the purposes of allowance as a credit the tax payable in Mauritius or Zambian, as the context requires, shall be deemed to include the amount of tax which is otherwise payable in either of the two Contracting States but has been reduced or waived by either State in order to promote its economic development.
ARTICLE 23
NON-DISCRIMINATION
1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment with an enterprise of a Contracting State has in the other Contracting State not be less favourable levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.
3. Enterprises of Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first mentioned State are or may be subjected.
4. Nothing in this Article shall not be construed as obliging a Contracting State to grant to resident of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
5. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first mentioned State.
6. In this Article the term "taxation" means taxes which are subject of this Agreement.
ARTICLE 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States, result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which he is a resident or, if the case comes under paragraph 1 of Article 23, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.
ARTICLE 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by this Agreement in so far as the taxation there under is not contrary to the Agreement. The exchange of information is not restricted by Article 1. Any information so exchanged shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determine of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
ARTICLE 26
MEMBERS OF THE DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreement.
ARTICLE 27
ENTRY INTO FORCE
1. Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the entering into force of this Agreement. The Agreement shall enter into force on the date of receipt of the later of these notifications.
2. The provisions of the Agreement shall apply:
(a) in Mauritius, on income for any income year beginning on or after the first day of July next following the date upon which this Agreement enters into force; and
(b) in Zambia,
(i) with regard to other taxes withheld at source, in respect of amounts paid or credited on or after the first day of the second month next following the date upon which the Agreement enters into force.
(ii) with regard to other taxes, in respect of taxable years beginning on or after the first day of the second month next following the date upon which the Agreement enters into force.
ARTICLE 28
TERMINATION
1. This Agreement shall remain in force indefinitely but either of the Contracting States may terminate the Agreement through the diplomatic channels, by giving to the other Contracting State written notice of termination not later than 30 June of any calendar year starting five years after the year in which the Agreement entered into force.
2. In such even the Agreement shall cease to have effect:
(a) in Mauritius, on income for any income year beginning on or after the first day of July next following the calendar year in which such notice is given; and
(b) in Zambia:
(i) with regard to other taxes withheld at source, in respect of amounts paid or credited after the end of the calendar year in which such notice is given; and
(ii) with regard to other taxes, in respect of taxable years beginning after the end of the calendar year in which such notice is given.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (REPUBLIC OF SEYCHELLES) ORDER
[Section 76]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 106 of 2011.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Seychelles) Order.
It is hereby declared that the Agreement, the text of which is set out in the Schedule to this Order, being an Agreement relating to the relief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of Seychelles shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE REPUBLIC OF SEYCHELLES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
PREAMBLE
The Government of the Republic of Zambia and the Government of the Republic of Seychelles desiring to promote and strengthen the economic relations between the two countries:
Have agreed as follows:
ARTICLE 1
PERSON COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State, political subdivision or of its local authorities irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income.
3. The existing taxes to which this Agreement shall apply are:
(a) in Zambia:
the Income Tax;
(hereinafter referred to as " the Seychelles tax")
(b) in Seychelles
(i) the Business Tax; and
(ii) the Petroleum Income Tax
(hereinafter referred to as "Seychelles tax")
4. This Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
(a) the term "Zambia" means the Republic of Zambia or any area within which Zambia, in accordance with International law, may exercise sovereign rights or jurisdiction.
(b) the term "Seychelles" means the territory of the Republic of Seychelles including its exclusive economic zone and continental shelf where Seychelles exercises sovereign rights and jurisdiction in conformity with the provisions of the United Nations Convention on the Law of the Sea;
(c) the terms "a Contracting State" and the other "Contracting State" means the Republic of Zambia or the Republic of Seychelles as the context requires;
(d) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;
(e) the term "competent authority" means
(i) in Zambia the Commissioner General of the Zambian Revenue Authority or his authorised representative;
(ii) in Seychelles, the Minister of Finance or his authorised representative
(f) the terms "enterprise" applies to the carrying on of any business;
(g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(h) the term "international traffic" means any transport by a ship, aircraft operated by an enterprise of a Contracting State, except when the ship, aircraft is operated solely between places in the other Contracting State;
(i) the term "national" means;
(ii) any individual possessing the nationality of a contracting state; and
(iii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;
(i) the term "person" includes an individual, a company and any other body of persons which is treated as an entity for tax purposes; and
(j) the term "business" includes the performance of professional services and of other activities of an independent character.
2. As regards the application of the provisions of the Agreement at any time by a Contracting State, any terms not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of registration or any other criterion of a similar nature and also includes that State, political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources situated in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then this status shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him. If he as a permanent home available to him in both Contracting States, he shall be deemed to be a resident with which his personal and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interest cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which has an habitual abode;
(c) if the individual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise if wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction, exploitation or exploration of natural resources.
3. The term "permanent establishment" likewise encompasses:
(a) a building site or a construction, assembly or installation project or supervisory activity in connection with such site or activity, but only where such site, project or activity continues for a period of more than 183 day;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue for the same or a connected project within the Contracting State for a period or periods aggregating more than 183 days within any 12 month period.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of proceeding by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for enterprise, any other activity of a preparatory or auxiliary character; and
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting on behalf of an enterprise and has, and habitually exercises, in Contracting State an authority to conclude contracts in the name of the enterprises, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
{mprestriction ids="2,3,5"}
6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FORM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property, (including income from agriculture or forestry), situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraph 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
5. For the purposes of this Article, the term "agriculture" includes fish farming, processing, breeding and raising aquatic species including specifically prawn, crayfish, oysters and shellfish.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific performed or for management, or except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase of that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
INTERNATIONAL TRANSPORT
1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management is situated.
2. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic include:
(a) profit from the rental on a bareboat basis of ships or aircraft; and
(b) profits from the use, maintenance or rentals of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise;
where such rental or where such use, maintenance or rental, as the case may be, is incidental to the operations of ship or aircraft in international traffic.
3. If the place of effective management of a shipping enterprise is abroad a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident.
4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprise had been those which would have been made between independent enterprise, then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States if necessary consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) five (5) per cent of the gross amount of the dividend if the beneficial owner is a company which holds at least 20 five (25) per cent of the capital of the company paying the dividends; or
(b) ten (10) per cent of the gross amount of the dividends in all other cases.
The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights participating in profits, not being debt claims, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed five (5) per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State if:
(a) the payer of the interest is the Government of that Contracting State, political subdivision or a local authority thereof;
(b) the interest is paid to the Government of the other Contracting State, political subdivision or a local authority thereof; or
(c) the interest is paid to the Bank of Zambia or the Central Bank of Seychelles.
4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed ten (10) per cent of the gross amount of the royalties.
3.The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including computer software, cinematograph films, or films or tapes or discs used for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4.The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6.Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount of royalties. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other state.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) may be taxed in that other State.
3. Gains from the alienation of ships or aircrafts operated in international traffic or movable property pertaining to the operation of such ships or aircrafts, shall be taxable only in that State in which the place of effective management is situated.
4. Gains from the alienation of any property other than that referred to in paragraph 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17, and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal year concerned;
(b) the remuneration is paid by, or no behalf of an employer who is not a resident of the others State, and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived from an employment exercised board a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 15
DIRECTOR’S FEES
Director’s fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 16
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
3. Income derive by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraph 1 and 2 of this Article, shall be exempt from tax in that other State if the visit to that other State is supported wholly or substantially by funds of either Contracting State, political subdivision or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
ARTICLE 17
PENSIONS AND ANNUITIES
1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration and annuities arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in the first mentioned State.
2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
3. Notwithstanding the provisions of paragraph 1, pensions paid and other similar payments made under the social security system of a Contracting State shall be taxable only in that State.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any person paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3.The provisions of Articles 14, 15, 16 and 17 of this Agreement shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority or a statutory body thereof.
ARTICLE 19
TEACHERS AND RESEARCHERS
1. An individual who is immediately before visiting a Contracting State is a resident of the other Contracting State and who, at the invitation of the Government of the first mentioned Contracting State or of a university, college, school, museum or other cultural institution in that first mentioned Contract State or under an official programme of cultural exchange, is present in that Contracting State for a period not exceeding two consecutive years solely for the purpose of teaching, giving lectures or carrying out research at such institution shall be exempted from tax in that Contracting State on his remuneration for such activity, provided that payment of such remuneration is derived by him from outside that Contracting State.
2. The provisions of paragraph 1 of this Article shall not apply to income from research if such research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons.
ARTICLE 20
STUDENT, APPRENTICES AND BUSINESS TRAINEES
1. Payments which a student or business apprentices or trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is representing in the first mentioned Contracting State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that Contracting State, provided that such payments arise from sources outside the Contracting State.
2. In respect of grants, scholarships and remunerations from employment not covered by paragraph 1, a student, business apprentices or trainee described in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the State which he is visiting.
ARTICLE 21
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraphs 1 shall not apply to income other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and a right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
3. Notwithstanding the provisions of paragraph 1 and 2, item of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.
ARTICLE 22
ELIMINATION OF DOUBLE TAXATION
Double Taxation shall be eliminated as follows:
(a) In Zambia, where a resident of Zambia derives income from Seychelles which may be taxed in Seychelles in accordance with the provisions of this Agreement, the amount of the tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
(b) In Seychelles, where a resident of Seychelles derives income from Zambia which may be taxed in Zambia in accordance with the provisions of this Agreement, the amount of the tax payable in respect of that income shall be allowed as a credit against Seychelles tax imposed o that resident. The amount of credit, however, shall not exceed that part of Seychelles tax which is appropriate to that income.
2. For the purpose of paragraph 1 of this Article, the term "Zambian tax payable" and "Seychelles tax payable" shall be deemed to include the amount of tax which would have been paid in Zambia or in Seychelles, as the case may be, but for an exemption or reduction granted in accordance with the laws designed to promote economic development in Zambia or Seychelles as the case may be, such schemes having been mutually agreed by the competent authorities of the Contracting State as qualifying for the purposes of this paragraph.
ARTICLE 23
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment with an enterprise of a Contracting State has in the other Contracting State not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reduction for taxation purposes on account of civil status or family responsibilities which it grants to its own resident.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprise of that first mentioned State are or may be subjected.
6. The provisions of this Article shall apply to taxes which are the subject to of this Agreement.
ARTICLE 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States, result or will result for him in taxation not in accordance with this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which he is a resident or, if the case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. The competent authorities, through consultations, shall develop appropriate bilateral procedures, conditions, methods, and techniques for the implementation of the mutual agreement procedure provided for in this Article.
ARTICLE 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by this Agreement in so far as the taxation there under is not contrary to the Agreement. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determine of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
ARTICLE 26
MEMBERS OF THE DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreement.
ARTICLE 27
ENTRY INTO FORCE
1. Each of the Contracting States shall notify to the other Contracting State the completion of the procedures required by its law for the bringing into force of this Agreement. The Agreement shall enter into force on the date of receipt of the later of these notifications.
2. The provisions of the Agreement shall apply:
(a) In Zambia, in respect to income derived in any fiscal year on or after the first day of April next following the calendar year in which the notice is given.
(b) In Seychelles:
(i) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the first day of January in the year following the date on which this Agreement enters into force.
(ii) with regard to other taxes, in respect of taxable year beginning on or after the first day of January following the date on which this Agreement enters into force.
ARTICLE 28
TERMINATION
1. This Agreement shall remain in force indefinitely but either of the Contracting States may, terminate the Agreement through the diplomatic channel, by giving to the other Contracting State written notice of termination not later than 30 June of any calendar year starting five years after the year in which the Agreement entered into force.
2. In such event the Agreement shall cease to apply:
(a) with regard to taxes withheld at source, in respect of amounts paid or credited after the end of the calendar year in which such notice is given; and
(b) with regard to other taxes, in respect of taxable years beginning after the end of the calendar year in which such notice is given.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.
DONE at Victoria, Seychelles, in two originals, this 7th day of December, year two thousand and ten.
DANNY FAURE, | SITUMBEKO MUSOKOTWANE |
Vice-President and | Minister of Finance and |
Minister of Finance and Trade | National Planning |
For and on Behalf of the | For and on Behalf of the |
Government of the Republic of Seychelles | Government of the Republic of Zambia. |
INCOME TAX (PAY AS YOU EARN) REGULATIONS
[Section 71]
Arrangement of Regulations
Regulation
PART I
Preliminary
1. Title
2. Interpretation
3. Employee’s certificate
PART II
Deduction and Repayment of Tax
4. Deductions and repayments
5. Casual employee
6. New monthly and weekly paid employees
7. Emoluments not paid weekly or monthly
8. Deduction of tax at maximum or lower rate
9. Payment without deduction of tax
10. Payslips
11. Tax deduction record
12. Certificate on change of employment
13. Death of employee
14. Tax free emoluments
15. Repayment of tax during sickness or employment
16. Certificate of tax deducted
PART III
Payment and Recovery of Tax
17. Payment of tax by employer
18. Failure by employer to make returns or pay tax
19. Inspection
20. Records
21. Death of employer
22. Succession to business
PART IV
Assessment and Direct Collection
23. Overpayments and under payments
24. Procedure for direct collection
PART V
General Provisions
25. Notices
26. Bonus commission and other additional payments
27. Time when emoluments paid
28. Arrangement for gratuity or service charge
29. Payment of emoluments by person not employer
30. Revocation of SI 97 of 1999
SI 50 of 2014,
SI 102 of 2016.
PART I
Preliminary
These Regulations may be cited as the Income Tax (Pay As You Earn) Regulations.
In these Regulations, unless the context otherwise requires—
"allowable pension contribution" means a sum paid by an employee by way of contribution towards an approved pension fund or scheme, which is allowed to be deducted as an expense under section 37 of the Act;
"appropriate tax table" in relation to a monthly paid employee, weekly paid employee or casual employee means the applicable tax table providing figures for monthly, weekly or daily deductions;
"authorised officer" means a person authorised by the Commissioner-General for the purposes of these Regulations;
"casual employee" has the meaning assigned to it in the Employment Act;
"chargeable emoluments’' in relation to an employee, means the emoluments from an employee’s employment, which are chargeable to income tax, but does not include any allowable pension contribution or any amount which is exempt from income tax;
"cumulative chargeable emoluments" in relation to a date in a charge year, means the aggregate amount of chargeable emoluments paid or deemed to have been paid by the employer to an employee from the beginning of the charge year up to and including that date;
"cumulative tax" in relation to an employee at any date in a charge year, means the tax due in accordance with the appropriate lax tables in respect of the employee's cumulative chargeable emoluments paid during the year to that date, abated by the aggregate of the tax credit due in respect of those emoluments from the beginning of the year to that date;
"director" has the meaning assigned to it in the Companies Act;
"employing entity" means a company, firm or organisation, that pays emoluments;
"monthly paid employee" means an employee whose emoluments are payable on a monthly basis;
"monthly return" means a return of payment of tax made under regulation 17;
"payment period" in relation to an employee, means a period beginning with the day immediately following the day on which an emolument is payable to the employee and ending with the day on which the next payment of emoluments is payable;
"tax deduction record" means a record required to be kept under regulations 5, 11 and 24;
"tax table" means a tax table devised by the Commissioner-General under section 71 of the Act;
"total net tax deducted" in relation to the emoluments paid to an employee during any period, means the total tax deducted from the emoluments less any tax repaid to the employee; and
"weekly paid employee" means an employee whose emoluments are payable on a weekly basis.
(1) An employee shall, within 30 days of commencement of employment, notify the employer through a sworn affidavit, certifying whether or not—
(a) the current employment is the employee’s only employment;
(b) the employee is also an employee of another employer and that employment began before the employee’s current employment;
(c) the employee has been employed before in the charge year; or
(d) the employee has not been employed before in the charge year.
(2) An employer shall not be liable for failure to deduct tax at the maximum rate from any payment of emoluments to an employee where—
(a) the employee has given the employer a certificate under this regulation; and
(b) the employer shows they relied on the truthfulness of the certificate, unless the employer knew or ought to have known that the certificate was untrue in any particular.
PART II
Deduction and Repayment of Tax
(1) An employer shall deduct tax from the emoluments paid to an employee or repay tax to an employee, in accordance with the appropriate tax table.
(2) An employer shall, on the date of payment of emoluments to an employee, ascertain the cumulative chargeable emoluments of the employee at the date of the payment and the cumulative tax in respect of those emoluments.
(3) Where the cumulative tax exceeds the amount of the previous cumulative tax as at the time of the last preceding payment of emoluments to the employee in a charge year, the employer shall deduct the excess from the emoluments.
(4) Where the cumulative tax is less than the amount of the previous cumulative tax, the employer shall repay the difference to the employee.
(5) Where the cumulative tax is equal to the amount of the previous cumulative tax, tax shall not be deducted or repaid.
(6) Where there is no previous cumulative tax, the employer shall deduct the cumulative tax from the emoluments when making the payment in question.
(7) This regulation does not apply to a casual employee.
(1) An employer shall deduct tax from the emoluments paid to an employee in accordance with the appropriate tax table.
(2) Where a casual employee is not paid on a daily basis, the amount of tax to be deducted from the employee’s chargeable emoluments in accordance with this regulation shall be found by—
(a) dividing the amount of the employee’s emoluments for a payment period by the number of days in that period;
(b) finding the amount of tax which the appropriate tax table requires to be deducted from a payment of emoluments of the amount under paragraph (a); and
(c) multiplying the amount found under paragraph (b) by the number of days in the employee’s pay period.
(3) An employer of a casual employee shall keep a tax deduction record for any casual employee from whose emoluments tax is required to be deducted in such form as the Commissioner-General may specify in the Gazette.
(4) An employer shall keep a written record of the names, dates of employment and emoluments of any casual employee for whom the employer is not required to keep a tax deduction record.
(5) Regulations 8, 9, 11, 12 and 13 do not apply in relation to a casual employee.
6. New monthly and weekly paid employees
(1) An employer shall, where an employee who is not a casual employee commences employment with the employer after 1st January in a charge year, notify the Commissioner-General in such form as the Commissioner-General may specify in the Gazette.
(2) Unless the employee has given the employer a certificate in accordance with sub-regulation (3) of regulation 12, the employer shall, up to end of the charge year, apply regulation 4—
(a) in the case of a monthly paid employee, as if each month the employee works for the employer was the month of January; and
(b) in the case of a weekly paid employee, as if each week the employee works for the employer was the first week of the year.
7. Emoluments not paid weekly or monthly
An employer shall, where an employee’s payment period exceeds one month, calculate the tax due as follows—
(a) if the emoluments are payable once in a year, by reference to the tax table for the month of December in which the payment is made or it the emolument is made in any other month, for the December immediately following that month as if that were the table for the month in which the payment is made;
(b) if the emoluments are payable quarterly, by reference to the tax table for the last month in the quarter of the year in which the payment is made as if that were the table for the month in which the payment is made;
(c) if the emoluments are payable half-yearly, by reference to the table for June as respects the first payment made in the year, and by reference to the table for December as respects the second payment, as if in each case that were the table for the month in which the payment is made; or
(d) in any other case, by reference to the tax table for the month in which the payment is made.
8. Deduction or tax at maximum or lower rate
(1) Regulations 4, 6 and 7 do not apply where tax shall be deducted in accordance with this regulation.
(2) Subject to sub-regulations (4) and (5), an employer shall, where—
(a) chargeable emoluments of an employee are payable in respect of part-time employment; or
(b) chargeable emoluments of an employee are paid after the employee ceases to be in employment;
deduct tax at the maximum rate from each payment of emoluments the employer makes to the employee, without regard to the employee’s cumulative tax or to any lax credit to which the employee may be entitled.
(3) Sub-regulation (2) does not apply to any payment from which tax is required to be deducted under regulation 13.
(4) Paragraph (b) of sub-regulation (2) does not apply to any lump sum payment or to any amount taxable in accordance with sub-section (1) of section 21 of the Act, but where the payment is made, an employer shall deduct tax from that payment at the rate or rates specified in the Charging Schedule in relation to the payments for the tax year in which they are paid, without regard to the employee’s cumulative emoluments, the corresponding cumulative tax or to any tax credit to which the employee may be entitled.
(5) For the purpose of this regulation, where emoluments are payable to an employee in respect of only one employment, that employment shall not be treated as part-time employment whatever the hours of employment.
(6) Where an employee obtains other employment while still employed in the first employment, the later employment and any other employment shall be part-time employment for the purpose of these Regulations.
(7) In this regulation, reference to the maximum rate of tax, in relation to any payment of emoluments, is a reference to the highest rate of income tax applicable to the income of an individual for the year in which the emoluments are payable.
9. Payment without deduction of tax
(1) The Commissioner-General may. in writing direct an employer to pay the gross amount of emoluments to an employee without deduction of tax.
(2) Where a direction is made under sub-regulation (1), regulations 4, 6 and 7 shall not apply.
(3) A direction made under sub-regulation (1) shall—
(a) identify the employer and employee concerned;
(b) apply to the payment of emoluments made after such date as may be specified in the direction, not being less than 14 days after the date the direction is given to the employer; and
(c) be copied to the employee.
An employer shall, on the date of payment of emoluments, inform the employee, in writing, of the total amount of the emoluments paid on that date and the total net tax deducted from the emoluments.
(1) An employer shall apply to the Commissioner-General for a tax deduction record.
(2) The tax deduction record shall be in such form as the Commissioner-General may specify in the Gazette.
(3) An employer shall keep a tax deduction record for each of the employees, whether or not any tax is required to be deducted or repaid under these Regulations, recording on the tax deduction record the particulars specified on it, and where different tax deduction records are prescribed for different purposes under these Regulations the employer shall use the appropriate record.
(4) The tax deduction records may be kept by means of computer-generated records.
(5) Where tax is not deductible from any payment, an employer shall, unless the Commissioner-General otherwise directs, make any repayment of tax which may be due by reference to the employee's cumulative emoluments and the corresponding cumulative tax.
12. Certificate on change of employment
(1) Where an employer ceases to employ an employee, not being a casual employee, the employer shall, within five days of the date on which the employment ceases, send a certificate to the Commissioner-General in such form as the Commissioner-General may specify in the Gazette.
(2) An employer shall send a copy of the certificate to the employee on the date on which the employment ceases.
(3) An employee shall, on commencing the next employment, deliver a copy of the certificate to the new employer and the new employer shall—
(a) insert the address of the employee and the date on which the employment commenced on the copy of the certificate;
(b) prepare a tax deduction record in accordance with the particulars given in the copy of the certificate and record on the tax deduction record the cumulative tax as at the week or month shown on the copy of the certificate;
(c) subject to sub-regulation (4), deduct or repay tax as if the cumulative emoluments and cumulative tax shown on the tax deduction record represented emoluments paid to the employee by the new employer; and
(d) send a copy of the certificate to the Commissioner-General within seven days from the date on which the certificate is signed.
(4) Where tax repayable under paragraph (c) of sub-regulation (3) on the date of the first payment exceeds three thousand kwacha, the new employer shall forthwith notify the Commissioner-General and shall not make the repayment until authorised to do so by the Commissioner-General.
(5) Where emoluments are paid by the same person before and after retirement, retirement on pension shall not be treated as cessation of employment for the purposes of this Regulation.
(1) An employer shall notify the Commissioner-General of an employee’s death.
(2) The notification of death under sub-regulation (1) shall be made in such form as the Commissioner-General may specify in the Gazette within seven days of making the outstanding payment of, and deductions from, emoluments of the deceased employee.
(3) An employer shall, where emoluments are paid after the date of the employee’s death—
(a) pay emoluments exempt from tax under sub-section (5) of section 21 of the Act without any deduction of tax;
(b) deduct tax from the balance of emoluments specified under paragraph (a) at the rate specified in the Charging Schedule in relation to such emoluments for the tax year in which they are paid, without regard to the employee’s cumulative emoluments, the corresponding cumulative tax or to any tax credit to which the employee may be entitled; and
(c) as respects emoluments not within paragraph (a), deduct or pay tax as if the deceased employee was still in employment at the date of payment.
(1) Where an employer agrees with an employee to pay to the employee a specified amount of emoluments, in this regulation referred to as "the net emoluments" and to bear on the employee’s behalf any tax chargeable in respect of the net emoluments—
(a) the agreement shall be read as an agreement by the employer to pay to the employee such gross emoluments as will after deduction of tax in accordance with these Regulations be equal to the net emoluments; and
(b) the employer shall calculate the amount of tax to be deducted from any payment of the employee’s emoluments in accordance with these Regulations by reference to the gross emoluments of the employee, and not by reference to the employee’s net emoluments.
(2) Where the employer agrees to bear on behalf of an employee any tax due on any emoluments of the employee payable in a charge year, the employer shall give notice to the Commissioner-General within 14 days of the beginning of the year or of the commencement of the employment in question, whichever is the later, stating—
(a) the names and addresses of the employer and the employee;
(b) the net amount of the emoluments in question and if they are not payable wholly free of tax, how much is so payable or what level of tax will be borne by the employer; and
(c) such other information as the Commissioner-General may require.
15. Repayment of tax during sickness or unemployment
(1) Where an employee is not entitled to any emoluments due to absence from work, the employer shall, on the usual pay date, make such repayment of tax to the employee as may be appropriate, having regard to the cumulative emoluments on that date and the corresponding cumulative tax, notwithstanding that the employee is not entitled to any emoluments on that date.
(2) An employee who has ceased to be employed may, at the end of the charge year and in accordance with section 87 of the Act, apply to the Commissioner-General for a repayment of tax for each month for which the employee requires a tax refund in such form as the Commissioner-General may specify in the Gazette.
(3) An application made under sub-regulation (2) shall include a notice showing the total amount of emoluments paid to the employee and the total net tax deducted.
16. Certificate of Tax deducted
(1) An employer shall give to an employee—
(a) who is in the employer’s employment on the last day of a charge year; or
(b) who has ceased to be employed by the employer during a charge year;
from whose emoluments tax is required to be deducted under these Regulations, a certificate in such form as the Commissioner-General may specify in the Gazette.
(2) A certificate under sub-regulation (1) shall be given to the employee before the 1st March following the end of the charge year in question.
PART III
Payment and Recovery of Tax
17. Payment of tax by employer
(1) An employer shall, within 10 days of the end of an income tax month, send a monthly return to the Commissioner-General in such form as the Commissioner-General may specify in the Gazette.
[Reg 17(1) am by reg 2 of SI 102 of 2016.]
(2) An employer shall, where there is an excess of the amount deductible over the repayments, remit with the monthly return an amount equal to the excess to the Commissioner-General.
(3) The Commissioner-General shall give an employer a receipt showing the amount of tax remitted by the employer.
(4) Where the monthly return made under sub-regulation (1) shows an excess of repayments over the deductions, an employer may deduct the excess from a subsequent payment which the employer is required to make to the Commissioner-General under sub-regulation (1), or the employer may recover the excess from the Commissioner-General.
(5) Where the tax paid by an employer to the Commissioner-General in respect of an employee exceeds the amount actually deducted by the employer from the emoluments paid to the employee during the month, the employer may deduct an amount equal to the excess from the subsequent emoluments of the employee.
(6) A monthly return shall be signed, where the employer is—
(a) an individual, by the individual;
(b) a company, by a director or secretary of the company;
(c) a body of persons, by a principal officer of the body of persons; and
(d) a partnership, by a partner of the partnership.
(7) A monthly return may also be signed by a tax paying agent or any authorised representative of the employer.
(8) An employer who fails to submit a monthly return in accordance with this regulation is liable to pay a penally of one thousand penalty units for each calendar month or part thereof.
(9) The Commissioner-General may remit the whole or part of the penalty specified under sub-regulation (8).
18. Failure by employer to make returns or pay tax
(1) Where an employer fails to make a return or remit tax, the Commissioner-General may—
(a) make an estimate of the amount of tax which the employer is required to remit and issue a notice requiring the employer to pay that estimated amount of tax; or
(b) by notice, require the employer to submit a default return for that month in such form as the Commissioner-General may specify in the Gazette.
(2) An employer shall comply with the notice served under sub-regulation (1) within 14 days of the date of the notice.
(3) Where an employer pays any emoluments for a charge year to an employee after the end of that year or after the end of the employment, the employer shall, within 14 days after the month in which the payment was made, submit a supplementary return in such form as the Commissioner-General may specify in the Gazette.
(1) An employer shall, upon request by an authorised officer, produce to the officer for inspection—
(a) all wage sheets, tax deduction records, payslips and other documents or records relating to—
(i) the calculation or payment of emoluments in respect of the years or income tax months specified by the officer; and
(ii) the deduction of tax; and
(b) such other documents and records as may be specified by the authorised officer.
(2) Where the records are kept by the employer on a computer, the employer shall allow the officer reasonable access to the computer to examine the records.
(3) Where an officer requests a copy of a record or document, the employer shall provide the officer with the copy.
(4) The Commissioner-General may, by notice, require an employer to submit, within such time as may be specified in the notice, not being less than 21 days, all the tax deduction records relating to specified employees of the employer in that year or in any of the preceding 6 years.
(5) Where the Commissioner-General has reasonable grounds for believing that the case involves fraud, the Commissioner-General may require the submission of tax deduction records for earlier years.
An employer shall retain all records required to be kept for the purposes of these Regulations and all documents given or sent to the employer for those purposes until the expiry of a period of six years beginning with the year to which a record or document relates.
Where an employer dies, anything which the employer is required to do under these Regulations shall be done by the employer’s personal representative or, in the case of an employer who pays emoluments on behalf of another person, by the person succeeding the employer or, if no person succeeds the employer, the person on whose behalf the employer paid the emoluments.
(1) Where an undertaking carried on by an employer is transferred to another employer, the change in employer shall not in relation to the employees transferred to that employer, be treated as a change of employment for the purposes of these Regulations, and the new employer shall be liable to do anything which the old employer would have been required to do under these Regulations as if the change had not taken place.
(2) The new employer shall not be liable for the payment of tax which was deductible from emoluments paid to an employee before the change took place.
PART IV
Assessment and Direct Collection
23. Overpayments and underpayments
(1) Where the tax payable under an assessment is less than the total net tax deducted from the employee’s emoluments during the year, the Commissioner-General shall repay the difference to the employee.
(2) The Commissioner-General may require an employee to pay the excess where the tax payable under an assessment exceeds the total net tax deducted from the employee’s emoluments during the year.
24. Procedure for direct collection
(1) This regulation applies to an employee of a foreign mission or international organisation which is exempt from tax under the Diplomatic Immunities and Privileges Act, other than an employee who is exempt from lax.
(2) An employee referred to in sub-regulation (1) may use a tax deduction record.
(3) Where an employee receives chargeable emoluments during the year for which a tax deduction record is required, the employee shall record on that record the emoluments, the date on which the employee received them, the employee’s cumulative chargeable emoluments and the corresponding cumulative tax.
(4) An employee shall, within 10 days after the end of every month—
[Reg 24(4) am by reg 3 of SI 102 of 2016.]
(a) make a return to the Commissioner-General stating the amount of the cumulative tax corresponding to the employee’s cumulative chargeable emoluments as at the last date in the month in question on which the employee received emoluments, reduced by the amount of tax paid to the Commissioner-General in respect of the previous months in the same year; and
(b) remit to the Commissioner-General with the return a sum equal to the amount of the cumulative tax as so reduced.
(5) Where an employee—
(a) has not made a return or remitted tax to the Commissioner-General; or
(b) has remitted an amount of tax but the Commissioner-General is not satisfied that it is the amount which the employee is required to pay;
the Commissioner-General may, by notice, require the employee, within the specified time, to make a return or to remit to the Commissioner-General such amount of tax as may be specified in the notice.
(6) Where an employee ceases to receive emoluments from an employer, the employee shall make a return to the Commissioner-General showing the last date on which the employee received any emoluments, the employee’s cumulative emoluments at that date and the corresponding cumulative tax.
(7) An employee shall not use one tax deduction record in respect of two or more employment capacities.
PART V
General Provisions
(1) A notice or document authorised or required to be given, served or issued under these Regulations may be sent in person, electronically or by post to the last known address of the addressee.
(2) A notice or document sent under sub-regulation (1) shall be deemed to have been received by the addressee within 10 days from the date on which the notice or document was posted.
26. Bonus commission and other additional payments
Where an employer makes a payment of an amount of emoluments to an employee which is not the basic salary or wage on a day which is not the employee’s regular pay day, the employer shall deduct an amount of tax from that payment equal to the difference between—
(a) the amount the employer will deduct from the employee's next payment of the basic salary or wage; and
(b) the amount the employer would have deducted from the employee’s next payment of the basic salary or wage if the payment which is not the basic salary or wage were paid on the employee’s next regular pay day.
(1) For the purposes of these Regulations, a payment of, or on account of, a chargeable emolument shall be treated as made at the earliest of the following times—
(a) at the time when the payment is received by a person within the meaning of section 5 of the Act;
(b) at the time when the sum on account of the income is credited where—
(i) the emolument is an emolument from employment;
(ii) a sum on account of the emoluments is credited to an employer’s accounts or records at any time during a charge year; and
(iii) the holder of the employment is a director or a person exercising control of an employing entity during that charge year;
(c) at the time when the period ends or the time when the amount is determined, whichever is later, where—
(i) the emoluments are emoluments from an employment for a certain period; and
(ii) the holder of the employment is a director or a person exercising control or management of an employing entity at any time in the year in which the amount of the emolument is determined.
(2) For the purposes of paragraph (c) sub-regulation (1), a restriction on the right to draw the sums shall be disregarded.
28. Arrangement for gratuity or service charge
(1) Where an arrangement or agreement exists for a gratuity or service charge to be shared by a person among two or more employees, payment to an employee by way of sharing out of the gratuity or service charge by the person, including the retention by that person of a share where the person is also an employee, shall be regarded for the purposes of these Regulations as a payment of emoluments.
(2) A person making the payment under sub-regulation (1) shall be treated for the purposes of these Regulations as an employer.
(3) The Commissioner-General may, where satisfied that a person has failed to comply with this regulation, direct that sub-regulation (1) shall not apply to the agreement or arrangement under which that person makes the payment and that a share of gratuity or service charge shall be assessed under section 63 of the Act on the employee or employees receiving the share.
29. Payment of emoluments by person not employer
(1) Sub-regulation (2) applies where—
(a) an employee works during any period for a person, in this regulation referred to as "the relevant person" who is not the employee’s employer;
(b) a person other than the relevant person makes a payment of, or on account of, chargeable emoluments of the employee in respect of the work done in that period;
(c) these Regulations do not apply to the person making the payment; and
(d) tax chargeable in respect of the payment is not deducted and accounted for in accordance with these Regulations by the person making the payment.
(2) For the purposes of these Regulations, and where this sub-regulation applies, the relevant person shall be treated as making the payment and as the employer of the employee.
(3) Where emoluments are paid to an employee by one person in respect of a period and by another person in respect of a period which is wholly or partly the same as that other period, sub-regulation (1) shall apply separately to each person making any such payment in respect of a payment period as if emoluments in respect of that period were paid to the employee only by that person.
(4) Where the relevant person is treated as making a payment to an employee—
(a) the obligation to deduct tax from that payment shall have effect as an obligation to make the deduction from any payment of chargeable emoluments which the relevant person does actually make to the employee;
(b) if the relevant person is not able to make the deduction from the payment, that person shall, not later than 14 days after the month in which the obligation arose, account to the Commissioner-General for an amount of income tax equal to the amount of the deduction which the relevant person has not made; and
(c) any amount deducted and accounted for under this regulation shall be treated as an amount paid by the employee in question in respect of the employer’s liability to income tax for the year in which the obligation rose.
30. Revocation of SI 97 of 1999
The Income Tax (Pay As You Earn) Regulations, 1999, are hereby Revoked.
INCOME TAX (EUROPEAN INVESTMENT BANK) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title and commencement
2. Approval of international organisation
3. Exemption from tax
SI 56 of 2014.
(1) This Order may be cited as the Income Tax (European Investment Bank) (Approval and Exemption) Order.
(2) This Order shall be deemed to have come into operation on 10th October, 2014.
2. Approval of international organisation
The European Investment Bank is an approved organisation for purposes of exemption from tax with respect to the Agreement specified in the Schedule.
The income earned, including interest, fees and commission, by the organisation approved in paragraph 2 and accruing under the Agreement specified in the Schedule shall be exempt from tax pursuant to sub-paragraph (5) of paragraph 5 of Part III of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Partnership Agreement between the members of the African, Caribbean and Pacific group of States of the one part and the European Community and its Member States of the other part, signed in Cotonou on 23rd June, 2000.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Government of the United Kingdom of Great Britain and Northern Ireland) Order.
It is declared that the Agreement, the text of which is set out in the Schedule, being an Agreement relating to the relief from double taxation on the income made between the Government of the Republic of Zambia and the Government of the United Kingdom of Great Britain and Northern Ireland shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL
The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Zambia desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital have agreed as follows:
ARTICLE 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.
3. The existing taxes to which this Agreement shall apply are in particular:
(a) in the Republic of Zambia, the Income Tax (hereinafter referred to as "Zambian tax"); and
(b) in the United Kingdom:
(i) the income tax;
(ii) the corporation tax; and
(iii) the capital gains tax;
(hereinafter referred to as "United Kingdom tax").
4. This Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement unless the context otherwise requires:
(a) the term "Zambia" means the Republic of Zambia, or any area within which Zambia, in accordance with international law, may exercise sovereign right or jurisdiction;
(b) the term "United Kingdom" means Great Britain and Northern Ireland, including any area outside the territorial sea of the United Kingdom designated under its laws concerning the Continental Shelf and in accordance with international law as an area within which the rights of the United Kingdom with respect to the sea bed and subsoil and their natural resources may be exercised;
(c) the terms "a Contracting State" and the other Contracting State mean the Republic of Zambia or the United Kingdom, as the context requires;
(d) the term "business" includes the performance of professional services and of other activities of an independent character;
(e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(f) the term "competent authority" means:
(i) in Zambia, the Commissioner General of the Zambia Revenue Authority or the Commissioner General’s authorised representative; and
(ii) in the United Kingdom, the Commissioners for Her Majesty's Revenue and Customs or their authorised representative;
(g) the term enterprise applies to the carrying on of any business;
(h) the terms enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(i) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(j) the term "national" means:
(i) in relation to Zambia, any individual possessing the nationality or citizenship of Zambia and any legal person or association deriving its status as such from the laws in force in Zambia; and
(ii) in relation to the United Kingdom, any British citizen, or any British subject not possessing the citizenship of any other Commonwealth country or territory, provided he has the right of abode in the United Kingdom; and any legal person, partnership or association deriving its status as such from the laws in force in the United Kingdom;
(k) the term "person" includes an individual, a company and any other body of persons.
2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income or capital gains from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows:
(a) the individual shall be deemed to be the resident solely of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident solely of the State with which the individual’s personal and economic relations are closer (centre of vital interests);
(b) if sole residence cannot be determined under the provisions of sub-paragraph (a), the individual shall be deemed to be a resident solely of the State in which the individual has an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be the resident solely of the State of which the individual is a national;
(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which that person shall be deemed to be a resident for the purposes of this Agreement. In the absence of a mutual agreement by the competent authorities of the Contracting States, the person shall not be considered a resident of either Contracting State for the purposes of claiming any benefits provided by this Agreement, except those provided by Articles 23, 24 and 25.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and
(g) an installation or structure used for the exploration for natural resources, provided that the installation or structure continues for a period of not less than 183 days.
3. The term "permanent establishment" likewise encompasses:
(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site, project or activity, but only where such site, project or activity continues for a period of more than 183 days;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned;
(c) for an individual, the performing of services in a Contracting State by that individual, but only if the individual’s stay in that State, for the purpose of performing those services, is for a period or periods aggregating more than 183 days within any twelve month period commencing or ending in the fiscal year concerned.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, the agent will not be considered an agent of an independent status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprises may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income or capital gains which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
SHIPPING AND AIR TRANSPORT
1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
2. For the purposes of this Article, profits from the operation of snips, or aircraft in international traffic shall include:
(a) profits derived from the rental on a bareboat basis of ships or aircraft; and
(b) profits derived from the use, maintenance, rental or lease of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise;
where such rental or such use, maintenance, rental or lease as the case may be, is incidental to the operation of ships or aircraft in international traffic.
3. If the place of effective management of a shipping enterprise is aboard a ship then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises,
then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividends, except as provided in sub-paragraph (b);
(b) 15 per cent of the gross amounts of the dividends where those dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax.
The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term dividends as used in this Article means income from shares, or other rights, not being debt claims, participating in profits, as well as any other item which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.
6. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. (a) Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by:
(i) the government, a political subdivision or a local authority of the other Contracting State; or
(ii) the Central Bank of the other Contracting State; or
(iii) any agency wholly owned by government, subdivision, or local authority of the other Contracting State.
The competent authorities of the Contracting States may determine by mutual agreement any other government institution to which this paragraph shall apply.
(b) For the purpose of this Article, Central Bank means:
(i) in the case of Zambia, the Bank of Zambia, and
(ii) in the case of the United Kingdom, the Bank of England.
4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article. The term shall not include any item which is treated as a dividend under the provisions of Article 10.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
8. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term royalties as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information (know how) concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
7. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable properly referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
4. Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.
5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and
(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State, and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard a ship or aircraft operated in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 15
DIRECTORS’ FEES
Directors’ fees and other similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 16
ENTERTAINMENTS AND SPORTS PERSONS
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sports person, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sports person in that person’s capacity as such accrues not to the entertainer or sports person but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sports person are exercised.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2 shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the first mentioned Contracting State, a political subdivision or a local authority thereof, or takes place under a culture agreement or arrangement between the Governments of the Contracting States.
ARTICLE 17
PENSIONS AND ANNUITIES
1. Any pension (other than a pension of the kind referred to in paragraph 2 of Article 18) and any annuity derived from sources within a Contracting State by an individual who is a resident of the other Contracting State and subject to tax in that other State in respect thereof shall be exempt from tax in the first mentioned Contracting State.
2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
3. Notwithstanding the provisions of paragraph 1 pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State, a political subdivision or a local authority thereof shall be taxable only in that State.
4. Notwithstanding the provisions of paragraph 1, a lump sum payment derived from a pension scheme established in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in the first mentioned State.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political subdivision or a
(b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting subdivision or a political subdivision or a local authority thereof.
ARTICLE 19
STUDENTS AND BUSINESS APPRENTICES
A student or business apprentice who is present in a Contracting State solely for the purpose of the student’s or business apprentice's education or training and who is, or immediately before being so present was, a resident of the other Contracting State shall be exempt from tax in the first mentioned State on payments received from outside that first mentioned State for the purposes of the student’s or business apprentice’s maintenance, education or training.
ARTICLE 20
PROFESSORS AND TEACHERS
1. Notwithstanding the provisions of Article 14, a professor or teacher who makes a visit to a Contracting State solely for the purpose of teaching carrying out research at a recognised educational institution such as a university, college, or school in that State for a period not exceeding two years from the date of first arrival in that State for such purpose and who is, or immediately before such visit was, a resident of the other Contracting State, shall, in respect of remuneration for such teaching or research, be exempt from tax in the first mentioned State, provided that such remuneration is received from sources outside that State.
2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but wholly or mainly for the private benefit of a specific person or persons.
ARTICLE 21
OTHER INCOME
1. Items of income beneficially owned by a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, where an amount of income is paid to a resident of a Contracting State out of income received by trustees or personal representatives administering the estates of deceased persons and those trustees or personal representatives are residents of the other Contracting State, that amount shall be treated as arising from the same sources, and in the same proportions, as the income received by the trustees or personal representatives out of which that amount is paid.
Any tax paid by the trustees or personal representatives in respect of the income paid to the beneficiary shall be treated as if it had been paid by the beneficiary.
3. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the beneficial owner of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
4. Where, by reason of a special relationship between the resident referred to in paragraph 1 and some other person, or between both of them and some third person, the amount of the Income referred to in that paragraph exceeds the amount (if any) which would have been agreed upon between them in the absence of such a relationship, the provisions of this Article shall apply only to the last mentioned amount. In such a case, the excess part of the income shall remain taxable according to the laws of each Contracting State, due regard being had to the other applicable provisions of this Agreement.
5. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the income is paid to take advantage of this Article means of that creation or assignment.
ARTICLE 22
CAPITAL
1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State may be taxed in that other State.
3. Capital represented by ships and aircraft operated in international traffic and by movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.
ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
1. Double taxation shall be eliminated as follows:
(a) in the case of Zambia, where a resident of Zambia derives income from the United Kingdom which may be taxed in the United Kingdom in accordance with the provisions of this Agreement, the amount of the United Kingdom tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
(b) in the case of the United Kingdom, subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom or, as the case may be, regarding the exemption from United Kingdom tax of a dividend arising in a territory outside the United Kingdom or of the profits of a permanent establishment situated in a territory outside the United Kingdom (which shall not affect the general principle hereof):
(i) Zambian tax payable under the laws of Zambia and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains from sources within Zambia (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Zambian tax is computed;
(ii) a dividend which is paid by a company which is a resident of Zambia to a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax, when the conditions for exemption under the law of the United Kingdom are met;
(iii) the profits of a permanent establishment in Zambia of a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
(iv) in the case of a dividend not exempted from tax under sub-paragraph (ii) above which is paid by a company which is a resident of Zambia to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit mentioned in sub-paragraph (i) above shall also take into account the Zambian tax payable by the company in respect of its profits out of which such dividend is paid.
2. For the purposes of paragraph 1, profits, income and gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Agreement shall be deemed to arise from sources in that other State.
ARTICLE 24
NON DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 or 8 of Article 11, paragraph 6 or 7 of Article 12 or paragraph 4 or 5 of Article 21 apply, interest, royalties, and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first mentioned State are or may be subjected.
5. Nothing contained in this Article shall be construed as obliging either Contracting State to grant to individuals not resident in that State any of the personal allowances, reliefs and reductions for tax purposes which are granted to individuals so resident or to its nationals.
6. The provisions of this Article shall apply to the taxes which arc the subject of this Agreement.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraph 1 of Article 24, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.
ARTICLE 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws of the Contracting States concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy.
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
ARTICLE 27
ASSISTANCE IN RECOVERY
1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first mentioned State or is owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first mentioned State, the relevant revenue claim ceases to be:
(a) in the case of a request under paragraph 3, a revenue claim of the first mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or
(b) in the case of a request under paragraph 4, a revenue claim of the first mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection the competent authority of the first mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first mentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to carry out measures which would be contrary to public policy;
(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State;
(e) to provide assistance if that Contracting State considers that the taxes with respect to which assistance is requested are imposed contrary to generally accepted taxation principles.
ARTICLE 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
ARTICLE 29
ENTRY INTO FORCE
1. Each of the Contracting States shall notify the other in writing through diplomatic channels of the completion of the procedures required by their laws for the entry into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect in both Contracting States:
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January next following the calendar year in which this Agreement enters into force; and
(b) in respect of other taxes, for taxable periods (and in the case of United Kingdom corporation tax, financial years) beginning on or after the first day of January next following the calendar year in which this Agreement enters into force.
2. The Convention between the Government of Republic of Zambia and the Government of United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains, signed at Lusaka on 22nd March, 1972 as amended by the Protocol signed at Lusaka on 30th April, 1981, shall cease to have effect in respect of any tax with effect from the date upon which this Agreement has effect in respect of that tax in accordance with the provisions of paragraph 1 and shall terminate on the last such date.
ARTICLE 30
DURATION AND TERMINATION
This Agreement shall remain in force until terminated by one of the contracting states. Either contracting states may terminate this Agreement, through Diplomatic Channels, by giving notice of termination at least 6 months before the end of any calendar year beginning after the expiring of 5 years from the date of entry to force of this Agreement.
In such event, this Agreement shall cease to have effect in both Contracting States:
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following that in which the notice of termination is given;
(b) in respect of other taxes, for taxable periods (and in the case of United Kingdom corporation tax, financial years) beginning on or after the first day of January of the year next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto have signed this Agreement.
Done at Lusaka this 4th day of February, 2014.
For the Government of the Republic of |
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (REPUBLIC OF BOTSWANA) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 20 of 2015.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Botswana) Order.
It is declared that the Agreement, the text of which is set out in the Schedule to this Order, being an Agreement relating to the relief from double taxation on the income made between the Government of the Republic of Zambia and the Government of the Republic of Botswana shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE REPUBLIC OF BOTSWANA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
PREAMBLE
The Government of the Republic of Zambia and the Government of the Republic of Botswana desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,
Have agreed as follows:
ARTICLE 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political sub-divisions or of its local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which this Agreement shall apply are:
(a) in the Republic of Zambia, the Income Tax (hereinafter referred to as "Zambian tax"); and
(b) in Botswana: the income tax including taxation of capital gains (hereinafter referred to as "Botswana tax").
4. Notwithstanding any other provisions of this Agreement, where Botswana tax is paid or payable in accordance with a Tax Agreement under the Botswana Income Tax Act, this Agreement shall not apply except to such an extent as may be provided in such Tax Agreement.
5. The Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purpose of this Agreement, unless the context otherwise requires:
(a) the term "Zambia" means the Republic of Zambia; or any area within which Zambia, in accordance with international law, may exercise sovereign right or jurisdiction; and
(b) the term "Botswana" means the Republic of Botswana;
(c) the term "business" includes the performance of professional services and of other activities of an independent character;
(d) the terms "a Contracting State" and "the other Contracting State" mean Zambia or Botswana as the context requires;
(e) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(f) the term "competent authority" means:
(i) in Zambia, the Commissioner General of the Zambia Revenue Authority or his authorised representative; and
(ii) in Botswana, the Minister of Finance and Development Planning, represented by the Commissioner-General of the Botswana Unified Revenue Service or his authorised representative;
(g) the term "enterprise" applies to the carrying on of any business;
(h) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(i) the term "international traffic" means any transport by a ship, a boat, aircraft or rail or road transport vehicle operated by an enterprise that has its place of effective management in a Contracting State, except when the ship, boat, aircraft or rail or road transport vehicle is operated solely between places in the other Contracting State;
(j) the term "national" means:
(i) any individual possessing the nationality or citizenship of a Contracting State;
(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; and
(k) the term "person" includes an individual, an estate of a deceased person, a trust, a company and any other body of persons which is treated as an entity for tax purposes.
2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means; any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of effective management or any other criterion of a similar nature, and also includes that State and any political sub-divisions or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) the individual shall be deemed to be the resident solely of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident solely of the State with which the individual’s personal and economic interests are closer (centre of vital interests);
(b) if sole residence cannot be determined under the provisions of sub-paragraph (a), the individual shall be deemed to be a resident solely of the State in which the individual has an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be the resident solely of the State of which the individual is a national;
(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident solely of the State in which its place of effective management is situated. In case of doubt the competent authorities of the Contracting States shall settle the question by mutual agreement.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources;
(g) an installation or structure used for the exploration of natural resources provided that the installation or structure continues for a period of more than six months; and
(h) a warehouse in relation to a person providing storage facilities for others.
3. The term "permanent establishment" likewise encompasses:
(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site or project, but only where such site, project or activity continues for a period of more than 183 days within any twelve-month period;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating more than 183 days within any twelve-month period commencing or ending in the fiscal year concerned;
(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(c) the maintenance of stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such person—
(a) has, and habitually exercises in that State an authority to conclude contracts in the name of the enterprise;
(b) has no such authority, but habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders or makes deliveries on behalf of the enterprise;
unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 6 applies.
8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry), situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats, aircraft, rail and road transport vehicles shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
5. Where the ownership of shares or other rights in a company or legal person entitles the owner to the enjoyment of immovable property situated in a Contracting State and held by that company or legal person, income derived by the owner from the direct use, letting or use in any other form of the right of enjoyment may be taxed in that State.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as are attributed to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for use of patents or other rights, or by way of commission for specific services performed or for management, or except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
INTERNATIONAL TRANSPORT
1. Profits of an enterprise of a Contracting State from the operation of ships, boats, aircraft or rail or road transport vehicles in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
2. For the purposes of this Article, profits from the operation of ships, boats, aircraft or rail or road transport vehicles in international traffic shall include:
(a) profits derived from the rental or lease on a bare boat basis of ships, boats or aircraft used in international traffic;
(b) profits derived from the rental or lease of rail or road transport vehicles;
(c) profits derived from the use, rental or lease of containers, if such profits are incidental to the profits to which the provisions of paragraph 1 apply.
3. If the place of effective management of a shipping enterprise or of an inland waterways transport enterprise is aboard a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat is situated, or, if there is no such home harbour, in the Contracting State of which the operator of a ship or boat is a resident.
4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which holds at least 25 per cent of the capital of the company paying dividends; or
(b) 7 per cent of the gross amount of the dividends in all other cases.
The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement. This paragraph shall not affect taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders’ shares or other rights (not being debt-claims) participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by:
(a) the Government, a political sub-division or a local authority of the other Contracting State; or
(b) any agency wholly owned or controlled by Government, political sub-division, or local authority of the other Contracting State.
4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematography films and films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of or the right to use industrial, commercial, or scientific equipment or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 13
TECHNICAL FEES
1. Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.
2. However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the technical fees is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the technical fees.
3. The term "technical fees" as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of an administrative, technical, managerial or consultancy nature performed outside that State.
4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein and the technical fees are effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Technical fees shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the technical fees, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment, then such technical fees shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 14
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains from the alienation of ships, boats, aircraft or rail or road transport vehicles operated in international traffic or movable property pertaining to the operation of such ships, boats, aircraft or rail or road transport vehicles, shall be taxable only in the Contracting State in which the place of effective management is situated.
4. Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.
5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.
6. Notwithstanding the provisions of paragraph 5, gains from the alienation of shares or other corporate rights of a company which is a resident of one of the Contracting States derived by an individual who was a resident of that State and who after acquiring such shares or rights has become a resident of the other Contracting State, may be taxed in the first-mentioned State if the alienation of the shares or other corporate rights occur at any time during the two years next following the date on which the individual has ceased to be a resident of that first-mentioned State.
ARTICLE 15
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 16, 18, and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned;
(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, boat, aircraft or rail or road transport vehicle operated in international traffic by an enterprise of a Contracting State may be taxed in the State in which the place of effective management of the enterprise is situated.
ARTICLE 16
DIRECTORS’ FEES
Directors’ fees and other similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 17
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person’s capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the first-mentioned Contracting State, a political subdivision, or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
ARTICLE 18
PENSIONS AND ANNUITIES
1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration, and annuities, arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in the first-mentioned Contracting State.
2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
3. Notwithstanding the provisions of paragraph 1, pensions paid and other similar payments made under a public scheme which is part of the social security system of a Contracting State or a political subdivision or a local authority thereof shall be taxable only in that State.
ARTICLE 19
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political sub-division a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof.
ARTICLE 20
STUDENTS, APPRENTICES AND BUSINESS TRAINEES
A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of such person’s education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the purposes of such person’s maintenance, education or training.
ARTICLE 21
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.
ARTICLE 22
CAPITAL
1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services may be taxed in that other State.
3. Capital represented by ships and aircraft operated in international traffic and by boats engaged in inland waterways transport, rail or road transport and by movable property pertaining to the operation of such ships, aircraft, boats and rail or road transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.
ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
1. Double taxation shall be eliminated as follows:
(a) In Zambia, where a resident of Zambia derives income from Botswana which may be taxed in Botswana in accordance with the provisions of this Agreement, the amount of the Botswana tax paid in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income;
(b) In Botswana, subject to the provisions of the laws of Botswana regarding the allowance of a credit against Botswana tax of tax payable under the laws of a country outside Botswana, Zambian tax paid under the laws of Zambia and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in Zambia shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the Zambian tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana.
2. For the purposes of paragraph 1 of this Article, the terms "Zambian tax paid" and "Botswana tax paid" shall be deemed to include the amount of tax which would have been paid in Zambia or in Botswana, as the case may be, but for an exemption or reduction granted in accordance with laws which establish schemes for the promotion of economic development in Zambia or Botswana, as the case may be, such schemes having been mutually agreed by the competent authorities of the Contracting States as qualifying for the purposes of this paragraph.
3. A grant given by a Contracting State or a political sub-division or a local authority thereof to a resident of the other Contracting State in accordance with laws which establish schemes for the promotion of economic development, such schemes having been mutually agreed by the competent authorities of the Contracting States as qualifying for the purposes of this paragraph, shall be taxable only in the first-mentioned State.
ARTICLE 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. Stateless persons who are residents of a Contracting State shall not be subjected in either Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the State concerned in the same circumstances.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected.
5. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12 and paragraph 6 of Article 13 apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.
6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraph 1 of Article 24, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a joint commission consisting of representatives of the competent authorities of the Contracting States.
ARTICLE 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed by or on behalf of the Contracting States, insofar as the taxation thereunder is not contrary to the Agreement in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 of this Article be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, trust, foundation, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
6. The competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning the matters respecting which such exchange of information should be made.
ARTICLE 27
ASSISTANCE IN COLLECTION OF TAXES
1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be:
(a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection; or
(b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection.
The competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to carry out measures which would be contrary to public policy (ordre public);
(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.
ARTICLE 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall effect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
ARTICLE 29
ENTRY INTO FORCE
1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Agreement. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article.
2. The provisions of this Agreement shall apply:
(a) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the first day of the second month next following the date upon which the Agreement enters into force; and
(b) with regard to other taxes:
(i) in Zambia, in respect of income derived on or after the first day of April next following the date upon which the Agreement enters into force; and
(ii) in Botswana, in respect of income derived on or after the first day of July next following the date upon which the Agreement enters into force.
ARTICLE 30
TERMINATION
1. This agreement shall remain in force indefinitely but may be terminated by a Contracting State. Either Contracting States may terminate the Agreement, through the diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year after the expiration of a period of five years after the date of its entry into force.
2. In such case, the Agreement shall cease to have effect:
(a) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the first day of the second month next following the date upon which the notice of termination is given;
(b) with regard to other taxes:
(i) in Zambia, in respect of income derived on or after the first day of April next following the date upon which the notice of termination is given; and
(ii) in Botswana, in respect of income derived on or after the first day of July next following the date upon which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.
Done at Lusaka this 9th day of March, 2015 in duplicate, in the English language.
HON. O. K. MATAMBO | HON. A. B. CHIKWANDA, MP |
For the Government of the | For the Government of the |
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (IRELAND) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 70 of 2015.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Ireland) Order.
It is declared that the Agreement, the text of which is set out in the Schedule, being an Agreement relating to the relief from double taxation on the income made between the Government of the Republic of Zambia and the Government of Ireland shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
CONVENTION BETWEEN THE REPUBLIC OF ZAMBIA AND IRELAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS
The Government of the Republic of Zambia and the Government of Ireland, desiring to conclude a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, have agreed as follows:
ARTICLE 1
PERSONS COVERED
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Convention shall apply to taxes on income and capital gains imposed by each Contracting State, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income and capital gains all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation.
3. The existing taxes to which this Convention shall apply are:
(a) in the Republic of Zambia: the income tax, (hereinafter referred to as "Zambian tax"); and
(b) in Ireland:
(i) the income tax;
(ii) the universal social charge;
(ii) the corporation tax; and
(iii) the capital gains tax (hereinafter referred to as "Irish tax").
4. This Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise requires:
(a) the term "Zambia" means the Republic of Zambia, or any area within which Zambia, in accordance with international law, may exercise sovereign right or jurisdiction;
(b) the term "Ireland" includes any area outside the territorial waters of Ireland which has been or may hereinafter designated, under the laws of Ireland concerning the Exclusive Economic Zone and the Continental Shelf, as an area within which Ireland may exercise such sovereign rights and jurisdiction as are in conformity with international law;
(c) the terms "a Contracting State" and "the other Contracting State" means Zambia or Ireland, as the context requires and the term "Contracting State" means Zambia and Ireland;
(d) the term "business" includes the performance of professional services and of other activities of an independent character;
(e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(f) the term "competent authority" means:
(i) in Zambia, the Commissioner-General of the Zambia Revenue Authority or his authorised representative; and
(ii) in Ireland, the Revenue Commissioners or their authorised representative;
(g) the term "enterprise" applies to the carrying on of any business;
(h) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(i) the term "international traffic" means any transport by a ship, aircraft or rail or road transport vehicle operated by an enterprise of a Contracting State, except when the ship, aircraft, rail or road transport vehicle is operated solely between places in the other Contracting State;
(j) the term "national" in relation to a Contracting State, means:
(i) any individual possessing the nationality or citizenship of that Contracting State; and
(ii) any legal person or association deriving its status as such from the laws in force in that Contracting State;
(k) the term "person" includes an individual, a company and any other body of persons.
2. As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income or capital gains from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows:
(a) the individual shall be deemed to be resident only of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident only of the State with which the individual’s personal and economic relations are closer (centre of vital interests);
(b) if sole residence cannot be determined under the provisions of sub-paragraph (a), the individual shall be deemed to be a resident only of the State in which the individual has an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident only of the State of which the individual is a national;
(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources.
3. The term "permanent establishment" shall be deemed to include:
(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site, project or activity, but only where such site, project or activity continues for a period of more than 183 days;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned;
(c) for an individual, the performing of services in a Contracting State by that individual, but only if the individual’s stay in that State, for the purpose of performing those services, is for a period or periods aggregating more than 183 days within any twelve month period commencing or ending in the fiscal year concerned;
(d) an installation or structure used for the exploration for natural resources provided that the installation or structure continues for a period of not less than 183 days.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, the agent will not be considered an agent of an independent status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats aircraft and rail or road transport vehicles shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income or capital gains which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
INTERNATIONAL TRANSPORT
1. Profits of an enterprise of a Contracting State from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall be taxable only in that State.
2. For the purposes of this Article, profits from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall include:
(a) profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic;
(b) profits derived from the rental or lease of rail or road transport vehicles;
(c) profits derived from the use, rental or lease of containers, if such profits are incidental to the profits to which the provisions of paragraph 1 apply.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the firstmentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.
3. The provisions of paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted in a final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful default.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 per cent of the gross amount of the dividends.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares, or other rights, not being debtclaims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest referred to paragraph 1 shall be taxable only in the Contracting State of which the recipient is a resident if the beneficial owner of the interest is a resident of that State and:
(a) in the case of Zambia is:
(i) the Government of Zambia;
(ii) the Bank of Zambia;
(iii) the National Pension Scheme Authority as long as its capital is wholly owned by the Government of Zambia;
(iv) any financial institution wholly owned by the Government of Zambia as may be agreed from time to time between the competent authorities of the Contracting States; or
(v) any agency wholly owned by Government, political subdivision, or local authority of Zambia.
(b) in the case of Ireland is:
(i) the Government of Ireland;
(ii) the Central Bank of Ireland;
(iii) the National Pension Reserve Fund as long as its capital is wholly owned by the Government of Ireland;
(iv) any financial institution wholly owned by the Government of Ireland as may be agreed from time to time between the competent authorities of the Contracting States; or
(v) any agency wholly owned by Government, political subdivision, or local authority of Ireland.
The competent authorities of the Contracting States may determine by mutual agreement any other Government institution to which that paragraph shall apply.
4. The term "interest" as used in this Article means income from debtclaims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films, and recordings on tape or other media used for radio or television broadcasting or other means of reproduction or transmission), any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. Notwithstanding the provisions of paragraphs 2, in the case of payment of royalties in respect of any copyright of scientific work, any patent, trade mark, design or model, plan, secret formula or process of information concerning industrial, commercial or scientific experience, the tax charged shall not exceed 8 per cent of the gross amount of the royalties.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
5. The provisions of paragraphs 1, 2 and 4 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State from the alienation of ships, aircraft or rail or road transport vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft or rail or road transport vehicles, shall be taxable only in that State.
4. Gains derived by a resident of a Contracting State from the alienation of:
(a) shares, other than shares quoted on a recognised stock exchange, deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State; or
(b) an interest in a partnership or trust deriving more than 50 per cent of its value directly or indirectly from immovable property situated in the other Contracting State;
may be taxed in that other State.
5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which the alienator is a resident.
6. The provision of paragraph 5 shall not affect the right of a Contracting State to levy, according to its law, a tax on gains from the alienation of any property derived by an individual who is a resident of the other Contracting State and has been a resident of the firstmentioned State at any time during the five years immediately preceding the alienation of the property.
ARTICLE 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the firstmentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and
(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State, and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that Contracting State.
ARTICLE 15
DIRECTORS’ FEES
Directors’ fees and other similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 16
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person’s capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2 shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the firstmentioned Contracting State, a political subdivision or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
ARTICLE 17
PENSIONS AND ANNUITIES
1. Subject to provisions of paragraph 2 of Article 18, pensions paid and other remuneration paid to a resident of a Contracting State in consideration of past employment and any annuity paid to such a resident shall be taxable only in that State.
2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration paid, by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority in the discharge of functions of a governmental nature shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority in the discharge of functions of a governmental nature shall be taxable only in that State.
(b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
ARTICLE 19
STUDENTS AND BUSINESS APPRENTICES
A student or business apprentice who is present in a Contracting State solely for the purpose of the students or business apprentice’s education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the firstmentioned State on payments received from outside that firstmentioned State for the purposes of the student or business apprentice’s maintenance, education or training.
ARTICLE 20
PROFESSORS AND TEACHERS
1. Notwithstanding the provisions of Article 14, a professor or teacher who makes a visit to one of the Contracting States for a period not exceeding two years from the date of first arrival in that State, solely for the purpose of teaching or carrying out research at a university, college, school or other educational institution in that State and who is, or immediately before such visit was, a resident of the other Contracting State shall, in respect of remuneration for such teaching or research, be exempt from tax in the firstmentioned State, provided that such remuneration is derived by the professor or teacher from outside that State. An individual shall be entitled to the benefits of this Article only once.
2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but wholly or mainly for the private benefit of a specific person or persons.
ARTICLE 21
MISCELLANEOUS RULES APPLICABLE TO CERTAIN OFFSHORE ACTIVITIES
1. The provisions of this Article shall apply notwithstanding any other provision of this Convention where activities (in this Article called "relevant activities") are carried on offshore in connection with the exploration or exploitation of the sea bed and subsoil and their natural resources situated in a Contracting State.
2. An enterprise of a Contracting State which carries on relevant activities in the other Contracting State shall, subject to paragraph 3 of this Article, be deemed to be carrying on business in that other State through permanent establishment situated therein.
3. Relevant activities which are carried on by an enterprise of a Contracting State in the other Contracting State for a period or periods not exceeding in the aggregate 30 days within any period of twelve months shall not constitute the carrying on of business through a permanent establishment situated therein. For the purposes of this paragraph:
(a) where an enterprise of a Contracting State carrying on relevant activities in the other Contracting State is associated with another enterprise carrying on substantially similar relevant activities there, the former enterprise shall be deemed to be carrying on all such activities of the latter enterprise, except to the extent that those activities are carried on at the same time as its own activities;
(b) an enterprise shall be regarded as associated with another enterprise if one participates directly or indirectly in the management, control or capital of the other or if the same persons participate directly or indirectly in the management, control or capital of both enterprises.
4. Salaries, wages and similar remuneration derived by a resident of a Contracting State in respect of an employment connected with relevant activities in the other Contracting State may, to the extent that the duties are performed offshore in that other State, be taxed in that other State.
5. Gains derived by a resident of a Contracting State from the alienation of:
(a) exploration or exploitation rights; or
(b) shares (or comparable instruments) deriving their value or the greater part of their value directly or indirectly from such rights,
may be taxed in that other State.
In this paragraph "exploration or exploitation rights" mean rights to assets to be produced by the exploration or exploitation of the seabed or subsoil or their natural resources in the other Contracting State, including rights to interests in or to the benefit of such assets.
ARTICLE 22
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
1. Double taxation shall be eliminated as follows:
(a) in Zambia, where a resident of Zambia derives income from Ireland which may be taxed in Ireland in accordance with the provisions of this Convention, the amount of the Irish tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
(b) in Ireland, subject to the provisions of the laws of Ireland regarding the allowance as a credit against Irish tax of tax payable in a territory outside Ireland (which shall not affect the general principle hereof):
(i) Zambian tax payable under the laws of Zambia and in accordance with this Convention, whether directly or by deduction, on profits, income or gains from sources within Zambia (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or gains by reference to which Zambian tax is computed;
(ii) in the case of a dividend paid by a company which is a resident of Zambia to a company which is a resident of Ireland and which controls directly or indirectly 5 per cent or more of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Zambian tax creditable under the provision of sub-paragraph (b)(i)) Zambian tax payable by the company in respect of the profits out of which such dividend is paid.
2. For the purposes of paragraph 1, profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention, shall be deemed to be derived from sources in that other Contracting State.
3. Income which, in accordance with the provisions of this Convention is not subject to tax in a Contracting State, may be taken into account in determining the rate of tax to be imposed in that Contacting State.
ARTICLE 24
NON DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not resident of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where, the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 7 of Article 12, apply, interest, royalties, and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the firstmentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the firstmentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the firstmentioned State are or may be subjected.
5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraph 1 of Article 24, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Convention.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.
ARTICLE 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
ARTICLE 27
ASSISTANCE IN RECOVERY
1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the firstmentioned State or is owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the firstmentioned State, the relevant revenue claim ceases to be:
(a) in the case of a request under paragraph 3, a revenue claim of the firstmentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or
(b) in the case of a request under paragraph 4, a revenue claim of the firstmentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection.
The competent authority of the firstmentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the firstmentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to carry out measures which would be contrary to public policy;
(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.
ARTICLE 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
ARTICLE 29
ENTRY INTO FORCE
1. Each of the Contracting States shall notify the other in writing through diplomatic channels of the completion of the procedures required by their laws for the entry into force of this Convention. This Convention shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect:
(a) in Zambia:
(i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January next following the calendar year in which this Convention enters into force;
(ii) in respect of other taxes, for taxable periods beginning on or after the first day of January next following the calendar year in which this Convention enters into force.
(b) in Ireland:
(i) in respect of income tax, the universal social charge and capital gains tax, for any year of assessment beginning on or after the first day of January next following the calendar year in which this Convention enters into force:
(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January next following the calendar year in which this Convention enters into force.
2. The Convention between the Government of Republic of Zambia and the Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed at London on 29 March 1971 shall cease to have effect from the dates on which this Convention becomes effective in accordance with paragraph 1 of this Article.
ARTICLE 30
DURATION AND TERMINATION
This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention at any time after five years from the date on which the Convention enters into force provided that at least six months prior written notice of termination has been given through diplomatic channels.
In such event, this Convention shall cease to have effect:
(a) in Zambia:
(i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following that in which the notice of termination is given;
(ii) in respect of other taxes, for taxable periods beginning on or after the first day of January of the year next following that in which the notice of termination is given.
(b) in Ireland:
(i) in respect of income tax, the universal social charge and capital gains tax, for any year of assessment beginning on or after the first day of January of the year next following that in which the notice of termination is given;
(ii) in respect of corporation tax, for any financial year beginning on or after the first day of January of the year next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Convention.
Done at Lusaka, this 31st day of March, 2015, in two originals, both copies being equally authentic.
ALEXANDER B. CHIKWANDA | FINBAR MICHEAL O’BRIEN |
Minister of Finance | Ambassador to Zambia |
PROTOCOL
At the signing of this Convention between the Republic of Zambia and Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains, both sides have agreed upon the following provisions which shall form an integral part of the Convention:
1. With reference to Article 4 (Resident)
It is understood that a Common Contractual Fund (CCF) established in Ireland shall not be regarded as a resident of Ireland and shall be treated as fiscally transparent for the purposes of granting tax treaty benefits.
2. With reference to Article 5 (Permanent Establishment)
It is understood that for the purposes of determining the 183-day time limit in paragraph 3(d) of Article 5:
(a) where an enterprise of a Contracting State carrying on activities in the other Contracting State is associated with another enterprise carrying on substantially similar activities there, the former enterprise shall be deemed to be carrying on all such activities of the latter enterprise, except to the extent that those activities are carried on at the same time as its own activities;
(b) an enterprise shall be regarded as associated with another enterprise if one participates directly or indirectly in the management, control or capital of the other or if the same persons participate directly or indirectly in the management, control or capital of both enterprises.
3. With reference to Article 11 (Interest)
It is understood that in the case of Ireland, paragraph 3(b)(v) shall include the National Treasury Management Agency and any body under its management.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Convention.
Done at Lusaka, this 31st day of March, 2015, in two originals, both copies being equally authentic.
ALEXANDER B. CHIKWANDA | FINBAR MICHEAL O’BRIEN |
Minister of Finance | Ambassador to Zambia |
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (NETHERLANDS) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 95 of 2015.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Netherlands) Order.
It is declared that the Agreement, the text of which is set out in the Schedule, being an Agreement relating to the relief from double taxation on the income made between the Government of the Republic of Zambia and the Government of the Kingdom of the Netherlands shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
CONVENTION BETWEEN THE REPUBLIC OF ZAMBIA AND THE KINGDOM OF THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of Zambia and the Government of the Kingdom of the Netherlands, desiring to conclude a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows:
CHAPTER I
SCOPE OF THE CONVENTION
ARTICLE 1
PERSONS COVERED
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which this Convention shall apply are in particular:
(a) in Zambia, the Income Tax (hereinafter referred to as "Zambian tax"); and
(b) in the European part of the Netherlands:
(i) the income tax (inkomstenbelasting);
(ii) the wages tax (loonbelasting);
(iii) the company tax (vennootschapsbelasting) including the Government share in the net profits of the exploitation of natural resources levied pursuant to the Mining Act (Mijnbouwwet);
(iv) the dividend tax (dividendbelasting); and
in the Caribbean part of the Netherlands,
(i) the income tax (inkomstenbelasting);
(ii) the wages tax (loonbelasting);
(iii) the property tax (vastgoedbelasting);
(iv) the revenue tax (opbrengstbelasting);
(v) the Government share in the net profits of the exploitation of natural resources levied pursuant to the Mining Act BES (Mijnwet BES), the Mining Decree BES (Mijnbesluit BES) or the Petroleum Act Saba Bank BES (Petroleumwet Saba Bank BES); (hereinafter referred to as "Netherlands tax").
4. This Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.
CHAPTER II
DEFINITIONS
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context otherwise requires:
(a) the term "Zambia" means the Republic of Zambia;
(b) the term "the Netherlands" means:
(i) the European part of the Netherlands, including its territorial sea and any area beyond and adjacent to its territorial sea within which the Kingdom of the Netherlands, in accordance with international law, exercises jurisdiction or sovereign rights; and
(ii) the Caribbean part of the Netherlands which is situated in the Caribbean Sea and consists of the island territories of Bonaire, Sint Eustatius and Saba, including its territorial sea and any area beyond and adjacent to its territorial sea within which the Kingdom of the Netherlands in accordance with international law, exercises jurisdiction or sovereign rights, but excluding the part thereof relating to Aruba, Curaçao and Sint Maarten;
(c) the terms "a Contracting State" and "the other Contracting State" mean the Republic of Zambia (Zambia) or the Kingdom of the Netherlands (the Netherlands), as the context requires;
(d) the term "business" includes the performance of professional services and of other activities of an independent character;
(e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(f) the term "competent authority" means:
(i) in Zambia, the Commissioner General of the Zambia Revenue Authority or his authorised representative; and
(ii) in the Netherlands, the Minister of Finance or his authorised representative;
(g) the term "enterprise" applies to the carrying on of any business;
(h) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(i) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(j) the term "national" means:
(i) any individual possessing the nationality of a Contracting State; and
(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;
(k) the term "person" includes an individual, a company and any other body of persons;
(l) the term "a pension fund" means any scheme, fund or other arrangement established in a Contracting State which is:
(i) generally exempt from taxes on income in that State; and
(ii) operated principally to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements.
2. As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof.
2. A person, other than an individual, shall be regarded to be liable to tax:
(a) in the Netherlands, if the person is a resident of the Netherlands for the purposes of the company tax or the revenue tax;
(b) in Zambia, if the person is a resident of Zambia for the purposes of the Income Tax;
provided that the income derived by that person is treated under the tax laws of that State as income of that person and not as the income of the person’s beneficiaries, members or participants.
3. Notwithstanding the provisions of paragraphs 1 and 2, the term "resident of a Contracting State" does not include any person who is liable to tax in that State in respect only of income from sources in that State.
4. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows:
(a) the individual shall be deemed to be a resident only of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident only of the State with which the individual’s personal and economic relations are closer (centre of vital interests);
(b) if sole residence cannot be determined, under the provisions of sub-paragraph (a), the individual shall be deemed to be a resident only of the State in which the individual has an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident only of the State of which the individual is a national;
(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
5. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources.
3. The term "permanent establishment" shall be deemed to include:
(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site, project or activity, but only where such site, project or activity continues for a period of more than 183 days;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned;
(c) for an individual, the performing of services in a Contracting State by that individual, but only if the individual’s stay in that State, for the purpose of performing those services, is for a period or periods aggregating more than 183 days within any twelve month period commencing or ending in the fiscal year concerned; and
(d) an installation or structure used for the exploration for natural resources other than in the area referred to in paragraph 4, provided that the installation or structure continues for a period of not less than 183 days.
4. Notwithstanding the provisions of paragraphs 1, 2 and 3, an enterprise of a Contracting State which carries on activities in the territorial sea of the other Contracting State or in any area beyond and adjacent to its territorial sea as meant in sub-paragraph (b) of paragraph 1 of Article 3, within which that other Contracting State, in accordance with international law, exercises jurisdiction or sovereign rights (offshore activities), shall be deemed to carry on, in respect of those activities, business in that other State through a permanent establishment situated therein, unless the activities in question are carried on in the other State for a period or periods of less than in the aggregate 30 days in any twelve month period.
5. For the purposes of paragraph 4 of this Article, the term "offshore activities" shall be deemed not to include:
(a) one or any combination of the activities mentioned in paragraph 7;
(b) towing or anchor handling by ships primarily designed for that purpose and any other activities performed by such ships;
(c) the transport of supplies or personnel by ships or aircraft in international traffic.
6. For the purposes of determining the duration of the offshore activities under paragraph 4 in connection with paragraph 5, where an enterprise carrying on offshore activities in the other Contracting State is associated with another enterprise and that other enterprise continues, as part of the same project, the same offshore activities that are or were being carried on by the firstmentioned enterprise, and the aforementioned activities are in the aggregate carried on by both enterprises for a period of at least 30 days, each enterprise shall be deemed to carry on its activities for a period of at least 30 days in any twelve month period. For the purposes of this paragraph, an enterprise shall be regarded as associated with another enterprise if one enterprise holds directly or indirectly at least one third of the capital of the other enterprise or if a person holds directly or indirectly at least one third of the capital of both enterprises.
7. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
8. Notwithstanding the provisions of paragraphs 1, 2 and 4, where a person other than an agent of an independent status to whom paragraph 9 applies is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 7 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
9. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which should have been made between independent enterprises, the agent will not be considered an agent of an independent status within the meaning of this paragraph.
10. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry), situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment.
Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State.
2. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall include:
(a) profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic, and
(b) profits derived from the use, rental or lease of containers, if such profits are incidental to the profits to which the provisions of paragraph 1 apply.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the firstmentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits where that other State considers the adjustment justified. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 10 per cent of the capital of the company paying the dividends, or if the beneficial owner is a pension fund; or
(b) 15 per cent of the gross amount of the dividends in all other cases.
The competent authorities of the Contracting States may settle the mode of application of these limitations by mutual agreement.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders’ shares or other rights, not being debtclaims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
6. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.
The competent authority of the Contracting State which has to grant the benefits, shall consult with the competent authority of the other Contracting State before denying the benefits under this paragraph.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by:
(a) The government, a political subdivision or a local authority of the other Contracting State; or
(b) The Central Bank of the other Contracting State; or
(c) Any agency wholly owned by the government, a political subdivision or a local authority of the other Contracting State.
The Competent Authorities of the Contracting State may determine by mutual agreement any other government institution to which this paragraph shall apply.
4. The term "interest" as used in this Article means income from debtclaims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, and the debtclaim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debtclaim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
8. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debtclaim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment. The competent authority of the Contracting State which has to grant the benefits, shall consult with the competent authority of the other Contracting State before denying the benefits under this paragraph.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 7½ per cent of the gross amount of the royalties. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films, films or tapes or discs for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
7. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment. The competent authority of the Contracting State which has to grant the benefits, shall consult with the competent authority of the other Contracting State before denying the benefits under this paragraph.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains from the alienation of ships or aircraft operated in international traffic by an enterprise of a Contracting State, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Contracting State.
4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the firstmentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard a ship or aircraft operated in international traffic, shall be taxable only in that State.
ARTICLE 15
DIRECTORS’ FEES
1. Directors’ fees and other remuneration derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
2. For the purpose of the provisions of paragraph 1, the term "member of the board of directors" includes any person who is charged with the general management of the company and any person who is charged with the supervision thereof.
ARTICLE 16
ENTERTAINERS AND SPORTS PERSONS
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sports person in that person’s capacity as such accrues not to the entertainer or sports person but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sports person are exercised.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be taxable only in the firstmentioned State if the visit to that other State is supported wholly or mainly by public funds of the firstmentioned Contracting State, a political subdivision or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
ARTICLE 17
PENSIONS, ANNUITIES AND SOCIAL SECURITY PAYMENTS
1. Subject to the provisions of sub-paragraph (b) of paragraph 1 of Article 18, pensions and other similar remuneration and annuities, arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in the firstmentioned State.
2. Notwithstanding the provisions of paragraph 1, social security pensions paid and other social security payments made under the laws of a Contracting State shall be taxable only in that State.
3. A pension or other similar remuneration or an annuity shall be deemed to arise in a Contracting State insofar as the contributions or payments associated with that pension or other similar remuneration or annuity, or the entitlements received from that pension or other similar remuneration or annuity qualified for relief from tax in that State. The transfer of a pension, other similar remuneration or annuity from a pension fund or an insurance company in a Contracting State to a pension fund or insurance company in another State shall not restrict in any way the taxing rights of the firstmentioned State under this Article.
4. The provisions of this Article shall also apply in case a lump sum payment is made in lieu of a pension or other similar remuneration or an annuity before the date on which the pension or other similar remuneration or the annuity commences.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration, as well as pensions in respect of the services meant in sub-paragraph (a), shall be taxable only in the other Contracting State if the services are, or have been, rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. The provisions of Articles 14, 15 and 17 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
ARTICLE 19
STUDENTS AND BUSINESS APPRENTICES
Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the firstmentioned State solely for the purpose of that person’s education or training receives for the purpose of that person’s maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
ARTICLE 20
PROFESSORS AND TEACHERS
1. Notwithstanding the provisions of Article 14, payments and other remuneration which a professor or a teacher who is a resident of a Contracting State and who is present in the other Contracting State for the purpose of teaching or carrying out scientific research for a maximum period of two years, starting from the date of the actual commencement of the teaching or scientific activities, in a university, college or other institution for teaching or scientific research in that other State, receives for such teaching or research, shall not be taxed in the other Contracting State, provided that such remuneration is derived by the professor or teacher from outside that State.
2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but wholly or mainly for the private benefit of a specific person or persons.
ARTICLE 21
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
3. Notwithstanding the provisions of paragraph 1 and 2, if a resident of a Contracting State derives income from sources in the other Contracting State in the form of games of chance, such income may be taxed in that other State.
CHAPTER IV
ELIMINATION OF DOUBLE TAXATION
ARTICLE 22
1. Zambia shall eliminate double taxation as follows:
where a resident of Zambia derives income from the Netherlands which may be taxed in the Netherlands in accordance with the provisions of this Convention, the amount of the Netherlands tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
2. The Netherlands may include in the basis upon which taxes are imposed on its residents, the items of income which according to the provisions of this Convention, may be taxed or shall be taxable only in Zambia.
3. However, where a resident of the Netherlands derives items of income which according to paragraphs 1, 3 and 4 of Article 6, paragraph 1 of Article 7, paragraph 4 of Article 10, paragraph 5 of Article 11, paragraph 4 of Article 12, paragraphs 1 and 2 of Article 13, paragraph 1 of Article 14, paragraphs 1 and 2 of Article 17, paragraph 1 sub-paragraph (a) of Article 18 and paragraph 2 of Article 21 of this Convention may be taxed or shall be taxable only in Zambia and are included in the basis referred to in paragraph 2, the Netherlands shall exempt such items of income by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of the Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the amount of the items of income which are exempt from Netherlands tax under those provisions.
4. Further, the Netherlands shall allow a reduction from the Netherlands tax so computed for the items of income which according to paragraph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article 12, paragraph 1 of Article 15, paragraphs 1 and 2 of Article 16, paragraph 4 of Article 17, paragraph 3 of Article 21 of this Convention and paragraphs 2 and 3 of Article VI of the Protocol to this Convention may be taxed in Zambia to the extent that these items are included in the basis referred to in paragraph 2. The amount of this reduction shall be equal to the tax paid in Zambia on these items of income, but shall, in case the provisions of the Netherlands law for the avoidance of double taxation provide so, not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items for which the Netherlands gives a reduction under the provisions of the Netherlands law for the avoidance of double taxation.
This paragraph shall not restrict allowance now or hereafter accorded by the provisions of the Netherlands law for the avoidance of double taxation, but only as far as the calculation of the amount of the reduction of Netherlands tax is concerned with respect to the aggregation of income from more than one country and the carry forward of the tax paid in Zambia on the said items of income to subsequent years.
5. Notwithstanding the provisions of paragraph 2, the Netherlands shall allow a reduction from the Netherlands tax for the tax paid in Zambia on items of income which according to paragraph 1 of Article 7, paragraph 4 of Article 10, paragraph 5 of Article 11, paragraph 4 of Article 12 and paragraph 2 of Article 21 of this Convention may be taxed in Zambia to the extent that these items are included in the basis referred to in paragraph 1, insofar as the Netherlands under the provisions of the Netherlands law for the avoidance of double taxation allows a reduction from the Netherlands tax of the tax levied in another country on such items of income. For the computation of this reduction the provisions of paragraph 4 of this Article shall apply accordingly.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 23
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. Residents of a Contracting State who are not nationals of any State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the firstmentioned Contracting State in the same circumstances, in particular with respect to residence, are or may be subjected.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the firstmentioned State.
5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the firstmentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the firstmentioned State are or may be subjected.
6. Contributions paid by, or on behalf of, an individual who exercises employment or self employment in a Contracting State to a pension fund that is recognised for tax purposes in the other Contracting State shall be treated in the same way for tax purposes in the firstmentioned State as a contribution paid to a pension fund that is recognised for tax purposes in that firstmentioned State, provided that:
(a) such individual was contributing to such pension fund before he became a resident of the firstmentioned State; and
(b) the competent authority of the firstmentioned State considers that such pension fund generally corresponds to a pension fund recognised for tax purposes by that State.
For the purpose of this paragraph, "pension fund" includes a pension plan created under the social security legislation of a Contracting State.
7. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
ARTICLE 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraph 1 of Article 23, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Convention.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. The competent authorities, through consultations, may develop appropriate bilateral procedures, conditions, methods and techniques for the mutual agreement procedures provided for in this Article.
5. Where:
(a) under paragraph 1, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of this Convention; and
(b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within two years from the presentation of the case to the competent authority of the other Contracting State;
any unresolved issue arising from the case shall be submitted to arbitration at the request of either competent authority. These unresolved issues shall not, however, be submitted to arbitration if:
(i) a matter has been commenced in a court or administrative tribunal of competent jurisdiction and has not been withdrawn; or
(ii) a decision on the unresolved issues has already been rendered by such court or administrative tribunal of either State.
Unless a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision, that decision shall be binding on both Contracting States and shall be implemented notwithstanding any time limits in the domestic laws of these States. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this paragraph.
ARTICLE 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.
3. The Contracting States may release to the arbitrator or arbitrators, appointed under the provisions of paragraph 5 of Article 24, such information as is necessary for carrying out the arbitration procedure. Such arbitrator or arbitrators shall be subject to the limitations on disclosure described in paragraph 2 of this Article with respect to any information so released.
4. In no case shall the provisions of paragraphs 1, 2 and 3 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.
5. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 4 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
6. In no case shall the provisions of paragraph 4 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
ARTICLE 26
ASSISTANCE IN THE COLLECTION OF TAXES
1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the firstmentioned State or is owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the firstmentioned State, the relevant revenue claim ceases to be:
(a) in the case of a request under paragraph 3, a revenue claim of the firstmentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection; or
(b) in the case of a request under paragraph 4, a revenue claim of the firstmentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection;
the competent authority of the firstmentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the firstmentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to carry out measures which would be contrary to public policy;
(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.
ARTICLE 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
1. Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
2. For the purposes of the Convention, an individual who is a member of a diplomatic mission or consular post of a Contracting State in the other Contracting State or in a third State and who is a national of the sending State shall be deemed to be a resident of the sending State if that individual is subjected therein to the same obligations in respect of taxes on income as are residents of that State.
3. The Convention shall not apply to international organisations, organs and officials thereof and members of a diplomatic mission or consular post of a third State, being present in a Contracting State, if they are not subjected therein to the same obligations in respect of taxes on income as are residents of that State.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 28
ENTRY INTO FORCE
1. Each of the Contracting States shall notify the other in writing, through diplomatic channels, of the completion of its constitutional procedures for the entry into force of this Convention. This Convention shall enter into force on the last day of the month following the month in which the later of these notifications has been received and its provisions shall thereupon have effect in both Contracting States:
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January next following the calendar year in which this Convention enters into force;
(b) in respect of other taxes, for taxable periods beginning on or after the first day of January next following the calendar year in which this Convention enters into force.
2. The Convention between the Republic of Zambia and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at Lusaka on 19 December 1977, shall cease to have effect in respect of any tax with effect from the date upon which this Convention has effect in respect of that tax in accordance with the provisions of paragraph 1 and shall terminate on the last such date.
ARTICLE 29
DURATION AND TERMINATION
This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate this Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of this Convention.
In such event, this Convention shall cease to have effect in both Contracting States:
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following that in which the notice of termination is given;
(b) in respect of other taxes, for taxable periods beginning on or after the first day of January of the year next following that in which the notice of termination is given.
Notice of termination shall be regarded as having been given by a Contracting State on the date of receipt of such notice by the other Contracting State.
IN WITNESS WHEREOF the undersigned, being duly authorised hereto, have signed this Convention.
Done at Addis Ababa, this 15th day of July, 2015 in two originals, in the English language.
| ALEXANDER B. CHIKWANDA Minister of Finance For the Government of the Republic of Zambia | LILIANNE PLOUMEN Minister of Foreign Trade and Development Cooperation For the Government of the Kingdom of the Netherlands |
PROTOCOL
At the moment of signing the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, this day concluded between the Kingdom of the Netherlands and the Republic of Zambia, both sides have agreed that the following provisions shall form an integral part of the Convention.
I. GENERAL
Where entities are considered to be transparent by one of the Contracting States and are considered to be nontransparent by the other Contracting State, and this leads to double taxation or double nontaxation not in accordance with the provisions of this Convention, the competent authorities of the Contracting States shall find solutions pursuant to Article 24.
II. AD ARTICLE 1 and 4
Notwithstanding the provisions of Articles 1 and 4, the competent authorities of the Contracting States shall, by mutual agreement, decide whether or not a resident of a Contracting State is subject to a special regime and, if so, to which extent it shall not be entitled to the benefits of this Convention. A company which is treated as a tax exempt investment institution ("vrijgestelde beleggingsinstelling") as meant in the Netherlands Corporate Income Tax Act 1969 shall not be entitled to the benefits of Articles 10, 11, 12, 13 and 21 and the corresponding Articles of this Protocol.
III. AD ARTICLES 5, 6, 7 and 13
It is understood that rights to the exploration and exploitation of natural resources shall be regarded as immovable property located in the Contracting State to whose territorial sea and any area beyond and adjacent to its territorial sea as meant in sub-paragraph (b) of paragraph 1 of Article 3, within which that State, in accordance with international law, exercises jurisdiction or sovereign rights, including the seabed and subsoil thereof, these rights apply, and that these rights are regarded as assets of a permanent establishment in that State. Furthermore, it is understood that the aforementioned rights include rights to interests in, or benefits from assets that arise from, that exploration or exploitation.
IV. AD ARTICLE 9
1. It is understood that the fact that associated enterprises have concluded arrangements, such as cost sharing arrangements or general services agreements, for or based on the allocation of executive, general administrative, technical and commercial expenses, research and development expenses and other similar expenses, is not in itself a condition as meant in paragraph 1 of Article 9. However, this does not prevent a Contracting State from checking the abovementioned arrangements or agreements for conditions as meant in paragraph 1 of Article 9.
2. Where paragraph 2 of Article 9 requires a Contracting State to make an appropriate adjustment to reflect a change made by the other Contracting State falling within paragraph 1 of Article 9, the State making the appropriate adjustment shall not be required to take into account any penalty, whether tax or nontax, imposed by the other Contracting State.
V. AD ARTICLE 7
It is understood that, in respect of paragraphs 1 and 2 of Article 7, where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received by the enterprise, but shall be determined only on the basis of that portion of the income of the enterprise that is attributable to the actual activity of the permanent establishment in respect of such sales or business.
VI. AD ARTICLES 10, 11 and 12
Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Articles 10, 11 or 12, applications for the refund of the excess amount of tax have to be lodged with the competent authority of the State having levied the tax, in the case of Zambia, within a period of six years, and in the case of the Netherlands, within a period of five years, after the expiration of the calendar year in which the tax has been levied.
VII. AD ARTICLES 10 and 13
1. It is understood that income received in connection with the (partial) liquidation of a company or a purchase of own shares by a company is treated as dividends.
2. Notwithstanding the provisions of paragraphs 1, 2, and 5 of Article 10, dividends paid by a company which under the laws of a Contracting State is a resident of that State, to an individual who is a resident of the other Contracting State and who upon ceasing to be a resident of the firstmentioned State is taxed on the appreciation of capital as meant in paragraph 3 hereunder, may also be taxed in that State in accordance with the laws of that State, but only insofar as the assessment on the appreciation of capital is still outstanding.
3. Where an individual has been a resident of a Contracting State and has become a resident of the other Contracting State, the provisions of paragraph 4 of Article 13 shall not prevent the firstmentioned State from taxing under its domestic law the capital appreciation of shares, profit sharing certificates, call options and usufruct on shares and profit sharing certificates, in and debtclaims on a company for the period of residency of that individual in the firstmentioned State. In such case, the appreciation of capital taxed in the firstmentioned State shall not be included in the tax base when determining the appreciation of capital by the other State.
VIII. AD ARTICLE 25 and 26
1. The provisions of Article 25 and 26 shall apply accordingly to information that is relevant for carrying out the income related regulations and assistance in the collection of the contributions and payments made under the income related regulations under the laws of the Contracting States by the tax authorities of the Contracting States concerned with the implementation, administration or enforcement of these income related regulations.
2. Any information received under paragraph 1 of this Article in connection with Article 25 shall be used only for the purpose of the determination and levying of the contributions and the determination and granting of the benefits under the income related regulations as meant in paragraph 1 of this Article.
IN WITNESS WHEREOF the undersigned, being duly authorised hereto, have signed this Protocol.
Done at Addis Ababa, this 15th day of July, 2015 in two originals, in the English language.
| ALEXANDER B. CHIKWANDA Minister of Finance For the Government of the Republic of Zambia | LILIANNE PLOUMEN Minister of Foreign Trade and Development Co-operation For the Government of the Kingdom of the Netherlands |
INCOME TAX (AGENCE FRANÇAISE DE DEVELOPMENT AND PROPARCO) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of international organisations
3. Exemption from tax
SI 30 of 2016.
This Order may be cited as the Income Tax (Agence Française De Development and PROPARCO) (Approval and Exemption) Order.
2. Approval of international organisations
The Agence Française De Development and PROPARCO are approved organisations for the purposes of exemption from tax with respect to the Agreement specified in the Schedule.
The income earned, including interest, fees and commission, by the organisations approved in paragraph 2 and accruing under the Agreement specified in the Schedule, is exempt from tax pursuant to paragraph 5(5) of Part III of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
Agreement between the Government of the Republic of Zambia and the Government of the French Republic with respect to the activities of Agence Française De Development and PROPARCO in Zambia.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (KINGDOM OF NORWAY) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation relief
SI 41 of 2017.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Kingdom of Norway) Order.
The Agreement, the text of which is set out in the Schedule, being an Agreement relating to relief from double taxation on income and mutual assistance in tax matters made between the Government of the Republic of Zambia and the Kingdom of Norway has effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE REPUBLIC OF ZAMBIA AND THE KINGDOM OF NORWAY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of Zambia and the Government of the Kingdom of Norway, desiring to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, have agreed as follows:
Article 1
Persons Covered
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Article 2
Taxes Covered
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which this Agreement shall apply are in particular—
(a) in the case of Norway—
(i) the national tax on income;
(ii) the county municipal tax on income;
(iii) the municipal tax on income;
(iv) the national tax on remuneration to non resident artistes;
(hereinafter referred to as "Norwegian tax");
(b) in the case of Zambia, the Income Tax (hereinafter referred to as "Zambian tax").
4. This Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.
Article 3
General Definitions
1. For the purposes of this Agreement, unless the context otherwise requires—
(a) the term "Norway" means the Kingdom of Norway; the term does not comprise Svalbard, Jan Mayen and the Norwegian dependencies;
(b) the term "Zambia" means the Republic of Zambia or any area within which Zambia, in accordance with international law, may exercise sovereign rights or jurisdiction;
(c) the terms "a Contracting State" and "the other Contracting State" mean Norway or Zambia, as the context requires;
(d) the term "person" includes an individual, a company and any other body of persons;
(e) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(f) the term "enterprise" applies to the carrying on of any business;
(g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(h) the term "international traffic" means any transport by a ship or aircraft, except when the ship or aircraft is operated solely between places in a Contracting State;
(i) the term "competent authority" means—
(i) in Norway, the Minister of Finance or the Minister’s authorised representative; and
(ii) in Zambia, the Commissioner-General of the Zambia Revenue Authority, or the Commissioner-General's authorised representative;
(j) the term "national", in relation to a Contracting State, means—
(i) any individual possessing the nationality or citizenship of that Contracting State; and
(ii) any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State; and
(k) the term "business" includes the performance of professional services and of other activities of an independent character.
2. As regards the application of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
Article 4
Resident
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows—
(a) the individual shall be deemed to be a resident solely of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident solely of the State with which the individual’s personal and economic relations are closer (centre of vital interests);
(b) if sole residence cannot be determined under the provisions of sub-paragraph (a), the individual shall be deemed to be a resident solely of the State in which the individual has an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident solely of the State of which the individual is a national;
(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which that person shall be deemed to be a resident for the purposes of this Agreement, having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of a mutual agreement by the competent authorities of the Contracting States, such person shall not be entitled to any exemption or relief from tax provided by this Agreement, except to the extent and in such a manner as may be agreed upon by the competent authorities of the Contracting States.
Article 5
Permanent Establishment
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources.
3. The term "permanent establishment" also encompasses—
(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site, project or activity, but only where such site, project or activity continues for a period of more than 183 days;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned;
(c) for an individual, the performing of services in a Contracting State by that individual, but only if the individual’s stay in that State, for the purpose of performing those services, is for a period or periods aggregating more than 183 days within any twelve month period commencing or ending in the fiscal year concerned;
(d) an installation or structure used for the exploration for natural resources provided that the installation or structure continues for a period of not less than 183 days within any twelve month period.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include—
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which should have been made between independent enterprises, the agent will not be considered an agent of an independent status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 6
Income from Immovable Property
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
Article 7
Business Profits
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
5. For the purpose of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is a good and sufficient reason to the contrary.
6. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
Article 8
International Transport
1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.
2. Profits of an enterprise of a Contracting State from the use, maintenance, rental or lease of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise in international traffic shall be taxable only in that State.
3. The provisions of paragraphs 1 and 2 shall also apply to profits derived from the participation in a pool, a joint business or in an international operating agency.
Article 9
Associated Enterprises
1. Where—
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.
3. The provisions of paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted in the final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful default.
Article 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed—
(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;
(b) 15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. Where dividends are derived and beneficially owned by the Government of a Contracting State, such dividends shall be taxable only in that State. For the purposes of this paragraph, the term "Government of a Contracting State" shall include—
(a) in the case of Norway—
(i) the Central Bank of Norway;
(ii) the Government Pension Fund Global; and
(iii) a statutory body or any entity wholly owned by the Government of Norway; and
(b) in the case of Zambia—
(i) the Central Bank of Zambia; and
(ii) a statutory body or any entity wholly owned by the Government of Zambia.
4. The term "dividends" as used in this Article means income from shares or other rights, not being debt claims, participating in profits, as well as income from other corporate rights that is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
6. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
7. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.
Article 11
Interest
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is beneficially owned by—
(a) the Government, a political sub-division or a local authority of the other Contracting State. In the case of Norway the Government includes the Government Pension Fund Global;
(b) the Central Bank of the other Contracting State; or
(c) any agency or entity wholly owned by the Government, a political sub-division, or local authority of the other Contracting State.
4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profit, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
8. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.
Article 12
Royalties
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films, or films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
7. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment.
Article 13
Capital Gains
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.
4. Gains derived by an enterprise of a Contracting State from the alienation of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise in international traffic shall be taxable only in that State.
5. Gains from the alienation of any property, other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.
Article 14
Income From Employment
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if—
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve months period commencing or ending in the fiscal year concerned;
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment which the employer has in that other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised aboard a ship or aircraft operated in international traffic shall be taxable only in that State.
Article 15
Directors’ Fees
Directors’ fees and other similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors or of a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.
Article 16
Artistes and Sports Persons
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sports person, from that resident’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sports person acting as such accrues not to the entertainer or sports person but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sports person are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to income derived from activities performed in a Contracting State by entertainers or sports persons if the visit to that State is wholly or mainly supported by public funds of one or both of the Contracting States or political subdivisions or local authorities thereof. In such a case, the income is taxable only in the Contracting State in which the entertainer or the sports person is a resident.
Article 17
Pensions, Annuities, Payments under a Social Security System and Alimony
1. Pensions, annuities and other similar payments, including payments under a social security system, arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in that other State.
2. However, such payments may also be taxed in the State in which they arise, but the tax so charged shall not exceed 15 per cent of the gross amount.
3. The term "annuity" means a stated sum payable to an individual periodically at stated times during that person’s life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.
4. Alimony and other maintenance payments paid to a resident of a Contracting State shall be taxable only in that State. However, any alimony or other maintenance payments paid by a resident of a Contracting State to a resident of the other Contracting State shall, to the extent it is not allowable as a relief to the payer, be taxable only in the first mentioned State.
Article 18
Government Service
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State;
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who—
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. The provisions of Articles 14, 15 and 16 shall apply to salaries, wages and other similar remuneration, in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
Article 19
Students
Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first mentioned State solely for the purpose of that person’s education or training receives for the purpose of that person’s maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
Article 20
Other Income
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.
Article 21
Elimination of Double Taxation
1. Subject to the provisions of the laws of Norway regarding the allowance as a credit against Norwegian tax of tax payable in a territory outside Norway (which shall not affect the general principle of this Article):
(a) where a resident of Norway derives income which, in accordance with the provisions of this Agreement, may be taxed in Zambia, Norway shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Zambia on that income;
such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Zambia;
(b) where in accordance with any provision of the Agreement income derived by a resident of Norway is exempt from tax in Norway, Norway may nevertheless include such income in the tax base, but shall allow as a deduction from the Norwegian tax on income that part of the income tax which is attributable to the income derived from Zambia.
2. In Zambia double taxation shall be avoided as follows—
Where a resident of Zambia derives income from Norway which may be taxed in Zambia in accordance with the provisions of this Agreement, the amount of the Norwegian tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
Article 22
Non-Discrimination
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first mentioned State are or may be subjected.
5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
Article 23
Mutual Agreement Procedure
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraph 1 of Article 22, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.
Article 24
Exchange of Information
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
Article 25
Assistance in the Collection of Taxes
1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first mentioned State or is owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first mentioned State, the relevant revenue claim ceases to be—
(a) in the case of a request under paragraph 3, a revenue claim of the first mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection; or
(b) in the case of a request under paragraph 4, a revenue claim of the first mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection;
the competent authority of the first mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first mentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to carry out measures which would be contrary to public policy;
(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;
(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.
Article 26
Members of Diplomatic Missions and Consular Posts
1. Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
2. Insofar as, due to fiscal privileges granted to members of diplomatic missions and consular posts under the general rules of international law or under the provisions of special international agreements, income is not subject to tax in the receiving State, the right to tax shall be reserved to the sending State.
Article 27
Entry into Force
1. Each of the Contracting States shall notify the other in writing through diplomatic channels of the completion of its constitutional procedures for the entry into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications and its provisions shall thereupon have effect in both Contracting States—
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January next following the calendar year in which this Agreement enters into force;
(b) in respect of other taxes, for taxable periods beginning on or after the first day of January next following the calendar year in which this Agreement enters into force.
2. The Convention between the Kingdom of Norway and the Republic of Zambia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed in Oslo on 14 July 1971, shall terminate and cease to be effective from the date upon which this Agreement has effect in respect of the taxes to which this Agreement applies in accordance with the provisions of paragraph 1 of this Article.
Article 28
Termination
1. This Agreement shall remain in force indefinitely, but either of the Contracting States may, on or before 30th June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give to the other Contracting State, through diplomatic channels, written notice of termination. In such event, the Agreement shall cease to have effect.
2. In such event, this Agreement shall cease to have effect in both Contracting States—
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following that in which the notice of termination is given;
(b) in respect of other taxes, for taxable periods beginning on or after the first day of January of the year next following that in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.
Done at Lusaka, this 17th day of December, 2015, in two originals, in the English and Norwegian languages, both being equally authentic.
HIS EXCELLENCY ARVE OFSTAD, | HON. A.B. CHIKWANDA, MP, |
Ambassador | Minister of Finance |
For the Government of the | For the Government of the |
INCOME TAX (OVERSEAS PRIVATE INVESTMENT CORPORATION) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of international organisation
3. Exemption from tax
SI 42 of 2017.
This Order may be cited as the Income Tax (Overseas Private Investment Corporation) (Approval and Exemption) Order.
2. Approval of international organisation
The Overseas Private Investment Corporation is an approved organisation for purposes of exemption from tax with respect to the Agreement specified in the Schedule.
The income earned, including interest, fees and commission, by the organisation approved in paragraph 2 and accruing under the Agreement specified in the Schedule is exempt from tax pursuant to paragraph 5(5) of Part III of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Investment Incentive Agreement between the Government of the United States of America and the Government of the Republic of Zambia and the Overseas Private Investment Corporation, signed in Lusaka on 23rd June, 1999.
INCOME TAX (SUSPENSION OF TAX ON PAYMENTS TO NON-RESIDENT CONTRACTORS) (BATOKA HYDRO-ELECTRIC SCHEME AND KARIBA DAM REHABILITATION PROJECTS) REGULATIONS
[Section 15A]
Arrangement of Regulations
Regulation
1. Title
2. Suspension of tax
SI 43 of 2017.
These Regulations may be cited as the Income Tax (Suspension of Tax on payments to Non-Resident Contractors) (Batoka Hydro-Electric Scheme and Kariba Dam Rehabilitation Projects) Regulations.
The income tax on management and consultancy fees payable by the Zambezi River Authority to non-resident contractors in relation to the development of the Batoka Hydro-Electric Scheme and the rehabilitation of the Kariba Dam Projects is suspended for the duration of projects.
INCOME TAX (AFRICAN MANAGEMENT SERVICES COMPANY) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of international organisation
3. Exemption from tax
SI 70 of 2017.
This Order may be cited as the Income Tax (African Management Services Company) (Approval and Exemption) Order.
2. Approval of international organisation
The African Management Services Company (AMSCO) is an approved organisation for purposes of exemption from tax with respect to the agreement specified in the Schedule.
The income earned by the organisation approved in paragraph 2 and accruing under the Agreement specified in the Schedule is exempt from tax pursuant to paragraph 5(5) of Part III of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Cooperation Framework Agreement for Enterprise Development in Zambia between the Government of the Republic of Zambia through Ministry of Finance and the African Management Services Company, signed at Lusaka on 17th February, 2017.
INCOME TAX (EXEMPTION OF TAX ON INTEREST PAYMENTS TO OVERSEAS LENDERS BY MAAMBA COLLIERIES LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval and exemption from specific tax
SI 74 of 2017.
This Order may be cited as the Income Tax (Exemption of Tax on Interest Payments to Overseas Lenders by Maamba Collieries Limited) (Approval and Exemption) Order.
2. Approval and exemption from specific tax
(1) The income tax on interest payable by the Maamba Collieries Limited, to its lenders in respect of the development of the 300 megawatts electricity power plant project is approved for purposes of exemption from tax for the duration of the project in accordance with the Implementation Agreement signed between the Government of the Republic of Zambia and Maamba Collieries Limited dated 16th September, 2011.
(2) Sub-paragraph (1) shall not apply to a loan contracted after the coming into operation of this Order.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (THE KINGDOM OF MOROCCO) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 6 of 2018.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (The Kingdom of Morocco) Order.
The Agreement set out in the Schedule to this Order, relating to the relief from double taxation on the income made between the Government of the Republic of Zambia and the Kingdom of Morocco shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE REPUBLIC OF ZAMBIA AND THE KINGDOM OF MOROCCO FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Republic of Zambia and the Kingdom of Morocco;
Desiring to further promote and develop their economic relations by concluding an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income;
HAVE AGREED as follows:
ARTICLE 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises.
3. The existing taxes to which this Agreement shall apply are in particular:
(a) in the case of the Republic of Zambia, the Income Tax (hereinafter referred to as "Zambian tax"); and
(b) in the case of the Kingdom of Morocco:
(i) the Income Tax; and
(ii) the Corporation Tax;
(hereinafter referred to as "Moroccan tax").
4. This Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
(a) the term "Zambia" means the Republic of Zambia; or any area within which Zambia, in accordance with international law, may exercise sovereign rights or jurisdiction;
(b) the term "Morocco" means the Kingdom of Morocco and, when used in a geographical sense, the term "Morocco" includes:
(i) the territory of the Kingdom of Morocco, the territorial sea thereof; and
(ii) the maritime areas beyond the territorial sea, including the seabed and subsoil thereof (continental shelf) and the exclusive economic zone over which Morocco exercises sovereign rights, in accordance with its domestic laws and international law, for the purposes of exploration and exploitation of the natural resources of such areas;
(c) the terms "a Contracting state" and "the other Contracting state" mean the Republic of Zambia or the Kingdom of Morocco as the context requires;
(d) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(e) the term "competent authority" means:
(i) in the case of Zambia, the Commissioner-General of the Zambia Revenue Authority or the Commissioner-General’s authorised representative; and
(ii) in the case of Morocco, the Minister of Finance or his authorised representative;
(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise which is a resident of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(h) the term "national" means:
(i) any individual possessing the nationality of a Contracting State; or
(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; and
(i) the term "person" includes an individual, a company and any other body of persons.
2. As regards the application of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows:
(a) the individual shall be deemed to be a resident only of the State in which a permanent home is available to that individual; if a permanent home is available to that individual in both States, that individual shall be deemed to be a resident solely of the State with which that individual’s personal and economic relations are closer (centre of vital interests);
(b) if sole residence cannot be determined under the provisions of sub-paragraph (a), the individual shall be deemed to be a resident only of the State in which that individual has an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, that individual shall be deemed to be a resident only of the State of which that individual is a national; and
(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which such person shall be deemed to be a resident for the purposes of the Agreement, having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of exploration, extraction or exploitation of natural resources;
(g) a sales outlet; and
(h) a warehouse put at the disposal of a person providing storage facilities for others.
3. The term "permanent establishment" shall be deemed to include:
(a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith but only if such site, project or activities last more than six months;
(b) an installation or structure used in the exploration for natural resources provided that the installation or structure continues for a period of more than six months.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 7 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:
(a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or
(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which that person regularly delivers goods or merchandise on behalf of the enterprise.
6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.
7. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, that person will not be considered an agent of an independent status within the meaning of this paragraph.
8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry), situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats, and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State of which the enterprise is a resident.
2. For the purposes of this Article, profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall include:
(a) profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic; and
(b) profits derived from the use or rental of containers;
if such profits are incidental to the profits to which the provisions of paragraph 1 apply.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint-business or an international operating agency, but only to so much of the profits so derived as is attributable to the participant in proportion to its share in the joint operation.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.
3. The provisions of paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted in a final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful default.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.
The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement.
The provisions of paragraph 2 of this Article shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
6. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 1 and 2, interest arising in a contracting state, borne and paid by:
(a) the Government of the Republic of Zambia or its political sub-division or a local authority thereof, or its Central Bank, or any agency wholly owned by the Government or its political sub-division or local authority, to the Government of the Kingdom of Morocco or its Central Bank, shall be exempt from Zambian tax; and
(b) the Government of the Kingdom of Morocco or its Central Bank to the Government of the Republic of Zambia or a political sub-division or a local authority thereof, or its Central Bank, or any agency wholly owned by the Government, its political subdivision or local authority thereof, shall be exempt from Moroccan tax.
The competent authorities of the Contracting States may determine by mutual agreement any other government institution to which this paragraph shall apply.
4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such cases, the provisions of Article 7 or Article 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishments, or a fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
8. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.
ARTICLE 12
ROYALTIES AND FEES FOR TECHNICAL SERVICES
1. Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, notwithstanding the provisions of Article 14, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical services.
3. The term "royalties" as used in this Article means payments of any kind received as consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for radio or television broadcasting or broadcasting by satellite, cables, optical fibres or similar technology used for public broadcasting, magnetic tapes, discs or laser discs, any software, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial, agricultural or scientific experience (know-how).
4. The term "fees for technical services" as used in this Article means payments of any kind received as a consideration for services of a managerial, technical or consultancy nature but does not include payments for services mentioned in Article 15.
5. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other contracting state in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such cases, the provisions of Article 7 or 14, as the case may be, shall apply.
6. Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
8. The provisions of this Article shall not apply if it was the main purpose, or one of the main purposes, of any persons concerned with the creation or the assignment of the rights in respect of which the royalties, or the furnishing of services in respect of which fees for technical services, are paid to take advantage of this Article by means of that creation or assignment or that furnishing of services.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), or of such fixed base, may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State operating ships or aircraft in international traffic from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the enterprise is a resident.
4. Gains from the alienation of shares of the capital stock of a company, the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.
5. Gains from the alienation of any property other than that referred to in the preceding paragraphs of this Article, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State:
(a) if that resident has a fixed base regularly available in the other Contracting State for the purpose of performing that resident’s activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in the other Contracting State; or
(b) if that resident’s stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from that resident’s activities performed in that other State may be taxed in that other State.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18, 19, 20, and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, may be taxed in the Contracting State of which the employee is a resident.
ARTICLE 16
DIRECTORS’ FEES
Directors’ fees and similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 17
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person’s capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the first-mentioned Contracting State, a political subdivision or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
ARTICLE 18
PENSIONS
Pensions and other similar remunerations arising in a Contracting State and paid to a resident of the other Contracting State in consideration of past employment may be taxed in the state in which they arise.
ARTICLE 19
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State; and
(b) such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any pensions paid by or out of funds created by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State; and
(b) such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that other State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
ARTICLE 20
STUDENTS AND BUSINESS APPRENTICES
Payments which a student or business apprentice, who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of that student’s or business apprentice’s education or training, receives for the purpose of that student’s or business apprentice’s maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
ARTICLE 21
PROFESSORS AND TEACHERS
1. A professor or teacher who makes a temporary visit to one of the Contracting States for a period not exceeding two years from the date of first arrival in that State, solely for the purpose of teaching or carrying out research at a university, college, school or other educational institution in that State and who is, or immediately before such visit was, a resident of the other Contracting State shall, in respect of remuneration for such teaching or research, be exempt from tax in the first-mentioned State, provided that such remuneration is derived by the professor or teacher from outside that State.
2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but wholly or mainly for the private benefit of a specific person or persons.
ARTICLE 22
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
1. Where a resident of a Contracting State derives income which, in accordance with the provisions of this Agreement, may be taxed in the other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in that other State. Such deduction shall not, however, exceed that part of the income tax as computed before the deduction is given, which is attributable to the income which may be taxed in that other State.
2. Where in accordance with any provisions of this Agreement income derived by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
ARTICLE 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. Stateless persons who are residents of a Contracting State shall not be subjected in either Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of the State concerned in the same circumstances, in particular with respect to residence, are or may be subjected.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 7 of Article 12 apply, interest, royalties, fees for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.
5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which that person is a resident or, if the case comes under paragraph 1 of Article 24, to that of the Contracting State of which that person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives for the purpose of reaching an agreement in the sense of the preceding paragraphs.
ARTICLE 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; and
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
ARTICLE 27
ASSISTANCE IN THE COLLECTION OF TAXES
1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
2. The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation there under is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.
6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.
7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be:
(a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or
(b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection,
the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.
8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to carry out measures which would be contrary to public policy (ordre public);
(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice; and
(d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.
ARTICLE 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
ARTICLE 29
ENTRY INTO FORCE
1. Each of the Contracting States shall notify to the other, in writing, through diplomatic channels, the completion of procedures required by its law for the bringing into force of this Agreement.
2. This Agreement shall enter into force on the date of receipt of the later of these notifications and its provisions shall have effect—
(a) in respect of taxes withheld at source, on amounts paid or credited, on or after the first day of January of the calendar year following that in which this Agreement enters into force; and
(b) in respect of other taxes, for any taxable year or period beginning on or after the first day of January of the calendar year following that in which this Agreement enters into force.
ARTICLE 30
TERMINATION
1. This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after the fifth year following the year in which the Agreement has entered into force. In such case, the Agreement shall cease to have effect—
(a) in respect of taxes withheld at source, on amounts paid or credited, on or after the first day of January of the calendar year following that in which such notice is given; and
(b) in respect of other taxes, for any taxable year or period beginning on or after the first day of January of the calendar year following that in which such notice is given.
IN WITNESS WHEREOF, the undersigned, duly authorised thereto by their respective Governments, have signed this Agreement.
Done in duplicate at ................................, this ................. day of ............................... 20.......... in the English and Arabic languages, both texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.
FOR THE GOVERNMENT OF | FOR THE GOVERNMENT OF THE KINGDOM OF MOROCCO |
...................................................... | .............................................................. |
INCOME TAX (TAX AGENT) (TERMS AND CONDITIONS) REGULATIONS
[Section 7]
Arrangement of Regulations
Regulation
1. Title
2. Commission for Tax Agents
3. Duration of Agency
4. Government conditions of Agency
SI 48 of 2018.
These Regulations may be cited as the Income Tax (Tax Agent) (Terms and Conditions) Regulations.
(1) A person appointed by the Commissioner-General as a Tax Agent to collect base tax, presumptive tax, turnover tax or tax on rental income is entitled to a commission payable at a rate not exceeding three per cent of the actual tax revenue collected by that Tax Agent.
(2) The commission under sub-regulation (1) is payable on a monthly or quarterly basis, as agreed by the Commissioner-General and the Tax Agent.
The appointment of a Tax Agency under the Act is valid for a period of two years and may be renewed for a further period of two years.
4. Government conditions of Agency
The conditions set out in the Schedule apply to a Tax Agent appointed under the Act.
[Regulation 4]
GENERAL TERMS AND CONDITIONS FOR TAX AGENTS
1.0 Introduction
The Zambia Revenue Authority (ZRA) is a statutory body established under the Zambia Revenue Authority Act, Chapter 321 of the Laws of Zambia. ZRA is charged with the responsibility of collecting revenue on behalf of the Government of the Republic of Zambia under the supervision of the Minister of Finance.
Pursuant to the provisions of the Income Tax Act, Chapter 323 of the Laws of Zambia, ZRA is seeking to appoint Tax Collection Agents to assist in the collection of base tax, presumptive tax, turnover tax, and withholding tax on rental income.
2.0 Scope of Taxes
The tax that the Agent will collect on behalf of ZRA under this Contract is base tax. Base tax is a tax levied on small-scale businesses that cannot maintain adequate business records on which to base a correct tax assessment at the end of the charge year. Section 64 of the Income Tax Act Chapter 323 of the laws of Zambia empowers the Commissioner-General to assess base tax where the Commissioner -General does not have sufficient information on which to determine the tax payable.
The current base tax, as set out in the Income Tax (Amendment) Act No. 16 of 2017, is K365.00 per annum which translates into K1.00 per day. Base tax is collectable from marketeers, vendors and other small scale traders from the informal sector.
3.0 Collection Points
The Agent shall collect base tax from all eligible base taxpayers in the towns and districts of the Republic of Zambia, i.e. from all parts of the country.
4.0 Commission
The Agent shall be paid a Commission at the rate of three per cent of the total monthly revenue collection attributed to the Agent. The Commission shall be paid only on the moneys actually received by ZRA in any given month and attributed to the Agent.
5.0 Roles and responsibilities of the Agent
The roles and responsibilities of the Agent include but are not limited to—
(a) developing and maintaining a credible and secure database of taxpayers eligible to pay base tax. The database shall be in a format prescribed by ZRA;
(b) submitting a preliminary database indicated in 5(a) to ZRA within 30 days of signing of the Contract for Tax Collection Agency Services;
(c) continuously updating the database of taxpayers eligible to pay base tax and to submit the updated database to ZRA on a monthly basis;
(d) ensuring that all taxpayers on the database remit base tax to ZRA using an approved mode of payment;
(e) proposing and implementing best revenue collection modalities/mechanisms that will guarantee security of Government revenues, efficiency and timeliness of collection;
(f) developing and implementing a sensitisation strategy for effective communication;
(g) maintain auditable records; and
(h) allow ZRA and other oversight institutions to check the records.
6.0 Roles and responsibilities of ZRA
The responsibilities of ZRA include but are not limited to—
(a) ensuring that the taxpayers on the database submitted by the Agent are registered with ZRA for tax purposes;
(b) assessing the base tax that the Agent is required to collect to ensure that it is remitted to ZRA by the taxpayers;
(c) providing the Agent with the ZRA Account number(s) into which the revenue collected under the Tax Collection Agency Services will be paid;
(d) regularly monitoring, by way of monthly reviews, the performance of the Agent to ensure strict compliance with the provisions of these Terms of Reference and the Contract for Tax Collection Agency Services; and
(e) implementing taxpayer education programmes in the markets and other catchment areas.
7.0 Tax collection method
The Parties agree that the Agent will neither collect nor handle cash from taxpayers. Instead, the Agent will at all times ensure that every taxpayer on the database remits tax to ZRA through mobile money services offered by MTN, Airtel, Zamtel or any other mobile or electronic money transfer platform approved by ZRA.
8.0 Supervision of the Agent
The Agent will perform its roles and responsibilities under the direction of the Commissioner-General or the Commissioner-General’s nominee and will submit all reports on the deliverables to the office of the Commissioner-Domestic Taxes.
INCOME TAX (KONOIKE CONSTRUCTION COMPANY LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Effective date
3. Approval and exemption from income tax
4. Exemption from tax
SI 62 of 2019.
This Order may be cited as the Income Tax (Konoike Construction Company Limited) (Approval and Exemption) Order.
The Order is deemed to have come into operation on 29th June, 2011.
3. Approval and exemption from income tax
The Konoike Construction Company Limited and its Japanese employees working pursuant to the grant agreement entered into between the Japan International Co-operation Agency and the Government of the Republic of Zambia as described in paragraph (i) of the Schedule is approved for the purpose of exemption from income tax for the duration of the project specified in the Agreement between the Government of the Republic of Zambia acting through the Ministry of Local Government and Housing and Konoike Construction Company Limited, specified in paragraph (ii) of the Schedule.
The income earned including interest, fees and commission by Konoike Construction Company Limited pursuant to the agreements specified in paragraph 2, and described in the Schedule, is exempted from income tax pursuant to the Part II, paragraph 4(b) of the Second Schedule to the Act for the charge years covering the period from 29th June, 2011 to 31st August, 2013.
[Paragraphs 2 and 3]
AGREEMENT
(i) Grant Agreement between the Japan International Co-operation Agency and the Government of the Republic of Zambia dated 29th June, 2011 for the Project for the improvement of Water Supply Condition in Ndola City; and
(ii) Contract between Ministry of Local Government and Housing, the Government of the Republic of Zambia and Konoike Construction Company Limited, Japan for the project for the improvement of Water Supply Condition in Ndola dated 5th March, 2012.
INCOME TAX (ROYAL HASKONING DHV (PTY) LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title and commencement
2. Approval of Agency of foreign Government
3. Exemption from tax
SI 11 of 2020.
(1) This Order may be cited as the Income Tax (Royal Haskoning DHV (PTY) Limited) (Approval and Exemption) Order.
(2) This Order is deemed to have come into operation on 30th December, 2016.
2. Approval of Agency of foreign Government
The Royal Haskoning DHV (PTY) Limited is an approved organisation for purposes of exemption from income tax with respect to the agreement specified in the Schedule for the duration of the project.
The income earned, including interest, fees and commission by Royal Haskoning DHV (PTY) Limited under the agreement specified in paragraph 2 and described in the Schedule is exempted from income tax pursuant to Part II paragraph 4(b) of the Second Schedule to the Act for charge years covering the period from 30th December, 2016 to 31st December, 2020.
[Paragraphs 3 and 4]
AGREEMENT
The Grant Agreement between the Government of the Republic of Zambia and the Netherlands Enterprise Agency dated 30th December, 2016 for the project of water and sanitation works in Solwezi.
INCOME TAX (REMISSION) (NDOLA LIME COMPANY LIMITED) ORDER
[Section 15A]
Arrangement of Paragraphs
Paragraph
1. Title
2. Remission of income tax
SI 27 of 2020.
This Order may be cited as the Income Tax (Remission) (Ndola Lime Company Limited) Order.
Remission is granted for the income tax payable by Ndola Lime Company Limited as set out in the Schedule.
[Paragraph 2]
REMISSION OF INCOME TAX
Income Tax Type | Amount |
Pay as you earn | 54,917,495.57 |
Withholding tax on interest payments | 9,992,900.79 |
Company income tax | 1,543,937.70 |
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (THE SWISS CONFEDERATION) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double Taxation Agreement
SI 82 of 2020.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (The Swiss Confederation) Order.
The Convention, the text of which is set out in the Schedule, being an Agreement relating to the relief from double taxation on the income made between the Government of the Republic of Zambia and the Swiss Confederation has effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
CONVENTION BETWEEN THE REPUBLIC OF ZAMBIA AND CONFEDERATION FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF TAX EVASION AND AVOIDANCE
The Government of the Republic of Zambia and the Swiss Federal Council desiring to further develop their economic relationship and to enhance their cooperation in tax matters, intending to conclude a Convention for the elimination of double taxation with respect to taxes on income without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements) aimed at obtaining reliefs provided in this Convention for the indirect benefit to residents of Third States.
HAVE AGREED as follows:
Article 1
Persons Covered
1. This Convention shall apply to persons who are residents of one or both of the Contracting States.
2. For the purposes of this Convention, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Contracting State shall be considered to be income of a resident of a Contracting State but only to the extent that the income is treated, for purposes of taxation by that State, as the income of a resident of that State. In no case shall the provisions of this paragraph be construed so as to restrict in any way a Contracting State’s right to tax the residents of that State.
Article 2
Taxes Covered
1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which this Convention shall apply are in particular:
(a) in Switzerland:
the federal, cantonal and communal taxes on income (total income, earned income, income from capital, industrial and commercial profits, capital gains, and other items of income)
(hereinafter referred to as "Swiss tax");
(b) in Zambia:
the income tax
(hereinafter referred to as "Zambian tax").
4. This Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Convention in addition to or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.
5. This Convention shall not apply to taxes withheld at source on prizes in a lottery.
Article 3
General Definition
1. For the purposes of this Convention, unless the context otherwise requires:
(a) (i) the term "Switzerland" means the territory of the Swiss Confederation as defined by its laws in accordance with international law;
(ii) the term "Zambia" means the Republic of Zambia, or any area within which Zambia, in accordance with international law, may exercise sovereign rights or jurisdiction;
(b) the term "person" includes an individual, a company and any other body of persons;
(c) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(d) the term "enterprise" applies to the carrying on of any business;
(e) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" means respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(f) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(g) the term "competent authority" means:
(i) in the case of Switzerland, the Head of the Federal Department of Finance or his authorised representative;
(ii) in the case of Zambia, the Commissioner-General of the Zambia Revenue Authority or the Commissioner-General’s authorised representative;
(h) the term "national" in relation to a Contracting State means:
(i) any individual possessing the nationality or the citizenship of a Contracting State;
(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;
(i) the term "pension scheme" means any plan, scheme, fund, foundation, trust or other arrangement established in a Contracting State which is:
(i) regulated by and generally exempt from income taxation in that State; and
(ii) operated principally to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such schemes;
(j) the term "business" includes the performance of professional services and of other activities of an independent character.
2. As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has as that time under the law of that State for the purpose of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
Article 4
Resident
1. For the purpose of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual's status shall be determined as follows:
(a) the individual shall be deemed to be a resident solely of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident solely of the State with which the individual's personal and economic relations are closer (centre of vital interests);
(b) if sole residence cannot be determined under the provisions of sub-paragraph (a), the individual shall be deemed to be a resident solely of the State in which the individual has an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident solely of the State of which the individual is a national;
(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Slate in which its place of effective management is situated. In cases of doubt, the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the State in which the person's place of effective management is exercised, and in doing so shall take into account all relevant factors. In the absence of such agreement, that person shall not be entitled to claim any benefits provided by this Convention except those provided by paragraph 1 of Article 22 (Elimination of double taxation), Article 23 (Non discrimination) and Article 24 (Mutual agreement procedure).
Article 5
Permanent Establishment
1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources.
3. The term "permanent establishment" shall be deemed to include:
(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site, project or activity, but only where such site, project or activity continues for a period of more than 183 days;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned;
(c) for an individual, the performing of services in a Contracting State by that individual, but only if the individual’s stay in that State, for the purpose of performing those services, is for a period or periods aggregating more than 183 days within any twelve month period commencing or ending in the fiscal year concerned;
(d) an installation or structure used in the exploration for natural resources provided that the installation or structure continues for a period of not less than 183 days.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or similar activities which have a preparatory or auxiliary character for the enterprise;
(f) an installation or assembly project carried on by an enterprise of a Contracting State in the other Contracting State in connection with the delivery of machinery or equipment produced by that enterprise;
(g) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (f), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, the agent will not be considered an agent of an independent status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting Slate, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 6
Income From Immovable Property
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
Article 7
Business Profits
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions' expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere.
4. in so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
8. A Contracting State shall make no adjustment to the profits that are attributable to a permanent establishment of an enterprise of one of the Contracting States after 5 years from the end of the taxable year in which the profits would have been attributable to the permanent establishment. The provisions of this paragraph shall not apply in the case of fraud, gross negligence or wilful default.
Article 8
International Transport
1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.
2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
Article 9
Associated Enterprises
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the firstmentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.
3. A Contracting State shall not include in the profits of an enterprise, and tax accordingly, profits that would have accrued to the enterprise but by reason of the conditions referred to in paragraph 1 have not so accrued, after 5 years from the end of the taxable year in which the profits would have accrued to the enterprise. The provisions of this paragraph shall not apply in the case of fraud, gross negligence or wilful default.
Article 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends throughout a 365 day period that includes the day of the payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a merger or divisive reorganisation, or from a change of legal form, of the company that holds the shares or that pays the dividend);
(b) 15 per cent of the gross amount of the dividends in all other cases.
3. Notwithstanding the provisions of paragraph 2, the Contracting State of which the company is a resident shall exempt from tax dividends paid by that company, if the beneficial owner of the dividends is:
(a) in the case of Switzerland:
(i) the Central Bank of Switzerland;
(ii) a pension scheme as listed in clauses (i) to (iv) of sub-paragraph (b) of paragraph 2 of the protocol to this Convention; and
(iii) a statutory body or any entity wholly owned by the Government of Switzerland or its political subdivisions or local authorities; and
(b) in the case of Zambia:
(i) the Central Bank of Zambia;
(ii) a pension scheme as listed in clauses (i) to (iv) of sub-paragraph (a) of paragraph 2 of the protocol to this Convention; and
(iii) a statutory body or any entity wholly owned by the Government of Zambia or its political subdivisions or local authorities.
4. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the limitations of paragraphs 2 and 3. Paragraphs 2 and 3 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
5. The term "dividends" as used in this Article means income from shares or other rights, not being debt claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
6. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
7. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
Article 11
Interest
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to a resident of the other Contracting State who is the beneficial owner thereof shall be taxable only in that other State to the extent that such interest is paid to:
(a) in the case of Switzerland:
(i) the Central Bank of Switzerland;
(ii) a pension scheme as listed in clauses (i) to (iv) of sub-paragraph (b) of paragraph 2 of the protocol to this Convention; and
(iii) a statutory body or any entity wholly owned by the Government of Switzerland or its political subdivisions or local authorities; and
(b) in the case of Zambia:
(i) the Central Bank of Zambia;
(ii) a pension scheme as listed in clauses (i) to (iv) of sub-paragraph (a) of paragraph 2 of the protocol to this Convention; and
(iii) a statutory body or any entity wholly owned by the Government of Zambia or its political subdivisions or local authorities.
4. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the limitations of paragraphs 2 and 3.
5. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
6. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
7. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
8. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
Article 12
Royalties
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment with which the right or property in respect of which the royalties are paid is effective connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the lastmentioned amount. In such case, the excess of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
Article 13
Capital Gains
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains of an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.
4. Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State. The provisions of the preceding sentence shall not apply to gains:
(a) from the alienation of shares quoted on a stock exchange established in either Contracting State or on a stock exchange as may be agreed by the competent authorities of the Contracting States; or
(b) from the alienation of shares in a company the value of which consist of more than 50 per cent of immovable property, in which the company carries on its business.
5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.
Article 14
Income from Employment
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the firstmentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned;
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of the Contracting State may be taxed in that State.
Article 15
Directors’ Fees
Directors' fees and other similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
Article 16
Entertainers and Sportspersons
1. Notwithstanding the provisions of Article 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person's capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. The provisions of the preceding sentence shall not apply if it is established that neither the entertainer or the sportsperson, nor persons related to the entertainer or sportsperson, participate directly in the profits of such person.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the firstmentioned Contracting State, a political subdivision or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
Article 17
Pensions
Pensions and other similar remuneration arising in a Contracting State and paid to a resident of the other Contracting State in consideration of past employment may be taxed in the State in which they arise, and according to the laws of that State.
Article 18
Government Service
1. (a) Salaries, wages and other similar remuneration paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. The provisions of Articles 14, 15 and 16 shall apply to salaries, wages, and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
Article 19
Students and Business Apprentices
Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first mentioned State solely for the purpose of that individual's education or training receives for the purpose of that individual's maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
Article 20
Other Income
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
Article 21
Entitlement to Benefits
Notwithstanding the other provisions of this Convention, a benefit under this Convention shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Convention.
Article 22
Elimination of Double Taxation
1. In the case of Switzerland, double taxation shall be avoided as follows:
(a) where a resident of Switzerland derives income which, in accordance with the provisions of this Convention, may be taxed in Zambia, Switzerland shall, subject to the provisions of sub-paragraph (b), exempt such income from tax but may, in calculating tax on the remaining income of that resident, apply the rate of tax which would have been applicable if the exempted income had not been so exempted. However, such exemption shall apply to gains referred to in paragraph 4 of Article 13 only if actual taxation of such gains in Zambia is demonstrated.
(b) where a resident of Switzerland derives dividends, interest or royalties which, in accordance with the provisions of Articles 10, 11 or 12, may be taxed in Zambia, Switzerland shall allow, upon request, a relief to such resident. The relief may consist of:
(i) a deduction from the tax on the income of that resident of an amount equal to the tax levied in Zambia in accordance with the provisions of Articles 10, 11 and 12; such deduction shall not, however, exceed that part of the Swiss tax, as computed before the deduction is given, which is appropriate to the income which may be taxed in Zambia; or
(ii) a lump sum reduction of the Swiss tax; or
(iii) a partial exemption of such dividends, interest or royalties from Swiss tax, in any case consisting at least of the deduction of the tax levied in Zambia from the gross amount of the dividends, interest or royalties;
Switzerland shall determine the applicable relief and regulate the procedure in accordance with the Swiss provisions relating to the carrying out of international conventions of the Swiss Confederation for the avoidance of double taxation.
(c) a company which is a resident of Switzerland and which derives dividends from a company which is a resident of Zambia shall be entitled, for the purposes of Swiss tax with respect to such dividends, to the same relief which would be granted to the company if the company paying the dividends were a resident of Switzerland.
(d) the provisions of sub-paragraph (a) shall not apply to income derived by a resident of a Contracting State where the other Contracting State applies the provisions of this Convention to exempt such income from tax or applies the provisions of paragraph 2 of Article 10 or paragraph 2 of Article 11 or paragraph 2 of Article 12 of such income.
2. In the case of Zambia, double taxation shall be avoided as follows:
Where a resident of Zambia derives income from Switzerland which may be taxed in Switzerland in accordance with the provisions of this Convention, the amount of the Swiss tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is applicable to that income.
Article 23
Non Discrimination
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 8 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the firstmentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the firstmentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the firstmentioned State are or may be subjected.
5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
Article 24
Mutual Agreement Procedure
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Convention, that person may, irrespective of the remedies provided by the domestic law of those States, present that person's case to the competent authority of either Contracting State. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Convention.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Convention.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention.
4. The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.
5. Where:
(a) under paragraph 1, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of this Convention; and
(b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within three years from the presentation of the case to the competent authority of the other Contracting State;
any unresolved issues arising from the case shall be submitted to arbitration if either competent authority so requests. The person who has presented the case shall be notified of the request. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either State. The arbitration decision shall be binding on both States and shall be implemented notwithstanding any time limits in the domestic laws of these States unless both competent authorities agree on a different solution within six months after the decision has been communicated to them or unless a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this paragraph.
6. The Contracting States may release to the arbitration board, established under the provisions of paragraph 5, such information as is necessary for carrying out the arbitration procedure. The members of the arbitration board shall be subject to the limitations of disclosure described in paragraph 2 of Article 25 with respect to the information so released.
Article 25
Exchange of Information
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes covered by this Convention in so far as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Article 1.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (Public Order).
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
Article 26
Members of Diplomatic Missions and Consular Posts
Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
Article 27
Entry into Force
1. Each Contracting State shall notify to the other, through diplomatic channels, the completion of the procedures required by its law for the bringing into force of this Convention. This Convention shall enter into force on the date on which the latter of those notifications has been received.
2. The provisions of this Convention shall have effect:
(a) in respect of taxes withheld at source on amounts paid or credited on or after the first day of January of the calendar year next following the entry into force of this Convention;
(b) in respect of other taxes for taxation years beginning on or after the first day of January of the calendar year next following the entry into force of this Convention;
(c) in respect to Article 25, to information that relates to fiscal years or business years beginning on or after the first day of January of the calendar year next following the entry into force of this Convention. Article XX of the Convention between Switzerland and the United Kingdom of 30 September 1954 for the Avoidance of Double Taxation with respect to taxes on Income, extended to the Federation of Rhodesia and Nyasaland by an exchange of notes of 30 May 1961 between Switzerland and the United Kingdom and applicable to the Republic of Zambia, shall continue to be applicable for information regarding the taxable years before and including the year ending on the last day of December of the year this Convention enters into force.
3. The Convention between Switzerland and the United Kingdom of 30 September 1954 for the Avoidance of Double Taxation with respect to taxes on Income, extended to the Federation of Rhodesia and Nyasaland by an exchange of notes of 30 May 1961 between Switzerland and the United Kingdom and applicable to the Republic of Zambia, will terminate in respect of the relations between Switzerland and the Republic of Zambia on the date this Convention becomes applicable.
Article 28
Termination
This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year starting five years after the year in which this Convention entered into force. In such event, this Convention shall cease to have effect:
(a) in respect of taxes withheld at source on amounts paid or credited on or after the first day of January of the calendar year next following that in which the notice was given;
(b) in respect of other taxes for taxation years beginning on or after the first day of January of the calendar year next following that in which the notice was given.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Convention.
Done in duplicate at Lusaka this 29th day of August, 2017 in the French and English languages, both texts being equally authentic. In case there is any divergence of interpretation between the French and the English texts the English text shall prevail.
| For the Republic of Zambia: | For the Swiss Confederation: |
| FELIX C. MUTATI, Minister of Finance | ARTHUR MATTLI, Ambassador of Switzerland to the Republic of Zambia |
PROTOCOL
The Government of the Republic of Zambia
and
The Swiss Federal Council
Have agreed at the signing at Lusaka on the 29th August, 2017 of the Convention between the two States for the avoidance of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance upon the following provisions which shall form an integral part of the said Convention.
1. ad Article 1
(a) notwithstanding the other provisions of this Convention, a collective investment vehicle which is established in a Contracting State and which receives income arising in the other Contracting State shall be treated for purposes of applying the Convention to such income as an individual who is a resident of the Contracting State in which it is established and as the beneficial owner of the income it receives (provided that, if an individual who is a resident of the firstmentioned State had received the income in the same circumstances, such individual would have been considered to be the beneficial owner thereof), but only to the extent that the beneficial interests in the collective investment vehicle are owned by residents of the Contracting State in which the collective investment vehicle is established.
(b) for purposes of this paragraph, the term "collective investment vehicle" means, in the case of Switzerland, a contractual fund as defined in Article 25 and an investment company with variable capital as defined in Article 36 of the Federal Act on Collective Investment Schemes of 23 June 2006 and, in the case of Zambia, a Collective Investment Scheme as defined in Section 72 of the Securities Act, Chapter 354 of the Laws of Zambia, as well as any other investment fund, arrangement or entity established in either Contracting State which the competent authorities of the Contracting States agree to regard as a collective investment vehicle for purposes of this paragraph.
(c) notwithstanding the other provisions of this Convention, a Swiss limited partnership for collective capital investment schemes as defined in Article 98 of the Federal Act on Collective Investment Schemes of 23 June 2006 which receives income arising in Zambia shall not be treated as a resident of Switzerland, but may claim, on behalf of the owners of its beneficial interests, the tax reductions, exemptions or other benefits that would have been available under this Convention to such owners had they received such income directly. It may not make such a claim if the owner has itself made an individual claim for benefits with respect to income received by the partnership.
2. ad sub-paragraph (i) of paragraph 1 of Article 3
It is understood that the term "pension scheme" includes the following and any identical or substantially similar funds which are established pursuant to legislation introduced after the date of signature of this Convention:
(a) in Zambia, any pension scheme covered by:
(i) the National Pension Scheme Act CAP. 256;
(ii) the Local Authorities Superannuation Fund Act CAP. 284;
(iii) the Workers Compensation Act No. 10 of 1999;
(iv) the Public Service Pension Act CAP. 260;
(b) in Switzerland, any pension scheme covered by:
(i) the Federal Act on old age and survivors' insurance, of 20 December 1946;
(ii) the Federal Act on disabled persons' insurance of 19 June 1959;
(iii) the Federal Act on supplementary pensions in respect of old age, survivors' and disabled persons’ insurance of 6 October 2006;
(iv) the Federal Act on income compensation allowances in case of service and in case of maternity of 25 September 1952;
(v) the Federal Act on old age, survivors' and disabled persons' insurance payable in respect of employment or self employment of 25 June 1982, including pension funds which offer individual recognised pension plans comparable with occupational pension plans;
(vi) the Federal Act on Vested Benefits of 17 December 1993;
(vii) paragraph 6 and paragraph 7 of Article 89a of the Swiss Civil Code of 10 December 1907;
(viii) paragraph 1 of Article 331 of the Federal Act on the Amendment of the Swiss Civil Code (Part Five: The Code of Obligations) of 30 March 1911.
3. ad Article 4
In respect of paragraph 1 of Article 4, it is understood and confirmed that the term "resident of a Contracting State" includes in particular:
(a) a pension scheme established in that State; and
(b) an organisation that is established and is operated exclusively for religious, charitable, scientific, cultural, sporting, or educational purposes (or for more than one of those purposes) and that is a resident of that State according to its laws, notwithstanding that all or part of its income or gains may be exempt from tax under the domestic law of that State.
4. ad Article 17
It is understood that the term "pensions" as used in Article 17 does not only cover periodic payments, but also includes lump sum payments.
5. ad Articles 17 and 23
As regards Article 17 and Article 23, contributions to a pension scheme of a Contracting State that are made by or on behalf of an individual who renders services in the other Contracting State shall, for the purposes of determining the individual’s tax payable and the profits of an enterprise which may be taxed in that State, be treated in that State in the same way and subject to the same conditions and limitations as contributions made to a pension scheme in that Contracting State, provided that the individual was not a resident of that State, and was participating in the pension scheme, immediately before beginning to provide services in that State.
6. ad Article 25
(a) it is understood that an exchange of information will only be requested once the requesting Contracting State has exhausted all regular sources of information available under the internal taxation procedure.
(b) it is understood that the tax authorities of the requesting State shall provide the following information to the tax authorities of the requested State when making a request for information under Article 25:
(i) the identity of the person under examination or investigation;
(ii) the period of time for which the information is requested;
(iii) a statement of the information sought including its nature and the form in which the requesting State wishes to receive the information from the requested State;
(iv) the tax purpose for which the information is sought;
(v) to the extent known, the name and address of any person believed to be in possession of the requested information.
(c) it is understood that the reference to "foreseeable relevance" is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that the Contracting States are not at liberty to engage in "fishing expeditions" or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer. While sub-paragraph (b) contains important procedural requirements that are intended to ensure that fishing expeditions do not occur, clauses (i) through (v) of sub-paragraph (b) nevertheless are not to be interpreted in order to frustrate effective exchange of information.
(d) it is understood that Article 25 does not require the Contracting States to exchange information on an automatic or a spontaneous basis.
(e) it is understood that in case of an exchange of information, the administrative procedural rules regarding taxpayers’ rights provided for in the requested Contracting State remain applicable. It is further understood that these provisions aim at guaranteeing the taxpayer a fair procedure and not at preventing or unduly delaying the exchange of information process.
Done in duplicate at Lusaka this 29th day of August, 2017 in the French and English languages, both texts being equally authentic. In case there is any divergence of interpretation between the French and the English texts the English text shall prevail.
| For the Republic of Zambia: | For the Swiss Confederation: |
| FELIX C. MUTATI, Minister of Finance | ARTHUR MATTLI, Ambassador of Switzerland to the Republic of Zambia |
INCOME TAX (JOHN SNOW HEALTH ZAMBIA LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title, commencement and revocation
2. Approval of company engaged by international organisation
3. Exemption from tax
SI 32 of 2022.
1. Title, commencement and revocation
(1) This Order may be cited as the Income Tax (John Snow Health Zambia Limited) (Approval and Exemption) Order.
(2) This Order is deemed to have come into operation on 13th January, 2020, and shall stand revoked on 31st December, 2025.
2. Approval of company engaged by international organisation
The John Snow Health Zambia Limited is an approved organisation for purposes of exemption from tax with respect to the Agreement specified in the Schedule.
The income earned, including interest, fees and commission, by the organisation approved in paragraph 2 and accruing under the Agreement specified in the Schedule is exempt from tax pursuant to paragraph 5(5) of Part III of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
1. The Development Cooperation Agreement between the United States of America and the Government of the Republic of Zambia No. 611-000-G-11-0000 dated 27th September, 2011.
2. The Development Objective Grant Agreement between the United States of America and the Government of the Republic of Zambia No. 611-000-G-20-000 dated 31st July, 2020.
3. The Contract between the Government of the Republic of Zambia and John Snow Health Zambia Limited for the Electronic Supply Chain Management Information System (eSCMIS) Award Number - 72061120C00003 dated 13th January, 2020.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (UNITED ARAB EMIRATES) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double Taxation Agreement
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (United Arab Emirates) Order.
The Agreement, the text of which is set out in the Schedule, being an Agreement relating to the relief from double taxation on the income made between the Government of the Republic of Zambia and United Arab Emirates has effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE REPUBLIC OF ZAMBIA AND THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF TAX EVASION AND AVOIDANCE
The Government of the Republic of Zambia and the United Arab Emirates desiring to further develop their economic relationship and to enhance their cooperation in tax matters, intending to conclude an agreement for the elimination of double taxation with respect to taxes on income without creating opportunities for non taxation or reduced taxation through tax evasion or avoidance (including through treaty shopping arrangement aimed at obtaining reliefs provided in this agreement for the indirect benefit of residents of third States)
HAVE AGREED as follows:
Article 1
Persons Covered
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Article 2
Taxes Covered
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises.
3. The existing taxes to which this Agreement shall apply are, in particular:
(a) in Zambia:
the income tax
(hereinafter referred to as "Zambian tax")
(b) in the United Arab Emirates:
(i) the income tax; and
(ii) the corporate tax
(hereinafter referred to as "UAE tax").
4. This Agreement shall apply also to any identical or substantially similar taxes, which are imposed under the laws of a Contracting State after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes, which have been made in their respective taxation laws.
Article 3
Income from Hydrocarbons
Despite any other provision of this Agreement nothing shall affect the right of either one of the Contracting States, or of any of their local Governments or local authorities thereof to apply their domestic laws and regulations related to the taxation of income and profits derived from hydrocarbons situated in the territory of the respective Contracting State, as the case may be.
Article 4
General definitions
1. For the purposes of this Agreement, unless the context otherwise requires:
(a) the terms "a Contracting State" and "the other Contracting State" mean Zambia or United Arab Emirates, as the context requires;
(b) the Term "Zambia" means the Republic of Zambia; or any area within which Zambia, in accordance with international law, may exercise sovereign rights or jurisdiction;
(c) the term "United Arab Emirates" when used in a geographical sense, means the territory of the United Arab Emirates which is under its sovereignty as well as the area outside the territorial water, airspace and submarine areas over which the United Arab Emirates exercises, sovereign and jurisdictional rights in respect of any activity carried on in its water, sea bed, sub soil, in connection with the exploration for or the exploitation of natural resources by virtue of its law and international law;
(d) the term "person" includes an individual, an estate, a trust, a partnership, a company and any other body of persons;
(e) the term "national" means:
(i) any individual possessing the nationality of a Contracting State; and
(ii) any legal person, partnership or association or other entity deriving its status as such from the laws in force in a Contracting State or of a political subdivision or a local government thereof;
(f) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(g) a pension scheme means any plan, scheme, fund, trust, or other arrangement established in a Contracting State, generally exempt from tax in that State and operated principally either to administer or provide pension or retirement benefit or to earn income for the benefit of one or more such arrangements;
(h) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(i) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(j) the term "business" includes the performance of professional services and of other activities of an independent character;
(k) the term "qualified government entity" means, Central bank of a Contracting State, any person, Agency, institution, authority, fund, enterprise, organisation, or other entity owned or controlled directly or indirectly by a Contracting State or any political subdivision or local government thereof;
(l) the term "competent authority" means:
(i) in Zambia: The Commissioner-General of the Zambia Revenue Authority or the Commissioner-General’s authorised representative; and
(ii) in the UAE: the Minister of Finance or an authorised representative of the Minister of Finance.
2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Contracting State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
Article 5
Resident
1. For the purposes of this Agreement, the term "resident of a Contracting State" means—
(a) in Zambia, any person who under the laws of Zambia, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of similar nature, but does not include any person who is liable to tax in Zambia in respect only of income from sources therein; and
(b) in the UAE:
(i) a UAE national and an individual who is a resident under the laws of the UAE or of any political subdivision or local government and a national; and
(ii) any person other than an individual that is incorporated or otherwise recognised under the laws of the UAE or any political subdivision or local government thereof.
2. For the purposes of paragraph 1, a resident of a Contracting State include—
(a) the Government of that Contracting State and any political subdivision or local Government or local authority thereof;
(b) any person, other than an individual owned or controlled directly or indirectly by that State or any political subdivision or local government or local authority thereof;
(c) a qualified government entity;
(d) a pension fund;
(e) charities or religious, educational and cultural organisations.
3. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows:
(a) the individual shall be deemed to be a resident only of the Contracting State in which the individual has a permanent home available to him, and if the individual has a permanent home available to that individual in both Contracting States, that individual shall be deemed to be a resident only of the Contracting State with which that individual’s personal and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which the individual has that individual’s vital interests cannot be determined, or if that individual has not a permanent home available to that individual in either Contracting State, that individual shall be deemed to be a resident only of the Contracting State in which that individual has a habitual abode;
(c) if the individual has a habitual abode in both Contracting States or in neither of them, that individual shall be deemed to be a resident only of the Contracting State of which that individual is a national; and
(d) if the individual’s status cannot be determined under the provisions of subparagraph (c), the competent authorities of the Contracting States shall settle the question by mutual agreement.
4. Where by reason of the provisions of paragraph 1 a person, other than an individual, is a resident of both Contracting States, the competent authorities shall by mutual agreement determine the tax status of that person.
Article 6
Permanent Establishment
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially—
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of exploration extraction exploitation of natural resources
3. The term permanent establishment shall be deemed to include—
(a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith or drilling rig or ship used for the exploring or exploiting of natural resources constitute a permanent establishment only if such site, project or activities continue for a period of more than six months;
(b) the furnishing of services, including consultancy or managerial services, by an enterprise of a Contracting State through employees or other personnel engaged by the enterprise for such purpose, in the other Contracting State constitutes a permanent establishment only if activities of that nature continue for a period or periods aggregating more than nine months;
(c) for an individual, the performing of services in a Contracting State by that individual, but only if that individual’s stay in that State, for the purpose of performing those services is for a period aggregating more than six months within any twelve month period commencing or ending in the fiscal year concerned.
4. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if substantial, mechanical or scientific equipment or machinery is used for more than eighteen months or installed, in that other Contracting State by, for or under contract with the enterprise.
5. Despite the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include the—
(a) use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(e) maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise any other activity of a preparatory or auxiliary character; and
(f) maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
6. Despite the provisions of paragraphs 1 and 2, where a person, other than an agent of an independent status to whom paragraph 9 applies, is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if that person—
(a) has, and habitually exercises in the first mentioned Contracting State, an authority to conclude contracts in the name of such enterprise, unless the activities of such person are limited to those mentioned in paragraph 5 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph;
(b) has no such authority, but habitually maintains in the first mentioned Contracting State a stock of goods or merchandise belonging to such enterprise from which that person regularly delivers goods or merchandise on behalf of such enterprise;
(c) habitually secures orders in the first mentioned Contracting State, exclusively or almost exclusively for the enterprise itself or for such enterprise and other enterprises, which are controlled by it or have a controlling interest in it; and
(d) in so acting, the person manufactures or processes in that Contracting State for the enterprise goods or merchandise belonging to the enterprise.
7. Despite the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person, other than an agent of an independent status to whom paragraph 9 applies.
8. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and other enterprises, which are controlled by it or have a controlling interest in it, that person will not be considered an agent of an independent status within the meaning of this paragraph.
9. Despite the provision of paragraph 8 of this Article, insurance companies that are owned or controlled by a Contracting State or its Local Governments or local authorities shall be treated differently for tax purposes and shall be subject to tax only in the state of residence.
10. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 7
Income from Immovable Property
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other Contracting State.
2. The term "immovable property" shall have the meaning, which it has under the national laws of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general laws respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right of work, mineral deposits, sources and other natural resources Ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other term of immovable property.
4. The provisions of paragraphs 1 and 3 of this Article shall also apply to income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
5. The provisions of paragraphs 3 shall not apply if the beneficial owner of the income is the State itself or local authorities, political subdivision, local Governments or their financial institution.
Article 8
Business Profits
1. The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated in that other Contracting State. If the enterprise carries on or has carried on business in that manner, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions those deductible expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere, taking into consideration, any applicable law or regulations in the concerned Contracting State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
5. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary, the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
6. If the information available to the competent authority of a Contracting State is inadequate to determine the profits to be attributed to the permanent establishment of a person, nothing in this Article shall affect the application of any laws or regulations of that Contracting State relating to the determination of the tax liability of that permanent establishment by making of an estimate by the competent authority of that Contracting State of the profits to be subject to tax of that permanent establishment, provided that such laws or regulations shall be applied consistently with the principles of this Article, taking into account the information available to the competent authority.
7. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
8. Where profits include items of income or gains which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
9. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficiary owner of the profit is the State itself, or any of its political subdivision, local governments, local authority or their financial institutions, such income shall be taxable only at the State of residence.
Article 9
Shipping and Air Transport
Despite the provisions of Article 8 of this Agreement:
1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that Contracting State.
2. For the purposes of this Article profits from the operation of ships or aircraft in international traffic include—
(a) profits from the rental on a bareboat basis of ships or aircraft; and
(b) profits from the use, maintenance or rental of containers, including trailers and related equipment for the transport of containers, used for the transport of goods or merchandise.
3. (a) The provisions of paragraph 1 shall also apply to profits derived from—
(i) the participation in a pool, a joint business or an international operating agency;
(ii) selling of tickets on behalf of another enterprise;
(iii) income from selling of technical engineering to a third party; and
(iv) income deriving from deposits at the Bank, bonds, shares, stocks and other debentures.
(b) the income under subparagraph (a) shall be incidental to the operation of airlines.
4. Pending the entry into force of this Agreement, both Contracting States would take no action to recover taxes with respect to profits, income and gains referred to in this Article.
Article 10
Associated Enterprises
1. Where—
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that Contracting State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and the profits so included are profits which would have accrued to the enterprise of the first mentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting State shall make an appropriate adjustment to the amount of the profits subjected to tax. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other.
3. The provisions of paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted in a final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful default.
Article 11
Dividends
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other state.
2. However, Dividends paid by a company which is a resident of a Contracting State may also be taxed in that state according to the laws of that state, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed five per cent of the gross amount of the dividends.
3. Despite the provisions of paragraphs 1 and 2 of this Article, dividends paid by resident of a Contracting State to the resident of the other Contracting State shall be taxable only in that other state if the beneficial owner of the dividends is the Contracting State itself, or any of its political subdivision, local governments, local authorities, and their financial institutions.
4. The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders’ shares or other rights, not being debt claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation laws of the Contracting State of which the company making the distribution is a resident.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other Contracting State, or performs in that other Contracting State independent personal services from a fixed base situated in that other Contracting State, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 8 or Article 16, as the case may be, shall apply.
6. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Contracting State who is the beneficial owner of the dividends or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Contracting State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State.
Article 12
Interest
1. Interest paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other state. However, interest paid by a company which is a resident of a Contracting State may also be taxed in that state according to the laws of that state, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed five per cent of the gross amount of the interest.
2. Despite the provisions of paragraphs 1 and 2 of this Article, interest paid by resident of a Contracting State to the resident of the other Contracting State shall be taxable only in that other state if the beneficial owner of the interest is the Contracting State, or any of its political subdivision, local governments, local authorities, and their financial institutions.
3. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income which is subjected to the same taxation treatment as income from money lent by the taxation laws of the Contracting State in which the income arises.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated in that other Contracting State, or performs in that other Contracting State independent personal services from a fixed base situated in that other Contracting State, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 8 or Article 16, as the case may be, shall apply.
5. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner of the interest, or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
Article 13
Royalties
1. Royalties paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other state.
2. However, royalties paid by a company which is a resident of a Contracting State may also be taxed in that state according to the laws of that state, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed five per cent of the gross amount of the royalties.
3. Despite the provisions of paragraphs 1 and 2 of this Article, royalties paid by a resident of a Contracting State to the resident of the other Contracting State shall be taxable only in that other Contracting State if the beneficial owner of the royalties is the Contracting State itself, or any of its political sub-division, local governments, local authorities, and their financial institutions.
4. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and works on films, tapes or other means of reproduction for use in connection with television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information (know how) concerning industrial, commercial or scientific experience.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated in that other Contracting State, or performs in that other Contracting State independent personal services from a fixed base situated in that Contracting State and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 8 or Article 16, as the case may be, shall apply.
6. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner of the royalties or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
Article 14
Fees for Technical Services
1. Fees for Technical Services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other state.
2. However, subject to the provisions of Articles 8,16 (directors fees) and 17 (entertainers and sportsmen), fees for technical services arising in a Contracting State may also be taxed in the Contracting State in which they arise and subject to the laws of that state, the tax so charged shall not exceed five per cent of the gross amount of the fees.
3. Despite the provisions of paragraphs 1 and 2 of this Article, fees paid by a resident of a Contracting State to the resident of the other Contracting State shall be taxable only in that other state if the beneficial owner of the fees is the Contracting State itself, or any of its political sub division, local governments, local authorities, and their financial institutions.
Article 15
Capital Gains
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 7 and situated in the other Contracting State may be taxed in that other Contracting State, but the tax so charged shall be reduced by an amount equal to fifty per cent of such tax.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, shall be taxable only in that Contracting State.
3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that Contracting State.
4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident.
Article 16
Independent personal services
1. Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State except in any of the following circumstances, when such income may also be taxed in the other Contracting State if:
(a) the individual has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State;
(b) the individual’s stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate one hundred and eight three days in a twelve month period commencing or ending in the fiscal year concerned. In that case only so much of the income as is derived in that other Contracting State during the aforesaid period or periods may be taxed in that other Contracting State.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
Article 17
Income from Employment
1. Subject to the provisions of Articles 18, 20, and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other Contracting State.
2. Despite the provisions of paragraph 1, remuneration derived by a resident of a Contracting State shall be taxable only in the first mentioned Contracting State if all the following conditions are met:
(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate one hundred and eighty three days in a twelve month period commencing or ending in the fiscal year concerned;
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Contracting State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base, which the employer has in the other Contracting State.
3. Despite the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that Contracting State.
4. An individual who is both a national of a Contracting State and an employee of an enterprise of that Contracting State the principal business of which consists of the operation of aircraft in international traffic and who derives remuneration in respect of duties performed in the other Contracting State shall be taxable only in that Contracting State on remuneration derived from the individual employment with that enterprise.
5. Despite the provisions of this Article, salaries, wages and other similar remuneration and pensions paid by a government owned institution performing functions of a governmental nature which in the case of the UAE shall include the Central Bank of the U.A.E, Abu Dhabi Investment Authority, Abu Dhabi Investment Council, U.A.E. Investment Authority, Investment Corporation of Dubai, Abu Development Fund and any other governmental financial institutions such income shall be taxable only at the UAE.
Article 18
Directors’ Fees
1. Directors’ fees and similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
2. Salaries, wages and other similar remuneration derived by a resident of a Contracting State in the individual’s capacity as an official in a top level managerial position of a company which is a resident of the other Contracting State may be taxed in that other State.
Article 19
Artists and Sportsmen
1. Despite the provisions of Article 17 income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, a musician or as a sportsman, from that entertainer’s personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsman in that entertainer’s or sportsman’s capacity as such accrues not to the entertainer or sportsman but to another person, that income may, despite the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to income derived by entertainers or sportsmen who are residents of a Contracting State from personal activities as such exercised in the other Contracting State if their visit to that other Contracting State is substantially supported from the public funds of the first mentioned Contracting State, including those of any political subdivision, a local authority or statutory body thereof, nor to income derived by a non profit making organisation in respect of such activities provided no part of its income is payable to, or is otherwise available for the personal benefit of its proprietors, founders or members.
Article 20
Pensions and Annuities
1. Subject to the provisions of paragraph 2 of Article 21, pensions and other similar remuneration and annuities paid to an individual who is a resident of a Contracting State in consideration of past employment shall be taxable only in that Contracting State.
2. As used in this Article—
(a) the terms "pensions and other similar remuneration" mean periodic payments made after retirement in consideration of past employment or by way of compensations for injuries received in connection with past employment;
(b) the term "annuity" means a stated sum payable to an individual periodically at stated times during life, or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
Article 21
Government Service
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that Contracting State and the individual is a resident of that Contracting State and has fulfilled one of the following conditions:
(i) is a national of that Contracting State; or
(ii) did not become a resident of that Contracting State solely for rendering the services.
2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that Contracting State.
3. The provisions of Articles17 and 18 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
Article 22
Teachers and Researchers
An individual who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who at the invitation of the Government of the first mentioned Contracting State or of a university college, school, museum or other cultural institution in that first mentioned Contracting State or under an official programme of cultural exchange is present in that Contracting State for a period not exceeding two consecutive years solely for the purpose of teaching giving lectures or carrying out research at such institution shall be exempt from tax in that Contracting State on that individual’s remuneration for such activity.
Article 23
Students and Trainees
1. Payments which a student or business trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first mentioned Contracting State solely for the purpose of that student or business trainee’s education or training receives for the purpose of that student or business trainee’s maintenance, education or training shall not be taxed in that Contracting State, provided that such payments arise from sources outside that Contracting State.
2. In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business trainee described in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the Contracting State which the student or business trainee is visiting.
Article 24
Entitlement to Benefits
1. Despite the other provisions of this agreement, a benefit under this Agreement shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Agreement.
Article 25
Other Income
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 7, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 8 shall apply.
3. Despite the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.
Article 26
Elimination of Double Taxation
1. Double Taxation shall be eliminated in the Contracting States as follows:
(a) Where a resident of a Contracting State derives income which, in accordance with the provisions of this Agreement, may be taxed in the other Contracting State, the first mentioned State shall allow—
(i) as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in that other State; or
(ii) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in that other State.
(b) Such deduction in either case shall not, however, exceed that part of the income tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital, which may be, taxed in that other State.
2. Where in accordance with any provision of the agreement income derived or capital owned by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income or capital of that resident, take into account the exempted income or capital.
Article 27
Mutual Agreement Procedure
1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of the agreement, that person may, irrespective of the remedies provided by the domestic law of those states, present that person’s case to the competent authority of either Contracting State. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented despite any time limits in the domestic law of the Contracting State.
3. The competent authorities of the Contracting State shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting State may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.
Article 28
Exchange of Information
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws of the Contracting State concerning taxes covered by this Agreement imposed on behalf of a Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that Contracting State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; and
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
Article 29
Non Discrimination
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, despite the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment, which an enterprise of a Contracting State has in the other Contracting State, shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, relieves and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 10, paragraph 5 of Article 12 or paragraph 5 of Article 13 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first mentioned State are or may be subjected.
5. Nothing in this agreement shall prevent a Contracting State from granting exemption from tax or reduction to its own national companies in accordance to its domestic laws and regulations.
6. In this Article the term "taxation" means taxes which are the subject of this agreement.
Article 30
Miscellaneous Rules
1. The provisions of this Agreement shall not be construed to restrict in any manner, any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded—
(a) by the laws of a Contracting State in the determination of the tax imposed by that Contracting State; and
(b) by any other special arrangement on taxation between the Contracting States or between one of the Contracting States and residents of the other Contracting State.
Article 31
Income of Government and Institutions
The Federal or the Local Governments and their financial institutions of one of the Contracting States shall be exempt from tax in the other Contracting State in respect of any income or capital gains derived by such federal or Local Government from that other Contracting State except income from hydrocarbon as stated in Article 3.
Article 32
Members of Diplomatic Missions and Consular Posts
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts or employees of international organisations under the general rules of international law or under the provisions of special Agreements.
Article 33
Entry into Force
Each of the Contracting States shall notify to the other in writing the completion of its constitutional procedures for the entry into force of this Agreement. This Agreement shall enter into force on the date of receipt of the latter of these notifications and its provisions shall thereupon have effect in both Contracting States—
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year in which this Agreement is enters into force; and
(b) in respect of other taxes, for taxable periods beginning on or after the first day of January of the year in which this Agreement enters into force.
Article 34
Duration and Termination
The Agreement shall remain in force for a period of five years and shall continue in force thereafter for a similar period or periods unless either Contracting State notifies the other in writing, at least six months before the expiry of the initial or any subsequent period, of its intention to terminate this Agreement. In such event, this Agreement shall cease to have effect in both Contracting States—
(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following that in which the notice of termination is given; and
(b) in respect of other taxes, for taxable periods beginning on or after the first day of January of the year next following that in which the notice of termination is given.
IN WITNESS WHEREOF, the undersigned, duly authorised thereto by their respective Governments, have signed this Agreement.
Done at ....................... on ......./......./....... in the English and Arabic languages, both texts being equally authentic. In a case of divergence of interpretation, the English text shall prevail
For the Government of Zambia | For the Government of |
Minister of Foreign Affairs and | Minister of State |
PROTOCOL
The Government of the Republic of Zambia
and
The United Arab Emirates
Have agreed at the signing at ................................ on the .............................. of the agreement for the two States for the avoidance of double taxation with respect to taxes on income without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangement aimed at obtaining reliefs provided in this agreement for the indirect benefit of residents of third States) have agreed that the following provisions shall form an integral part of the Agreement.
With respect to paragraph 3 of Article 10 and, paragraph 3 of article 11, paragraph 3 of Article 13, paragraph 3 of Article 14, paragraph 5 of Article 7, paragraph 9 of Article 8, and Article 31, it is understood that the Contracting State, political subdivision, local authorities, and the government of the Contracted State shall include—
In Zambia:
(a) The Bank of Zambia;
(b) The Development Bank of Zambia;
(c) The Industrial Development Corporation;
(d) The National Pension Scheme Authority; and
(e) Any other similar institution established by the Government under the Laws of Zambia.
And in the UAE:
6. Central Bank of the United Arab Emirates;
7. Abu Dhabi Investment Authority;
8. Emirates Investment Authority;
9. Mubadala Investment Company;
10. Dubai World;
11. Investment Corporation of Dubai;
12. the Abu Dhabi Retirement Pensions and Benefit Fund;
13. the General Pension and Social Security Authority; and
14. Any other entity the capital of which is wholly directly or indirectly owned by the federal or local governments of the United Arab Emirates, including a political subdivision and local authority thereof which shall be notified to the other States through diplomatic channels.
IN WITNESS WHEREOF, the undersigned, duly authorised thereto by their respective Governments, have signed this protocol.
Done at ............................ on ....../....../...... in the English and Arabic languages, both texts being equally authentic. In a case of divergence of interpretation, the English text shall prevail.
For the Government of Zambia | For the Government of |
Minister of Foreign Affairs and | Minister of State for International |
For the Government of |