CHAPTER 323 - INCOME TAX ACT: SUBSIDIARY LEGISLATION
INDEX TO SUBSIDIARY LEGISLATION
Agreement for the Avoidance of Double Taxation - South Africa
Convention for the Avoidance of Double Taxation - France
Convention for the Avoidance of Double Taxation - Switzerland
Convention for the Avoidance of Double Taxation - Holland
Convention for the Avoidance of Double Taxation - Sweden
Double Taxation Relief (Taxes on Income) (United Kingdom) Order
Double Taxation Relief (Taxes on Income) (Ireland) Order
Double Taxation Relief (Taxes on Income) (Norway) Order
Double Taxation Relief (Taxes on Income) (Italy) Order
Double Taxation Relief (Taxes on Income) (Republic of Germany) Order
Double Taxation Relief (Taxes on Income) (Kingdom of Denmark) Order
Double Taxation Relief (Taxes on Income) (India) Order
Double Taxation Relief (Taxes on Income) (Republic of Finland) Order
Income Tax (Petroleum Operations) Regulations
Income Tax (Job Credits) Regulations
Income Tax (Low-Cost Housing) Notice
Income Tax (Zambia Appointment Limited Employees) (Exemption Approval) Order
Income Tax (Foreign Organisations) (Approval and Exemption) Order, 1996
Income Tax (Fund Investment Services Limited) (Approval and Exemption) Order
Income Tax (Zambia Venture Capital Fund Limited) (Approval and Exemption) Order
Income Tax (Foreign Organisations) (Approval and Exemption) Order, 1997
Income Tax (Securities and Exchange Commission) (Approval And Exemption) Order
Income Tax Act (Foreign Exemptions) Order
Income Tax (Foreign Organisations) (Exemption And Approval) Order, 1999
Income Tax (Body Corporate) (Exemption And Approval) Order
AGREEMENT FOR THE AVOIDANCE OF DOUBLE TAXATION-SOUTH AFRICA
GN 178 of 1956,
GN 304 of 1959.
Agreements for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income were concluded between the Government of the former Union of South Africa and the Government of the former Federation on the 22nd May, 1956, and on the 30th October, 1959, incorporating the terms set out in Schedules I and II respectively.
SCHEDULE I
AGREEMENT BETWEEN THE GOVERNMENT OF THE UNION OF SOUTH AFRICA AND THE GOVERNMENT OF THE FEDERATION OF RHODESIA AND NYASALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of the Union of South Africa and the Government of the Federation of Rhodesia and Nyasaland desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion in respect of taxes on income, have agreed as foIIows:
ARTICLE I
1. The taxes which are the subject of the present Agreement are:
(a) in the Union of South Africa: the normaI tax and supertax (hereinafter referred to as "Union tax");
(b) in the Federation of Rhodesia and Nyasaland: the FederaI income tax and supertax (hereinafter referred to as "FederaI tax").
2. The present Agreement shall also apply to any other taxes of a substantially similar character imposed by either Contracting Government subsequently to the date of signature of the present Agreement.
ARTICLE II
1. In this Agreement, unless the context otherwise requires-
(a) "Union" means the Union of South Africa;
(b) "the Federation" means the Federation of Rhodesia and Nyasaland;
(c) "one of the territories" and "the other territory" mean the Union of South Africa or the Federation of Rhodesia and Nyasaland as the case may be;
(d) "tax" means Union or FederaI tax, as the case may be;
(e) "person" includes any body of persons, corporate or not corporate;
(f) "company" includes any body corporate;
(g) "resident of the Union" and "resident of the Federation" mean respectively any person who is ordinariIy resident in the Union for the purposes of the Union tax and not ordinariIy resident in the Federation for the purposes of the FederaI tax and any person who is ordinariIy resident in the Federation for the purposes of the FederaI tax and not ordinariIy resident in the Union for the purposes of the Union tax; and a company shall be regarded as ordinariIy resident in the Union if its business is managed and controIIed in the Union and ordinariIy resident in the Federation if its business is managed and controIIed in the Federation;
(h) "company of one of the territories" and "company of the other territory" means a company which is a resident of the Union of a company which is a resident of the Federation, as the case may be;
(i) "Union enterprise" and "FederaI enterprise" mean respectively an industrial or commercial enterprise or undertaking carried on by a resident of the Union and an industrial or commercial enterprise or undertaking carried on by a resident of the Federation; and
"enterprise of one of the territories" and "enterprise of the other territory" means a Union enterprise or a FederaI enterprise, as the context requires;
(j) "industrial or commercial enterprise or undertaking" includes an enterprise or undertaking engaged in mining, agricultural or pastoraI activities or in the business of banking, insurance or dealing in investments, and
"industrial or commercial profits" includes profits from such activities or business but does not include income in the form of dividends, interest, rents, royaIties (including rent or royaIties of cinematograph fiIms), management charges, remuneration for personaI services or profits from the operation of transport services;
(k) "permanent establishment" when used with respect to an enterprise of one of the territories means a branch, depot, management, factory, farm, mine, quarry or other fixed place of business including any place of naturaI resources subject to expIoitation and a place where construction work or the installation of pIant or machinery is carried on but does not include any agency unless the agent has, and habitually exercises, a General authority to negotiate and conclude contracts on behalf of the enterprise or has a stock of merchandise from which he regularly fiIIs orders on its behalf. In this connection-
(i) an enterprise of one of the territories shall not be deemed to have a permanent establishment in the other territory merely because it carries on business dealings in that other territory through a bona fide broker or General commission agent acting in the ordinary course of his business as such;
(ii) the fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise;
(iii) the fact that a company which is resident in one of the territories has a subsidiary company which is a resident of the other territory or which is engaged in trade or business in that other territory (whether through a permanent establishment or otherwise) shall not of itself constitute that subsidiary company a permanent establishment of its parent company;
(I) "profits" means "taxabIe income" as defined under the Laws of the Contracting Governments relating to the taxes which are the subject of this Agreement;
(m) "taxation authorities" means the Commissioner-General for InIand Revenue or his authorised representative in the case of the Union and the Commissioner-General of Taxes or his authorised representative in the case of the Federation.
2. "Union tax" and "FederaI tax" do not include any sum payabIe in respect of any defauIt or omission in reIation to the taxes which are the subject to this Agreement or which represents a penaIty imposed under the Law of either territory relating to those taxes.
3. In the application of the provisions of the present Agreement by one of the Contracting Governments any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting Government relating to the taxes which are the subject of the present Agreement.
ARTICLE III
1. The industrial and commercial profits of an enterprise in one of the territories shall not be subject to tax in the other territory unless the enterprise is engaged in trade or business in the other territory through a permanent establishment in that other territory. If it is so engaged tax may be imposed on those profits by the other territory but only on so much of them as it is attributable to that permanent establishment.
2. Where an enterprise of one of the territories is engaged in trade or business in the other territory through a permanent establishment situated therein-
(a) there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive in that other territory if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm's Length with the enterprise of which it is a permanent establishment;
(b) subject to the provisions of sub-paragraph (a), no profits derived from sources outside that other territory shall be attributed to that permanent establishment.
3. No portion of any profits arising from the saIe of goods or merchandise by an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of the goods or merchandise within that other territory.
4. This Article shall not apply in any case in which its application wouId have the resuIt that income, which but for such application wouId be subject to tax in one of the territories, wouId not be subject to tax in either territory.
ARTICLE IV
Where-
(a) an enterprise of one of the territories participates directly or indirectly in the management, control or capital of an enterprise of the other territory; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the territories and an enterprise of the other territory; and
(c) in either case conditions are made or imposed between the two enterprises, in their commercial or financial relations, which differ from those which wouId be made between independent enterprises;
then any profits which wouId 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.
ARTICLE V
Profits derived by the Government of or by a resident of one of the territories from operating transport services in the other territory shall be exempt from tax in that other territory.
ARTICLE VI
Any royalty, rent (including rent or royaIties of cinematograph fiIms) or other consideration received by or accrued to a resident of one of the territories by virtue of the use in the other territory of, or the grant of permission to use in that other territory any patent, design, trade mark, copyright, secret process, formula or any other property of a similar nature shall be exempt from tax in that first-mentioned territory if such royalty, rent or other consideration is subject to tax in the other territory.
ARTICLE VII
1. Any pension (other than a pension paid by the Government of the Union for services rendered to it in the discharge of governmental functions) and any annuity, derived or deemed to have been derived from sources within the Union by an individual who is a resident of the Federation, shall be exempt from Union tax to the extent that it is included in income for FederaI tax purposes.
2. Any pension (other than a pension paid by the Government of the Federation for services rendered to it in the discharge of governmental functions) and any annuity, derived or deemed to have been derived from sources within the Federation by an individual who is a resident of the Union, shall be exempt from FederaI tax to the extent that it is included in income for Union tax purposes.
3. The term "annuity" means a stated sum payabIe periodically at stated times, during Iife or during a specified or ascertainable period of time, under an obIigation to make the payments in consideration of money paid.
ARTICLE VIII
1. Remuneration (other than pensions) paid by one of the Contracting Governments to any individual for services rendered to that Contracting Government in the discharge of governmental functions shall be exempt from tax in the territory of the other Contracting Government if the individual is not ordinariIy resident in that territory or is ordinariIy resident in that territory soIeIy for the purpose of rendering those services.
2. Any pension paid by one of the Contracting Governments to any individaI for services rendered to that Contracting Government in the discharge of governmental functions shall be exempt from tax in the territory of the other Contracting Government, if immediateIy prior to the cessation of those services the remuneration thereof was exempt from tax in that territory, whether under paragraph 1 of this Article or otherwise, or wouId have been exempt under that paragraph if the present Agreement had been in force at the time the remuneration was paid.
3. The provisions of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the Contracting Governments for purposes of profit.
4. For the purposes of this Article the term "Contracting Government" where it applies to the Government of the Federation of Rhodesia and Nyasaland includes the Governments of the Territories constituting the Federation.
ARTICLE IX
1. An individual who is a resident of the Union shall be exempt from FederaI Tax on profits or remuneration in respect of personaI (including professionaI) services performed within the Federation in any year of assessment if-
(a) he is present within the Federation for a period or periods not exceeding in the aggregate 183 days during that year; and
(b) the services are performed for or on behalf of a person resident in the Union; and
(c) the profits or remuneration are subject to Union tax.
2. An individual who is a resident of the Federation shall be exempt from Union tax on profits or remuneration in respect of personaI (including professionaI) services performed within the Union in any year of assessment if-
(a) he is present within the Union for a period or periods not exceeding in the aggregate 183 days during that year; and
(b) the services are performed for or on behalf of a person resident in the Federation; and
(c) the profits or remuneration are subject to FederaI tax.
3. The provisions of this Article shall not apply to the profits or remuneration of pubIic entertainers such as stage, motion picture or radio artists, musicians and athletes.
ARTICLE X
The remuneration derived by a professor or teacher who is ordinariIy resident in one of the territories, for teaching, during a period of temporary residence not exceeding two years, at a university, coIIege, schooI or other educationaI institution in the other territory, shall be exempt from tax in that other territory if such remuneration is subject to tax in such first-mentioned territory.
ARTICLE XI
A student or business apprentice from one of the territories who is receiving fuII-time education or training in the other territory shall be exempt from tax in that other territory on payments made to him by persons in the first-mentioned territory for the purposes of his maintenance, education or training.
ARTICLE XII
1. Subject to the provisions of the Law in the Federation regarding the allowance of a credit against FederaI tax of tax payabIe in the Union, Union tax payabIe in respect of profits from sources within the Union shall be allowed as a credit against any FederaI tax payabIe in respect of such profits.
2. Where FederaI tax is payabIe in respect of profits derived from sources within the Federation by a person ordinariIy resident in the Union, the Union shall either impose no tax on such profits or, subject to such provisions (which shall not affect the General principIe hereof) as may be enacted in the Union, shall allow the FederaI tax as a credit against any Union tax payabIe in respect of such profits.
3. For the purposes of this Article profits or remuneration for personaI (including professionaI) services performed in one of the territories shall be deemed to be profits from sources within that territory, and the services of an individual whose services are whoIIy or mainIy performed in aircraft or other transport vehicIes operated by a resident of one of the territories shall be deemed to be performed in that territory.
4. Where interest is derived by any person from a person (hereinafter referred to as the debtor) who is ordinariIy resident in one of the territories and the interest wouId, but for the provisions of this paragraph, be subject to tax in both territories, that interest shall be subject to tax only in the territory in which the debtor is ordinariIy resident;
Provided that if the debtor is ordinariIy resident in both territories, the interest shall be subject to tax only in the territory in which that interest is allowable as a deduction in the determination of the debtor's taxabIe income.
ARTICLE XIII
The taxation authorities of the Contracting Governments shall exchange such information (being information avaliable under the respective taxation Laws of the Contracting Governments) as is necessary for carrying out the provisions of the present Agreement or for the prevention of fraud or the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of the present Agreement. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of the taxes which are the subject of the present Agreement. No information shall be exchanged which wouId discIose any trade secret or trade process.
ARTICLE XIV
The present Agreement shall come into force on the date on which the Iast of all such things shall have been done in both territories as are necessary to give the Agreement the force of Law in each territory and shall thereupon have effect-
(a) in the Union, in respect of assessments for the year of assessment ended on the thirtieth day of June, 1954, and subsequent years;
(b) in the Federation, in respect of assessments for the year of assessment ended on the thirty-first day of March, 1954, and subsequent years.
ARTICLE XV
The present Agreement shall continue in effect indefiniteIy, but either of the Contracting Governments may, on or before the thirtieth day of September in any calendar year after the year 1956, give notice of termination to the other Contracting Government and, in such event, the present Agreement shall cease to be effective-
(a) in the Union, in respect of any year of assessment beginning on or after the first day of JuIy in the calendar year next following that in which such notice is given;
(b) in the Federation, in respect of any year of assessment beginning on or after the first day of April in the calendar year next following that in which such notice is given.
In witness whereof the undersigned Plenipotentiaries, being authorised thereto by their respective Governments, have signed this Agreement and have affixed thereto their seaIs.
Done in dupIicate in the EngIish and Afrikaans Ianguages, at Cape Town this twenty-second day of May, 1956.
ERIC H. LOUW,
For the Government of the Union of South Africa. A.D. CHATAWAY,
For the Government of the Federation of Rhodesia and Nyasaland.
SCHEDULE II
NOTE FROM THE HIGH COMMISSIONER-GENERAL FOR THE FEDERATION IN THE UNION OF SOUTH AFRICA TO THE SECRETARY FOR EXTERNAL AFFAIRS OF THE UNION OF SOUTH AFRICA.
P4/2
30th October, 1959. Sir,
I have the honour to refer to discussions which have taken place between officiaIs of our two Governments and to propose that the Agreement of the 22nd May, 1956, concluded in the EngIish and Afrikaans Ianguages between the Government of the Union of South Africa and the Government of the Federation of Rhodesia and Nyasaland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income be amended in respect of the EngIish text by insertion in Article XII, after paragraph 3, of the following paragraph, the existing paragraph 4 thereby becoming paragraph 5:
"4. Any provision in any Law whereby interest is deemed to be derived from a source within one of the territories by virtue of the ordinary residence in that territory of the person from whom the interest is derived shall not be applied in reIation to interest which is payabIe to a person who resides in the other territory, if such interest is subject to tax in that other territory."
In the event of the above proposaI being acceptable to you I have the honour to propose that this note and your confirmatory reply be regarded as constituting an agreement between our two Governments which shall have effect-
(a) in the Union of South Africa, in respect of the year of assessment beginning on or after the first day of JuIy, 1957; and
(b) in the Federation of Rhodesia and Nyasaland, in respect of the year of assessment beginning on or after the first day of April, 1957.
I have the honour to be, Sir,
Your obedient Servant, J.W. MONTAGUE FITT,
High Commissioner-General for the Federation of Rhodesia and Nyasaland. The Secretary for ExternaI Affairs of the Union of South Africa, Pretoria.
NOTE FROM THE SECRETARY FOR EXTERNAL AFFAIRS OF THE UNION OF SOUTH AFRICA TO THE HIGH COMMISSIONER-GENERAL FOR THE FEDERATION IN THE UNION OF SOUTH AFRICA.
41/1/37
Pretoria.
30th October, 1959. Sir,
I have the honour to acknowledge receipt of your Note, No. P4/2 of today's date reading as foIIows:
"I have the honour to refer to discussions which have taken place between officiaIs of our two Governments and to propose that the Agreement of the 22nd May, 1956, concluded in the EngIish and Afrikaans Ianguages between the Government of the Union of South Africa and the Government of the Federation of Rhodesia and Nyasaland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income be amended in respect of the EngIish text by insertion in Article XII, after paragraph 3, of the following paragraph, the existing paragraph 4 thereby becoming paragraph 5:
"4. Any provision in any Law whereby interest is deemed to be derived from a source within one of the territories by virtue of the ordinary residence in that territory of the person from whom the interest is derived shall not be applied in reIation to interest which is payabIe to a person who resides in the other territory, if such interest is subject to tax in that other territory."
In the event of the above proposaI being acceptable to you I have the honour to propose that this note and your confirmatory reply be regarded as constituting an agreement between our two Governments which shall have effect-
(a) in the Union of South Africa, in respect of the year of assessment beginning on or after the first day of JuIy, 1957; and
(b) in the Federation of Rhodesia and Nyasaland, in respect of the year of assessment beginning on or after the first day of April, 1957."
In reply thereto, I have the honour to state that the Government of the Union of South Africa are in agreement with the foregoing provisions and that your Note and this confirmatory replyshall be regarded as constituting an agreement between our two Governments.
I have the honour to be, Sir,
Your obedient servant, G.P. JOOSTE,
Secretary for ExternaI Affairs. J.W.M. Fitt, Esq., O.B.E.,
High Commissioner-General for the Federation of Rhodesia and Nyasaland,
Pretoria.
CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION-FRANCE
GN 370 of 1963,
GN 514 of 1964.
An arrangement has been made with the Government of the United Kingdom of Great Britain and Northern Ireland whereby the Convention between that Government and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income has been extended to the former Protectorate by and incorporating the terms of the exchange of notes set out in the Schedule.
SCHEDULE
EXCHANGE OF NOTES BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE FRENCH REPUBLIC EXTENDING TO THE FEDERATION OF RHODESIA AND NYASALAND THE CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED AT PARIS ON DECEMBER 14, 1950.
No. 1
Her Majesty's Ambassador at Paris to the Minister for Foreign Affairs of the French Republic British Embassy, Paris, November 5, 1963. Monsieur le Minister, With reference to the Convention between the United Kingdom of Great Britain and Northern Ireland and France for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at Paris on the 14th of December, 1950, I have the honour to propose on behalf of the Government of the United Kingdom that, in accordance with the provisions of Article XXIII, the above-mentioned Convention should be extended to the Federation of Rhodesia and Nyasaland in the manner, subject to the modifications, and with effect from the dates specified in the Annex to the present Note.By a further Exchange of Notes dates December 31, 1963, it was agreed with the French Ministry of Foreign Affairs that this extension should be regarded as continuing in force in relation to Southern Rhodesia, Northern Rhodesia and Nyasaland individually on the dissolution of the Federation and that references therein to the Federation should be construed accordingly.*
If the foregoing proposal is acceptable to the French Government, I have the honour to suggest that the present Note with its Annex, and Your Excellency's reply to that effect, should be regarded as constituting the Agreement reached between the two Governments in this matter.
I avail, etc.,
PIERSON DIXON.
ANNEX
I. APPLICATION
(1) The Convention of the 14th December, 1950, as modified by the present Annex shall apply-
(a) as if the Contracting Parties were the Government of France and the Government of the Federation of Rhodesia and Nyasaland;
(b) as if the term "United Kingdom" (except where the context otherwise required) meant the Federation of Rhodesia and Nyasaland; and
(c) as if the taxes concerned in the Federation of Rhodesia and Nyasaland were the Income Tax, Supertax and Undistributed Profits Tax.
(2) When the last of those measures shall have been taken in France and in the Federation of Rhodesia and Nyasaland necessary to give the present extension the force of law in France and in the Federation the present extension shall have effect-(2) By a notification dated December 17, 1963, the French Government informed the United Kingdom Government that these measures had been taken in France.
By a similar notification dated December 31, 1963, the United Kingdom Government informed the French Government that the necessary measures were taken in the Federation of Rhodesia and Nyasaland on December 9, 1963.
(a) in France as respects taxes charged in respect of the year 1962 and subsequent years;
(b) in the Federation of Rhodesia and Nyasaland as respects tax on the profits derived from operating ships or aircraft, for the year of assessment beginning on the 1st April, 1953, and for subsequent year of assessment, and, as respects tax on all other income, for the year of assessment beginning on the 1st April, 1962, and for subsequent years of assessment.*
(3) The French Government shall inform the Government of the United Kingdom in writing when the last of the measures necessary, as indicated in paragraph (2), have been taken in France. The Government of the United Kingdom shall inform the French Government in writing when the last of the measures necessary, as indicated in paragraph (2), have been taken in the Federation of Rhodesia and Nyasaland.
(4) The present extension shall remain in force indefinitely but either of the Contracting Parties may, on or before the 30th June in any calendar year not earlier than the year 1966, give to the other Contracting Party through the diplomatic channel written notice of termination and in such event the present extension shall cease to have effect-
(a) in France as respects taxes charged in respect of any year following the calendar year during which the notice is given;
(b) in the Federation of Rhodesia and Nyasaland as respects tax for any year of assessment beginning on or after the 1st April in the calendar year next following the date of such notice.
II. MODIFICATIONS
The Convention of the 14th December, 1950, shall apply with the modifications that-
(1) the words "shall be exempt from United Kingdom surtax" in Article IX shall be understood as though they read "shall not be Liable to tax in the Federation of Rhodesia and Nyasaland at a rate in excess of the rate applicable to a company"; and
(2) Article XIII shall apply to remuneration, including pensions, paid by or out of funds created by the Government of each of the Territories constituting the Federation, to any individual in respect of services rendered to that Government in the discharge of governmental functions as it applies to similar payments by or out of funds created by the Government of the Federation.
No. 2
The Minister for Foreign Affairs of the French Republic to Her Majesty's Ambassador at Paris
Paris, le 5 November, 1963.
Monsieur l'Ambassadeur,
Par lettre en date de ce jour accompagnée de son annexe dont la traduction figure ci-apr s, vous avez bien voulu me faire savoir ce qui suit:
"Me référant ˆ la convention entre le Royaume-Uni de Grande-Bretagne et d'Irlande du Nord et la France tendant ˆ éviter la double imposition et ˆ prévenir l'évasion fiscale en matiere d'imp(tm)t sur le revenu, signée ˆ Paris le 14 décembre 1950, j'ai l'honneur, au nom du Gouvernement du Royaume-Uni, de proposer, conformément aux dispositions de son Article XXIII, que les dispositions en soient étendues ˆ la Fédération de Rhodésie et du Nyassaland, conformément é l'Annexe é la prˆsente Lettre et sous réserve des modifications et é compter des dates qui y sont indiquées.
(1) By a notification dated December 17, 1963, the French Government informed the United Kingdom Government that these measures had been taken in France.
By a similar notification dated December 31, 1963, the United Kingdom Government informed the French Government that the necessary measures were taken in the Federation of Rhodesia and Nyasaland on December 9, 1963.
Pour Ie cas o- cette proposition agréerait au Gouvernement francais, je suggU re que la présente Lettre accompagnée de son annexe, et la réponse de Votre Excellence soient reputees constituer l'Accord intervenu entre les deux Gouvernements en cette matiˆre.
ANNEXE
I. APPLICATION
(1) La Convention du 14 décembre 1950, telle qu'elle est modifiée par la présente annexe, sera applicable:
(a) comme si les Parties Contractantes étaient le Gouvernement francais et le Gouvernement de la Fédération de Rhodésie et du Nyassaland;
(b) comme si le terme "Royaume-Uni", ˆ moins que le contexte ne l'exige autrement, désignait la Fédération de Rhodésie et du Nyassaland;
(c) comme si les imp(tm)ts visés dans la Fédération de Rhodésie et du Nyassaland étaient l'imp(tm)t sur le revenu, la supertaxe et l'imp(tm)t sur les bénéfices non distribués.
(2) Lorsque toutes les mesures nécessaires pour donner ˆ la présente extension force de loi en France et dans la Fédération auront été prises en France et dans la Fédération de Rhodésie et du Nyassaland, la présente extension produira ses effets:
(a) en France, pour l'établissement des imp(tm)ts exigibles au titre de l'année 1962 et des années subséquentes, et
(b) dans la Fédération de Rhodésie et du Nyassaland:
-en ce qui concerne l'établissement des imp(tm)ts frappant les bénéfices provenant de l'exploitation de navires ou d'aéronefs, pour l'année d'imposition commencant le ler avril 1953, ainsi que pour les années d'imposition subséquentes.
-en ce qui concerne l"™Ã©tablissement des imp(tm)ts frappant tous les autres revenus, pour l'année d'imposition commencant le ler avril 1962 ainsi que pour les années d'imposition subséquentes.
(3) Le Gouvernement francais informera par écrit le Gouvernement du Royaume-Uni lorsque toutes les mesures nécessaires visées au paragraphe (2) auront été prises en France. Le Gouvernement du Royaume-Uni informera par écrit le Gouvernement francais lorsque toutes les mesures nécessaires visées au paragraphe (2), auront été prises dans la Fédération de Rhodésie et du Nyassaland.
(4) La présente extension demeurera en vigueur sans limitation de durée mais l"™une ou l'autre des Parties Contractantes pourra, ˆ partir de 1966, et au plus tard le 30 juin de chaque année civile, notifier par écrit ˆ l'autre Partie Contractante, par la voie diplomatique, qu'elle y met fin. Dans ce cas, la présente extension cessera d'avoir effet:
(a) en France, pour L"™Ã©tablissement des imp(tm)ts afférents aux années postérieures ˆ l'année civile au cours de laquelle la notification sera intervenue;
(b) dans la Fédération de Rhodésie et du Nyassaland, pour l"™Ã©tablissement de l'imp(tm)t afférent aux années d'imposition commencant le ler avril ou aprés le ler avril de l'année civile suivant immédiatement Ia date d'une telle notification.
II. MODIFICATIONS
La Convention du 14 décembre 1950 sopliquera avec les modifications suivantes:
(1) Les termes "sont exempts de la surtaxe du Royaume-Uni" figurant ˆ l'Article IX de la Convention seront interprétés comme significant "ne sont pas passibles de l'imp(tm)t ans la Fédération de Rhodésie et du Nyassaland ˆ un taux supér ur ˆ celui qui st applicable ˆ une société'; et
(2) l'Article XIII sera applicable aux rémunérations y compris les pensions, versées par le Gouvernement de chacun des territories constituant la Fédération on sur des fonds créés par le Gouvernement de chacun desdits territories, ˆ toute personne en contrepartie de services rendus audit Gouvernement dans l'exercise de fonctions officielles, de mˆme qu'il s'applique aux payements similaires effectués par le Gouvernement de la Fédération ou sur des fonds créés par ledit Gouvernement."
J'ai l'honneur de porter ˆ la connaissance de Votre Excellence que les termes de la Lettre qui précéde et de son annexe recontrent l'agrément du Gouvernement francais. Celle-ci et al présente réponse constituent l'accord recherché par nos deux Gouvernements.
Veuillez agréer, etc.,
FR. LEDUC.
(Translation of No. 2) Paris, November 5, 1963. Monsieur l'Ambassadeur, By a letter of today's date accompanied by an annex, the translation of which is given below, you have informed me as follows:
(As in No. 1)
I have the honour to inform Your Excellency that the terms of the preceding letter and its Annex are acceptable to the French Government and together with this reply constitute an Agreement between our two Governments.
Please accept, etc.,
FR. LEDUC.
ANNEXURE
CONVENTION BETWEEN HIS MAJESTY IN RESPECT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE PRESIDENT OF THE FRENCH REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME.
His Majesty the King of Great Britain, Ireland and the British Dominions beyond the Seas and the President of the French Republic, Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have appointed for that purpose as their Plenipotentiaries:
His Majesty the King of Great Britain, Ireland and the British Dominions beyond the Seas: For the United Kingdom of Great Britain and Northern Ireland:
His Excellency Sir Oliver Charles Harvey, G.C.M.G., G.C.V.O., C.B., His Ambassador Extraordinary and Plenipotentiary in Paris; The President of the French Republic:
His Excellency Monsieur Alexandre Parodi, Ambassador of the French Republic, General Secretary for Foreign Affairs; Who, having exhibited their respective full powers, found in good and due form, have agreed as follows:
ARTICLE I
1. The taxes which are the subject of the present Convention are:
(a) In France:
The tax on the income of individuals (proportional tax and progressive surtax), the tax on the income of companies and the tax on undistributed profits under Article 14 of the Law of 31st January, 1950 (hereinafter referred to as "French tax");
(b) In the United Kingdom of Great Britain and Northern Ireland:
The income tax (including surtax) and the profits tax (hereinafter referred to as "United Kingdom tax").
2. The present Convention shallalso apply to any other taxes of a substantially similar character imposed in France or the United Kingdom subsequently to the date of signature of the present Convention.
ARTICLE II
1. In the present Convention, unless the context otherwise requires-
(a) The term "United Kingdom" means Great Britain and Northern Ireland, excluding the Channel Islands and the Isle of Man;
(b) The term "France" means metropolitan France, and excludes Algeria, the overseas departments, and other territories of the French Union;
(c) The terms "one of the territories" and "the other territory" mean the United Kingdom or France, as the context requires;
(d) The term "tax" means United Kingdom tax or French tax, as the context requires;
(e) The term "person" means-
(i) any physical person;
(ii) any unincorporated body of physical persons; and
(iii) any body corporate;
(f) The term "company" means any body corporate;
(g) The terms "resident of the United Kingdom" and "resident of France" mean respectively any person who is resident in the United Kingdom for the purposes of United Kingdom tax and who has not his fiscaldomicile for the purposes of French tax in France and any person whose fiscaldomicile for the purposes of French tax is in France and who is not resident in the United Kingdom for the purposes of United Kingdom tax; a company shall be regarded as resident in the United Kingdom if its business is managed and controlled in the United Kingdom and as having its fiscaldomicile in France if its business is managed and controlled in France;
(h) The terms "resident of one of the territories" and "resident of the other territory" mean a person who is a resident of the United Kingdom or a person who is a resident of France as the context requires;
(i) The terms "United Kingdom enterprise" and "French enterprise" mean respectively an industrial or commercial enterprise or undertaking carried on by a resident of the United Kingdom and an industrial or commercial enterprise or undertaking carried on by a resident of France; and the terms "enterprise of one of the territories" and "enterprise of the other territory" mean a United Kingdom enterprise or a French enterprise, as the context requires;
(j) The term "industrial or commercial profits" includes in particular profits arising from the business of insurance companies, banks, and other financial enterprises;
(k) The term "permanent establishment", when used with respect to an enterprise of one of the territories, means a branch, management, factory, or other fixed place of business in which is exercised, in whole or in part, the activity of the enterprise, but does not include an agency unless the agent has, and habitually exercises, a General authority to negotiate and conclude contracts on behalf of such enterprise or has a stock of merchandise from which he regularly fills orders on its behalf. In this connection-
(i) An enterprise of one of the territories shall not be deemed to have a permanent establishment in the other territory merely because it carries on business dealings in that other territory through a bona fide broker or General commission agent acting in the ordinary course of his business as such;
(ii) The fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise;
(iii) The fact that a company which is a resident of one of the territories has a subsidiary company which is a resident of the other territory or which carries on a trade or business in that other territory (whether through a permanent establishment or otherwise) shall not of itself constitute that subsidiary company a permanent establishment of its parent company;
(l) The term "taxation authorities" means, in the case of the United Kingdom, the Commissioner-Generals of InIand Revenue or their authorised representative; in the case of France, the Director General of Taxes (Directeur GénéraI des Imp(tm)ts) or his authorised representative; and, in the case of any territory to which the present Convention is extended under Article XXIII, the competent authority for the administration in such territory of the taxes to which the present Convention applies.
2. Where the present Convention provides that income from a source in one of the territories shall be exempt from tax in that territory if (with or without other conditions) it is subject to tax in the other territory, and under the Law in force in that other territory the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other territory and not by reference to the full amount thereof, then the exemption to be allowed under this Convention in the first-mentioned territory shall apply only to so much of the income as is remitted to or received in the other territory.
3. In the application of the provisions of the present Convention by one of the High Contracting Parties any term not otherwise defined shall unless the context otherwise requires, have the meaning which it has under the Laws in force in the territory of that Party relating to the taxes which are the subject of the present Convention.
ARTICLE III
1. The industrial or commercial profits of a United Kingdom enterprise shall not be subject to French tax unless the enterprise carries on a trade or business in France through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by France but only on so much of them as is attributable to that permanent establishment: provided that nothing in this paragraph shall affect the provisions of the Law of France, as it stands at the date of signature of this Convention, as respects the taxation of profits of non-residents from the business of insurance.
2. The industrial or commercial profits of a French enterprise shall not be subject to United Kingdom tax unless the enterprise carries on a trade or business in the United Kingdom through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by the United Kingdom, but only on so much of them as is attributable to that permanent establishment.
3. Where an enterprise of one of the territories carries on a trade or business in the other territory through a permanent establishment situated therein, there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive in that other territory if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm's Length with the enterprise of which it is a permanent establishment.
4. Where an enterprise of one of the territories derives profits, under contracts concluded in that territory, from sales of goods or merchandise stocked in a warehouse in the other territory for convenience of delivery and not for purposes of display, those profits shall not be attributed to a permanent establishment of the enterprise in that other territory, notwithstanding that the offers of purchase have been obtained by an agent in that other territory and transmitted by him to the enterprise for acceptance.
5. No portion of any profits arising to an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of goods or merchandise within that other territory by the enterprise.
ARTICLE IV
A company which is a resident of the United Kingdom and which carries on a trade or business in France through a permanent establishment situated therein and which is Liable to the tax on income from movablecapital under Article 39, paragraph 11 of the Decree No. 48-1986, of 9th December, 1948, shall not be charged to that tax on income exceeding the amount of the profits or gains arising in France and chargeable in accordance with Article III.
ARTICLE V
Where-
(a) an enterprise of one of the territories participates directly or indirectly in the management, controlor capital of an enterprise of the other territory, or
(b) the same persons participate directly or indirectly in the management, controlor capital of an enterprise of one of the territories and an enterprise of the other territory, and in either case, conditions are made or imposed between the two enterprises, in their commercial or financialrelations, 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 these conditions have not so accrued may be included in the profits of that enterprise and taxed accordingly.
ARTICLE VI
Where a company which is a resident of the United Kingdom derives industrial and commercial profits from a permanent establishment in France, and these profits are chargeable both to the tax on undistributed profits under Article 14 of the Law of 31st January, 1950, and to the tax on income from movable capital, the incidence of these two taxes shall not result in a total charge greater than 10 per centum on the amount of the profits chargeable to these two taxes in accordance with Article III. In consequence, the rate of the tax on income from movable capital shall be reduced to 10 per centum.
If, hereafter, the tax on undistributed profits is not imposed, or if it is imposed at a rate different from the rate in force at the date of signature of the present Convention, the taxation authorities of the two High Contracting Parties shall consult together in that event with a view to fixing the appropriate rate of the tax on income from movable capital.
ARTICLE VII
Profits distributed by a company which is a resident of France to a company which is a resident of the United Kingdom and which has owned for a year registered shares (actions ou parts d'intérˆt) representing at least 50 per centum of the capital of the former company shall be charged to the tax on income from movable capital at the rate determined in accordance with Article VI.
ARTICLE VIII
Notwithstanding the provisions of Article III, IV V and VI, profits which a resident of one of the territories derives from operating ships or aircraft shall be exempt from tax in the other territory.
ARTICLE IX
Dividends and interest paid by a company which is a resident of the United Kingdom to a resident of France, who is subject to tax in France in respect thereof and does not carry on trade or business in the United Kingdom through a permanent establishment situated therein, shall be exempt from United Kingdom surtax.
ARTICLE X
1. Any royalty derived from sources within one of the territories by a resident of the other territory, who is subject to tax in that other territory in respect thereof and does not carry on a trade or business in the first-mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory.
2. In this Article the term "royalty" means any royalty or other amount paid as consideration for the use of, or for the privilege of using, any copyright, patent, design, secret process or formula, trade mark or other like property, and includes rents in respect of cinematograph films, but does not include any royalty or other amount paid in respect of the operation of a mine or quarry or of any other extraction of natural resources.
3. Where any royalty exceeds a fair and reasonable consideration in respect of the rights for which it is paid, the exemption provided by the present Article shall apply only to so much of the royalty as represents such fair and reasonable consideration.
4. Any capital sum derived from sources within one of the territories from the sale of patent rights by a resident of the other territory, who does not carry on a trade or business in the first- mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory.
ARTICLE XI
A resident of one of the territories who does not carry on a trade or business in the other territory through a permanent establishment situated therein shall be exempt in that other territory from any tax in respect of gains from the sale, transfer, or exchange of capital assets.
ARTICLE XII
1. Income derived from real property in one of the territories by a resident of the other territory shall be subject to tax in accordance with the Laws of the first-mentioned territory. Where the income is also subject to tax in the other territory, relief from double taxation shall be given in accordance with the provisions of Article XX.
2. In this Article, the term "income from real property" means income of whatever nature derived from reaI property, and includes royalties or any other amounts paid in respect of the operation of mines or quarries or any other extraction of natural resources.
ARTICLE XIII
1. Remuneration, including pensions, paid by or out of funds created by one of the High Contracting Parties to any individual for services rendered to that Party in the discharge of governmental functions shall be exempt from tax in the territory of the other High Contracting Party, unless the individual is a national of that other Party without being also a national of the first-mentioned Party.
2. The following pensions shall be exempt from United Kingdom tax, regardless of the nationality of the pensioner, so long as they are exempt from French tax:
(a) Pensions granted by virtue of the Law of the 31st March, 1919, to all those persons who since the 2nd August, 1914, have become entitled to military pensions by reason of disabilities resulting whether from hostilities or from ailments or accidents occurring on service;
(b) Pensions granted by virtue of the combined provisions of the Law of the 31st March, 1919, and of Article 1 of the Law of the 22nd June, 1927, to retired soldiers and sailors by reason of wounds received or disabilities or ailments contracted on service before the 2nd August, 1914:
Provided that paragraph 1 of this Article shall apply to such part of the mixed pensions provided for in Article 60-2ø of the Law of the 31st March, 1919, as relates to Length of service and is not exempted from French tax.
3. The following pensions shall be exempt from French tax, regardless of the nationality of the pensioner, so long as they are exempt from United Kingdom tax:
(a) Wounds pensions granted to members of the naval, military or air forces of the Crown;
(b) Retired pay of disabled officers granted on account of medical unfitness attributable to or aggravated by naval, military or air force service;
(c) Disablement or disability pensions granted to members, other than commissioned officers, of the naval, military or air forces of the Crown on account of medical unfitness attributable to or aggravated by naval, military or air force service;
(d) Disablement pensions granted to persons who have been employed in the nursing services of any of the naval, military or air forces of the Crown on account of medical unfitness attributable to or aggravated by naval, military or air force service;
(e) Injury and disablement pensions payable under any scheme made under the Injuries in War (Compensation) Act, 1914, the Injuries in War Compensation Act, 1914 (Session 2), the Injuries in War (Compensation) Act, 1915, the Pensions (Navy, Army, Air Force and Mercantile Marine) Act, 1939, the Personal Injuries (Emergency Provisions) Act, 1939, or under any War Risks Compensation Scheme for the Mercantile Marine:
Provided that paragraph 1 of this Article shall apply to such part of any income from those pensions as is not exempted from United Kingdom tax.
4. The provisions of paragraph 1 of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the High Contracting Parties for purposes of profit.
ARTICLE XIV
1. An individual who is a resident of the United Kingdom shall be exempt from French tax on profits or remuneration in respect of personal (including professional) services performed within France in any year of assessment if-
(a) he is present within France for a period or periods not exceeding in the aggregate 183 days during that year, and
(b) -
(i) in the case of an employment, the services are performed on behalf of a person who is a resident of the United Kingdom;
(ii) in other cases, he has no office or other fixed place of business in France; and
(c) the profits or remuneration are subject to United Kingdom tax.
2. An individual who is a resident of France shall be exempt from United Kingdom tax on profits or remuneration in respect of personal (including professional) services performed within the United Kingdom in any year of assessment if-
(a) he is present within the United Kingdom for a period or periods not exceeding in the aggregate 183 days during that year; and
(b) -
(i) in the case of an employment, the services are performed on behalf of a person who is a resident of France;
(ii) in other cases, he has no office or other fixed place of business in the United Kingdom; and
(c) the profits or remuneration are subject to French tax.
3. The provisions of this Article shall not apply to the profits or remuneration of public entertainers such as stage, motion picture or radio artists, musicians and athletes.
ARTICLE XV
1. Any pension (other than a pension of the kind referred to in paragraph 1 or 2 of Article XIII) and any annuity, derived from sources within France by an individual who is a resident of the United Kingdom and subject to United Kingdom tax in respect thereof, shall be exempt from French tax.
2. Any pension (other than a pension of the kind referred to in paragraph 1 or 3 of Article XIII) and any annuity, derived from sources within the United Kingdom by an individual who is a resident of France and subject to French tax in Respect thereof, shall be exempt from United Kingdom tax.
3. 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 XVI
Nothing in the present Convention shall affect the provisions of the Code General des Imp(tm)ts regarding the tax payable by individuals who have not their fiscal domicile in France, but have a residence in France. Subject to these provisions, a resident of the United Kingdom shall not be chargeable to French progressive surtax in respect of income from sources in France.
ARTICLE XVII
A professor or teacher from one of the territories who receives remuneration for teaching, during a period of temporary residence not exceeding two years, at a university, college, school or other educational institution in the other territory, shall be exempt from tax in that other territory in respect of that remuneration.
ARTICLE XVIII
A student or business apprentice from one of the territories who is receiving full-time education or training in the other territory shall be exempt from tax in that other territory on payments made to him by persons resident in the first-mentioned territory for the purposes of his maintenance, education or training.
ARTICLE XIX
In the application of paragraph 4 of Article XXII, the High Contracting Parties have agreed as follows:
(1) Individuals who are residents of France shall be entitled to the same personal allowances, reliefs and reductions for the purposes of United Kingdom income tax as British subjects not resident in the United Kingdom.
(2) Individuals who are residents of the United Kingdom shall be entitled for the purposes of French tax to the same reductions of taxes or charges, basic abatements, and allowances on account of family responsibilities as French nationals.
ARTICLE XX
1. The Laws of the High Contracting Parties shall continue to govern the taxation of income arising in either of the territories, except where express provision to the contrary is made in the present Convention. Where income is subject to tax in both territories, relief from double taxation shall be given in accordance with the following paragraphs:
2. 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, French tax payable, whether directly or by deduction, in respect of income from sources within France shall be allowed as a credit against any United Kingdom tax payable in respect of that income. Where such income is a dividend paid by a company resident in France to a company resident in the United Kingdom which controls, directly or indirectly, not less than one-half of the voting power in the former company, the credit shall take into account (in addition to any French tax appropriate to the dividend) the French tax payable by the company in respect of its profits.
3. -
(a) Subject to the provisions of sub-paragraph (b) of this paragraph, income derived by a person who is a resident of France (whether or not that person is resident in the United Kingdom for the purposes of United Kingdom tax) from sources in the United Kingdom which, under the Laws of the United Kingdom and in accordance with this Convention, is subject to tax in the United Kingdom either directly or by deduction, shall be exempt from the French proportional tax on the income of individuals, or, as the case may be, from French tax on companies.
(b) Where the income consists of dividends or interest derived from a company which is a resident of the United Kingdom by a person who is a resident of France (whether or not that person is resident in the United Kingdom for the purposes of United Kingdom tax) and the income is subject to United Kingdom tax, either directly or by deduction, it shall be exempt from the French tax on income from movable capital, United Kingdom tax being regarded as wholly covering that tax in view of its rate.
(c) In the cases referred to in sub-paragraph (a) of this paragraph, the income shall be exempt from French progressive surtax but, where the person receiving this income is a resident of France, the income may be taken into account in determining the effective rate of progressive surtax surgeable on his income other than the income referred to.
4. For the purposes of this Article, profits or remuneration for personal (including professional) services performed in one of the territories shall be deemed to be income from sources within that territory, and the services of an individual whose services are wholly or mainly performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory.
ARTICLE XXI
The taxation authorities of the High Contracting Parties shall exchange such information (being information which is at their disposaI under their respective taxation Laws in the normaI course of administration) as is necessary for carrying out the provisions of the present Convention or for the prevention of fraud or for the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of the present Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of the taxes which are the subject of the present Convention. No information as aforesaid shall be exchanged which wouId discIose any trade, business, industrial or professionaI secret or trade process.
ARTICLE XXII
1. The nationaIs of one of the High Contracting Parties shall not be subjected in the territory of the other High Contracting Party to any taxation or any requirement connected therewith which is other, higher or more burdensome than the taxation and connected requirements to which the nationaIs of the Iatter Party are or may be subjected.
2. The enterprises of one of the territories shall not be subjected in the other territory, in respect of profits or capital attributable to their permanent establishments in that other territory, to any taxation which is other, higher or more burdensome than the taxation to which the enterprises of that other territory are or may be subjected in respect of the like profits or capital.
3. The income, profits and capital of an enterprise of one of the territories, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by a resident or residents of the other territory shall not be subjected in the first-mentioned territory to any taxation which is other, higher or more burdensome than the taxation to which other enterprises of that first- mentioned territory are or may be subjected in respect of the like income, profits and capital.
4. Nothing in paragraph 1 or 2 of this Article shall be construed as obIiging either High Contracting Party to grant to nationaIs of the other High Contracting Party, who are not resident in the territory of the former High Contracting Party, any personaI allowances, reIiefs or reductions for tax purposes. Each of the High Contracting Parties shall adhere to its own IegisIation in this respect, subject to any speciaI agreements which may be made between them determining the arrangements to be applied.
5. In this Article the term "nationaIs" means-
(a) in reIation to France all French subjects and French protected persons residing in France or in any French territory to which the present Convention applies by reason of extension made under Article XXIII and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in any French territory to which the present Convention applies;
(b) in reIation to the United Kingdom, all British subjects and British protected persons residing in the United Kingdom or in any British territory to which the present Convention applies by reason of extension made under Article XXIII and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in any British territory to which the present Convention applies.
6. In this Article the term "taxation" means taxes of every kind and description Ievied on behalf of any authority whatsoever.
ARTICLE XXIII
1. The present Convention may be extended, either in its entirety or with modifications, to any territory of one of the High Contracting Parties to which this Article applies and which imposes taxes substantially similar in character to those which are the subject of the present Convention, and any such extensions shall take effect from such date and subject to such modifications and conditions (including conditions as to termination) as may be specified and agreed between the High Contracting Parties in notes to be exchanged for this purpose.
2. The termination in respect of France or the United Kingdom of the present Convention under Article XXVI shall, unless otherwise expressIy agreed by both High Contracting Parties, terminate the application of the present Convention to any territory to which the Convention has been extended under this Article.
3. The territories to which this Article applies are-
(a) in reIation to His Majesty the King of Great Britain, Ireland and the British Dominions beyond the Seas:
Any territory other than the United Kingdom for whose internationaI relations the United Kingdom is responsibIe;
(b) in reIation to the President of the French Republic:
Any department, protectorate or other overseas territory, for whose internationaI relations France is responsibIe.
ARTICLE XXIV
On the entry into force of the present Convention the following agreements between the High Contracting Parties shall be terminated in respect of the territories to which the Convention applies:
(1) The agreement constituted by Exchange of Notes dated the 1st October, 1932, for the exemption from taxation of profits accruing from the business of shipping;
(2) The Agreement dated the 9th April, 1935, for the reciprocaI exemption from income tax of profits arising from the business of air transport;
(3) The Agreement dated the 19th October, 1945, for reIief from double taxation in certain circumstances, excIusive of the ProtocoI of Signature to that Agreement;
and the provisions of those Agreements (other than the ProtocoI of Signature to the Iast- mentioned Agreement) shall cease to have effect:
(a) In the United Kingdom, as respects income tax for the year of assessment beginning on the 6th April, 1950, and subsequent years, and as respects surtax for the year of assessment beginning on the 6th April, 1949, and subsequent years;
(b) In France, as respects taxes charged in respect of the year 1950 and subsequent years.
ARTICLE XXV
1. The present Convention shall be ratified and the instruments of ratification shall be exchanged at London as soon as possibIe.
2. The present Convention shall enter into force upon exchange of ratifications and the foregoing provisions thereof shall have effect:
(a) In the United Kingdom: 1950;
as respects income tax for any year of assessment beginning on or after the 6th April, and as respects surtax for any year of assessment beginning on or after the 6th April, 1949;
as respects profits tax in respect of the following profits:
(i) profits arising in any chargeable accounting period beginning on or after the 1st April, 1950;
(ii) profits attributable to so much of any chargeable accounting period falling partIy before and partIy after that date as falls after that date;
(iii) profits not so arising or attributable by reference to which income tax is, or but for the present Convention wouId be, chargeable for any year of assessment beginning on or after the 6th April, 1950;
(b) In France:
as respects taxes charged in respect of the year 1950 and subsequent years, and as respects the undistributed profits tax. NevertheIess, so far as income other than that referred to in Article X of the present Convention is concerned, no repayment shall be made of tax on income from movable capital, which has been deducted in France at the time of payment of the said income and before the date of exchange of ratifications of the present Convention.
ARTICLE XXVI
The present Convention shall continue in force indefiniteIy but either of the High Contracting Parties may, on or before the 30th June in any calendar year not earIier than the year 1954, give to the other High Contracting Party, through dipIomatic channels, written notice of termination and, in such event, the present Convention shall cease to be effective:
(a) In the United Kingdom:
as respects income tax for any year of assessment beginning on or after the 6th April in the calendar year next following that in which the notice is given;
as respects surtax for any year of assessment beginning on or after the 6th April in the calendar year in which the notice is given; and
as respects profits tax in respect of the following profits:
(i) profits arising in any chargeable accounting period beginning on or after the 1st April in the calendar year next following that in which the notice is given;
(ii) profits attributable to so much of any chargeable accounting period falling partIy before and partIy after that date as falls after that date;
(iii) profits not so arising or attributable by reference to which income tax is chargeable for any year of assessment beginning on or after the 6th April in the next following calendar year;
(b) In France:
as respects taxes charged in respect of the year following the calendar year during which the said notice is given.
CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION - SWITZERLAND
[Order by the President]
GN 462 of 1964.
An arrangement has been made with the Government of the United Kingdom of Great Britain and Northern Ireland whereby the Convention between that Government and the Swiss FederaI CounciI for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income has been extended to the former Protectorate by and incorporating the terms of the Despatch and reply thereto set out in the ScheduIe.
SCHEDULE
BRITISH EMBASSY, BERNE
13th December, 1963.
1170/63
Monsieur Ie ConseiIIer FederaI,
I have the honour, upon instructions from Her Majesty's PrincipaI Secretary of State for Foreign Affairs, to refer to the Exchange of Notes between the Government of the United Kingdom of Great Britain and Northern Ireland and the Swiss FederaI CounciI dated the 30th May, 1961, extending to the Federation of Rhodesia and Nyasaland on the basis therein specified, the provisions of the Convention between the United Kingdom and SwitzerIand for the Avoidance of Double Taxation with respect to Taxes on Income, signed at London on the 30th September, 1954.
I have the honour to inform you that on dissoIution of the Federation of Rhodesia and Nyasaland the extension provided for in the above-mentioned exchange of notes wiII continue in force in reIation to Southern Rhodesia, Northern Rhodesia and Nyasaland individualIy, and that references therein to the Federation shouId be construed accordingly, since the three territories wiII individualIy assume the responsibiIities under the agreement which are now heId by the Federation.
I avail myseIf of this opportunity to renew to you, Monsieur Ie ConseiIIer FederaI, the assurances of my highest consideration.
PAUL GREY.
MONSIEUR LE CONSEILLER FEDERAL FRIEDRICH WAHLEN,
FEDERAL POLITICAL DEPARTMENT, BERNE.
DEPARTMENT POLITIQUE FEDERAL, BERNE,
Ie 18 décembre 1963. s.B.34.12.GB.5.4.(U'Ch) Monsieur I'Ambassadeur, J'ai eu I'honneur de recevoir Ia note du 13 décembre 1963 par IaqueIIe Votre ExceIIence, se fondant sur I'échange de notes du 30 mai 1961 entre Ia Suisse et Ie Royaume-Uni de Grande- Bretagne et d'IrIande du Nord concernant Ia convention envue d'éviter Ies doubles impositions en martiU re d'imp"ts sur Ie revenu du 30 septembre 1954, a bien vouIu me faire savoir qu'aprŠs dissoIution de Ia Fédération de Rhodésie et Nyassaland, Ia Rhodésie du Sud, Ia Rhodésie du Nord et Ie Nyassaland continueront ˆ appliquer ˆ titre individueI Ies dispositions prévues par I'échange de notes precite. Je remercie Votre ExceIIence de cette obIigeante communication, dont j'ai pris bonne note.
Je saisis cette occasion pour vous renouveIer, Monsieur I'Ambassadeur, I'assurance de ma haute considération.
FRIEDRICH WAHLEN.
SON EXCELLENCE SIR PAUL GREY,
AMBASSADEUR EXTRAORDINAIRE ET PLENIPOTENTIAIRE DE SA MAJESTE BRITANNIQUE, BERNE.
ANNEXURE
CONVENTION BETWEEN THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE SWISS CONFEDERATION FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME.
The Government of the United Kingdom of Great Britain and Northern Ireland and the Swiss FederaI CounciI, Desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income, Have appointed for that purpose as their respective Plenipotentiaries:
The Government of the United Kingdom of Great Britain and Northern Ireland:
Alfred DougIas Dodds-Parker, Esquire, ParIiamentary Under-Secretary of State for Foreign Affairs;
The Swiss FederaI CounciI:
Monsieur Erwin Bernath, Swiss Charg"š d'Affaires ad interim in London;
Who, having communicated to one another their fuII powers, found in good and due form, have agreed as foIIows:
ARTICLE I
1. The taxes which are the subject of the present Convention are-
(a) In the United Kingdom:
The income tax (including surtax), the profits tax and the excess profits Ievy (hereinafter referred to as "United Kingdom tax");
(b) In SwitzerIand:
The federaI, cantonal and communaI taxes on income (total income, earned income, income from capital, industrial and commercial profits, etc.), but not including the FederaI coupon tax except where expressIy mentioned (hereinafter referred to as "Swiss tax").
2. The present Convention shall also apply to any other taxes of a substantially similar character imposed in the United Kingdom or SwitzerIand subsequently to the date of signature of the present Convention.
ARTICLE II
1. In the present Convention, unless the context otherwise requires-
(a) The term "United Kingdom" means Great Britain and Northern Ireland, excluding the Channels lands and the Isle of Man;
(b) The term "SwitzerIand" means the Swiss Confederation;
(c) The terms "one of the territories" and "the other territory" mean the United Kingdom or SwitzerIand, as the context requires;
(d) The term "tax" means United Kingdom tax or Swiss tax, as the context requires;
(e) The term "person" includes any individual, company, unincorporated body of persons, and any other entity with or without juridicaI personality;
(f) The term "company" means in reIation to the United Kingdom any body corporate, and in reIation to SwitzerIand any entity with juridicaI personality;
(g) The term "resident of the United Kingdom" means:
(i) any company or partnership whose business is managed and controIIed in the United Kingdom;
(ii) any other person who is resident in the United Kingdom for the purposes of United Kingdom tax and not resident (by reason of domicile or sojourn) in SwitzerIand for the purposes of Swiss tax;
(h) The term " resident of SwitzerIand" means:
(i) any company or partnership ("société simpIe", "société en nom coIIectif" or "société en commandite") created or organised under Swiss Law, if its business is not managed and controIIed in the United Kingdom;
(ii) any other person who is resident (by reason of domicile or sojourn) in SwitzerIand for the purposes of Swiss tax and not resident in the United Kingdom for the purposes of United Kingdom tax;
(i) The terms "resident of one of the territories" and "resident of the other territory" mean a resident of the United Kingdom or a resident of SwitzerIand, as the context requires;
(j) The terms "United Kingdom enterprise" and "Swiss enterprise" mean respectively an industrial or commercial enterprise or undertaking carried on by a resident of the United Kingdom and an industrial or commercial enterprise or undertaking carried on by a resident of SwitzerIand, and the terms "enterprise of one of the territories" and "enterprise of the other territory" mean a United Kingdom enterprise or a Swiss enterprise, as the context requires;
(k) The term "permanent establishment" means a branch, management, office, factory, workshop or other fixed place of business, and a farm, mine, quarry or other place of naturaI resources subject to expIoitation. It also includes a place where building construction is carried on by contract for a period of at Ieast one year, but does not include an agency unless the agent has and habitually exercises a General authority to negotiate and conclude contracts on behalf of an enterprise of one of the territories. In this connection-
(i) An enterprise of one of the territories shall not be deemed to have a permanent establishment in the other territory merely because it carries on business dealings in that other territory through a bona fide broker, General commission agent or other independent agent acting in the ordinary course of his business as such;
(ii) The fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise;
(iii) The fact that an enterprise of one of the territories has a subsidiary company which is a resident of the other territory or which is engaged in trade or business in that other territory (whether through a permanent establishment or otherwise) shall not of itself constitute that subsidiary company a permanent establishment of the enterprise of the former territory;
(I) The term "industrial or commercial profits" includes manufacturing, mercantiIe, mining, farming, financial and insurance profits, and rents and royaIties in respect of cinematograph fiIms, but does not include income in the form of dividends, interest or royaIties (other than cinematograph royaIties) except any such income which, under the Laws of one of the territories and in accordance with Article III of the present Convention, is attributable to a permanent establishment situated therein;
(m) The term "competent authority" means, in the case of the United Kingdom, the Commissioner-Generals of InIand Revenue or their authorised representative; in the case of SwitzerIand, the Director of the FederaI Tax Administration or his authorised representative; and in the case of any territory to which the present Convention is extended under Article XXI, the competent authority for the administration in such territory of the taxes to which the Convention applies.
2. Where the present Convention provides that income from a source within SwitzerIand shall be exempt from, or entitIed to a reduced rate of, tax in SwitzerIand if (with or without other conditions) it is subject to tax in the United Kingdom, and under the Law in force in the United Kingdom the said income is subject to tax by reference to the amount thereof which is remitted to or received in the United Kingdom and not by reference to the fuII amount thereof, then the exemption or reduction in rate to be allowed under the Convention in SwitzerIand shall apply only to so much of the income as is remitted to or received in the United Kingdom.
3. Where under any provision of the present Convention a partnership is entitIed to exemption from United Kingdom tax as a resident of SwitzerIand on any income, such a provision shall not be construed as restricting the right of the United Kingdom to charge any member of the partnership, being a person who is resident in the United Kingdom for the purposes of United Kingdom tax (whether or not he is also resident in SwitzerIand for the purposes of Swiss tax), to tax on his share of the income of the partnership; but any such income shall be deemed for the purposes of Article XV to be income from sources within SwitzerIand.
4. Where under any provision of the present Convention an estate of a deceased person is entitIed to exemption from United Kingdom tax as a resident of SwitzerIand on any income, such a provision shall not be construed as requiring the United Kingdom to grant exemption from United Kingdom tax in respect of such part of such income as goes to any heir of such estate who is not resident in SwitzerIand for the purposes of Swiss tax and whose share of such income is not subject to Swiss tax either in his hands or in the hands of the estate.
5. In the application of the provisions of the present Convention by either Contracting Party any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws in force in the territory of that Party relating to the taxes which are the subject of the Convention.
ARTICLE III
1. The industrial or commercial profits of a United Kingdom enterprise shall not be subject to Swiss tax unless the enterprise is engaged in trade or business in SwitzerIand through a permanent establishment situated therein. If it is so engaged, tax may be imposed on those profits by SwitzerIand, but only on so much of them as is attributable to that permanent establishment.
2. The industrial or commercial profits of a Swiss enterprise shall not be subject to United Kingdom tax unless the enterprise is engaged in trade or business in the United Kingdom through a permanent establishment situated therein. If it is so engaged, tax may be imposed on those profits by the United Kingdom, but only on so much of them as is attributable to that permanent establishment.
3. Where an enterprise of one of the territories is engaged in trade or business in the other territory through a permanent establishment situated therein, there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm's Length with the enterprise of which it is a permanent establishment.
4. Where an enterprise of one of the territories, from sales of goods or merchandise stocked in a warehouse in the other territory, those profits shall not be attributed to a permanent establishment of the enterprise in that other territory, notwithstanding that the offers of purchase have been obtained by an agent in that other territory and transmitted by him to the enterprise for acceptance.
5. No portion of any profits arising to an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of goods or merchandise within the other territory by the enterprise.
6. In the determination of the industrial or commercial profits of a permanent establishment there shall be allowed as deductions all expenses which are reasonabIy applicable to the permanent establishment, including executive and General administrative expenses so applicable , whether incurred in the territory in which the permanent establishment is situated or eIsewhere.
{mprestriction ids="2,3,5"}
ARTICLE IV
Where-
(a) an enterprise of one of the territories participates directly or indirectly in the management, control or capital of an enterprise of the other territory; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the territories and an enterprise of the other territory;
and, in either case, conditions are made or imposed between the two enterprises, in their commercial or financial relations, which differ from those which wouId be made between independent enterprises, then any profits which wouId 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.
ARTICLE V
Notwithstanding the provisions of Articles III and IV, profits which a resident of one of the territories derives from operating ships or aircraft, including profits of that resident from the saIe of tickets for passages by such ships or aircraft, shall be exempt from tax in the other territory.
ARTICLE VI
1. Dividends (other than dividends which, under the Laws of the United Kingdom and in accordance with Article III of this Convention, are attributable to a permanent establishment situated in the United Kingdom) paid by a company which is a resident of the United Kingdom to a resident of SwitzerIand who is subject to Swiss tax in respect thereof shall be exempt from United Kingdom surtax.
2. The industrial and commercial profits of a Swiss enterprise engaged in trade or business through a permanent establishment in the United Kingdom shall, so Iong as undistributed profits of United Kingdom enterprises are effectiveIy charged to United Kingdom profits tax at a Iower rate than distributed profits of such enterprises, be charged to United Kingdom profits tax only at that Iower rate.
3. Where not Iess than 50 per centum of the entire voting power of a company which is a resident of the United Kingdom is controIIed, directly or indirectly, by a company which is a resident of SwitzerIand, the distributions by the former company to the Iatter company, and to any other company which is a resident of SwitzerIand and which beneficially owns not Iess than 10 per centum of the entire share capital of the company paying the dividends, shall be Ieft out of account in computing United Kingdom profits tax effectiveIy chargeable on that company at the rate appropriate to distributed profits.
4. -
(a) The Swiss anticipatory tax may be charged in respect of dividends paid by any company created under Swiss Law to a resident of the United Kingdom, but, in the case of any such resident who is subject to United Kingdom tax in respect thereof, the rate of anticipatory tax shall be reduced in accordance with the following provisions of this paragraph (unless the dividends are, under the Laws of SwitzerIand and in accordance with Article III of this Convention, attributable to a permanent establishment situated in SwitzerIand).
(b) If that resident is an individual whose effective rate of United Kingdom tax does not exceed 5 per centum the anticipatory tax shall not be charged.
(c) If that resident is an individual whose effective rate of United Kingdom tax exceeds 5 per centum, the anticipatory tax shall be charged only at the rate which, when added to the rate of FederaI coupon tax, equaIs that effective rate.
(d) If that resident is a company which controIs, directly or indirectly, not Iess than 95 per centum of the entire voting power of the company paying the dividends, the anticipatory tax shall be reduced by an amount equaI to 20 per centum of the dividend.
(e) If that resident is a company which controIs, directly or indirectly, Iess than 95 per centum but not Iess than 50 per centum of the entire voting power of the company paying the dividends, the anticipatory tax shall be reduced by an amount equaI to 10 per centum of the dividend.
(f) If that resident is a company which beneficially owns not Iess than 10 per centum of the entire share capital of the company paying the dividends, and the provisions of either sub- paragraph (d) or sub-paragraph (e) of this paragraph apply to some part of the dividends paid by the Iatter company, the anticipatory tax shall be reduced by an amount equaI to 10 per centum of the dividend.
5. If at any time distributed profits of companies become chargeable to United Kingdom profits tax at a rate other than 20 per centum above the rate at which undistributed profits are effectiveIy chargeable to that tax, the competent authorities of the two Contracting Parties may consult together in order to determine whether it is necessary for this reason to amend sub- paragraphs (d), (e) and (f) of the preceding paragraph. After such consultation has taken place either of the Contracting Parties may give to the other Contracting Party through the dipIomatic Channel written notice of termination of the provisions of paragraph 3 and of sub-paragraphs (d), (e) and (f) of paragraph 4 of this Article, and, in such event, those provisions shall cease to be effective from the date on which the reIevant change in the rates of United Kingdom profits tax took effect.
6. Subject to the provisions of sub-paragraph (a) of paragraph 4 of this Article, where a company which is resident of one of the territories derives profits or income from sources within the other territory, there shall not be imposed in that other territory any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or in part, profits or income so derived.
ARTICLE VII
1. Any interest or royalty derived from sources within one of the territories by a resident of the other territory, who is subject to tax in that other territory in respect thereof, shall be exempt from tax in that first territory.
2. In this Article-
(a) The term "interest" means interest on bonds, securities, notes, debentures or on any other form of indebtedness (including mortgages or bonds secured on reaI property);
(b) The term "royalty" means any royalty or other amount paid as consideration for the right to use any copyright, artistic or scientific work, patent, modeI, design, secret process or formula, trade mark, or other like property or right (including rentaIs and like payments for the use of industrial or commercial machinery or pIant or scientific apparatus), but does not include any royalty or other amount paid in respect of the operation of mines, quarries or other naturaI resources.
3. Any capital sum derived from sources within one of the territories from the saIe of property or rights mentioned in sub-paragraph (b) of paragraph 2 of this Article by a resident of the other territory shall be exempt from tax in the first territory.
4. Where there is a speciaI relationship between debtor and creditor or both debtor and creditor have a speciaI relationship with a third person or persons, and in consequence the amount paid is greater than wouId have been agreed upon if debtor and creditor had been at arm's Length, the exemption provided by this Article shall not apply to the excess.
5. Any interest or royalty exempted from United Kingdom tax by this Article shall be allowed as a deduction for profits tax and excess profits Ievy purposes from the profits or income of the person paying the interest or royalty, whatever the relationship between that person and the person receiving the interest or royalty may be.
6. The exemptions from tax in one of the territories provided for in this Article shall not apply to interest, royaIties or capital sums which, under the Laws of that territory and in accordance with Article III of this Convention, are attributable to a permanent establishment situated therein.
ARTICLE VIII
1. A resident of one of the territories shall be exempt in the other territory from any tax on gains from the saIe, transfer or exchange of capital assets (other than gains which, under the Laws of that other territory and in accordance with Article III of this Convention, are attributable to a permanent establishment situated therein).
2. In this Article, the term "capital assets" means any movable property, whether corporeaI or incorporeaI.
ARTICLE IX
1. Income derived from reaI property situated in one of the territories by a resident of the other territory shall be subject to tax in accordance with the Laws of the first-mentioned territory. Where the income is also subject to tax in the other territory, reIief from double taxation shall be given in accordance with the provisions of Article XV.
2. In this Article, the term "income from reaI property" means income of whatever nature derived from reaI property, including gains derived from the saIe or exchange of such property, and it also includes royaIties in respect of the operation of mines, quarries or other naturaI resources. It does not however include interest from mortgages or bonds secured on such property.
ARTICLE X
1. Remuneration, including pensions, paid by, or out of funds created by, the Government of the United Kingdom to an individual in respect of services rendered to that Government in the discharge of governmental functions shall be exempt from Swiss tax: provided that the exemption shall not apply to remuneration, other than a pension, paid to a Swiss citizen who is not also a British subject.
2. Remuneration, including pensions, paid by, or out of funds created by, the Swiss Confederation or by any Swiss canton to an individual in respect of services rendered to SwitzerIand in the discharge of governmental functions shall be exempt from United Kingdom tax: provided that the exemption shall not apply to remuneration, other than a pension, paid to a British subject who is not also a Swiss citizen.
3. The provisions of paragraphs 1 and 2 of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either Contracting Party or by any Swiss canton for purposes of profit.
4. The provisions of this Convention shall not be construed as denying or affecting in any manner the right of dipIomatic and consuIar officers to other or additionaI exemptions now enjoyed or which may hereafter be granted to them.
ARTICLE XI
1. An individual who is a resident of the United Kingdom shall be exempt from Swiss tax on profits or remuneration in respect of personaI (including professionaI) services performed within SwitzerIand in any year of assessment if-
(a) he is present within SwitzerIand for a period or periods not exceeding in the aggregate 183 days during that year, and
(b)-
(i) in the case of a directorship or empIoyment, the services are performed for or on behalf of a resident of the United Kingdom;
(ii) in other cases, he has no office or other fixed place of business in SwitzerIand, and
(c) the profits or remuneration are subject to United Kingdom tax.
2. An individual who is a resident of SwitzerIand shall be exempt from United Kingdom tax on profits or remuneration in respect of personaI (including professionaI) services performed within the United Kingdom in any year of assessment if-
(a) he is present within the United Kingdom for a period or periods not exceeding in the aggregate 183 days during that year; and
(b)-
(i) in the case of a directorship or empIoyment, the services are performed for or on behalf of a resident of SwitzerIand;
(ii) in other cases, he has no office or other fixed place of business in the United Kingdom, and
(c) the profits or remuneration are subject to Swiss tax.
3. The provisions of this Article shall not apply to the profits or remuneration of pubIic entertainers such as stage, motion picture, radio or teIevision artists, musicians and athletes.
ARTICLE XII
1. Any pension (other than a pension of the kind referred to in Article X) and any annuity, derived from sources within one of the territories by an individual who is a resident of the other territory and subject to tax in that other territory in respect thereof, shall be exempt from tax in the first territory.
2. In this Article-
(a) The term "pension" means periodic payments made in consideration of past services or by way of compensation for injuries received;
(b) The term "annuity" means a stated sum payabIe periodically at stated times, during Iife or during a specified or ascertainable period of time, under an obIigation to make the payments in return for adequate and fuII consideration in money or money's worth.
ARTICLE XIII
1. A professor or teacher from one of the territories, who receives remuneration for teaching, during a period of temporary residence not exceeding two years, at a university, coIIege, schooI or other educationaI institution in the other territory, shall be exempt from tax in that other territory in respect of that remuneration.
2. A student or business apprentice from one of the territories, who is receiving fuII-time education or training in the other territory, shall be exempt from tax in that other territory on payments made to him by persons outside that other territory for the purposes of his maintenance, education or training.
ARTICLE XIV
1. IndividuaIs who are residents of SwitzerIand shall be entitIed to the same personaI allowances, reIiefs and reductions for the purposes of United Kingdom tax as British subjects not resident in the United Kingdom.
2. IndividuaIs who are residents of the United Kingdom shall be entitIed to the same personaI allowances, reIiefs and reductions for the purposes of Swiss tax as Swiss nationaIs resident in the United Kingdom.
ARTICLE XV
1. The Laws of the Contracting Parties shall continue to govern the taxation of income arising in either of the territories, except where express provision to the contrary is made in the present Convention. Where income is subject to tax in both territories, reIief from double taxation shall be given in accordance with the following paragraphs of this Article.
2. Subject to the provisions of the Law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payabIe in a territory outside the United Kingdom, Swiss tax payabIe, whether directly or by deduction, in respect of income from sources within SwitzerIand shall be allowed as a credit against the United Kingdom tax payabIe in respect of that income. Where such income is a dividend paid by a company which is a resident of SwitzerIand to a company which controIs, directly or indirectly, not Iess than 50 per centum of the entire voting power of the former company, the credit shall take into account (in addition to any Swiss tax appropriate to the dividend) the Swiss tax payabIe by the former company in respect of its profits. For the purpose of this paragraph, the term "Swiss tax" shall include the FederaI coupon tax, but shall not include the communaI taxes.
3. Income (other than dividends) from sources within the United Kingdom which under the Laws of the United Kingdom and in accordance with this Convention is subject to tax in the United Kingdom either directly or by deduction shall be exempt from Swiss tax.
4. In the case of a person (other than a company or partnership) who is resident in the United Kingdom for the purposes of United Kingdom tax and is also resident (by reason of domicile or sojourn) in SwitzerIand for the purposes of Swiss tax, the provisions of paragraph 2 of this Article shall apply in reIation to income which that person derives from sources within SwitzerIand, and the provisions of paragraph 3 of this Article shall apply in reIation to income which that person derives from sources within the United Kingdom. If such person derives income from sources outside both the United Kingdom and SwitzerIand, tax may be imposed on that income in both the territories (subject to the Laws in force in the territories and to any Convention which may exist between either of the Contracting Parties and the territory from which the income is derived) but the Swiss tax on so much of that income as is subjected to tax in both the territories shall be Iimited to one-haIf of the tax on such income, and the United Kingdom tax on that income shall be reduced by a credit, in accordance with paragraph 2 of this Article, for the Swiss tax so computed.
5. For the purposes of this Article, profits or remuneration for personaI (including professionaI) services performed in one of the territories shall be deemed to be income from sources within that territory, except that the remuneration of a director of a company shall be deemed to be income from sources within the territory in which the company is resident, and the services of an individual whose services are whoIIy or mainIy performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory.
ARTICLE XVI
1. Where it is provided in this Convention that reIief from tax in respect of any kind of income shall be allowed in the territory from which such income is derived, that provision shall not be construed as requiring that income to be paid without deduction of tax at source at the fuII rate. Where tax has been deducted at source from such income the taxation authorities of the territory in which reIief from tax is required to be given shall, when the tax-payer in receipt of the income shows to their satisfaction and within the time Iimits prescribed in that territory that he is entitIed to the reIief, arrange for the appropriate repayment of tax.
2. Where any income is exempted from tax by any provision of this Convention, it may nevertheIess be taken into account in computing the tax on other income or in determining the rate of such tax.
3. For the purpose of calculating the reIiefs due under Articles VI and XIV, the income of a partnership shall be regarded as that of its individual members.
ARTICLE XVII
1. The provisions of the present Convention shall not be construed as restricting in any manner any exemption, deduction, credit or other allowance now or hereafter accorded by the Laws in force in the territory of one of the Contracting Parties in the determination of the tax imposed in such territory.
2. The provisions of the present Convention shall not be construed as derogating from any right or priviIege conferred upon taxpayers by the Agreement of the 17th October, 1931, between the Government of the United Kingdom and the Swiss FederaI CounciI for reciprocaI exemption from taxation on profits or gains arising through an agency.
ARTICLE XVIII
1. The nationaIs of one Contracting Party shall not be subjected in the territory of the other Contracting Party to any taxation or any requirement connected therewith which is other, higher or more burdensome than the taxation and connected requirements to which the nationaIs of the Iatter Party are or may be subjected in similar circumstances.
2. The enterprises of one of the territories, whether carried on by a company, a body of persons or by individuals aIone or in partnership, shall not be subjected in the other territory, in respect of income, profits or capital attributable to their permanent establishments in that other territory to any taxation which is other, higher or more burdensome than the taxation to which the enterprises of that other territory, similarIy carried on are or may be subjected in respect of the like income, profits or capital.
3. The income, profits and capital of an enterprise of one of the territories, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by a resident or residents of the other territory, shall not be subjected in the first territory to any taxation which is other, higher or more burdensome than the taxation to which other like enterprises of that first territory are or may be subjected in similar circumstances in respect of the like income, profits and capital.
4. Nothing in paragraph 1 or paragraph 2 of this Article shall be construed as obIiging one Contracting Party to grant to nationaIs of the other Contracting Party who are not resident in the territory of the former Party the same personaI allowances, reIiefs and reductions for tax purposes as are granted to its own nationaIs.
5. In this Article the term "nationaIs" means-
(a) in reIation to SwitzerIand, all Swiss citizens wherever residing and all entities with or without juridicaI personality created under Swiss Law;
(b) in reIation to the United Kingdom, all British subjects and British protected persons-
(i) residing in the United Kingdom or any territory to which the present Convention is extended under Article XXI; or
(ii) deriving their status as such from connection with the United Kingdom or any territory to which the present Convention is extended under Article XXI, and all IegaI persons, partnerships, associations and other entities deriving their status as such from the Law in force in the United Kingdom or any territory to which the Convention is extended under Article XXI.
6. In this Article the term "taxation" means taxes of every kind and description Ievied on behalf of any authority whatsoever.
ARTICLE XIX
1. Where a taxpayer shows to the satisfaction of the competent authority of the Contracting Party of which he is a nationaI or in whose territory he is a resident that he has not received the treatment in the other territory to which he is entitIed under any provision of this Convention, that competent authority shall consult with the competent authority of the other Party with a view to the avoidance of the double taxation in question.
2. The competent authorities of the two Contracting Parties may communicate with each other directly for the purpose of giving effect to the provisions of this Convention (and in particular the provisions of Articles III and IV) and for resoIving any difficuIty or doubt as to the application or interpretation of the Convention.
ARTICLE XX
1. The competent authorities of the Contracting Parties shall exchange such information (being information which is at their disposaI under their respective taxation Laws in the normaI course of administration) as is necessary for carrying out the provisions of the present Convention in reIation to the taxes which are the subject of the Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of the taxes which are the subject of the Convention. No information as aforesaid shall be exchanged which wouId discIose any trade, business, industrial or professionaI secret or trade process.
2. In no case shall the provisions of this Article be construed as imposing upon either of the Contracting Parties the obIigation to carry out administrative measures at variance with the reguIations and practice of either Contracting Party or which wouId be contrary to its sovereignty, security or pubIic poIicy or to suppIy particulars which are not procurabIe under its own IegisIation or that of the Party making application.
ARTICLE XXI
1. The present Convention may be extended, either in its entirety or with modifications, to any territory for whose internationaI relations the United Kingdom is responsibIe and which imposes taxes substantially similar in character to those which are the subject of the Convention, and any such extension shall take effect from such date and subject to such modifications and conditions (including conditions as to termination) as may be specified and agreed between the Contracting Parties in notes to be exchanged for this purpose.
2. The termination in respect of the United Kingdom or SwitzerIand of the present Convention under Article XXIV shall, unless otherwise expressIy agreed by the Contracting Parties, terminate the application of the Convention to any territory to which it has been extended under this Article.
ARTICLE XXII
1. The present Convention shall be ratified and the instruments of ratification shall be exchanged at Berne as soon as possibIe.
2. The present Convention shall enter into force upon the exchange of ratifications.
ARTICLE XXIII
1. Upon the entry into force of the present Convention in accordance with Article XXII, the provisions of the Convention shall have effect-
(a) In the United Kingdom:
as respects income tax (including surtax) for any year of assessment beginning on or after the 6th April, 1953;
as respects profits tax and excess profits Ievy in respect of the following profits-
(i) profits by reference to which income tax is, or but for the present Convention wouId be, chargeable for any year of assessment beginning on or after the 6th April, 1953;
(ii) other profits being profits by reference to which income tax is not chargeable, but which arise in any chargeable accounting period beginning on or after 1st April, 1953, or are attributable to so much of any chargeable accounting period falling partIy before and partIy after that date as falls after that date;
(b) In SwitzerIand:
for any taxabIe year beginning on or after the 1st January, 1953.
2. The exemption from tax provided in Article V shall have effect for any year of assessment beginning on or after the 6th April, 1946.
ARTICLE XXIV
The present Convention shall continue in effect indefiniteIy but either Contracting Party may, on or before the 30th June in any calendar year not earIier than the year 1957, give to the other Contracting Party, through the dipIomatic channel, written notice of termination and, in such event, the Convention shall cease to be effective-
(a) In the United Kingdom:
as respects income tax (including surtax) for any year of assessment beginning on or after the 6th April in the calendar year next following that in which the notice is given;
as respects profits tax in respect of the following profits-
(i) profits by reference to which income tax is chargeable for any year of assessment beginning on or after the 6th April in the calendar year next following that in which the notice is given;
(ii) other profits being profits by reference to which income tax is not chargeable, but which arise in any chargeable accounting period beginning on or after the 1st April in the calendar year next following that in which the notice is given or are attributable to so much of any chargeable accounting period falling partIy before and partIy after the date as falls after that date;
(b) In SwitzerIand:
for any taxabIe year beginning on or after the 1st January of the calendar year next following that in which the notice is given.
SCHEDULE
EXCHANGE OF NOTES BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE SWISS FEDERAL COUNCIL EXTENDING THE CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME OF 30TH SEPTEMBER 1954 TO THE FEDERATION OF RHODESIA AND NYASALAND.
Berne, 30th May, 1961
No. 1
Her Britannic Majesty's Embassy's Note with Annex to the Swiss FederaI PoIiticaI Department.
BRITISH EMBASSY, BERNE.
30th May, 1961. Your ExceIIency,
I am instructed by Her Majesty's PrincipaI Secretary of State for Foreign Affairs to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Swiss FederaI CounciI for the Avoidance of Double Taxation with respect to Taxes on Income, signed at London on the 30th September, 1954.
I have the honour to propose on behalf of the Government of the United Kingdom that, in accordance with the provisions of Article XXI, the above-mentioned Convention shouId be extended to the Federation of Rhodesia and Nyasaland in the manner, subject to the modifications, and with effect from the dates specified in the Annex to the present Note.
If the foregoing proposaI is acceptable to the Swiss Government, I have the honour to suggest that the present Note with its Annex and Your ExceIIency's reply to that effect shouId be regarded as constituting the Agreement reached between the two Governments in this matter.
I have the honour to be,
With the highest consideration, Your ExceIIency's obedient Servant, PAUL GREY.
SON EXCELLENCE MONSIEUR LE CONSEILLER FEDERAL MAX EDOUARD PETITPIERRE,
DEPARTMENT POLITIQUE FEDERAL, BERNE.
ANNEX
PART I
APPLICATION
(1) The said Convention as modified by the present Annex shall apply-
(a) as if the Contracting Parties were the Swiss FederaI CounciI and the Government of the Federation of Rhodesia and Nyasaland;
(b) as if the taxes concerned in the Federation of Rhodesia and Nyasaland were the income tax, supertax and undistributed profits tax; and
(c) as if references to "the date of signature of the present Convention" were references to the date of the Exchange of Notes to which the present Annex is appended.
(2) When the Iast of those measures shall have been taken in SwitzerIand and in the Federation of Rhodesia and Nyasaland necessary to give the present extension the force of Law in SwitzerIand and in the Federation respectively, the present extension shall have effect-
(a) in SwitzerIand: for any taxabIe year beginning on or after the first day of January, 1959; and
(b) in the Federation of Rhodesia and Nyasaland: as respects taxes charged for the year of assessment beginning on the first day of April, 1959, and for subsequent years of assessment.
(3) The Swiss FederaI CounciI shall inform the Government of the United Kingdom in writing through the dipIomatic Channel when the Iast of the measures necessary, as indicated in paragraph (2), have been taken in SwitzerIand. The Government of the United Kingdom shall inform the Swiss FederaI CounciI in writing through the dipIomatic Channel when the Iast of the measures necessary, as indicated in paragraph (2), have been taken in the Federation of Rhodesia and Nyasaland.
(4) The present extension shall continue in effect indefiniteIy but either the Government of the United Kingdom or the Swiss FederaI CounciI may, on or before the thirtieth day of June in any calendar year not earIier than the year 1962, give to the other through the dipIomatic Channel written notice of termination and in such event the present extension shall cease to have effect-
(a) in SwitzerIand: for any taxabIe year beginning on or after the first day of January of the calendar year next following that in which the notice is given; and
(b) in the Federation of Rhodesia and Nyasaland: as respects taxes charged for any year of assessment beginning on or after the first day of April in the calendar year next following that in which the notice is given.
PART II
MODIFICATIONS
The said Convention shall, for the purposes of the extension to the Federation of Rhodesia and Nyasaland, apply with the following modifications:
(a) Article VI shall be replaced by the following provision:
Where a company which is a resident of one of the territories derives profits or income from sources within the other territory, there shall not be imposed in that other territory any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or in part, profits or income so derived: provided, however, that the Swiss coupon tax and the Swiss anticipatory tax may be charged in respect of dividends paid by any company created or organised under Swiss Law.
(b) Article X shall apply to remuneration including pensions paid by, or out of funds created by, the Government of each of the Territories constituting the Federation of Rhodesia and Nyasaland to any individual in respect of services rendered to that Government in the discharge of governmental functions as it applies to similar payments by, or out of funds created by, the Government of the Federation.
(c) References to the Laws of the United Kingdom shall be understood to mean "the Laws of the Federation of Rhodesia and Nyasaland".
No. 2
The President of the Swiss Confederation to Her Britannic Majesty's Ambassador in Berne.
Berne,
30th May, 1961. Monsieur I'Ambassadeur,
I have had the honour to receive your Note of today's date by which your ExceIIency made known to me the following:
"I am instructed by Her Majesty's PrincipaI Secretary of State for Foreign Affairs to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Swiss FederaI CounciI for the Avoidance of Double Taxation with respect to Taxes on Income, signed at London on the 30th September, 1954.
I have the honour to propose on behalf of the Government of the United Kingdom that, in accordance with the provisions of Article XXI, the above-mentioned Convention shouId be extended to the Federation of Rhodesia and Nyasaland in the manner, subject to the modifications, and with effect from the dates specified in the Annex to the present Note.
If the foregoing proposaI is acceptable to the Swiss Government, I have the honour to suggest that the present Note with its Annex and Your ExceIIency's reply to that effect shouId be regarded as constituting the Agreement reached between the two Governments in this matter."
I confirm to your ExceIIency, that with reference to Article XXI of the preceding Convention, the Swiss FederaI CounciI has approved the contents of your Note. In consequence, your Note and the present reply together with their annexes constitute an Agreement in this matter between our two Governments.
I take this opportunity to renew to you, Monsieur I'Ambassadeur, the assurance of my highest consideration.
CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION - HOLLAND
[Order by the President]
GN 463 of 1964.
An arrangement has been made with the Government of the United Kingdom of Great Britain and Northern Ireland whereby the Convention between the Government and the Government of HoIIand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income has been extended to the former Protectorate by and incorporating the terms of the Despatch and reply thereto set out in the Schedule.
SCHEDULE
223
BRITISH EMBASSY,
THE HAGUE.
December 7, 1963.
Your ExceIIency,
I have the honour, upon instructions from Her Majesty's PrincipaI Secretary of State for Foreign Affairs, to refer to the Exchange of Notes between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the NetherIands dated the 20th December and 27th December 1962 extending to the Federation of Rhodesia and Nyasaland, on the basis therein specified, the provisions of the Convention between the United Kingdom and the NetherIands for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on the 15th October, 1948.
The Governments of Southern Rhodesia, Northern Rhodesia and Nyasaland have requested the United Kingdom Government to address the NetherIands Government regarding the arrangements to obtain immediateIy after dissoIution of the Federation, the target date of which, as agreed at the Victoria Falls Conference, is the 31st December, 1963.
As it is particularIy undesirabIe to have any hiatus in double taxation agreements I have the honour to propose on behalf of the Government of the United Kingdom that on dissoIution of the Federation of Rhodesia and Nyasaland the extension provided for in the above-mentioned Exchange of Notes shouId be regarded as continuing in force in reIation to Southern Rhodesia, Northern Rhodesia and Nyasaland individualIy and that references therein to the Federation shouId be construed accordingly.
I shouId be gratefuI if Your ExceIIency wouId Iet me know, if possibIe before the 31st December, whether the NetherIands Government sees any objection to this proposaI.
I avail myseIf of this opportunity to renew to Your ExceIIency the assurances of my highest consideration.
A. N. NOBLE.
Dr. J. M. A. H. Luns,
Minister for Foreign Affairs.
MINISTRY OF FOREIGN AFFAIRS, THE HAGUE.
The Hague, December 23, 1963.
Treaty Department
DVE/VB-184938
Sir,
I have the honour to acknowIedge receipt of Your ExceIIency's letter number 223 of 7th December, 1963, regarding the Exchange of Notes between the Government of the Kingdom of the NetherIands and the Government of the United Kingdom of Great Britain and Northern Ireland dated the 20th December and the 27th December, 1962, extending to the Federation of Rhodesia and Nyasaland, on the basis therein specified, the provisions of the Convention between the NetherIands and the United Kingdom for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on 15th October, 1948.
In reply to your letter I wouId inform Your ExceIIency that the Government of the Kingdom of the NetherIands sees no objection to the proposaI contained therein and that therefore, on the dissoIution of the Federation of Rhodesia and Nyasaland, the extension provided for in the above-mentioned Exchange of Notes wiII be regarded as continuing in force in reIation to the Kingdom, on the one hand, and the countries of Southern Rhodesia, Northern Rhodesia and Nyasaland individualIy, on the other.
I avail myseIf of this opportunity to renew to Your ExceIIency the assurances of my highest consideration.
For the Minister of Foreign Affairs
(Signed)
BARON S. J. VAN TUYLL VAN SEROOSKERKEN,
Secretary-General.
His ExceIIency,
Sir Andrew NobIe,
Ambassador Extraordinary and Plenipotentiary of Her Britannic Majesty,
THE HAGUE.
ANNEXURE
CONVENTION BETWEEN HIS MAJESTY IN RESPECT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND HER MAJESTY THE QUEEN OF THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME.
His Majesty the King of Great Britain, Ireland and the British Dominions beyond the Seas and Her Majesty the Queen of the NetherIands, Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have appointed for that purpose as their Plenipotentiaries:
His Majesty the King of Great Britain, Ireland and the British Dominions beyond the Seas: For the United Kingdom of Great Britain and Northern Ireland:
The Right HonourabIe Ernest Bevin, M.P., His PrincipaI Secretary of State for Foreign Affairs; Her Majesty the Queen of the NetherIands:
For the Kingdom of the NetherIands:
His ExceIIency Jonkheer E. MichieIs van Verduynen, Her Ambassador Extraordinary and Plenipotentiary in London;
Who, having exhibited their respective fuII powers, found in good and due form, have agreed as foIIows:
ARTICLE I
1. The taxes which are the subject of the present Convention are-
(a) In the NetherIands:
The income tax, the wages tax, the company tax, the dividends tax and the tax on fees of directors and managers of companies (hereinafter referred to as "NetherIands tax");
(b) In the United Kingdom of Great Britain and Northern Ireland:
The income tax (including surtax) and the profits tax (hereinafter referred to as "United Kingdom tax").
2. The present Convention shall also apply to any other taxes of a substantially similar character imposed in the NetherIands or the United Kingdom subsequently to the date of signature of the present Convention.
ARTICLE II
1. In the present Convention, unless the context otherwise requires-
(a) The term "United Kingdom" means Great Britain and Northern Ireland, excluding the Channel Islands and the Isle of Man;
(b) The term "NetherIands" means the Kingdom of the NetherIands in Europe;
(c) The terms "one of the territories" and "the other territory" mean the United Kingdom or the NetherIands, as the context requires;
(d) The term "tax" means United Kingdom tax or NetherIands tax as the context requires;
(e) The term "person" includes any body of persons, corporate or not corporate;
(f) The term "company" means any body corporate, and any partnership the capital of which is whoIIy or partIy represented by shares;
(g) The terms "resident of the United Kingdom" and "resident of the NetherIands" mean respectively any person who is resident in the United Kingdom for the purposes of United Kingdom tax and not resident in the NetherIands for the purposes of NetherIands tax, and any person who is resident in the NetherIands for the purposes of NetherIands tax and not resident in the United Kingdom for the purposes of United Kingdom tax; a company shall be regarded as resident in the United Kingdom if its business is managed and controIIed in the United Kingdom and as resident in the NetherIands if its business is managed and controIIed in the NetherIands;
(h) The terms "resident of one of the territories" and "resident of the other territory" mean a person who is a resident of the United Kingdom or a person who is a resident of the NetherIands, as the context requires;
(i) The terms "United Kingdom enterprise" and "NetherIands enterprise" mean respectively an industrial or commercial enterprise carried on by a resident of the United Kingdom and an industrial or commercial enterprise carried on by a resident of the NetherIands, and the terms "enterprise of one of the territories" and "enterprise of the other territory" mean a United Kingdom enterprise or a NetherIands enterprise, as the context requires;
(j) The term "industrial or commercial profits" includes rents or royaIties in respect of cinematograph fiIms;
(k) The term "permanent establishment" when used with respect to an enterprise of one of the territories, means a branch, management, factory, or other fixed place of business, but does not include an agency unless the agent has, and habitually exercises, a General authority to negotiate and conclude contracts on behalf of such enterprise or has a stock of merchandise from which he regularly fiIIs orders on its behalf. In this connection-
(i) An enterprise of one of the territories shall not be deemed to have a permanent establishment in the other territory merely because it carries on business dealings in that other territory through a bona fide broker or General commission agent acting in the ordinary course of his business as such;
(ii) The fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise;
(iii) The fact that a company which is a resident of one of the territories has a subsidiary company which is a resident of the other territory or which carries on a trade or business in that other territory (whether through a permanent establishment or otherwise) shall not of itself constitute that subsidiary company a permanent establishment of its parent company.
2. In the application of the provisions of the present Convention by one of the High Contracting Parties any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws in force in the territory of that Party relating to the taxes which are the subject of the present Convention.
ARTICLE III
1. The industrial or commercial profits of a United Kingdom enterprise shall not be subject to NetherIands tax unless the enterprise carries on a trade or business in the NetherIands through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by the NetherIands, but only on so much of them as is attributable to that permanent establishment.
2. The industrial or commercial profits of a NetherIands enterprise shall not be subject to United Kingdom tax unless the enterprise carries on a trade or business in the United Kingdom through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by the United Kingdom, but only on so much of them as is attributable to that permanent establishment.
3. Where an enterprise of one of the territories carries on a trade or business in the other territory through a permanent establishment situated therein, there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive in that other territory if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm's Length with the enterprise of which it is a permanent establishment.
4. Where an enterprise of one of the territories derives profits, under contracts concluded in that territory, from sales of goods or merchandise stocked in a warehouse in the other territory for convenience of delivery and not for purposes of display, those profits shall not be attributed to a permanent establishment of the enterprise in that other territory, notwithstanding that the offers of purchase have been obtained by an agent in that other territory and transmitted by him to the enterprise for acceptance.
5. No portion of any profits arising to an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of goods or merchandise within that other territory by the enterprise.
ARTICLE IV
Where-
(a) an enterprise of one of the territories participates directly or indirectly in the management, control or capital of an enterprise of the other territory, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the territories and an enterprise of the other territory, and in either case, conditions are made or imposed between the two enterprises in their commercial or financial relations, which differ from those which wouId be made between independent enterprises, then any profits which wouId 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.
ARTICLE V
Notwithstanding the provisions of Articles III and IV, profits which a resident of one of the territories derives from operating ships or aircraft shall be exempt from tax in the other territory.
ARTICLE VI
1. Dividends paid by a company resident in one of the territories to a resident of the other territory, who is subject to tax in that other territory in respect thereof and does not carry on a trade or business in the first-mentioned territory through a permanent establishment situated therein, shall be exempt from any tax in that first-mentioned territory which is chargeable on dividends in addition to the tax chargeable in respect of the profits or income of the company.
2. Where a company which is a resident of one of the territories derives profits or income from sources within the other territory, there shall not be imposed in that other territory any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or in part, profits or income so derived.
ARTICLE VII
1. Any interest or royalty derived from sources within one of the territories by a resident of the other territory, who is subject to tax in that other territory in respect thereof and does not carry on a trade or business in the first-mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory.
2. In this Article-
(a) The term "interest" includes interest on a debenture or on any other form of indebtedness, except in so far as such other indebtedness is secured by way of mortgage of immovable property;
(b) The term "royalty" means any royalty or other amount paid as consideration for the use of, or for the priviIege of using, any copyright, patent, design, secret process or formula, trade mark or other like property, but does not include any royalty or other amount paid in respect of the operation of a mine or quarry or of any other extraction of naturaI resources.
3. Where any interest or royalty exceeds a fair and reasonabIe consideration in respect of the indebtedness or rights for which it is paid, the exemption provided by the present Article shall apply only to so much of the interest or royalty as represents such fair and reasonabIe consideration.
4. Any capital sum derived from sources within one of the territories from the saIe of patent rights by a resident of the other territory, who does not carry on a trade or business in the first- mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory.
ARTICLE VIII
Income from immovable property interest (other than debenture interest) from any mortgage of such property, and royaIties in respect of the operation of a mine or quarry or of any other extraction of a naturaI resource, shall be subject to tax in accordance with the Law in force in the territory in which such immovable property, mine, quarry or naturaI resource is situated.
ARTICLE IX
1. Remuneration, including pensions, paid by, or out of funds created by, one of the High Contracting Parties to any individual in respect of services rendered to that Party in the discharge of governmental functions shall be exempt from tax in the territory of the other High Contracting Party, unless the individual is a nationaI of that other Party without being also a nationaI of the first-mentioned Party.
2. The provisions of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the High Contracting Parties for purposes of profit.
ARTICLE X
1. An individual who is a resident of the United Kingdom shall be exempt from NetherIands tax on profits or remuneration in respect of personaI (including professionaI) services performed within the NetherIands in any year of assessment, if-
(a) he is present within the NetherIands for a period or periods not exceeding in the aggregate 183 days during that year, and
(b) the services are performed for or on behalf of a resident of the United Kingdom, and
(c) the profits or remuneration are subject to United Kingdom tax.
2. An individual who is a resident of the NetherIands shall be exempt from United Kingdom tax on profits or remuneration in respect of personaI (including professionaI) services performed within the United Kingdom in any year of assessment, if-
(a) he is present within the United Kingdom for a period or periods not exceeding in the aggregate 183 days during that year, and
(b) the services are performed for or on behalf of a resident of the NetherIands, and
(c) the profits or remuneration are subject to NetherIands tax.
3. The provisions of this Article shall not apply to the profits or remuneration of pubIic entertainers such as theatre, motion picture or radio artists, musicians and athletes.
ARTICLE XI
1. Any pension (other than a pension of the kind referred to in paragraph 1 of Article IX) and any annuity, derived from sources within the NetherIands by an individual who is a resident of the United Kingdom and subject to United Kingdom tax in respect thereof, shall be exempt from NetherIands tax.
2. Any pension (other than a pension of the kind referred to in paragraph 1 of Article IX) and any annuity, derived from sources within the United Kingdom by an individual who is a resident of the NetherIands and subject to NetherIands tax in respect thereof, shall be exempt from United Kingdom tax.
3. The term "annuity" means a stated sum payabIe periodically at stated times, during Iife or during a specified or ascertainable period of time, under an obIigation to make the payments in return for adequate and fuII consideration in money or money's worth.
ARTICLE XII
A professor or teacher from one of the territories, who receives remuneration for teaching, during a period of temporary residence not exceeding two years, at a university, coIIege, schooI or other educationaI institution in the other territory, shall be exempt from tax in that other territory in respect of that remuneration.
ARTICLE XIII
A student, student-trainee or business apprentice from one of the territories who is receiving fuII-time education or training in the other territory shall be exempt from tax in that other territory on payments made to him by persons in the first-mentioned territory for the purposes of his maintenance, education or training.
ARTICLE XIV
1. IndividuaIs who are residents of the NetherIands shall be entitIed to the same personaI allowances, reIiefs and reductions for the purposes of United Kingdom income tax as British subjects not resident in the United Kingdom.
2. IndividuaIs who are residents of the United Kingdom shall be entitIed to the same personaI allowances and reIiefs for the purposes of NetherIands tax as NetherIands nationaIs not resident in the NetherIands.
ARTICLE XV
1. Subject to the provisions of the Law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payabIe in a territory outside the United Kingdom, NetherIands tax payabIe, whether directly or by deduction, in respect of income from sources within the NetherIands shall be allowed as a credit against any United Kingdom tax payabIe in respect of that income. Where such income is a dividend paid by a company resident in the NetherIands to a company resident in the United Kingdom which controIs, directly or indirectly, not Iess than one-haIf of the voting power in the former company, the credit shall take into account, in addition to any NetherIands tax payabIe in respect of the dividend, the NetherIands tax payabIe by the former company in respect of its profits.
2. As far as may be in accordance with the provisions of NetherIands Law, United Kingdom tax payabIe, whether directly or by deduction, in respect of income from sources within the United Kingdom shall be allowed as a credit against any NetherIands tax payabIe in respect of that income: provided that for the purposes of this paragraph and of the aforesaid provision of NetherIands Law, the NetherIands tax payabIe in respect of such income (before allowance of any credit) shall be deemed to be an amount which bears the same proportion to the total NetherIands tax payabIe (before allowance of any credit) by the person entitIed to such income as such income bears to that person' total income subject to NetherIands tax, and the credit shall not exceed the amount so determined.
3. For the purposes of this Article, profits or remuneration for personaI (including professionaI) services performed in one of the territories shall be deemed to be income from sources within that territory, and the services of an individual whose services are whoIIy or mainIy performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory.
ARTICLE XVI
1. The taxation authorities of the High Contracting Parties shall exchange such information (being information which is at their disposaI under their respective taxation Laws in the normaI course of administration) as is necessary for carrying out the provisions of the present Convention or for the prevention of fraud or for the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of the present Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of the taxes which are the subject of the present Convention. No information as aforesaid shall be exchanged which wouId discIose any trade, business, industrial or professionaI secret or trade process.
2. As used in this Article, the term "taxation authorities" means, in the case of the United Kingdom, the Commissioner-Generals of InIand Revenue or their authorised representatives; in the case of the NetherIands, the "Directeur-GeneraaI der BeIastingen" or his authorised representative; and, in the case of any territory to which the present Convention is extended under Article XIX, the competent authority for the administration in such territory of the taxes to which the present Convention applies.
ARTICLE XVII
The following agreements between the United Kingdom and the Kingdom of the NetherIands shall not have effect for any year or period for which the present Convention has effect, that is to say:
(a) the agreement dated 20th May, 1926, for the reciprocaI exemption from income tax in certain cases of profits accruing from the business of shipping;
(b) the convention dated 6th June, 1935, for reciprocaI exemption from taxes in certain cases; and
(c) the agreement constituted by exchange of notes dated 27th August, 1936, for reciprocaI exemptions from certain taxation in respect of the business of air transport.
ARTICLE XVIII
1. The nationaIs of one of the High Contracting Parties shall not be subjected in the territory of the other High Contracting Party to any taxation or any requirement connected therewith which is other, higher or more burdensome than the taxation and connected requirements to which the nationaIs of the Iatter Party are or may be subjected.
2. The enterprises of one of the territories shall not be subjected in the other territory, in respect of profits attributable to their permanent establishments in that other territory, to any taxation which is other, higher or more burdensome that the taxation to which the enterprises of that other territory are or may be subjected in respect of the like profits.
3. Nothing in paragraph 1 or paragraph 2 of this Article shall be construed as obIiging one of the High Contracting Parties to grant to nationaIs of the other High Contracting Party who are not resident in the territory of the former Party the same personaI allowances, reIiefs and reductions for tax purposes as are granted to His own nationaIs.
4. In this Article the term "nationaIs" means-
(a) in reIation to the NetherIands:
(i) all NetherIands nationaIs;
(ii) all NetherIands subjects residing in the NetherIands;
(iii) as regards any NetherIands territory to which the present Convention applies by reason of extension made under Article XIX, all NetherIands subjects who reside in such territory or who derive their status as NetherIands subjects from birth in, or origin from, such territory;
(iv) all IegaI persons, partnerships and associations deriving their status as such from the Law in force in any NetherIands territory to which the present Convention applies;
(b) in reIation to the United Kingdom, all British subjects and British protected persons residing in or belonging to the United Kingdom or any British territory to which the present Convention applies by reason of extension made under Article XIX, and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in any British territory to which the present Convention applies.
5. In this Article the term "taxation" means taxes of every kind and description Ievied on behalf of any authority whatsoever.
ARTICLE XIX
1. The present Convention may be extended, either in its entirety or with modifications, to any territory of one of the High Contracting Parties to which this Article applies and which imposes taxes substantially similar in character to those which are the subject of the present Convention, and any such extension shall take effect from such date and subject to such modifications and conditions (including conditions as to termination) as may be specified and agreed between the High Contracting Parties in notes to be exchanged for this purpose.
2. The termination in respect of the NetherIands or the United Kingdom of the present Convention under Article XXI shall, unless otherwise expressIy agreed by both High Contracting Parties, terminate the application of the present Convention to any territory to which the Convention has been extended under this Article.
3. The territories to which this Article applies are-
(a) in reIation to His Majesty the King of Great Britain, Ireland and the British Dominions beyond the Seas:
Any territory other than the United Kingdom for whose foreign relations the United Kingdom is responsibIe;
(b) in reIation to Her Majesty the Queen of the NetherIands:
Any territory other than the NetherIands for whose foreign relations the NetherIands is responsibIe.
ARTICLE XX
1. The present Convention shall be ratified and the instruments of ratification shall be exchanged at London as soon as possibIe.
2. Upon exchange of ratifications the present Convention shall have effect:
(a) In the United Kingdom: 1948;
as respects income tax for any year of assessment beginning on or after the 6th April, and
as respects surtax for any year of assessment beginning on or after the 6th April, 1947;
as respects profits tax (not being profits tax apportionable to so much of any chargeable accounting period as falls before the 1st January, 1947), in respect of the following profits:
(i) profits arising in any chargeable accounting period beginning on or after the 1stApril, 1948;
(ii) profits attributable to so much of any chargeable accounting period falling partIy before and partIy after that date as falls after that date;
(iii) profits not so arising or attributable by reference to which income tax is, or but for the present Agreement wouId be, chargeable for any year of assessment beginning on or after the 6th April, 1948;
(b) In the NetherIands: 1947;
as respects income tax for any year of assessment beginning after the 31st December,
as respects the company tax for any chargeable accounting period beginning after the 31st December, 1947; and for the unexpired portion of any chargeable accounting period current at that date; and as respects any other taxes for the calendar year 1948 and subsequent years.
ARTICLE XXI
The present Convention shall continue in effect indefiniteIy but either of the High Contracting Parties may, on or before the 30th June in any calendar year not earIier than the year 1952, give to the other High Contracting Party through dipIomatic channels, written notice of termination and, in such event, the present Convention shall cease to be effective:
(a) In the United Kingdom:
as respects income tax for any year of assessment beginning on or after the 6th April in the calendar year next following that in which the notice is given;
as respects surtax for any year of assessment beginning on or after the 6th April in the calendar year in which the notice is given; and
as respects profits tax in respect of the following profits:
(i) profits arising in any chargeable accounting period beginning on or after the 1stApril in the calendar year next following that in which the notice is given;
(ii) profits attributable to so much of any chargeable accounting period falling partIy before and partIy after that date as falls after that date;
(iii) profits not so arising or attributable by reference to which income tax is chargeable for any year of assessment beginning on or after the 6th April in the next following calendar year;
(b) In the NetherIands:
as respects income tax for any year of assessment beginning after the end of the calendar year in which the notice is given;
as respects the company tax for any chargeable accounting period beginning after the end of the calendar year in which the notice is given, and for the unexpired portion of any chargeable accounting period current at the end of that year; and
given.
as respects any other taxes for any calendar year following that in which the notice is In witness whereof the above-mentioned Plenipotentiaries have signed the present Convention and have affixed thereto their seaIs.
SCHEDULE
EXCHANGE OF NOTES BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE KINGDOM OF THE NETHERLANDS EXTENDING THE CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME OF THE 15TH OCTOBER, 1948, TO THE FEDERATION OF RHODESIA AND NYASALAND.
The Hague, December 20th, 1962
No. 1
Her Britannic Majesty's Embassy's Note with Annex to the Minister of Foreign Affairs of Her Majesty the Queen of the NetherIands.
BRITISH EMBASSY, THE HAGUE.
20th December, 1962. Your ExceIIency,
I have the honour, upon instructions from Her Majesty's PrincipaI Secretary of State for Foreign Affairs, to refer to the Convention between the United Kingdom of Great Britain and Northern Ireland and the Kingdom of the NetherIands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on the 15th October, 1948.
I have the honour to propose on behalf of the Government of the United Kingdom that, in accordance with the provisions of Article XIX, the above-mentioned Convention shouId be extended to the Federation of Rhodesia and Nyasaland in the manner, subject to the modifications, and with effect from the dates specified in the Annex to the present Note.
If the foregoing proposaI is acceptable to the Government of the Kingdom of the NetherIands, I have the honour to suggest that the present Note with its Annex, and Your ExceIIency's reply to that effect shouId be regarded as constituting an Exchange of Notes as provided for in the first paragraph of Article XIX of the above-mentioned Convention and as pIacing on record the agreement reached between the two Governments in this matter.
I avail myseIf of this opportunity to renew to Your ExceIIency the assurance of my highest consideration.
A. N. NOBLE.
His ExceIIency, Dr. J. M. A. H. Luns, Minister of Foreign Affairs, The Hague.
ANNEX
PART I
APPLICATION
(a) The said Convention as modified by the present Annex shall apply-
(1) as if the contracting parties were the Government of the Kingdom of the NetherIands and the Government of the Federation of Rhodesia and Nyasaland;
(2) as if the term "United Kingdom" (except where the context otherwise required) meant the Federation of Rhodesia and Nyasaland;
(3) as if the taxes concerned in the Federation of Rhodesia and Nyasaland were the income tax, supertax and undistributed profits tax: provided that for the purposes only of the application of paragraph 2 of Article XV of the Convention, the taxes concerned shall include the territoriaI surcharges charged in Northern Rhodesia, Nyasaland and Southern Rhodesia; and
(4) as if references to "the date of signature of the present Convention" were references to the date of the Exchange of Notes to which the present Annex is appended.
(b) When the Iast of these measures shall have been taken in the Federation of Rhodesia and Nyasaland necessary to give the present extension the force of Law in the Federation, the present extension shall have effect-
(1) In the NetherIands:
as respects income tax for any year of assessment beginning after 31st December, 1954;
as respects the company tax for any chargeable accounting period beginning after 31st December, 1954, and for the unexpired portion of any chargeable accounting period current at that date; and
as respects any other taxes for the calendar year 1955 and for subsequent years;
(2) In the Federation of Rhodesia and Nyasaland as respects tax for the year of assessment beginning on 1st April, 1955, and for subsequent years of assessment.
(c) The Government of the United Kingdom shall inform the Government of the Kingdom of the NetherIands in writing when the Iast of the measures necessary, as indicated in paragraph (b), have been taken in the Federation of Rhodesia and Nyasaland.
(d) Except as specified in Part II modification (a) below, the present extension shall remain in force indefiniteIy and shall continue to remain in force notwithstanding that the Convention may have been terminated by either of the High Contracting Parties in accordance with Article XXI thereof. Either High Contracting Party may, however, on or before the 30th June in any calendar year not earIier than the year 1964 give to the other Contracting Party through the dipIomatic Channel written notice of termination and in such event the present extension shall cease to have effect-
(1) In the NetherIands: as respects income tax for any year of assessment beginning after the end of the calendar year in which the notice is given;
as respects the company tax for any chargeable accounting period beginning after the end of the calendar year in which such notice is given and for the unexpired portion of any chargeable accounting period current at the end of that year; and as respects any other taxes for any calendar year following that in which the notice is given;
(2) In the Federation of Rhodesia and Nyasaland as respects tax for any year of assessment beginning on or after the 1st April in the calendar year next following the date of such notice.
PART II
MODIFICATIONS
The said Convention shall apply with the modifications that-
(a) Article VI shall cease to be applicable on the 1st January, 1963; and
(b) Article IX shall be amended by the addition of the following new paragraph:
"3. For the purposes of this Article any reference to the Government of the Federation of Rhodesia and Nyasaland shall include a reference to the Governments of its constituent territories."
No. 2
Note to Her Britannic Majesty's Ambassador at The Hague from the Minister of Foreign Affairs of Her Majesty the Queen of the NetherIands.
Ministry of Foreign Affairs,
The Hague.
Treaty Department
THE HAGUE,
27th December, 1962. Sir,
I have the honour to acknowIedge receipt of Your ExceIIency's Note of the 20th December, 1962, with Annex, which reads as foIIows:
"I have the honour, upon instructions from Her Majesty's PrincipaI Secretary of State for Foreign Affairs, to refer to the Convention between the United Kingdom of Great Britain and Northern Ireland and the Kingdom of the NetherIands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on the 15th October, 1948.
I have the honour to propose on behalf of the Government of the United Kingdom that, in accordance with the provisions of Article XIX, the above-mentioned Convention shouId be extended to the Federation of Rhodesia and Nyasaland in the manner, subject to the modifications, and with effect from the dates specified in the Annex to the present Note.
If the foregoing proposaI is acceptable to the Government of the Kingdom of the NetherIands, I have the honour to suggest that the present Note with its Annex, and Your ExceIIency's reply to that effect shouId be regarded as constituting an Exchange of Notes as provided for in the first paragraph of Article XIX of the above-mentioned Convention and as pIacing on record the agreement reached between the two Governments in this matter".
In reply I have the honour to inform you that the Government of the Kingdom of the NetherIands accept the foregoing proposaI and agree to regard your Note, together with the present reply, as constituting an Exchange of Notes as provided for in the first paragraph of Article XIX of the above-mentioned Convention, and as pIacing on record the agreement reached between the two Governments in this matter.
I avail myseIf of this opportunity to renew to Your ExceIIency the assurance of my highest consideration.
DR. J. M. A. H. LUNS.
His ExceIIency, Sir Andrew NobIe, British Ambassador at The Hague.
Ministry of Foreign Affairs.
The Hague.
ANNEX
PART I
APPLICATION
(a) The said Convention as modified by the present Annex shall apply-
(1) as if the contracting parties were the Government of the Kingdom of the NetherIands and the Government of the Federation of Rhodesia and Nyasaland;
(2) as if the term "United Kingdom" (except where the context otherwise required) meant the Federation of Rhodesia and Nyasaland;
(3) as if the taxes concerned in the Federation of Rhodesia and Nyasaland were the income tax, supertax and undistributed profits tax: provided that for the purposes only of the application of paragraph 2 of Article XV of the Convention, the taxes concerned shall include the territoriaI surcharges charged in Northern Rhodesia, Nyasaland and Southern Rhodesia; and
(4) as if references to "the date of signature of the present Convention" were references to the date of the Exchange of Notes to which the present Annex is appended.
CONVENTION FOR THE AVOIDANCE OF DOUBLE TAXATION - SWEDEN
[Order by the President]
GN 465 of 1964.
An arrangement has been made with the Government of the United Kingdom of Great Britain and Northern Ireland whereby the Convention between that Government and the Government of Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income has been extended to the former Protectorate by and incorporating the terms of the Despatch and reply thereto set out in the ScheduIe.
SCHEDULE
BRITISH EMBASSY, STOCKHOLM,
21st December, 1963. YOUR EXCELLENCY,
1. I have the honour, upon instructions from Her Majesty's PrincipaI Secretary of State for Foreign Affairs, to refer to the Exchange of Notes between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Sweden dated the 28th May, 1958, extending to the Federation of Rhodesia and Nyasaland on the basis therein specified the provisions of the Convention between the United Kingdom and Sweden for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on the 30th March, 1949.
2. I have the honour to propose on behalf of the Government of the United Kingdom that on dissoIution of the Federation of Rhodesia and Nyasaland the extension provided for in the above-mentioned Exchange of Notes shouId be regarded as continuing in force in reIation to Southern Rhodesia, Northern Rhodesia and Nyasaland individualIy and that references therein to the Federation shouId be construed accordingly.
3. If the foregoing proposaI is acceptable to the Government of Sweden, I have the honour to suggest that the present Note, and your reply to that effect, shouId be regarded as constituting an Agreement reached between the two Governments in this matter.
I avail myseIf of this opportunity to renew to Your ExceIIency the assurances of my highest consideration.
P. M. CROSTHWAITE,
Her Majesty's Ambassador. HIS EXCELLENCY
MR. TORSTEN NILSSON,
THE MINISTER FOR FOREIGN AFFAIRS OF SWEDEN.
STOCKHOLM, December 21, 1963. Your ExceIIency,
I have the honour to acknowIedge receipt of Your ExceIIency's Note of December 21, 1963, which reads as foIIows:
1. I have the honour, upon instructions from Her Majesty's PrincipaI Secretary of State for Foreign Affairs, to refer to the Exchange of Notes between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Sweden dated the 28th May, 1958, extending to the Federation of Rhodesia and Nyasaland on the basis therein specified the provisions of the Convention between the United Kingdom and Sweden for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on the 30th March. 1949.
2. I have the honour to propose on behalf of the Government of the United Kingdom that on dissoIution of the Federation of Rhodesia and Nyasaland the extension provided for in the above-mentioned Exchange of Notes shouId be regarded as continuing in force in reIation to Southern Rhodesia, Northern Rhodesia and Nyasaland individualIy and that references therein to the Federation shouId be construed accordingly.
3. If the foregoing proposaI is acceptable to the Government of Sweden, I have the honour to suggest that the present Note, and your reply to that effect, shouId be regarded as constituting an Agreement reached between the two Governments in this matter."
In reply, I have the honour to state that the Government of Sweden considers that Your ExceIIency's Note and the present reply constitute an Agreement between the two Governments.
ANNEXURE
CONVENTION BETWEEN HIS MAJESTY IN RESPECT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND HIS MAJESTY THE KING OF SWEDEN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME.
London, 30th March, 1949
His Majesty The King of Great Britain, Ireland and the British Dominions beyond the Seas and His Majesty the King of Sweden, Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have appointed for that purpose as their Plenipotentiaries:
His Majesty The King of Great Britain, Ireland and the British Dominions beyond the Seas: For the United Kingdom of Great Britain and Northern Ireland:
Sir WiIIiam Strang, K.C.B., K.C.M.G., M.B.E., Permanent Under-Secretary of State for Foreign Affairs;
His Majesty the King of Sweden:
His ExceIIency Monsieur Bo Gunnar Richardsson HaggIof, His Majesty's Ambassador Extraordinary and Plenipotentiary in London;
Who, having exhibited their respective fuII powers, found in good and due form, have agreed as foIIows:
ARTICLE I
1. The taxes which are the subject of the present Convention are-
(a) In Sweden:
The State income tax (including coupon tax) and the tax on the undistributed profits of companies (Erstatningsskatt), and for the purposes of Articles XXII, paragraph 3, and XXIII to XXV incIusive, the State capital tax (hereinafter referred to as "Swedish tax");
(b) In the United Kingdom of Great Britain and Northern Ireland:
The income tax (including surtax) and the profits tax (hereinafter referred to as "United Kingdom tax").
2. The present Convention shall also any other taxes of a substantially similar character imposed in the United Kingdom or Sweden subsequently to the date of signature of the present Convention.
ARTICLE II
1. In the present Convention, unless the context otherwise requires-
(a) The term "United Kingdom" means Great Britain and Northern Ireland, excluding the Channels lands and the Isle of Man;
(b) The terms "one of the territories" and "the other territory" mean the United Kingdom or Sweden, as the context requires;
(c) The term "tax" means United Kingdom tax or Swedish tax, as the context requires;
(d) The term "person" includes any body of persons, corporate or not corporate;
(e) The term "company" means any body corporate;
(f) The terms "resident of the United Kingdom" and "resident of Sweden" mean respectively any person who is resident in the United Kingdom for the purposes of United Kingdom tax and not resident in Sweden for the purposes of Swedish tax, and any person who is resident in Sweden for the purposes of Swedish tax and hot resident in the United Kingdom for the purposes of United Kingdom tax; a company shall be regarded as resident in the United Kingdom if its business is managed and controIIed in the United Kingdom and as resident in Sweden if it is incorporated under the Laws of Sweden and its business is not managed and controIIed in the United Kingdom, or if it is not so incorporated but its business is managed and controIIed in Sweden;
(g) The terms "resident of one of the territories" and "resident of the other territory" mean a person who is a resident of the United Kingdom or a person who is a resident of Sweden, as the context requires;
(h) The terms "United Kingdom enterprise" and "Swedish enterprise" mean respectively an industrial or commercial enterprise or undertaking carried on by a resident of the United Kingdom and an industrial or commercial enterprise or undertaking carried on by a resident of Sweden, and the terms "enterprise of one of the territories" and "enterprise of the other territory" mean a United Kingdom enterprise or a Swedish enterprise, as the context requires;
(i) The term "industrial or commercial profits" includes rents or royaIties in respect of cinematograph fiIms;
(j) The term "permanent establishment" when used with respect to an enterprise of one of the territories, means a branch, management, factory, or other fixed place of business, a mine, quarry or any other place of naturaI resources subject to expIoitation. It also includes a place where building construction is carried on by contract for a period of a Ieast one year, but does not include an agency unless the agent has, and habitually exercises, a General authority to negotiate and conclude contracts on behalf of the enterprise or has a stock of merchandise from which he regularly fiIIs orders on its behalf. In this connection-
(i) An enterprise of one of the territories shall not be deemed to have a permanent establishment in the other territory merely because it carries on business dealings in that other territory through a bona fide broker or General commission agent acting in the ordinary course of his business as such;
(ii) The fact that an enterprise of one of the territories maintains in the other territory a fixed place of business exclusively for the purchase of goods or merchandise shall not of itself constitute that fixed place of business a permanent establishment of the enterprise;
(iii) The fact that a company which is a resident of one of the territories has a subsidiary company which is a resident of the other territory or which carries on a trade or business in that other territory (whether through a permanent establishment or otherwise) shall not of itself constitute that subsidiary company a permanent establishment of its parent company.
2. Where under this Convention any income is exempt from tax in one of the territories if (with or without other conditions) it is subject to tax in the other territory, and that income is subject to tax in that other territory by reference to the amount thereof which is remitted to or received in that other territory, the exemption to be allowed under this Convention in the first- mentioned territory shall apply only to the amount so remitted or received.
3. In the application of the provisions of the present Convention by one of the High Contracting Parties any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws in force in the territory of that Party relating to the taxes which are the subject of the present Convention.
ARTICLE III
1. The industrial or commercial profits of a United Kingdom enterprise shall not be subject to Swedish tax unless the enterprise carries on a trade or business in Sweden through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by Sweden, but only on so much of them as is attributable to that permanent establishment.
2. The industrial or commercial profits of a Swedish enterprise shall not be subject to United Kingdom tax unless the enterprise carries on a trade or business in the United Kingdom through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by the United Kingdom, but only on so much of them as is attributable to that permanent establishment.
3. Where an enterprise of one of the territories carries on a trade or business in the other territory through a permanent establishment situated therein, there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive in that other territory if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm's Length with the enterprise of which it is a permanent establishment.
4. Where an enterprise of one of the territories derives profits, under contracts concluded in that territory, from sales of goods or merchandise stocked in a warehouse in the other territory for convenience of delivery and not for purposes of display, those profits shall not be attributed to a permanent establishment of the enterprise in that other territory.
5. No portion of any profits arising to an enterprise of one of the territories shall be attributed to a permanent establishment situated in the other territory by reason of the mere purchase of goods or merchandise within that other territory by the enterprise.
ARTICLE IV
Where-
(a) an enterprise of one of the territories participates directly or indirectly in the management, control or capital of an enterprise of the other territory; or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the territories and an enterprise of the other territory;
and in either case, conditions are made or imposed between the two enterprises, in their commercial or financial relations, which differ from those which wouId be made between independent enterprises, then any profits which wouId 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.
ARTICLE V
1. The industrial and commercial profits of a Swedish enterprise shall, so Iong as undistributed profits of United Kingdom enterprises are effectiveIy charged to United Kingdom profits tax at a Iower rate than distributed profits of such enterprises, be charged to United Kingdom profits tax only at that Iower rate.
2. Where a company which is a resident of Sweden controIs, directly or indirectly, not Iess than 50 per centum of the entire voting power of a company which is a resident of the United Kingdom, distributions by the Iatter company to the former company shall be Ieft out of account in computing United Kingdom profits tax effectiveIy chargeable on the Iatter company at the rate appropriate to distributed profits.
ARTICLE VI
Notwithstanding the provisions of Articles III, IV and V, profits which a resident of one of the territories derives from operating ships or aircraft shall be exempt from tax in the other territory.
ARTICLE VII
1.-
(a) Dividends paid by a company which is a resident of the United Kingdom to a resident of Sweden, who is subject to tax in Sweden in respect thereof and does not carry on a trade or business in the United Kingdom through a permanent establishment situated therein, shall be exempt from United Kingdom surtax.
(b) The Swedish coupon tax on dividends paid by a company which is a resident of Sweden to a resident of the United Kingdom, who is subject to tax in the United Kingdom in respect thereof and does not carry on a trade or business in Sweden through a permanent establishment situated therein, shall not exceed 5 per centum:
Provided that where the resident of the United Kingdom is a company which controIs, directly or indirectly, not Iess than 50 per centum of the entire voting power of the company paying the dividends, the dividends shall be exempt from coupon tax.
2. Where a company which is a resident of one of the territories derives profits or income from sources within the other territory, there shall not be imposed in that other territory any form of taxation on dividends paid by the company to persons not resident in that other territory, or any tax in the nature of undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or in part, profits or income so derived.
ARTICLE VIII
1. Any interest derived from sources within one of the territories by a resident of the other territory who is subject to tax in that other territory in respect thereof and does not carry on a trade or business in the first-mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory.
2. In this Article, the term "interest" includes interests on bonds, securities, notes, debentures or any other form of indebtedness.
3. Where any interest exceeds a fair and reasonabIe consideration in respect of the indebtedness for which it is paid, the exemption provided by the present Article shall apply only to so much of the interest as represents such fair and reasonabIe consideration.
ARTICLE IX
1. Any royalty derived from sources within one of the territories by a resident of the other territory, who is subject to tax in that other territory in respect thereof and does not carry on a trade or business in the first-mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory.
2. In this Article, the term "royalty" means any royalty or other amount paid as consideration for the use of, or for the priviIege of using, any copyright, patent, design, secret process or formula, trade mark, or other like property, but does not include any royalty or other amount paid in respect of the operation of a mine or quarry or of any other extraction of naturaI resources.
3. Where any royalty exceeds a fair and reasonabIe consideration in respect of the rights for which it is paid, the exemption provided by the present Article shall apply only to so much of the royalty as represents such fair and reasonabIe consideration.
4. Any capital sum derived from sources within one of the territories from the saIe of patent rights by a resident of the other territory who does not carry on a trade or business in the first- mentioned territory through a permanent establishment situated therein, shall be exempt from tax in that first-mentioned territory.
ARTICLE X
1. Income of whatever nature derived from reaI property within the territory of the United Kingdom (other than income from mortgages or bonds secured by the reaI property) by a resident of Sweden who is subject to tax in the United Kingdom in respect thereof shall be exempt from tax in Sweden.
2. Any royalty or other amount paid in respect of the operation of a mine or quarry or of any other extraction of naturaI resources within the territory of the United Kingdom to a resident of Sweden who is subject to tax in the United Kingdom in respect thereof, shall be exempt from tax in Sweden.
3. Swedish tax payabIe in respect of income of the kind referred to in the preceding paragraphs, derived from sources within Sweden by a resident of the United Kingdom who is Liable to tax in the United Kingdom in respect thereof, shall in accordance with Article XIX be allowed as a credit against the United Kingdom tax payabIe in respect of that income.
ARTICLE XI
1. Where under the provisions of this Convention a resident of the United Kingdom is exempt or entitIed to reIief from Swedish tax, similar exemption or reIief shall be applied to the undivided estates of deceased persons in so far as one or more of the beneficiaries is a resident of the United Kingdom.
2. Swedish tax on the undivided estate of a deceased person shall, in so far as the income accrues to a beneficiary who is resident in the United Kingdom, be allowed as a credit under Article XIX.
ARTICLE XII
A resident of one of the territories who does not carry on a trade or business in the other territory through a permanent establishment situated therein shall be exempt in that other territory from any tax on gains from the saIe, transfer, or exchange of capital assets.
ARTICLE XIII
1. Remuneration or pensions paid by, or out of funds created by, one of the High Contracting Parties to any individual in respect of services rendered to that Party in the discharge of governmental functions shall be exempt from tax in the territory of the other High Contracting Party, unless the individual is a nationaI of that other Party without being also a nationaI of the first-mentioned Party.
2. The provisions of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the High Contracting Parties for purposes of profit.
ARTICLE XIV
1. An individual who is a resident of the United Kingdom shall be exempt from Swedish tax on profits or remuneration in respect of personaI (including professionaI) services performed within Sweden in any year of assessment if-
(a) he is present within Sweden for a period or periods not exceeding in the aggregate 183 days during that year, and
(b) the services are performed for or on behalf of a resident of the United Kingdom, and
(c) the profits or remuneration are subject to United Kingdom tax.
2. An individual who is a resident of Sweden shall be exempt from United Kingdom tax on profits or remuneration in respect of personaI (including professionaI) services performed within the United Kingdom in any year of assessment, if-
(a) he is present within the United Kingdom for a period or periods not exceeding in the aggregate 183 days during that year, and
(b) the services are performed for or on behalf of a resident of Sweden, and
(c) the profits or remuneration are subject to Swedish tax.
3. The provisions of this Article shall not apply to the profits or remuneration of pubIic entertainers such as theatre, motion picture or radio artists, musicians and athletes.
ARTICLE XV
1. Any pension (other than a pension of the kind referred to in paragraph 1 of Article XIII) and any annuity, derived from sources within Sweden by an individual who is a resident of the United Kingdom and subject to United Kingdom tax in respect thereof, shall be exempt from Swedish tax.
2. Any pension (other than a pension of the kind referred to in paragraph 1 of Article XIII) and any annuity, derived from sources within the United Kingdom by an individual who is a resident of Sweden and subject to Swedish tax in respect thereof, shall be exempt from United Kingdom tax.
3. The term "annuity" means a stated sum payabIe periodically at stated times, during Iife or during a specified or ascertainable period of time, under an obIigation to make payments in return for adequate and fuII consideration in money or money's worth.
ARTICLE XVI
A professor or teacher from one of the territories, who receives remuneration for teaching, during a period of temporary residence not exceeding two years, at a university, coIIege or other establishment for further education in the other territory, shall be exempt from tax in that other territory in respect of that remuneration.
ARTICLE XVII
A student or business apprentice from one of the territories, who is receiving fuII-time education or training in the other territory, shall be exempt from tax in that other territory on payments made to him by persons in the first-mentioned territory for the purposes of his maintenance, education or training.
ARTICLE XVIII
1. IndividuaIs who are residents of Sweden shall be entitIed to the same personaI allowances, reIiefs and reductions for the purposes of United Kingdom tax as British subjects not resident in the United Kingdom.
2. IndividuaIs who are residents of the United Kingdom shall be entitIed to the same personaI allowances, reIiefs and reductions for the purposes of Swedish tax as those to which Swedish nationaIs not resident in Sweden may be entitIed.
ARTICLE XIX
1. Subject to the provisions of the Law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payabIe in a territory outside the United Kingdom, Swedish tax payabIe under the Laws of Sweden and in accordance with this Convention, whether directly or by deduction, in respect of income from sources within Sweden shall be allowed as a credit against any United Kingdom tax payabIe in respect of that income. Where such income is an ordinary dividend paid by a company which is a resident of Sweden the credit shall take into account (in addition to any Swedish tax appropriate to the dividend) the Swedish tax payabIe by the company in respect of its profits and where it is a dividend paid on participating preference shares and representing both a dividend at the fixed rate to which the shares are entitIed and an additionaI participation in profits, the Swedish tax so payabIe by the company shall likewise be taken into account in so far as the dividend exceeds that fixed rate.
2. Income from sources within the United Kingdom which under the Laws of the United Kingdom and in accordance with this Convention is subject to tax in the United Kingdom either directly or by deduction shall be exempt from Swedish tax:
Provided that where such income is a dividend paid by a company being a resident of the United Kingdom to a person resident in Sweden, not being a company, whether or not he is also resident in the United Kingdom, Swedish tax may be charged on the amount of the dividend after deduction of United Kingdom income tax, but the amount of Swedish tax chargeable shall be reduced by a sum equaI to 20 per centum of the amount of the dividend so charged.
3. Where income is derived from sources outside both the United Kingdom and Sweden by a person who is resident in the United Kingdom for the purposes of United Kingdom tax and also resident in Sweden for the purposes of Swedish tax, the income may be taxed in both countries (subject to any Convention which may exist between either of the High Contracting Parties and the territory or territories from which the income is derived), but the Swedish tax on that income shall be Iimited to tax on the proportion of such income represented by the proportion which such person's income from sources in Sweden bears to the sum of his income from sources in Sweden and of his income from sources in the United Kingdom, and the United Kingdom tax on that income shall be reduced by a credit, in accordance with paragraph 1 of this Article, for the Swedish tax on the proportion of that income so computed.
4. The speciaI tax payabIe in Sweden by pubIic entertainers such as theatre and radio artists, musicians and athletes (beviIIningsavgift f"r vissa offentIiga f"restallningar) shall be regarded, for the purposes of this Article, as Swedish tax.
5. For the purposes of this Article, profits or remuneration for personaI (including professionaI) services performed in one of the territories shall be deemed to be income from sources within that territory, and the services of an individual whose services are whoIIy or mainIy performed in ships or aircraft operated by a resident of one of the territories shall be deemed to be performed in that territory.
6. The graduated rate of Swedish tax to be imposed on residents of Sweden may be calculated as though income exempted under this Convention were included in the amount of the total income.
ARTICLE XX
1. The taxation authorities of the High Contracting Parties shall exchange such information (being information which is at their disposaI under their respective taxation Laws in the normaI course of administration) as is necessary for carrying out the provisions of the present Convention or for the prevention of fraud or for the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of the present Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of the taxes which are the subject of the present Convention. No information as aforesaid shall be exchanged which wouId discIose any trade, business, industrial or professionaI secret or trade process.
2. As used in this Article the term "taxation authorities" means, in the case of the United Kingdom, the Commissioner-Generals of InIand Revenue, in the case of Sweden, the Finance Ministry, and, in the case of any territory to which the present Convention is extended under Article XXIII, the competent authority for the administration in such territory of the taxes to which the present Convention applies.
ARTICLE XXI
The following agreements between the United Kingdom and Sweden shall not have effect for any period for which the present Convention has effect, that is to say-
(a) the agreement dated 19th December, 1924, for the reciprocaI exemption from income tax in certain cases of profits accruing from the business of shipping;
(b) the agreement dated 6th JuIy, 1931, for the reciprocaI exemption from taxes in certain cases of profits arising through agencies.
ARTICLE XXII
1. The nationaIs of one of the High Contracting Parties shall not be subjected in the territory of the other High Contracting Party to any taxation or any requirement connected therewith which is other, higher or more burdensome than the taxation and connected requirements to which the nationaIs of the Iatter Party are or may be subjected.
2. The enterprises of one of the territories shall not be subjected in the other territory, in respect of profits attributable to their permanent establishments in that other territory, to any taxation which is other, higher or more burdensome than the taxation to which the enterprise of that other territory are or may be subjected in respect of the like profits.
3. An individual or company being a resident of one of the territories shall not be subject to any tax on capital in the other territory which is other, higher or more burdensome than the tax on capital to which an individual or, as the case may be, a company, being a resident of that other territory is or may be subjected.
4. Nothing in paragraph 1 or paragraph 2 of this Article shall be construed as obIiging one of the High Contracting Parties to grant to nationaIs of the other High Contracting Party who are not resident in the territory of the former Party the same personaI allowances, reIiefs and reductions for tax purposes as are granted to His own nationaIs.
5. In this Article the term "nationaIs" means-
(a) in reIation to Sweden, all Swedish subjects and all Iegal persons, partnerships and associations deriving their status as such from the Law in force in Sweden;
(b) in reIation to the United Kingdom, all British subjects and British protected persons residing in the United Kingdom or any British territory to which the present Convention applies by reason of extension made under Article XXIII and all IegaI persons, partnerships and associations derving their status as such from the Law in force in any British territory to which the present Convention applies.
6. In this Article the term "taxation" means taxes of every kind and description Ievied on behalf of any authority whatsoever.
ARTICLE XXIII
1. The present Convention may be extended, either in its entirety or with modifications, to any territory for whose foreign relations the United Kingdom is responsibIe and which imposes taxes substantially similar in character to those which are the subject of the present Convention, and any such extension shall take effect from such date and subject to such modifications and conditions (including conditions as to termination) as may be specified and agreed between the High Contracting Parties in notes to be exchanged for this purpose.
2. The termination in respect of Sweden or the United Kingdom of the present Convention under Article XXV shall, unless otherwise expressIy agreed by both High Contracting Parties, terminate the application of the present Convention to any territory to which the Convention has been extended under this Article.
ARTICLE XXIV
1. The present Convention shall be ratified by the High Contracting Parties. Ratification by His Majesty the King of Sweden shall be subject to the consent of the Riksdag.
2. The instruments of ratification shall be exchanged at StockhoIm as soon as possibIe.
3. Upon exchange of ratifications the present Convention shall have effect-
(a) In Sweden:
as respects tax on income which is assessed in or after the calendar year beginning on 1st January, 1950, being income for which preIiminary tax is payabIe during the period 1st March, 1949, to 28th February, 1950; or any succeeding period;
as respects coupon tax payabIe on or after 1st January, 1949;
as respects capital tax which is assessed in or after the calendar year beginning on 1st January, 1950;
(b) In the United Kingdom:
as respects income tax for any year of assessment beginning on or after 6th April, 1949; as respects surtax for any year of assessment beginning on or after 6th April, 1948; and as respects profits tax in respect of the following profits: 1949;
(i) profits arising in any chargeable accounting period beginning on or after 1st April,
(ii) profits attributable to so much of any chargeable accounting period falling partIy before and partIy after that date as falls after that date;
(iii) profits not so arising or attributable by reference to which income tax is, or but for the present Convention wouId be, chargeable for any year of assessment beginning on or after 6th April, 1949.
ARTICLE XXV
The present Convention shall continue in effect indefiniteIy but either of the High Contracting Parties may, on or before 30th June in any calendar year not earIier than the year 1953, give to the other High Contracting Party, through dipIomatic channels, written notice of termination and, in such event, the present Convention shall cease to be effective-
(a) In Sweden:
as respects tax on income for which preIiminary tax is payabIe after the Iast day of February in the calendar year next following that in which the notice is given;
as respects coupon tax payabIe on or after 1st January in the calendar year next following that in which the notice is given;
as respects capital tax assessed in or after the second calendar year following that in which the notice is given;
(b) In the United Kingdom:
as respects income tax for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;
as respects surtax for any year of assessment beginning on or after 6th April in the calendar year in which the notice is given; and
as respects profits tax in respect of the following profits:
(i) profits arising in any chargeable accounting period beginning on or after 1st April in the calendar year next following that in which the notice is given;
(ii) profits attributable to so much of any chargeable accounting period falling partIy before and partIy after that date as falls after that date;
(iii) profits not so arising or attributable by reference to which income tax is chargeable for any year of assessment beginning on or after 6th April in the next following calendar year.
In witness whereof the above-mentioned Plenipotentiaries have signed the present Convention and have affixed thereto their seaIs.
Done at London, in dupIicate, in the EngIish and Swedish Ianguages, both texts being equally authentic, on the thirtieth day of March, one thousand nine hundred and forty-nine.
(L.S.) GUNNAR HAGGLOF.................................................... GUNNAR HAGGLOF....................................................
(L.S.) WILLIAM STRANG............................................................ WILLIAM STRANG. "A"
BRITISH EMBASSY,
STOCKHOLM.
May 28, 1958.
Your ExceIIency,
I am instructed by Her Majesty's PrincipaI Secretary of State for Foreign Affairs to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on the 30th March, 1949.
I have the honour to propose on behalf of the Government of the United Kingdom that, in accordance with the provisions of Article XXIII, the above-mentioned Convention shouId be extended to the territories named in the Annex to the present Note in the manner, subject to the modifications, and with effect from the dates, specified therein.
If the foregoing proposaI is acceptable to the Swedish Government, I have the honour to suggest that the present Note with its Annex, and Your ExceIIency's reply to that effect, shouId be regarded as constituting the agreement reached between the two Governments in this matter.
ANNEX
I - TABLE OF TERRITORIES TO WHICH THE CONVENTION OF THE 30TH MARCH, 1949, FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME IS TO BE EXTENDED IN ACCORDANCE WITH ARTICLE XXIII OF THE SAID CONVENTION SUBJECT TO THE CONDITIONS SET OUT IN PARAGRAPHS II AND III OF THIS ANNEX.
Column (1) |
Column (2) |
Column (3) |
Kenya |
The Income Tax (including Surtax) and the PersonaI Tax. |
1st January 1955 |
Rhodesia and Nyasaland |
The Income Tax, Supertax and Undistributed Profits Tax. |
1st April, 1955 |
Federation of Tanganyika |
The Income Tax(including Surtax) and the Non-Native PoII Tax or PersonaI Tax. |
1st January, 1955 |
Uganda |
The Income Tax(including Surtax) and the non-African PoII Tax. |
1st January, 1955 |
Zanzibar |
The Income Tax 1st January, 1955 (including Surtax). |
1st January, 1955 |
II - APPLICATION
(a) The said Convention as modified by the present Annex shall apply in the case of each territory mentioned in CoIumn (1) of the above TabIe,
(1) as if the Contracting Parties were the Government of Sweden and the Government of that territory;
(2) as if the taxes concerned in the case of each territory were those mentioned opposite the name of that territory in CoIumn (2) of the above TabIe;
(3) as if references to "the date of signature of the present Convention" were references to the date of the Exchange of Notes to which the present Annex is appended.
(b) When the Iast of those measures shall have been taken in Sweden and in any territory named in the above TabIe necessary to give the present extension the force of Law in Sweden and in such territory, respectively, the present extension shall have effect-
(1) in Sweden: 1956;
as respects tax on income for which preIiminary tax is payabIe after the 29th February,
as respects coupon tax payabIe on or after the 1st January, 1956;
as respects capital tax assessed in or after the calendar year 1957;
(2) in such territory: as respects tax for the year, year of assessment or year of income beginning on the date specified opposite its name in CoIumn (3) of the above TabIe and for subsequent years, years of assessment or years of income.
(c) The Government of Sweden shall inform the Government of the United Kingdom in writing when the Iast of the measures necessary, as indicated in paragraph (b), have been taken in Sweden. The Government of the United Kingdom shall inform the Government of Sweden in writing when the Iast of the measures necessary, as indicated in paragraph (b, have been taken in all or any of the territories named in the above TabIe.
(d) The present extension shall continue in effect indefiniteIy but either of the Contracting Parties may, or or before the 30th June in any calendar year not earIier than the year 1960, give to the other Contracting Party through the dipIomatic Channel written notice of termination which may apply to any or all of the territories named in the above TabIe and in such event the present extension shall cease to have effect-
(1) in Sweden:
as respects tax on income for which preIiminary tax is payabIe after the Iast day of February in the calendar year next following that in which the notice is given;
as respects coupon tax payabIe on or after the 1st January in the calendar year next following that in which the notice is given;
as respects capital tax assessed in or after the second calendar year next following that in which the notice is given;
(2) in such of the territories named in the above TabIe as are concerned: as respects tax for any year, year of assessment or year of income beginning on or after the 1st January in the calendar year in which the notice is given.
III - MODIFICATIONS
The said Convention as modified by the present Annex shall apply-
(a) for the purposes of the extension to Kenya, Tanganyika, Uganda and Zanzibar, with the following exceptions:
(1) The following words shall be inserted at the end of sub-paragraph (c) of paragraph 1 of Article II:
"but shall not include any tax which is payabIe in respect of any defauIt or commission in reIation to the taxes to which this Convention as extended applies or which represents a penaIty imposed under the Law of the territory concerned relating to those Taxes";
(2) The following sub-paragraph shall be substituted for sub-paragraph (i) of paragraph 1 of Article II:
"(i) The term 'industrial or commercial profits' does not include income in the form of dividends, interest, rents or royaIties (other than rents or royaIties in respect of cinematograph fiIms), management charges or remuneration for personaI services";
(3) Sub-paragraph (j) of paragraph 1 of Article II shall be amended by deIeting-
(i) the fuII-stop after the word "expIoitation", and
(ii) the words "It also includes a place where building construction is carried on by contract for a period of at Ieast one year";
(4) Nothing in paragraph 2 of Article III shall affect any provisions of the Law of those territories regarding the taxation of income from the business of insurance;
(5) The following words shall be inserted at the end of paragraph 3 of Article III:
"and the profits so attributed shall be deemed to be income derived from sources in that other territory";
(6) Paragraph 4 of Article III shall be deIeted;
(7) The following Article shall be substituted for Article V:
ARTICLE V
If the industrial and commercial profits of a company which is a resident of Sweden become chargeable to a form of [United Kingdom] tax under which, in the case of companies which are residents of [the United Kingdom], the undistributed or undistributabIe income is charged to tax at a Iower rate than the distributed or distributabIe income of such companies, these industrial and commercial profits shall be charged to [United Kingdom] tax only at the Iower rate";
(8) Articles VIII, XVI and XVIII shall be deIeted;
(9) Article XX shall be amended as foIIows:
(i) by deIeting the words "or for the prevention of fraud or for the administration of statutory provisions against IegaI avoidance";
(ii) by inserting after "assessment and coIIection of" the words "or the hearing of appeals in reIation to";
(b) for the purposes of the extension to the Federation of Rhodesia and Nyasaland, with the following exceptions:
(1) In Article VII 1 (a), for the words "shall be exempt from United Kingdom surtax" there shall be substituted "shall be exempt from FederaI supertax";
(2) Article XIII shall apply to remuneration including pensions paid by, or out of funds created by, the Government of each of the Territories constituting the Federation to any individual in respect of services rendered to that Government in the discharge of governmental functions as it applies to similar payments by, or out of funds created by, the Government of the Federation;
(3) In the proviso to Article XIX 2, for the words "after deduction of United Kingdom income tax" there shall be substituted "after deduction of FederaI income tax and of the TerritoriaI Surcharge charged in Northern Rhodesia, Nyasaland and Southern Rhodesia".
"B" STOCKHOLM,
May 28th, 1958.
1 encI.
ROYAL MINISTRY FOR
FOREIGN AFFAIRS
Your ExceIIency,
I have the honour to acknowIedge receipt of Your ExceIIency's Note of May 28, 1958, which reads as foIIows:
"I am instructed by Her Majesty's PrincipaI Secretary of State for Foreign Affairs to refer to the Convention between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Sweden for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on the 30th March, 1949.
I have the honour to propose on behalf of the Government of the United Kingdom that, in accordance with the provisions of Article XXIII, the above-mentioned Convention shouId be extended to the territories named in the Annex to the present Note in the manner, subject to the modifications, and with effect from the dates, specified therein.
If the foregoing proposaI is acceptable to the Swedish Government, I have the honour to suggest that the present Note with its Annex, and Your ExceIIency's reply to that effect, shouId be regarded as constituting the agreement reached between the two Governments in this matter."
I reply, I have the honour to state that the Government of Sweden considers that Your ExceIIency's Note with its Annex and the present reply to which a copy of the Annex is attached constitute an agreement between the two Governments.
ANNEX
I-TABLE OF TERRITORIES TO WHICH THE CONVENTION OF THE 30TH MARCH, 1949, FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME IS TO BE EXTENDED IN ACCORDANCE WITH ARTICLE XXIII OF THE SAID CONVENTION SUBJECT TO THE CONDITIONS SET OUT IN PARAGRAPHS II AND III OF THIS ANNEX
Column (1) |
Column (2) |
Column (3) |
Kenya |
The Income Tax (including Surtax) and the PersonaI Tax. |
1st January1955 |
Rhodesia and Nyasaland, |
he Income Tax, Supertax and Undistributed Profits Tax |
1st April, 1955 |
Federation of Tanganyika |
The Income Tax (including Surtax) and the Non-Native PoII Tax or PersonaI Tax. |
1st January, 1955 |
Uganda |
The Income Tax (including Surtax) and the non-African PoII Tax. |
1st January, 1955 |
Zanzibar |
The Income Tax 1st January, 1955 (including Surtax). |
1st January, 1955 |
II - APPLICATION
(a) The said Convention as modified by the present Annex shall apply in the case of each territory mentioned in CoIumn (1) of the above TabIe,
(1) as if the Contracting Parties were the Government of Sweden and the Government of that territory;
(2) as if the taxes concerned in the case of each territory were those mentioned opposite the name of that territory in CoIumn (2) of the above TabIe;
(3) as if references to "the date of signature of the present Convention" were references to the date of the Exchange of Notes to which the present Annex is appended.
(b) When the Iast of those measures shall have been taken in Sweden and in any territory named in the above TabIe necessary to give the present extension the force of Law in Sweden and in such territory, respectively, the present extension shall have effect-
(1) in Sweden:
February, 1956;
as respects tax on income for which preIiminary tax is payabIe after the 29th
as respects coupon tax payabIe on or after the 1st January, 1956;
as respects capital tax assessed in or after the calendar year 1957;
(2) in such territory: as respects tax for the year, year of assessment or year of income beginning on the date specified opposite its name in CoIumn (3) of the above TabIe and for subsequent years, years of assessment or years of income.
(c) The Government of Sweden shall inform the Government of the United Kingdom in writing when the Iast of the measures necessary, as indicated in paragraph (b), have been taken in Sweden. The Government of the United Kingdom shall inform the Government of Sweden in writing when the Iast of the measures necessary, as indicated in paragraph (b), have been taken in all or any of the territories named in the above TabIe.
(d) The present extension shall continue in effect indefiniteIy but either of the Contracting Parties may, on or before the 30th June in any calendar year not earIier than the year 1960, give to the other Contracting Party through the dipIomatic Channel written notice of termination which may apply to any or all of the territories named in the above TabIe and in such event the present extension shall cease to have effect-
(1) in Sweden:
as respects tax on income for which preIiminary tax is payabIe after the Iast day of February in the calendar year next following that in which the notice is given;
as respects coupon tax payabIe on or after the 1st January in the calendar year next following that in which the notice is given;
as respects capital tax assessed in or after the second calendar year next following that in which the notice is given;
(2) in such of the territories named in the above TabIe as are concerned: as respects tax for any year, year of assessment or year of income beginning on or after the 1st January in the calendar year in which the notice is given.
III - MODIFICATIONS
The said Convention as modified by the present Annex shall apply-
(a) for the purposes of the extension to Kenya, Tanganyika, Uganda and Zanzibar, with the following exceptions:
(1) The following words shall be inserted at the end of sub-paragraph (c) of paragraph 1 of Article II:
"but shall not include any tax which is payabIe in respect of any defauIt or omission in reIation to the taxes to which this Convention as extended applies or which represents a penaIty imposed under the Law of the territory concerned relating to those Taxes";
(2) The following sub-paragraph shall be substituted for sub-paragraph (i) of paragraph 1 of Article II:
"(i) The term 'industrial or commercial profits" does not include income in the form of dividends, interest, rents or royaIties (other than rents or royaIties in respect of cinematograph fiIms), management charges or remuneration for personaI services";
(3) Sub-paragraph (j) of paragraph 1 of Article II shall be amended by deIeting-
(i) the fuII-stop after the word "expIoitation", and
(ii) the words "It also includes a place where building construction is carried on by contract for a period of at Ieast one year";
(4) Nothing in paragraph 2 of Article III shall affect any provisions of the Law of those territories regarding the taxation of income from the business of insurance;
(5) The following words shall be inserted at the end of paragraph 3 of Article III: "and the profits so attributed shall be deemed to be income derived from sources in that other territory";
(6) Paragraph 4 of Article III shall be deIeted;
(7) The following Article shall be substituted for Article V:
ARTICLE V
If the industrial and commercial profits of a company which is a resident of Sweden become chargeable to a form of [United Kingdom] tax under which, in the case of companies which are residents of [the United Kingdom], the undistributed or undistributabIe income charged to tax at a Iower rate than the distributed or distributabIe income of such companies, these industrial and commercial profits shall be charged to [United Kingdom] tax only at the Iower rate";
(8) Articles VIII, XVI and XVIII shall be deIeted;
(9) Article XX shall be amended as foIIows
(i) by deIeting the words "or for the prevention of fraud or for the administration of statutory provisions against legaI avoidance";
(ii) by inserting after "assessment and coIIection of" the words "or the hearing of appeals in reIation to";
(b) for the purposes of the extension to the Federation of Rhodesia and Nyasaland, with the following exceptions:
(1) In Article VII 1 (a), for the words "shall be exempt from United Kingdom surtax" there shall be substituted "shall be exempt from FederaI supertax";
(2) Article XIII shall apply to remuneration including pensions paid by, or out of funds created by, the Government of each of the Territories constituting the Federation to any individual in respect of services rendered to that Government in the discharge of governmental functions as it applies to similar payments by, or out of funds created by, the Government of the Federation;
(3) In the proviso to Article XIX 2, for the words "after deduction of United Kingdom income tax" there shall be substituted "after deduction of FederaI income tax and of the TerritoriaI Surcharge charged in Northern Rhodesia, Nyasaland and Southern Rhodesia".
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE REPUBLIC OF KENYA 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 Kenya, 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 foIIows:
SI 67 of 1970.
ARTICLE I
1. The taxes which are the subject of the present Convention are-
(a) in Zambia (and hereinafter referred to as "Zambian tax")-
(i) the income tax;
(ii) supertax;
(iii) the undistributed profits tax; and
(iv) the personaI Ievy;
(b) in Kenya (and hereinafter referred to as "Kenyan tax")-
(i) the income tax;
(ii) corporation tax;
(iii) the undistributed income tax; and
(iv) the graduated personaI tax.
2. The present Convention shall also apply to any other taxes of a substantially similar character imposed in Zambia or Kenya subsequently to the date of signature of the present Convention. At the end of each year the taxation authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation Laws.
ARTICLE II
1. In the present Convention, unless the context otherwise requires-
(a) the term "Zambia" mean the Republic of Zambia;
(b) the term "Kenya" means the Republic of Kenya;
(c) the terms "one of the Contracting States" and "the other Contracting State" mean Zambia or Kenya, as the context requires;
(d) the term "tax" means Zambian tax or Kenyan tax, 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 "person" includes any body of persons corporate or not corporate;
(g) the term "resident of Zambia" means any person who is resident in Zambia for the purposes of Zambian tax and not resident in Kenya for the purposes of Kenyan tax; the term "resident of Kenya" means any person who is resident in Kenya for the purposes of Kenyan tax and not resident in Zambia for the purposes of Zambian tax, and a company shall be regarded as resident in Zambia if its business is managed and controIIed in Zambia and resident in Kenya if its business is managed and controIIed in Kenya;
(h) the terms "resident of one of the Contracting States" and "resident of the other Contracting State" mean a resident of Zambia or a resident of Kenya, as the context requires;
(i) the terms "Zambian enterprise" and "Kenyan enterprise" mean, respectively, an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking carried on by a resident of Zambia, and an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking carried on by a resident of Kenya;
(j) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean a Zambian enterprise or a Kenyan enterprise, as the context requires.
2. In the application of the provisions of the present Convention by the Government of one of the Contracting States, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of the present Convention.
ARTICLE III
1. For the purposes of this Convention the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy carried on.
2. The term "permanent etabIishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oiI weII, quarry or other place of extraction of naturaI resources;
(g) a farm or pIantation;
(h) a building site or construction or assembly project which exists for more than six months.
3. The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 goods or merchandise belonging to the enterprise soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
4. An enterprise of one of the Contracting States shall be deemed to have a permanent establishment in the other Contracting State if-
(a) it carries on supervisory activities in that other Contracting State for more than six months in connection with a construction, installation or assembly project which is being undertaken in that other Contracting State;
(b) it carries on a business which consists of providing the services of pubIic entertainers referred to in Article XIV, in that other Contracting State.
5. A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State-other than an agent of independent status to whom paragraph 6 applies-shall be deemed to be a permanent establishment in the former Contracting State if-
(a) he has, and habitually exercise in that former Contracting State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise; or
(b) he maintains in that former Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly fiIIs orders on behalf of the enterprise.
6. An enterprise of one of the 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 independent status, where such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of one of the Contracting States controIs or is controIIed 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 IV
1. The industrial and commercial profits of an enterprise of a Contracting State shall be taxabIe 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, tax may be imposed in that other Contracting State, but only on so much of them as is attributable to the permanent establishment.
2. Where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein-
(a) 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 whoIIy independentIy with the enterprise of which it is a permanent establishment;
(b) subject to the provisions of sub-paragraph (a) no industrial or commercial profits derived from sources outside that other Contracting State shall be attributed to that permanent establishment.
3. No part of the profits arising from the saIe of goods or merchandise by an enterprise in one of the Contracting States shall be attributed to a permanent establishment situated in the other Contracting State by reason of the mere purchase of the goods or merchandise within that other Contracting State.
4. In determining the industrial or commercial profits of a permanent establishment, there shall be allowed as deductions all expenses, including administrative and executive expenses, which wouId be deductibIe if the permanent establishment were an independent enterprise in so far as they are reasonabIy allocatable to the permanent establishment, whether incurred in the Contracting State in which the permanent establishment is situated or eIsewhere.
5. Nothing in this Article shall precIude either Contracting State from determining the profits to be attributed to a permanent establishment in that State on the basis of an apportionment of the total profits of the enterprise to its various parts as may be customary. The method of apportionment adopted shall, however, be such that the resuIt shall be in accordance with the principIes Iaid down in this Article.
6. Save where expressIy provided eIsewhere in this Convention, this Article shall not apply, if by reason of its application industrial and commercial profits which wouId normally be subject to tax in one of the Contracting States, wouId not be subject to tax in either of the Contracting States.
7. Where industrial and commercial profits include items of income which are deaIt with separateIy in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
8. Where-
(a) an enterprise of one of the Contracting States 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 one of the Contracting States 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 wouId be made between independent enterprises, then any profits which wouId 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.
ARTICLE V
1. Income or profits derived by the Government, a IocaI authority or statutory corporation of one of the Contracting States from the operation of ships aircraft or railways, shall be exempt from tax in the other Contracting State.
2. Income or profits derived by a resident of one of the Contracting States from the operation of ships and aircraft shall be exempt from tax in the other Contracting State unless the ship or aircraft is operated whoIIy or mainIy between places within that other Contracting State.
3. -
(a) A resident of Zambia who derives profits from the operation of overIand transport services in Kenya, may be subject to tax in Kenya, on such proportion of those profits that derive from traffic originating in Kenya, but the tax so charged shall be allowed as a credit against any Zambian tax charged in respect of that same income.
(b) A resident of Kenya who derives profits from the operation of overIand transport services in Zambia, may be subject to tax in Zambia on such proportion of those profits that derive from traffic originating in Zambia, but the tax so charged shall be allowed as a credit against any Kenya tax charged in respect of that same income.
ARTICLE VI
1. Dividends paid by a company resident in Kenya to a resident of Zambia who is subject to Zambian tax in respect thereof shall be exempt from any tax in Kenya which is chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
2. Dividends paid by a company resident in Zambia to a resident of Kenya who is subject to Kenyan tax in respect thereof shall be exempt from any tax in Zambia which is chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
3. Where a company which is a resident of one of the Contracting States derives profits or income from sources within the other Contracting State, there shall not be imposed in that other Contracting State any form of taxation on dividends paid by the company to persons not resident in that other Contracting State, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or part, profits or income so derived.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment, with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case Article IV concerning the allocation of profits to permanent establishment shall apply.
5. If the system of taxation applicable in either of the Contracting States to the profits and distributions of companies is altered the taxation authorities may consult each other in order to determine whether it is necessary for this reason to amend the provisions of paragraphs 1 and 2 of this Article.
ARTICLE VII
1. Any royalty or rent, including royalty or rent in respect of cinematograph or teIevision fiIms or tapes, or any sound recording or advertising matter connected with such fiIms, or any other consideration received by or accrued to a resident of one of the Contracting States by virtue of the use in the other Contracting State, of or the grant of permission to use in that other Contracting State any patent, design, modeI, pIan, trade mark, copyright, secret process, formula or other property of a similar nature, including any amount received or accrued for the imparting of or the undertaking to impart any knowIedge directly or indirectly connected with the use of any such fiIms, sound recording, advertising matter, patent design, modeI, pIan, trade mark, copyright, secret process, formula or other property of a similar nature, shall be exempt from tax in the first-mentioned Contracting State if such royalty or rent is subject to tax in the other Contracting State.
2. The term "royalty" as used in this Article includes, inter alia, a payment of any kind received as consideration for the use of or the right to use industriaI, commercial or scientific experience, but does not include any amount paid in respect of the operation of a mine, oiI weII or quarry or of any other place of extraction of naturaI resources.
ARTICLE VIII
1. Interest from a source in one of the Contracting States derived by a resident in the other Contracting State shall be exempt from tax in that other Contracting State, unless it is not subject to tax in the first-mentioned Contracting State.
2. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt claims of every kind as weII as all other income assimilated to income from money Ient by the taxation Law of the Contracting State in which the income arises.
3. Where, owing to a speciaI relationship between the payer and the recipient, or between both of them and some other person the amount of interest paid, having regard to the debt claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case the excess part of the payments shall remain taxabIe according to the taxation Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE IX
1. Remuneration, other than pensions, paid by the Government of Zambia to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Kenyan tax if the individual is not ordinariIy resident in Kenya, or is ordinariIy resident in Kenya soIeIy for the purpose of rendering those services.
2. Remuneration, other than pensions, paid by the Government of Kenya to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Zambian tax if the individual is not ordinariIy resident in Zambia or is ordinariIy resident in Zambia soIeIy for the purpose of rendering those services.
3. The provisions of this Article shall not apply to payments in respect of services rendered in connection with any business carried on by either of the Contracting States for the purposes of profit.
4. For the purposes of this Article the word "Government" shall include any IocaI authority or statutory corporation of either of the Contracting States.
ARTICLE X
1. Any pension or annuity paid by the Government of Zambia to any individual for services rendered to the Government of Zambia in the discharge of governmental functions, or paid by the Central African Pension Fund, which is deemed for the purposes of Zambian tax to be derived from a source in Zambia, shall be exempt from Kenyan tax.
2. Any pension or annuity paid by or out of funds created by the Government of Kenya to any individual for services rendered to the Government of Kenya in the discharge of governmental functions which is deemed for the purposes of Kenyan tax to be derived from a source in Kenya shall be exempt from Zambian tax.
3. For the purposes of this Article the word "Government" shall include any poIiticaI or IocaI authority or statutory corporation of either of the Contracting States.
4. Any pension of annuity, other than a pension referred to in paragraphs 1 and 2 derived from sources within Zambia by an individual who is a resident of Kenya, and subject to Kenyan tax in respect thereof, shall be exempt from Zambian tax.
5. The term "royalty" as used in this Article includes, inter alia, a payment of any kind received as consideration for the use of or the right to use industriaI, commercial or scientific experience, but does not include any amount paid in respect of the operation of a mine, oiI weII or quarry or of any other place of extraction of naturaI resources.
ARTICLE XI
1. An individual who is resident in Zambia shall be exempt from Kenyan tax on his profits or remuneration in respect of personaI, including professionaI, services unless the services are performed, or the empIoyment is exercised in Kenya. To such extent as the services are performed or the empIoyment is exercised in Kenya his profits or remuneration may be taxed in Kenya, but if-
(a) he is present within Kenya for a period or periods not exceeding in the aggregate 183 days during any year of assessment; and
(b) the services are performed for or on behalf of a person who is a resident of Zambia; and
(c) the remuneration or profits are subject to Zambian tax; and
(d) the remuneration or profits are not directly deductibIe from the income for Kenyan tax purposes of a permanent establishment in Kenya of that person; such profits or remuneration shall be exempt from Kenyan tax.
2. An individual who is resident in Kenya shall be exempt from Zambian tax on his profits or remuneration in respect of personaI, including professionaI, services unless the services are performed, or the empIoyment is exercised in Zambia. To such extent as the services are performed or the empIoyment is exercised in Zambia his profits or remuneration may be taxed in Zambia, but if-
(a) he is present within Zambia for a period or periods not exceeding in the aggregate 183 days during any year of assessment; and
(b) the services are performed for or on behalf of a person who is resident in Kenya; and
(c) the remuneration or profits are subject to Kenyan tax; and
(d) the remuneration or profits are not directly deductibIe from the income for Zambian tax purposes of a permanent establishment in Zambia of that person; such profits or remuneration shall be exempt from Zambian tax.
3. Notwithstanding the preceding provisions of this Article, directors' fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company resident in the other Contracting State, may be taxed in that other Contracting State.
4. Those profits or remuneration for personaI services which are deaIt with separateIy in other Articles of this Convention, shall not be affected by the provisions of this Article.
ARTICLE XII
The remuneration derived by a professor or teacher from one of the Contracting States for teaching, during a period of temporary residence not exceeding two years, at a university, coIIege, schooI or other recognised educationaI institution in the other Contracting State, shall be exempt from tax in that other Contracting State if such remuneration is subject to tax in the first-mentioned Contracting State.
ARTICLE XIII
1. A student or business apprentice from one of the Contracting States who is receiving fuII- time education or training in the other Contracting State, and is temporariIy resident there soIeIy for the purpose of such education and training, shall be exempt from tax in that other Contracting State on all payments made to him by persons in the first-mentioned Contracting State for his maintenance, education or training.
2. Any individual from one of the Contracting States who is temporariIy present for a period not exceeding two years in the other Contracting State for the purpose of study, research or training, and who is in receipt of a grant, allowance or award, from a scientific, educationaI reIigious or charitable organisation, or under a technicaI assistance programme of the Government of either Contracting State, shall be exempt from tax in that other Contracting State in respect of that grant, allowance or award, and in respect of any remuneration for personaI services undertaken in connection with such study, research or training and incidentaI thereto.
ARTICLE XIV
Income derived by pubIic entertainers, such as theatre, motion picture, radio and teIevision artistes and musicians, and by athletes from their personaI activities as such, may be taxed in the Contracting State in which these activities are exercised, provided such income is not derived from a visit sponsored officially by the other Contracting State, the cost of which is borne whoIIy or mainIy out of the pubIic funds of that other Contracting State.
ARTICLE XV
For the purposes of the present Convention:
1. Dividends paid by a company which is a resident of one of the Contracting States shall be treated as income from a source within that Contracting State.
2. Interest paid by one of the Contracting States, including any IocaI authority or statutory corporation thereof, or by an enterprise of one of the Contracting States shall be treated as income from sources within that Contracting State; except that-
(a) interest paid by an enterprise of one of the Contracting States with a permanent establishment outside that Contracting State on indebtedness incurred for the use of such permanent establishment in the conduct of its trade and business, and borne by that permanent establishment shall be treated as income from sources within the State in which the permanent establishment is situated; and
(b) in the case of an enterprise of one of the Contracting States engaged in the business of banking, interest paid on deposits made with a permanent establishment of that business outside the Contracting State, shall be treated as income from sources within the State where the permanent establishment is situated.
3. RoyaIties as defined in paragraph 2 of Article VII of this Convention shall be treated as income from sources within the Contracting State in which the property referred to in that paragraph is used.
4. Income from immovable property (including income derived from the alienation of such property) and royaIties paid in respect of the operation of a mine, oiI weII, quarry or of any other place of extraction of naturaI resources, shall be treated as derived from sources within the Contracting State in which such immovable property, mine, oiI weII, quarry or place of extraction of naturaI resources is situated.
ARTICLE XVI
1. Where a resident of Zambia derives income from sources within Kenya which, in accordance with the provisions of this Convention is exempt from Zambian tax but may be taxed in Kenya, then Zambia may, in calculating tax on the remaining income of that person, apply the rate of tax which wouId have been applicable if the income derived from sources within Kenya had not been so exempted.
2. Where a resident of Kenya derives income from sources within Zambia which, in accordance with the provisions of this Convention is exempt from Kenyan tax but may be taxed in Zambia, then Kenya may, in calculating tax on the remaining income of that person, apply the rate of tax which wouId have been applicable if the income derived from sources within Zambia had not been so exempted.
3. Where a resident of one of the Contracting States derives income from sources within the other Contracting State, which apart from the provisions of this Article may be taxed in both Contracting States, then the first-mentioned Contracting State shall allow as a deduction from the tax on the income of that person an amount equaI to the tax paid in that other Contracting State. Such deduction, however, shall not exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income derived from that other Contracting State.
4. For the purposes of paragraph 3 of this Article the term "tax paid" shall be deemed to include any amount which wouId have been payabIe either as Zambian tax but for an exemption or reduction of tax granted under the Pioneer Industries (ReIief from Income Tax) Act, 1965, or as Kenyan tax but for an exemption or reduction of tax under any equivaIent Law, or any similar Law in either of the Contracting States of like purpose and effect.
ARTICLE XVII
1. Residents of one of the Contracting States 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 residents of that other Contracting State in the same circumstances are or may be subjected.
2. The taxation on a permanent establishment which an enterprise of one of the Contracting States has in the other Contracting State shall not be Iess favourabIy Ievied in that other Contracting State than the taxation Ievied on enterprises of that other Contracting State carrying on the same activities.
3. Enterprises of one of the Contracting States, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 Contracting State are or may be subjected.
4. This Article shall not be construed as obIiging either one of the Contracting States to grant to residents of the other Contracting State any personaI allowances, abatements, reIiefs and reductions for tax purposes which by Law are only avaliable to its own residents.
5. In this Article the term "taxation" means taxes of every kind and description.
ARTICLE XVIII
The taxation authorities of the Contracting States shall exchange such information, being information which is avaliable under their respective taxation Laws, as is necessary for the carrying out of the provisions of the present Convention or for the prevention of fraud or the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of this Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of the taxes which are the subject of this Convention, or with the determination of appeals in reIation thereto. No information shall be exchanged which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE XIX
1. Where it appears to the taxation authorities of one of the Contracting States that a taxpayer resident in that Contracting State has not received the treatment to which he is entitIed under the provisions of this Convention, so that his income or any part of his income is subjected to double taxation, those taxation authorities shall, on due request by the taxpayer, consult with the taxation authorities of the other Contracting State with a view to the avoidance of the double taxation in question.
2. The taxation authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of the present Convention and for resoIving any difficuIty or doubt as to its application or interpretation.
ARTICLE XX
The present Convention shall come into force on the Ratified on 29th JuIy, 1969.*date when the Iast of all such things shall have been done in Zambia and Kenya as are necessary to give the Convention the force of Law in Zambia and Kenya respectively, and shall thereupon have effect-
(a) in Zambia, in respect of tax for any period of assessment or charge beginning after 1st April, 1964;
(b) in Kenya, in respect of tax for any period of assessment beginning after 1st January, 1964.
ARTICLE XXI
1. The present Convention shall continue in effect indefiniteIy but either of the Contracting States may on or before the Iast day of March in any calendar year not earIier than 1969 give notice of termination to the other Contracting State and, in such event, the Convention shall cease to be effective-
(a) in Zambia, in respect of tax for any period of assessment or charge beginning on or after the first day of April in the calendar year next following that in which such notice is given;
(b) in Kenya, in respect of tax for any period of assessment beginning on or after the first day of January in the calendar year next following that in which such notice is given.
2. The termination of the present Convention shall not have the effect of reviving any convention, agreement or arrangement abrogated by the present Convention.
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE UNITED REPUBLIC OF TANZANIA 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 United Republic of Tanzania,
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 foIIows:
ARTICLE I
1. The taxes which are the subject of the present Convention are-
(a) in Zambia (and hereinafter referred to as "Zambian tax")-
(i) the income tax;
(ii) supertax;
(iii) the undistributed profits tax; and
(iv) the personaI Ievy.
(b) in Tanzania (and hereinafter referred to as "Tanzanian tax")-
(i) the income tax;
(ii) corporation tax;
(iii) the undistributed income tax; and
(iv) the personaI tax.
2. The present Convention shall also apply to any other taxes of a substantially similar character imposed in Zambia or Tanzania subsequently to the date of signature of the present Convention. At the end of each year the taxation authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation Laws.
ARTICLE II
1. In the present Convention, unless the context otherwise requires-
(a) the term "Zambia" means the Republic of Zambia;
(b) the term "Tanzania" means the United Republic of Tanzania;
(c) the terms "one of the Contracting States" and "the other Contracting State" mean Zambia or Tanzania, as the context requires;
(d) the term "tax" means Zambian tax or Tanzanian tax, 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 "person" includes any body of persons corporate or not corporate;
(g) the term "resident of Zambia" means any person who is resident in Zambia for the purposes of Zambian tax and not resident in Tanzania for the purposes of Tanzanian tax; the term "resident of Tanzania" means any person who is resident in Tanzania for the purposes of Tanzanian tax and not resident in Zambia for the purposes of Zambian tax, and a company shall be regarded as resident in Zambia if its business is managed and controIIed in Zambia and resident in Tanzania if its business is managed and controIIed in Tanzania;
(h) the terms "resident of one of the Contracting States" and "resident of the other Contracting State" mean a resident of Zambia or a resident of Tanzania, as the context requires;
(i) the terms "Zambian enterprise" and "Tanzanian enterprise" mean, respectively, an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking carried on by a resident of Zambia, and an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking carried on by a resident of Tanzania;
(j) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean a Zambian enterprise or a Tanzanian enterprise, as the context requires.
2. In the application of the provisions of the present Convention by the Government of one of the Contracting States, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of the present Convention.
ARTICLE III
1. For the purposes of this Convention the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy carried on.
2. The term "permanent establishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oiI weII, quarry or other place of extraction of naturaI resources;
(g) a farm or pIantation;
(h) a building site or construction or assembly project which exists for more than six months.
3. The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
4. An enterprise of one of the Contracting States shall be deemed to have a permanent establishment in the other Contracting State if-
(a) it carries on supervisory activities in that other Contracting State for more than six months in connection with a construction, installation or assembly project which is being undertaken in that other Contracting State;
(b) it carries on a business which consists of providing the services of pubIic entertainers referred to in Article XIV, in that other Contracting State.
5. A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State-other than an agent of independent status to whom paragraph 6 applies-shall be deemed to be a permanent establishment in the former Contracting State if-
(a) he has, and habitually exercises in that former Contracting State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise; or
(b) he maintains in that former Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly fiIIs orders on behalf of the enterprise.
6. An enterprise of one of the Contracting States 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 independent status, where such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of one of the Contracting States controIs or is controIIed 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 IV
1. The industrial and commercia lprofits of an enterprise of a Contracting State shall be taxabIe 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 tax may be imposed in that other Contracting State, but only on so much of them as is attributable to the permanent establishment.
2. Where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein-
(a) 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 whoIIy independentIy with the enterprise of which it is a permanent establishment;
(b) subject to the provisions of sub-paragraph (a) no industrial or commercial profits derived from sources outside that other Contracting State shall be attributed to that permanent establishment.
3. No part of the profits arising from the saIe of goods or merchandise by an enterprise in one of the Contracting States shall be attributed to a permanent establishment situated in the other Contracting State by reason of the mere purchase of the goods or merchandise within that other Contracting State.
4. In determining the industrial or commercial profits of a permanent establishment, there shall be allowed as deductions all expenses, including administrative and executive expenses, which wouId be deductibIe if the permanent establishment were an independent enterprise in so far as they are reasonabIy allocatable to the permanent establishment, whether incurred in the Contracting State in which the permanent establishment is situated or eIsewhere.
5. Nothing in this Article shall precIude either Contracting State from determining the profits to be attributed to a permanent establishment in that State on the basis of an apportionment of the total profits of the enterprise to its various parts as may be customary. The method of apportionment adopted shall, however, be such that the resuIt shall be in accordance with the principIes Iaid down in this Article.
6. Save where expressIy provided eIsewhere in this Convention, this Article shall not apply, if by reason of its application industrial and commercial profits which wouId normally be subject to tax in one of the Contracting States, wouId not be subject to tax in either of the Contracting States.
7. Where industrial and commercial profits include items of income which are deaIt with separateIy in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
8. Where-
(a) an enterprise of one of the Contracting States 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 one of the Contracting States 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 wouId be made between independent enterprises, then any profits which wouId 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.
ARTICLE V
1. Income or profits derived by the Government, a IocaI authority or statutory corporation of one of the Contracting States from the operation of ships, aircraft or railways, shall be exempt from tax in the other Contracting State.
2. Income or profits derived by a resident of one of the Contracting States from the operation of ships and aircraft shall be exempt from tax in the other Contracting State unless the ship or aircraft is operated whoIIy or mainIy between places within that other Contracting State.
3. -
(a) A resident of Zambia who derives profits from the operation of overIand transport services in Tanzania, may be subject to tax in Tanzania on such proportion of those profits that derive from traffic orginating in Tanzania but the tax so charged shall be allowed as a credit against any Zambian tax charged in respect of that same income.
(b) A resident of Tanzania who derives profits from the operation of overIand transport services in Zambia, may be subject to tax in Zambia on such proportion of those profits that derive from traffic originating in Zambia but the tax so charged shall be allowed as a credit against any Tanzanian tax charged in respect of that same income.
ARTICLE VI
1. Dividends paid by a company resident in Tanzania to a resident of Zambia who is subject to Zambian tax in respect thereof shall be exempt from any tax in Tanzania which is chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
2. Dividends paid by a company resident in Zambia to a resident of Tanzania who is subject to Tanzanian tax in respect thereof shall be exempt from any tax in Zambia which is chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
3. Where a company which is a resident of one of the Contracting States derives profits or income from sources within the other Contracting State, there shall not be imposed in that other Contracting State any form of taxation on dividends paid by the company to persons not resident in that other Contracting State, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or part, profits or income so derived.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment, with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case Article IV concerning the allocation of profits to permanent establishments shall apply.
5. If the system of taxation applicable in either of the Contracting States to the profits and distributions of companies is altered the taxation authorities may consult each other in order to determine whether it is necessary for this reason to amend the provisions of paragraphs 1 and 2 of this Article.
ARTICLE VII
1. Any royalty or rent, including royalty or rent in respect of cinematograph or teIevision fiIms or tapes, or any sound recording or advertising matter connected with such fiIms, or any other consideration received by or accrued to a resident of one of the Contracting States by virtue of the use in the other Contracting State of or the grant of permission to use in that other Contracting State any patent, design, modeI, pIan, trade mark, copyright, secret process, formula or other property of a similar nature, including any amount received or accrued for the imparting of or the undertaking to impart any knowIedge directly or indirectly connected with the use of any such fiIms, sound recording, advertising matter, patent, design, modeI, pIan, trade mark, copyright, secret process, formula or other property of a similar nature, shall be exempt from tax in the first-mentioned Contracting State if such royalty or rent is subject to tax in the other Contracting State.
2. The term "royalty" as used in this Article includes, inter alia, a payment of any kind received as consideration for the use of or the right to use industriaI, commercial or scientific experience, but does not include any amount paid in respect of the operation of a mine, oiI weII or quarry or of any other place of extraction of naturaI resources.
ARTICLE VIII
1. Interest from a source in one of the Contracting States derived by a resident in the other Contracting State shall be exempt from tax in that other Contracting State, unless it is not subject to tax in the first-mentioned Contracting State.
2. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt claims of every kind as weII as all other income assimilated to income from money Ient by the taxation Law of the Contracting State in which the income arises.
3. Where, owing to a speciaI relationship between the payer and the recipient, or between both of them and some other person the amount of interest paid, having regard to the debt claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case the excess part of the payments shall remain taxabIe according to the taxation Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE IX
1. Remuneration, other than pensions, paid by the Government of Zambia to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Tanzanian tax if the individual is not ordinariIy resident in Tanzania, or is ordinariIy resident in Tanzania soIeIy for the purpose of rendering those services.
2. Remuneration, other than pensions, paid by the Government of Tanzania to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Zambian tax if the individual is not ordinariIy resident in Zambia or is ordinariIy resident in Zambia soIeIy for the purpose of rendering those services.
3. The provisions of this Article shall not apply to payments in respect of services rendered in connection with any business carried on by either of the Contracting States for the purposes of profit.
4. For the purposes of this Article the word "Government" shall include any IocaI authority or statutory corporation of either of the Contracting States.
ARTICLE X
1. Any pension or annuity paid by the Government of Zambia to any individual for services rendered to the Government of Zambia in the discharge of governmental functions, or paid by the Central African Pension Fund, which is deemed for the purposes of Zambian tax to be derived from a source in Zambia, shall be exempt from Tanzanian tax.
2. Any pension or annuity paid by or out of funds created by the Government of Tanzania to any individual for services rendered to the Government of Tanzania in the discharge of governmental functions which is deemed for the purposes of Tanzanian tax to be derived from a source in Tanzania, shall be exempt from Zambian tax.
3. For the purposes of this Article the word "Government" shall include any poIiticaI or IocaI authority or statutory corporation of either of the Contracting States.
4. Any pension or annuity, other than a pension referred to in paragraphs 1 and 2 derived from sources within Zambia by an individual who is a resident of Tanzania, and subject to Tanzanian tax in respect thereof, shall be exempt from Zambian tax.
5. Any pension or annuity, other than a pension referred to in paragraphs 1 and 2 derived from sources within Tanzania by an individual who is a resident of Zambia, and subject to Zambian tax in respect thereof shall be exempt from Tanzanian tax.
ARTICLE XI
1. An individual who is resident in Zambia shall be exempt from Tanzania tax on his profits or remuneration in respect of personaI, including professionaI, services unless the services are performed, or the empIoyment is exercised in Tanzania. To such extent as the services are performed or the empIoyment is exercised in Tanzania his profits or remuneration may be taxed in Tanzania, but if-
(a) he is present within Tanzania for a period or periods not exceeding in the aggregate 183 days during any year of assessment; and
(b) the services are performed for or on behalf of a person who is a resident of Zambia; and
(c) the remuneration or profits are subject to Zambian tax; and
(d) the remuneration or profits are not directly deductibIe from the income for Tanzanian tax purposes of a permanent establishment in Tanzania of that person;
such profits or remuneration shall be exempt from Tanzanian tax.
2. An individual who is resident in Tanzania shall be exempt from Zambian tax on his profits or remuneration in respect of personaI, including professionaI, services unless the services are performed, or the empIoyment is exercised in Zambia. To such extent as the services are performed or the empIoyment is exercised in Zambia his profits or remuneration may be taxed in Zambia, but if-
(a) he is present within Zambia for a period or periods not exceeding in the aggregate 183 days during any year of assessment; and
(b) the services are performed for or on behalf of a person who is resident in Tanzania; and
(c) the remuneration or profits are subject to Tanzanian tax; and
(d) the remuneration or profits are not directly deductibIe from the income for Zambian tax purposes of a permanent establishment in Zambia of that person;
such profits or remuneration shall be exempt from Zambian tax.
3. Notwithstanding the preceding provisions of this Article, directors' fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company resident in the other Contracting State, may be taxed in that other Contracting State.
4. Those profits or remuneration for personaI services which are deaIt with separateIy in other Articles of this Convention, shall not be affected by the provisions of this Article.
ARTICLE XII
The remuneration derived by a professor or teacher from one of the Contracting States for teaching, during a period of temporary residence not exceeding two years, at a university, coIIege, schooI or other recognised educationaI institution in the other Contracting State, shall be exempt from tax in that other Contracting State if such remuneration is subject to tax in the first-mentioned Contracting State.
ARTICLE XIII
1. A student or business apprentice from one of the Contracting States who is receiving fuII time education or training in the other Contracting State, and is temporariIy resident there soIeIy for the purpose of such education and training, shall be exempt from tax in that other Contracting State on all payments made to him by persons in the first-mentioned Contracting State for his maintenance, education or training.
2. Any individual from one of the Contracting States, who is temporariIy present for a period not exceeding two years in the other Contracting State for the purpose of study, research or training, and who is in receipt of a grant, allowance or award, from a scientific, educationaI, reIigious or charitable organisation, or under a technicaI assistance programme of the Government of either Contracting State, shall be exempt from tax in that other Contracting State in respect of that grant, allowance or award, and in respect of any remuneration for personaI services undertaken in connection with such study, research or training and incidentaI thereto.
ARTICLE XIV
Income derived by pubIic entertainers, such as theatre, motion picture, radio and teIevision artistes and musicians, and by athletes from their personaI activities as such, may be taxed in the Contracting State in which these activities are exercised, provided such income is not derived from a visit sponsored officially by the other Contracting State, the cost of which is borne whoIIy or mainIy out of the pubIic funds of that other Contracting State.
ARTICLE XV
For the purposes of the present Convention-
1. Dividends paid by a company which is a resident of one of the Contracting States shall be treated as income from a source within that Contracting State.
2. Interest paid by one of the Contracting States, including any IocaI authority or statutory corporation thereof, or by an enterprise of one of the Contracting States shall be treated as income from sources within that Contracting State; except that-
(a) interest paid by an enterprise of one of the Contracting States with a permanent establishment outside that Contracting State on indebtedness incurred for the use of such permanent establishment in the conduct of its trade and business, and borne by that permanent establishment shall be treated as income from sources within the State in which the permanent establishment is situated; and
(b) in the case of an enterprise of one of the Contracting States engaged in the business of banking, interest paid on deposits made with a permanent establishment of that business outside the Contracting State, shall be treated as income from sources within the State where the permanent establishment is situated.
3. RoyaIties as defined in paragraph 2 of Article VII of this Convention shall be treated as income from sources within the Contracting State in which the property referred to in that paragraph is used.
4. Income from immovable property (including income derived from the alienation of such property) and royaIties paid in respect of the operation of a mine, oiI weII, quarry or of any other place of extraction of naturaI resources, shall be treated as derived from sources within the Contracting State in which such immovable property, mine, oiI weII, quarry or place of extraction of naturaI resources is situated.
ARTICLE XVI
1. Where a resident of Zambia derives income from sources within Tanzania which, in accordance with the provisions of this Convention is exempt from Zambian tax but may be taxed in Tanzania, then Zambia may, in calculating tax on the remaining income of that person, apply the rate of tax which wouId have been applicable if the income derived from sources within Tanzania had not been so exempted.
2. Where a resident of Tanzania derives income from sources within Zambia which, in accordance with the provisions of this Convention is exempt from Tanzanian tax but may be taxed in Zambia, then Tanzania may, in calculating tax on the remaining income of that person, apply the rate of tax which wouId have been applicable if the income derived from sources within Zambia had not been so exempted.
3. Where a resident of one of the Contracting States derives income from sources within the other Contracting State, which apart from the provisions of this Article may be taxed in both Contracting States, then the first-mentioned Contracting State shall allow as a deduction from the tax on the income of that person an amount equaI to the tax paid in that other Contracting State. Such deduction, however, shall not exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income derived from that other Contracting State.
4. For the purposes of paragraph 3 of this Article the term "tax paid" shall be deemed to include any amount which wouId have been payabIe either as Zambian tax but for an exemption or reduction of tax granted under the Pioneer Industries (ReIief from Income Tax) Act, 1965, or as Tanzanian tax but for an exemption or reduction of tax under any equivaIent Law, or any similar Law in either of the Contracting States of like purpose and effect.
ARTICLE XVII
1. Residents of one of the Contracting States 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 residents of that other Contracting State in the same circumstances are or may be subjected.
2. The taxation on a permanent establishment which an enterprise of one of the Contracting States has in the other Contracting State shall not be Iess favourabIy Ievied in that other Contracting State than the taxation Ievied on enterprises of that other Contracting State carrying on the same activities.
3. Enterprises of one of the Contracting States, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 Contracting State are or may be subjected.
4. This Article shall not be construed as obIiging either one of the Contracting States to grant to residents of the other Contracting State any personaI allowances, abatements, reIiefs and reductions for tax purposes which by Law are only avaliable to its own residents.
5. In this Article the term "taxation" means taxes of every kind and description.
ARTICLE XVIII
The taxation authorities of the Contracting States shall exchange such information, being information which is avaliable under their respective taxation Laws, as is necessary for the carrying out of the provisions of the present Convention or for the prevention of fraud or the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of this Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of taxes which are the subject of this Convention, or with the determination of appeals in reIation thereto. No information shall be exchanged which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE XIX
1. Where it appears to the taxation authorities of one of the Contracting States that a taxpayer resident in that Contracting State has not received the treatment to which he is entitIed under the provisions of this Convention, so that his income or any part of his income is subjected to double taxation, those taxation authorities shall, on due request by the taxpayer, consult with the taxation authorities of the other Contracting State with a view to the avoidance of the double taxation in question.
2. The taxation authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of the present Convention and for resoIving any difficuIty or doubt as to its application or interpretation.
ARTICLE XX
The present Convention shall come into force on the date
(a) in Zambia, in respect of tax for any period of assessment or charge beginning after 1st April, 1964;
(b) in Tanzania, in respect of tax for any period of assessment beginning after 1st January, 1964.
ARTICLE XXI
1. The present Convention shall continue in effect indefiniteIy but either of the Contracting States may on or before the Iast day of March in any calendar year not earIier than 1969 give notice of termination to the other Contracting State, and, in such event, the Convention shall cease to be effective-
(a) in Zambia, in respect of tax for any period of assessment or charge beginning on or after the first day of April, in the calendar year next following that in which such notice is given;
(b) in Tanzania, in respect of tax for any period of assessment beginning on or after the first day of January in the calendar year next following that in which such notice is given.
2. The termination of the present Convention shall not have the effect of reviving any convention, agreement or arrangement abrogated by the present Convention.
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE REPUBLIC OF UGANDA 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 Uganda, 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 foIIows:
ARTICLE I
1. The taxes which are the subject of the present Convention are-
(a) in Zambia (and hereinafter referred to as "Zambian tax")-
(i) the income tax;
(ii) supertax;
(iii) the undistributed profits tax; and
(iv) the personaI Ievy;
(b) in Uganda (and hereinafter referred to as "Ugandan tax")-
(i) the income tax;
(ii) corporation tax;
(iii) the undistributed income tax; and
(iv) the personaI graduated tax.
2. The present Convention shallalso apply to any other taxes of a substantially similar character imposed in Zambia or Uganda subsequently to the date of signature of the present Convention. At the end of each year the taxation authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation Laws.
ARTICLE II
1. In the present Convention, unless the context otherwise requires-
(a) the term "Zambia" means the Republic of Zambia;
(b) the term "Uganda" means the Republic of Uganda;
(c) the terms "one of the Contracting States" and "the other Contracting State" mean Zambia or Uganda, as the context requires;
(d) the term "tax" means Zambian tax or Ugandan tax, 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 "person" includes any body of persons corporate or not corporate;
(g) the term "resident of Zambia" means any person who is resident in Zambia for the purposes of Zambian tax and not resident in Uganda for the purposes of Ugandan tax; the term "resident of Uganda" means any person who is resident in Uganda for the purposes of Ugandan tax and not resident in Zambia for the purposes of Zambian tax, and a company shall be regarded as resident in Zambia if its business is managed and controIIed in Zambia and resident in Uganda if its business is managed and controIIed in Uganda;
(h) the terms "resident of one of the Contracting States" and "resident of the other Contracting State" mean a resident of Zambia or a resident of Uganda, as the context requires;
(i) the terms "Zambian enterprise" and "Ugandan enterprise" mean, respectively, an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking carried on by a resident of Zambia, and an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking carried on by a resident of Uganda;
(j) the terms "enterprise of one of the Contracting States" and "enterprise of the other Contracting State" mean a Zambian enterprise or a Ugandan enterprise, as the context requires.
2. In the application of the provisions of the present Convention by the Government of one of the Contracting States, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of the present Convention.
ARTICLE III
1. For the purposes of this Convention the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy carried on.
2. The term "permanent establishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oiI weII, quarry or other place of extraction of naturaI resources;
(g) a farm or pIantation;
(h) a building site or construction or assembly project which exists for more than six months.
3. The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
4. An enterprise of one of the Contracting States shall be deemed to have a permanent establishment in the other Contracting State if-
(a) it carries on supervisory activities in that other Contracting State for more than six months in connection with a construction, installation or assembly project which is being undertaken in that other Contracting State;
(b) it carries on a business which consists of providing the services of pubIic entertainers referred to in Article XIV, in that other Contracting State.
5. A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State-other than an agent of independent status to whom paragraph 6 applies-shall be deemed to be a permanent establishment in the former Contracting State if-
(a) he has, and habitually exercises in that former Contracting State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise; or
(b) he maintains in that former Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly fiIIs orders on behalf of the enterprise.
6. An enterprise of one of the Contracting States 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 independent status, where such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of one of the Contracting States controIs or is controIIed 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 IV
1. The industrial and commercial profits of an enterprise of a Contracting State shall be taxabIe 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, tax may be imposed in that other Contracting State, but only on so much of them as is attributable to the permanent establishment.
2. Where an enterprise of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein-
(a) 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 whoIIy independentIy with the enterprise of which it is a permanent establishment;
(b) subject to the provisions of sub-paragraph (a) no industrial or commercial profits derived from sources outside that other Contracting State shall be attributed to that permanent establishment.
3. No part of the profits arising from the saIe of goods or merchandise by an enterprise in one of the Contracting States shall be attributed to a permanent establishment situated in the other Contracting State by reason of the mere purchase of the goods or merchandise within that other Contracting State.
4. In determining the industrial or commercial profits of a permanent establishment there shall be allowed as deductions all expenses, including administrative and executive expenses, which wouId be deductibIe if the permanent establishment were an independent enterprise in so far as they are reasonabIy allocatable to the permanent establishment, whether incurred in the Contracting State in which the permanent establishment is situated or eIsewhere.
5. Nothing in this Article shall precIude either Contracting State from determining the profits to be attributed to a permanent establishment in that State on the basis of an apportionment of the total profits of the enterprise to its various parts as may be customary. The method of apportionment adopted shall, however, be such that the resuIt shall be in accordance with the principIes Iaid down in this Article.
6. Save where expressIy provided eIsewhere in this Convention, this Article shall not apply, if by reason of its application industrial and commercial profits which wouId normally be subject to tax in one of the Contracting States, wouId not be subject to tax in either of the Contracting States.
7. Where industrial and commercial profits include items of income which are deaIt with separateIy in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
8. Where-
(a) an enterprise of one of the Contracting States 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 one of the Contracting States 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 wouId be made between independent enterprises, then any profits which wouId 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.
ARTICLE V
1. Income or profits derived by the Government, a IocaI authority or statutory corporation of one of the Contracting States from the operation of ships, aircraft or railways, shall be exempt from tax in the other Contracting State.
2. Income or profits derived by a resident of one of the Contracting States from the operation of ships and aircraft shall be exempt from tax in the other Contracting State unless the ship or aircraft is operated whoIIy or mainIy between places within that other Contracting State.
3. -
(a) A resident of Zambia who derives profits from the operation of overIand transport services in Uganda, may be subject to tax in Uganda on such proportion of those profits that derive from traffic originating in Uganda; but the tax so charged shall be allowed as a credit against any Zambian tax charged in respect of that same income.
(b) A resident of Uganda who derives profits from the operation of overIand transport services in Zambia, may be subject to tax in Zambia on such proportion of those profits that derive from traffic originating in Zambia; but the tax so charged shall be allowed as a credit against any Ugandan tax charged in respect of that same income.
ARTICLE VI
1. Dividends paid by a company resident in Uganda to a resident of Zambia who is subject to Zambian tax in respect thereof shall be exempt from any tax in Uganda which is chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
2. Dividends paid by a company resident in Zambia to a resident of Uganda who is subject to Ugandan tax in respect thereof shall be exempt from any tax in Zambia which is chargeable on dividends in addition to the tax chargeable on the profits or income of the company.
3. Where a company which is a resident of one of the Contracting States derives profits or income from sources within the other Contracting State, there shall not be imposed in that other Contracting State any form of taxation on dividends paid by the company to persons not resident in that other Contracting State, or any tax in the nature of an undistributed profits tax on undistributed profits of the company, whether or not those dividends or undistributed profits represent, in whole or part, profits or income so derived.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment, with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case Article IV concerning the allocation of profits to permanent establishments shall apply.
5. If the system of taxation applicable in either of the Contracting States to the profits and distributions of companies is altered the taxation authorities may consult each other in order to determine whether it is necessary for this reason to amend the provisions of paragraphs 1 and 2 of this Article.
ARTICLE VII
1. Any royalty or rent, including royalty or rent in respect of cinematograph or teIevision fiIms or tapes, or any sound recording or advertising matter connected with such fiIms, or any other consideration received by or accrued to a resident of one of the Contracting States by virtue of the use in the other Contracting State of or the grant of permission to use in that other Contracting State any patent, design, modeI, pIan, trade mark, copyright, secret process, formula or other property of a similar nature, including any amount received or accrued for the imparting of or the undertaking to impart any knowIedge directly or indirectly connected with the use of such fiIms, sound recording, advertising matter, patent, design, modeI, pIan, trade mark, copyright, secret process, formula or other property of a similar nature, shall be exempt from tax in the first-mentioned Contracting State if such royalty or rent is subject to tax in the other Contracting State.
2. The term "royalty" as used in this Article includes, inter alia, a payment of any kind received as a consideration for the use of or the right to use industriaI, commercial or scientific experience, but does not include any amount paid in respect of the operation of a mine, oiI weII or quarry or of any other place of extraction of naturaI resources.
ARTICLE VIII
1. Interest from a source in one of the Contracting States derived by a resident in the other Contracting State shall be exempt from tax in that other Contracting State, unless it is not subject to tax in the first-mentioned Contracting State.
2. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt claims of every kind as weII as all other income assimilated to income from money Ient by the taxation Law of the Contracting State in which the income arises.
3. Where, owing to a speciaI relationship between the payer and the recipient, or between both of them and some other person, the amount of interest paid, having regard to the debt claim for which it is paid exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case the excess part of the payments shall remain taxabIe according to the taxation Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE IX
1. Remuneration other than pensions paid by the Government of Zambia to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Ugandan tax if the individual is not ordinariIy resident in Uganda, or is ordinariIy resident in Uganda soIeIy for the purpose of rendering those services.
2. Remuneration, other than pensions paid by the Government of Uganda to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from Zambian tax if the individual is not ordinariIy resident in Zambia or is ordinariIy resident in Zambia soIeIy for the purpose of rendering those services.
3. The provisions of this Article shall not apply to payments in respect of services rendered in connection with any business carried on by either of the Contracting States for the purposes of profit.
4. For the purposes of this Article the word "Government" shall include any IocaI authority or statutory corporation of either of the Contracting States.
ARTICLE X
1. Any pension or annuity paid by the Government of Zambia to any individual for services rendered to the Government of Zambia in the discharge of governmental functions, or paid by the Central African Pension Fund, which is deemed for the purposes of Zambian tax to be derived from a source in Zambia, shall be exempt from Ugandan tax.
2. Any pension or annuity paid by or out of funds created by the Government of Uganda to any individual for services rendered to the Government of Uganda in the discharge of governmental functions which is deemed for the purposes of Ugandan tax to be derived from a source in Uganda, shall be exempt from Zambian tax.
3. For the purposes of this Article the word "Government" shall include any poIiticaI or IocaI authority or statutory corporation of either of the Contracting States.
4. Any pension or annuity, other than a pension referred to in paragraphs 1 and 2 derived from sources within Zambia by an individual who is a resident of Uganda, and subject to Ugandan tax in respect thereof, shall be exempt from Zambian tax.
5. Any pension or annuity, other than a pension referred to in paragraphs 1 and 2 derived from sources within Uganda by an individual who is a resident of Zambia, and subject to Zambian tax in respect thereof, shall be exempt from Ugandan tax.
ARTICLE XI
1. An individual who is resident in Zambia shall be exempt from Ugandan tax on his profits or remuneration in respect of personaI, including professionaI, services unless the services are performed, or the empIoyment is exercised, in Uganda. To such extent as the services are performed or the empIoyment is exercised in Uganda his profits or remuneration may be taxed in Uganda, but if-
(a) he is present within Uganda for a period or periods not exceeding in the aggregate 183 days during any year of assessment; and
(b) the services are performed for or on behalf of a person who is a resident of Zambia; and
(c) the remuneration or profits are subject to Zambian tax; and
(d) the remuneration or profits are not directly deductibIe from the income for Ugandan tax purposes of a permanent establishment in Uganda of that person;
such profits or remuneration shall be exempt from Ugandan tax.
2. An individual who is resident in Uganda shall be exempt from Zambian tax on his profits or remuneration in respect of personaI, including professionaI, services unless the services are performed, or the empIoyment is exercised, in Zambia. To such extent as the services are performed or the empIoyment is exercised in Zambia his profits or remuneration may be taxed in Zambia, but if-
(a) he is present within Zambia for a period or periods not exceeding in the aggregate 183 days during any year of assessment; and
(b) the services are performed for or on behalf of a person who is resident in Uganda; and
(c) the remuneration of profits are subject to Ugandan tax; and
(d) the remuneration or profits are not directly deductibIe from the income for Zambian tax purposes of a permanent establishment in Zambia of that person;
such profits or remuneration shall be exempt from Zambian tax.
3. Notwithstanding the preceding provisions of this Article, directors' fees and similar payments derived by a resident of one of the Contracting States in his capacity as a member of the board of directors of a company resident in the other Contracting State, may be taxed in that other Contracting State.
4. Those profits or remuneration for personaI services which are deaIt with separateIy in other Articles of this Convention, shall not be affected by the provisions of this Article.
ARTICLE XII
The remuneration derived by a professor or teacher from one of the Contracting States for teaching, during a period of temporary residence not exceeding two years, at a university, coIIege, schooI or other recognised educationaI institution in the other Contracting State, shall be exempt from tax in that other Contracting State if such remuneration is subject to tax in the first-mentioned Contracting State.
ARTICLE XIII
1. A student or business apprentice from one of the Contracting States who is receiving fuII time education or training in the other Contracting State, and is temporariIy resident there soIeIy for the purpose of such education and training, shall be exempt from tax in that other Contracting State on all payments made to him by persons in the first-mentioned Contracting State for his maintenance, education or training.
2. Any individual from one of the Contracting States, who is temporariIy present for a period not exceeding two years in the other Contracting State for the purpose of study, research or training, and who is in receipt of a grant, allowance or award from a scientific, educationaI, reIigious or charitable organisation, or under a technicaI assistance programme of the Government of either Contracting State, shall be exempt from tax in that other Contracting State in respect of that grant, allowance or award, and in respect of any remuneration for personaI services undertaken in connection with such study, research or training and incidentaI thereto.
ARTICLE XIV
Income derived by pubIic entertainers, such as theatre, motion picture, radio and teIevision artistes and musicians, and by athletes from their personaI activities as such, may be taxed in the Contracting State in which these activities are exercised, provided such income is not derived from a visit sponsored officially by the other Contracting State, the cost of which is borne whoIIy or mainIy out of the pubIic funds of that other Contracting State.
ARTICLE XV
For the purposes of the present Convention:
1. Dividends paid by a company which is a resident of one of the Contracting States shall be treated as income from a source within that Contracting State.
2. Interest paid by one of the Contracting States, including any IocaI authority or statutory corporation thereof, or by an enterprise of one of the Contracting States shall be treated as income from sources within that Contracting State; except that-
(a) interest paid by an enterprise of one of the Contracting States with a permanent establishment outside that Contracting State on indebtedness incurred for the use of such permanent establishment in the conduct of its trade and business, and borne by that permanent establishmentshall be treated as income from sources within the State in which the permanent establishment is situated; and
(b) in the case of an enterprise of one of the Contracting States engaged in the business of banking, interest paid on deposits made with a permanent establishment of that business outside the Contracting State, shall be treated as income from sources within the State where the permanent establishment is situated.
3. RoyaIties as defined in paragraph 2 of Article VII of this Convention shall be treated as income from sources within the Contracting State in which the property referred to in that paragraph is used.
4. Income from immovable property (including income derived from the alienation of such property) and royaIties paid in respect of the operation of a mine, oiI weII, quarry or of any other place of extraction of naturaI resources, shall be treated as derived from sources within the Contracting State in which such immovable property, mine, oiI weII, quarry or place of extraction of naturaI resources is situated.
ARTICLE XVI
1. Where a resident of Zambia derives income from sources within Uganda which, in accordance with the provisions of this Convention is exempt from Zambian tax but may be taxed in Uganda, then Zambia may, in calculating tax on the remaining income of that person, apply the rate of tax which wouId have been applicable if the income derived from sources within Uganda had not been so exempted.
2. Where a resident of Uganda derives income from sources within Zambia which, in accordance with the provisions of this Convention is exempt from Ugandan tax but may be taxed in Zambia, then Uganda may, in calculating tax on the remaining income of that person, apply the rate of tax which wouId have been applicable if the income derived from sources within Zambia had not been so exempted.
3. Where a resident of one of the Contracting States derives income from sources within the other Contracting State, which apart from the provisions of this Article may be taxed in both the Contracting States, then the first-mentioned Contracting State shall allow as a deduction from the tax on the income of that person an amount equaI to the tax paid in that other Contracting State. Such deduction, however, shall not exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income derived from that other Contracting State.
4. For the purposes of paragraph 3 of this Article the term "tax paid" shall be deemed to include any amount which wouId have been payabIe either as Zambian tax but for an exemption or reduction of tax granted under the Pioneer Industries (ReIief from Income Tax) Act, 1965, or as Ugandan tax but for an exemption or reduction of tax under any equivaIent Law, or any similar Law in either of the Contracting States of like purpose and effect.
ARTICLE XVII
1. Residents of one of the Contracting States 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 residents of that other Contracting State in the same circumstances are or may be subjected.
2. The taxation on a permanent establishment which an enterprise of one of the Contracting States has in the other Contracting State shall not be Iess favourabIy Ievied in that other Contracting State than the taxation Ievied on enterprises of that other Contracting State carrying on the same activities.
3. Enterprises of one of the Contracting States, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 Contracting State are or may be subjected.
4. This Article shall not be construed as obIiging either one of the Contracting States to grant to residents of the other Contracting State any personaI allowances, abatements, reIiefs and reductions for tax purposes which by Law are only avaliable to its own residents.
5. In this Article the term "taxation" means taxes of every kind and description.
ARTICLE XVIII
The taxation authorities of the Contracting States shall exchange such information, being information which is avaliable under their respective taxation Laws, as is necessary for the carrying out of the provisions of the present Convention or for the prevention of fraud or the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of this Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons other than those concerned with the assessment and coIIection of the taxes which are the subject of this Convention, or with the determination of appeals in reIation thereto. No information shall be exchanged which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE XIX
1. Where it appears to the taxation authorities of one of the Contracting States that a taxpayer resident in that Contracting State has not received the treatment to which he is entitIed under the provisions of this Convention, so that his income or any part of his income is subjected to double taxation, those taxation authorities shall, on due request by the taxpayer, consult with the taxation authorities of the other Contracting State with a view to the avoidance of the double taxation in question.
2. The taxation authorities of the Contracting States may communicate with each other directly for the purpose of giving effect to the provisions of the present Convention and for resoIving any difficuIty or doubt as to its application or interpretation.
ARTICLE XX
The present Convention shall come into force on the Ratified on 29th JuIy, 1969.*date when the Iast of all such things shall have been done in Zambia and Uganda as are necessary to give the Convention the force of Law in Zambia and Uganda respectively, and shall thereupon have effect-
(a) in Zambia, in respect of tax for any period of assessment or charge beginning after 1stApril, 1964;
(b) in Uganda, in respect of tax for any period of assessment beginning after 1st January, 1964.
ARTICLE XXI
1. The present Convention shall continue in effect indefiniteIy but either of the Contracting States may on or before the Iast day of March in any calendar year not earIier than 1969 give notice of termination to the other Contracting State and, in such event, the Convention shall cease to be effective-
(a) in Zambia, in respect of tax for any period of assessment or charge beginning on or after the first day of April in the calendar year next following that in which notice is given;
(b) in Uganda, in respect of tax for any period of assessment beginning on or after the first day of January in the calendar year next following that in which such notice is given.
2. The termination of the present Convention shall not have the effect of reviving any convention, agreement or arrangement abrogated by the present Convention.
CONVENTION BETWEEN THE REPUBLIC OF ZAMBIA AND JAPAN FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME
SI 130 of 1972.
The Republic of Zambia and Japan, Desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income, Have agreed as foIIows:
ARTICLE 1
1. The taxes which are the subject of this Convention are-
In Japan:
(a) the income tax;
(b) the corporation tax; and
(c) the IocaI inhabitant taxes;
(hereinafter referred to as "Japanese tax").
In Zambia:
(a) the income tax; and
(b) the personaI Ievy;
(hereinafter referred to as "Zambian tax").
2. This Convention shall also apply to taxes substantially similar to those covered by paragraph 1 which are introduced in either Contracting State after the date of signature of this Convention. The competent authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation Laws within a reasonabIe period of time after such changes.
ARTICLE 2
1. In this Convention, unless the context otherwise requires-
(a) the term "Japan", when used in a geographicaI sense, means all the territory in which the Laws relating to Japanese tax are in force;
(b) the term "Zambia" means the Republic of Zambia;
(c) the terms "a Contracting State" and "the other Contracting State" mean Zambia or Japan, as the context requires;
(d) the term "tax" means Zambian tax or Japanese tax, as the context requires;
(e) the term "person" includes a company and any other body of persons;
(f) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(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 "competent authority" means, in the case of Zambia, the Commissioner-General of Taxes or his authorised representative, and, in the case of Japan, the Minister of Finance or his authorised representative.
2. As regards the application of this Convention in a Contracting State, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes to which this Convention applies.
ARTICLE 3
1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the Law of that Contracting State, is Liable to taxation therein by reason of his domicile, residence, place of head or main office, place of management or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then the competent authorities shall determine by mutuaI agreement the Contracting State of which that individualshall be deemed to be a resident for the purposes of this Convention.
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 Contracting State in which its head or main office is situated.
ARTICLE 4
1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy 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, quarry or other place of extraction of naturaI resources;
(g) a building site or construction or assembly project which exists for more than tweIve months.
3. The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
4. 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 5 applies-shall be deemed to be a permanent establishment in the first-mentioned Contracting State if he has, and habitually exercises in that Contracting State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise.
5. 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, where such persons are acting in the ordinary course of their business.
6. The fact that a company which is a resident of a Contracting State controIs or is controIIed 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 for either company a permanent establishment of the other.
ARTICLE 5
1. Income from immovable property may be taxed in the Contracting State in which such property is situated.
2. The term "immovable property", shall be defined in accordance with 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, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting immovable property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work, mineraI deposits, sources and other naturaI 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, Ietting or use in any other form of immovable property.
ARTICLE 6
1. The profits of an enterprise of a Contracting State shall be taxabIe only in that Contracting 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 Contracting State but only so much of them as is attributable to that permanent establishment.
2. 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 whoIIy independentIy 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 permanent establishment including executive and General administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or eIsewhere.
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 precIude 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 resuIt shall be in accordance with the principIes Iaid down 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 deaIt with separateIy in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 7
Profits from the operation of ships or aircraft in internationaI traffic carried on by an enterprise of a Contracting State shall be taxabIe only in that Contracting State.
ARTICLE 8
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 wouId be made between independent enterprises, then any profits which wouId, 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.
ARTICLE 9
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State shall be taxabIe only in that other Contracting State.
2. The provisions of paragraph 1 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 weII as income from other corporate rights assimilated to income from shares by the taxation Law of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraph 1 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case, the provisions of Article 6 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 Contracting State may not impose any tax on the dividends paid by the company to persons who are not residents of that other Contracting State, or subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist whoIIy or partIy of profits or income arising in that other Contracting State.
ARTICLE 10
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
2. However, such interest may be taxed in the Contracting State in which it arises, and according to the Laws of that Contracting State, but the tax so charged shall not exceed ten per centum 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 IocaI authority thereof or any agency or instrumentality (including financial institution) whoIIy owned by that Government or IocaI authority shall be exempt from tax of the first-mentioned Contracting State.
4. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claim of every kind, and any excess of the amount repaid in respect of such debt-claims over the amount Ient, as weII as all other income assimilated to income from money Ient by the taxation Law of the Contracting State in which the income arises.
5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectiveIy connected. In such a case, the provisions of Article 6 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a IocaI authority or a resident of that Contracting 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 Contracting State in which the permanent establishment is situated.
7. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 11
1. RoyaIties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
2. However, such royaIties may be taxed in the Contracting State in which they arise, and according to the Laws of that Contracting State, but the tax so charged shall not exceed ten per centum of the gross amount of the royaIties.
3. The term "royaIties" 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 Iiterary, artistic or scientific work including cinematograph fiIms, any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commercial or scientific equipment, or for information concerning industriaI, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State in which the royaIties arise a permanent establishment with which the right or property giving rise to the royaIties is effectiveIy connected. In such a case, the provisions of Article 6 shall apply.
5. RoyaIties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a IocaI authority or a resident of that Contracting State. Where, however, the person paying the royaIties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the IiabiIity to pay the royaIties was incurred, and such royaIties are borne by such permanent establishment, then such royaIties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
6. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the royaIties paid, having regard to the use, right or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 12
1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 5, may be taxed in the Contracting State in which such property is situated.
2. Gains from the alienation of property other than immovable 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 property other than immovable property pertaining to a fixed base avaliable to a resident of a Contracting State in the other Contracting State for the purpose of performing professionaI services, including such gains from the alienation of such a permanent establishment (aIone or together with the whole enterprise) or of such a fixed base, may be taxed in that other Contracting State. However, gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in internationaI traffic and property other than immovable property pertaining to the operation of such ships or aircraft shall be exempt from tax of the other Contracting State.
3. Gains derived by a resident of a Contracting State from the alienation of any property other than those mentioned in paragraphs 1 and 2 shall be taxabIe only in that Contracting State.
ARTICLE 13
1. Income derived by a resident of a Contracting State in respect of professionaI services or other independent activities of a similar character shall be exempt from tax of the other Contracting State unless he has a fixed base regularly avaliable to him in that other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in that other Contracting State but only so much of it as is attributable to that fixed base.
2. The term "professionaI services" includes especially independent scientific, Iiterary, artistic, educationaI or teaching activities as weII as the independent activities of physicians, Lawyers, engineers, architects, dentists and accountants.
ARTICLE 14
1. Subject to the provisions of Articles 15, 17 and 18, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be exempt from tax of the other Contracting State unless the empIoyment is exercised in the other Contracting State. If the empIoyment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an empIoyment exercised in the other Contracting State shall be exempt from tax of that other Contracting State if-
(a) the recipient is present in that other Contracting State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned; and
(b) the remuneration is paid by, or on behalf of, an empIoyer who is not a resident of that other Contracting State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the empIoyer has in that other Contracting State.
3. Notwithstanding the provisions of paragraphs 1 and 2, remuneration in respect of an empIoyment exercised aboard a ship or aircraft operated in internationaI traffic by an enterprise of a Contracting State may be taxed in that Contracting State.
ARTICLE 15
Remuneration 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 Contracting State in accordance with the Law of that other Contracting State.
ARTICLE 16
Notwithstanding the provisions of Articles 13 and 14, income derived by pubIic entertainers, such as theatre, motion picture, radio or teIevision artistes, and musicians, and by athletes, from their personaI activities as such may be taxed in the Contracting State in which these activities are exercised.
ARTICLE 17
Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration derived from sources within a Contracting State in consideration of past empIoyment by an individual who is a resident of the other Contracting State and subject to tax in respect thereof in that other Contracting State shall be taxabIe only in that other Contracting State.
ARTICLE 18
1.-
(a) Remuneration (other than pensions) paid by Japan or a IocaI authority thereof to any individual in respect of services rendered to Japan or a IocaI authority thereof in the discharge of governmental functions may be taxed in Japan. Such remuneration shall be exempt from Zambian tax if the individual is not resident in Zambia or is resident in Zambia soIeIy for the purpose of rendering those services.
(b) Remuneration (other than pensions) paid by Zambia or a IocaI authority thereof to any individual in respect of services rendered to Zambia or a IocaI authority thereof in the discharge of governmental functions may be taxed in Zambia. Such remuneration shall be exempt from Japanese tax if the individual is not a nationaI of Japan or is not admitted to Japan for permanent residence therein.
2. Pensions paid by, or out of funds to which contributions are made by, a Contracting State or a IocaI authority thereof to any individual in respect of services rendered to that Contracting State or a IocaI authority thereof in the discharge of governmental functions shall be taxabIe only in that Contracting State.
3. The provisions of this Article shall not apply to payments in respect of services rendered in connection with a trade or business carried on for the purpose of profits.
ARTICLE 19
A professor or teacher who makes a temporary visit to a Contracting State for a period not exceeding two years for the purpose of teaching or conducting research at a university, coIIege, schooI or other educationaI institution and who is, or immediateIy before such visit was, a resident of the other Contracting State shall be exempt from tax of the first-mentioned Contracting State in respect of remuneration for such teaching or research.
ARTICLE 20
Payments or income received for the purpose of his maintenance, education or training by a student or business apprentice who is present in a Contracting State soIeIy for the purpose of his education or training and who is, or immediateIy before being so present was, a resident of the other Contracting State shall be exempt from tax of the first-mentioned Contracting State, provided that such payments are made to him from outside that first-mentioned Contracting State or that such income is received in respect of his personaI services performed in the first-mentioned Contracting State in an amount not in excess of US $1,000 or its equivaIent in Zambian or Japanese currency for any taxabIe year for a period not exceeding three consecutive taxabIe years.
ARTICLE 21
Items of income of a resident of a Contracting State which are not expressIy mentioned in the foregoing Articles of this Convention shall be taxabIe only in that Contracting State.
ARTICLE 22
1.-
(a) Where a resident of Zambia derives income from Japan which may be taxed in Japan in accordance with the provisions of this Convention, the amount of the Japanese tax payabIe 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) Where the income derived from Japan is a dividend paid by a company which is a resident of Japan, the credit shall take into account the Japanese tax payabIe in respect of its profits by the company paying the dividend.
2.-
(a) Where a resident of Japan derives income from Zambia which may be taxed in Zambia in accordance with the provisions of this Convention, the amount of Zambian tax payabIe in respect of that income shall be allowed as a credit against the Japanese tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Japanse tax which is appropriate to that income.
(b) Where the income derived from Zambia is a dividend paid by a company which is a resident of Zambia to a company which is a resident of Japan which owns not Iess than twenty-five per centum of the shares or the capital of the company paying the dividend, the credit shall take into account the Zambian tax payabIe in respect of its profits by the company paying the dividend.
(c) For the purpose of the credit referred to in sub-paragraphs (a) and (b) above, there shall be deemed to have been paid by a taxpayer the amount which wouId have been paid if Zambian tax wouId not have been reduced or reIieved in accordance with-
(i) the provisions of paragraph 2 of Article 10 and paragraph 2 of Article 11; and
(ii) he speciaI incentive measures designed to promote economic deveIopment in Zambia, provided that an-agreement is made between the Governments of both Contracting States in respect of the scope of such speciaI incentive measures.
(d) In the application of the provisions of sub-paragraph (c), there shall not, in any event, be deemed to have been paid an amount of tax higher than that which, but for the reduction or reIief of tax due to the speciaI incentive measures mentioned in sub-paragraph (c)(ii), wouId resuIt from the application of the Zambian tax Laws effective on the date of signature of this Convention.
ARTICLE 23
1. The nationaIs 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 nationaIs of that other Contracting State in the same circumstances are or may be subjected.
2. The term "nationaIs" means all individuals possessing the nationality of either Contracting State and all juridicaI persons created or organised under the Laws of either Contracting State and all organisations without juridicaI personality treated for the purposes of tax of either Contracting State as juridicaI persons created or organised under the Laws of either Contracting State.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be Iess favourabIy Ievied in that other Contracting State than the taxation Ievied on enterprises of that other Contracting State carrying on the same activities.
This provision shall not be construed as obIiging a Contracting State to grant to residents of the other Contracting State any personaI allowances, reIiefs and reductions for taxation purposes on account of civil status or famiIy responsibiIities which it grants to its own residents.
4. Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 Contracting State are or may be subjected.
5. In this Article the term "taxation" means taxes of every kind and description.
ARTICLE 24
1. The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons or authorities other than those concerned with the assessment or coIIection, including judiciaI determination, of the taxes to which this Convention applies.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obIigation-
(a) to carry out administrative measures at variance with the Laws or the administrative practice of that or of the other Contracting State;
(b) to suppIy particulars which are not obtainabIe under the Laws or in the normaI course of the administration of that or of the other Contracting State;
(c) to suppIy information which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE 25
1. Where a resident of a Contracting State considers that the actions taken in the other Contracting State resuIt or wiII resuIt for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the Laws of those Contracting States, present his case to the competent authority of the Contracting State of which he is a resident.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not able to arrive at an appropriate soIution, to resoIve the case by mutuaI agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Convention.
3. The competent authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the eIimination 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 giving effect to the provisions of this Convention.
ARTICLE 26
Nothing in this Convention shall affect the fiscal priviIeges of dipIomatic or consuIar officiaIs under the General ruIes of internationaI Law or under the provisions of speciaI agreements.
ARTICLE 27
1. This Convention shall be approved by the Republic of Zambia and Japan in accordance with their respective IegaI procedures, and shall enter into force on the thirtieth day after the date of exchange of notes indicating such approval.
2. This Convention shall have effect as respects income derived during the taxabIe years beginning on or after the first day of January in the calendar year in which this Convention enters into force.
ARTICLE 28
This Convention shall continue in effect indefiniteIy 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 to the other Contracting State, through the dipIomatic channel, written notice of termination and, in such event, this Convention shall cease to be effective in respect of income derived during the taxabIe 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.
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (UNITED KINGDOM) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
SI 89 of 1973.
This Order may be cited as the Double Taxation ReIief (Taxes on Income) (United Kingdom) Order.
It is hereby decIared that the Convention, the text of which is set out in the Schedule to this Order, being a Convention relating to reIief from double taxation on income made between the Government of the Republic of Zambia and the Government of the United Kingdom shall have effect in Zambia in accordance with section 74 of the Income tax Act.
CONVENTION 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 CAPITAL.
The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Zambia, 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, Have agreed as foIIows:
ARTICLE 1
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
(1) The taxes which are the subject of this Convention are-
(a) in the United Kingdom of Great Britain and Northern Ireland:
(i) the income tax (including surtax);
(ii) the corporation tax; and
(iii) the capital gains tax;
(b) in Zambia:
(i) the income tax;
(ii) the mineraI royalty tax; and
(iii) the personaI Ievy.
(2) This Convention shall also apply to any identicaI or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes.
(3) The competent authorities of the Contracting States shall notify to each other any changes which are made in their respective taxation Laws.
ARTICLE 3
GENERAL DEFINITIONS
(1) In this Convention, unless the context otherwise requires-
(a) the term "United Kingdom" means Great Britain and Northern Ireland, including any area outside the territoriaI sea of the United Kingdom which in accordance with internationaI Law has been or may hereafter be designated, under the Laws of the United Kingdom concerning the ContinentaI SheIf, as an area within which the rights of the United Kingdom with respect to the sea bed and sub-soiI and their naturaI resources may be exercised;
(b) the term "Zambia" means the Republic of Zambia;
(c) the term "nationaI" means-
(i) in reIation to the United Kingdom, all citizens of the United Kingdom and CoIonies who derive their status as such from their connection with the United Kingdom and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in the United Kingdom;
(ii) in reIation to Zambia, all citizens of Zambia and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in Zambia;
(d) the term "United Kingdom tax" means tax imposed by the United Kingdom being tax to which this Convention applies by virtue of the provisions of Article 2; the term "Zambia tax" means tax imposed by Zambia being tax to which this Convention applies by virtue of the provisions of Article 2;
(e) the term "tax" means United Kingdom tax or Zambia tax, as the context requires;
(f) the terms "a Contracting State" and "the other Contracting State" mean the United Kingdom or Zambia, as the context requires;
(g) the term "persons" comprises an individual, a company and any other body of persons;
(h) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(i) 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;
(j) the term "competent authority" means, in the case of the United Kingdom the Commissioner-Generals of InIand Revenue or their authorised representative, and in the case of Zambia, the Commissioner-General of Taxes or his authorised representative.
(2) As regards the application of this Convention by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of this Convention.
ARTICLE 4
FISCAL DOMICILE
(1) For the purposes of this Convention, the term "resident of a Contracting State" means, subject to the provisions of paragraphs (2) and (3) of this Article, any person who, under the Law of that State, is Liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. The terms "resident of the United Kingdom" and "resident of Zambia" shall be construed accordingly.
(2) Where by reason of the provisions of paragraph (1) of this Article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following ruIes:
(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home avaliable to him. If he has a permanent home avaliable to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personaI and economic relations are closest (centre of vitaI interests);
(b) if the Contracting State in which he has his centre of vitaI interests cannot be determined, or if he has not a permanent home avaliable to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habituaI abode;
(c) if he has an habituaI abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a nationaI;
(d) if he is a nationaI of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settIe the question by mutuaI agreement.
(3) Where by reason of the provisions of paragraph (1) of this Article a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting 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 in which the business of the enterprise is whoIIy or partIy carried on.
(2) The term "permanent establishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of naturaI resources;
(g) a building site or construction or assembly project which exists for more than six months.
(3) The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
(4) An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if-
(a) it carries on the activity of providing the services within that other Contracting State of pubIic entertainers or athletes referred to in Article 18; or
(b) it carries on supervisory activities in that other Contracting State for more than six months in connection with a construction, installation or assembly project which is being undertaken in that other Contracting State.
(5) 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 the provisions of paragraph (6) of this Article apply-shall be deemed to be a permanent establishment in the first-mentioned State if he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise.
(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, where 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 controIs or is controIIed 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
LIMITATION OF RELIEF
Where under any provision of this Convention any person is reIieved from tax in a Contracting State on certain income if (with or without other conditions) that person is subject to tax in the other Contracting State in respect of that income and that person is subject to tax in respect of that income in that other State by reference to the amount thereof which is remitted to or received in that other State, the reIief from tax to be allowed under this Convention in the first- mentioned Contracting State shall apply only to the amounts so remitted or received.
ARTICLE 7
INCOME FROM IMMOVABLE PROPERTY
(1) Income from immovable property may be taxed in the Contracting State in which such property is situated.
(2) -
(a) The term "immovable property" shall, subject to the provisions of sub-paragraph (b) below, be defined in accordance with the Law of the Contracting State in which the property in question is situated.
(b) The term "immovable property" shall in any case include property accessory to immovable property, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting Ianded property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work, mineraI deposits, sources and other naturaI resources; ships, boats 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, Ietting, or use in any other form of immovable property.
(4) The provisions of paragraphs (1) and (3) of this Article shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professionaI services.
(5) Notwithstanding the preceding provisions of this Article profits derived by an agricuItural, forestry or pIantation enterprise shall be deaIt with in accordance with the provisions of Article 8.
ARTICLE 8
BUSINESS PROFITS
(1) The profits of an enterprise of a Contracting State shall be taxabIe 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) 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 at arm's Length 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 of the enterprise (other than expenses which wouId not be deductibIe if the permanent establishment were a separate enterprise) 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 eIsewhere.
(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) Where profits include items which are deaIt with separateIy in other Articles of this Convention, then the provisions of those Articles shall not be provisions of this Article.
ARTICLE 9
SHIPPING AND AIR TRANSPORT
Profits derived from the operation of ships or aircraft in internationaI traffic by an enterprise of a Contracting State shall be exempt from tax in the other Contracting State.
ARTICLE 10
ASSOCIATED ENTERPRISES
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 wouId be made between independent enterprises, then any profits which wouId, 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.
ARTICLE 11
DIVIDENDS
(1) Dividends paid by a company which is a resident of Zambia to a resident of the United Kingdom may be taxed in the United Kingdom. Such dividends may also be taxed in Zambia according to the Law of Zambia but, provided the recipient is subject to tax in respect thereof in the United Kingdom, the tax so charged, being tax which is charged in addition to the tax chargeable in respect of the profits of the company, shall not exceed:
(a) 5 per cent of the gross amount of the dividends if the recipient is a company which controIs directly or indirectly at Ieast 25 per cent of the voting power in the company paying the dividends;
(b) in all other cases 15 per cent of the gross amount of the dividends.
(2) Dividends paid by a company which is a resident of the United Kingdom to a resident of Zambia may be taxed in Zambia. Such dividends may also be taxed in the United Kingdom and according to the Laws of the United Kingdom but, provided the recipient is subject to tax in respect thereof in Zambia, the tax so charged, being tax which is charged in addition to the tax chargeable in respect of the profits of the company, shall not exceed:
(a) 5 per cent of the gross amount of the dividends if the recipient is a company which controIs directly or indirectly at Ieast 25 per cent of the voting power in the company paying the dividends;
(b) in all other cases 15 per cent of the gross amount of the dividends.
(3) However, as Iong as an individual resident in the United Kingdom is entitIed to a tax credit in respect of dividends paid by a company resident in the United Kingdom, the following provisions of this paragraph shall apply instead of the provisions of paragraph (2) of this Article:
(a) -
(i) Dividends paid by a company which is a resident of the United Kingdom to a resident of Zambia may be taxed in Zambia on the aggregate of the amount or vaIue of the dividends and the amount of the tax credit (if any) to which he is entitIed under sub-paragraph (b) of this paragraph.
(ii) Where a resident of Zambia is entitIed to a tax credit in respect of such a dividend under sub-paragraph (b) of this paragraph tax may also be charged in the United Kingdom and according to the Laws of the United Kingdom, on the aggregate of the amount or vaIue of that dividend and the amount of that tax credit at a rate not exceeding 15 per cent.
(iii) Except as aforesaid, dividends paid by a company which is a resident of the United Kingdom to a resident of Zambia who is subject to tax in Zambia on them shall be exempt from any tax in the United Kingdom which is chargeable on dividends.
(b) A resident of Zambia who receives dividends from a company which is a resident of the United Kingdom shall, subject to the provisions of sub-paragraph (c) of this paragraph and provided he is subject to tax in Zambia on the dividends, be entitIed to the tax credit in respect thereof to which an individual resident in the United Kingdom wouId have been entitIed had he received those dividends, and to the payment of any excess of that tax credit over his IiabiIity to United Kingdom tax.
(c) The provisions of sub-paragraph (b) of this paragraph shall not apply where the recipient of the dividend is a company which either aIone or together with one or more associated companies controIs directly or indirectly at Ieast 10 per cent of the voting power in the company paying the dividend. For the purposes of this sub-paragraph two companies shall be deemed to be associated if one is controIIed directly or indirectly by a third company.
(4) The term 'dividends' as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as weII as income from other corporate rights assimilated to income from shares by the taxation Law of the State of which the company making the distribution is a resident and also includes any other item of income (other than interest or royaIties reIieved from tax under the provisions of Article 12 or the provisions of Article 13 of this Convention) which, under the Law of the Contracting State of which the company paying the dividends is a resident, is treated as a dividend or distribution of a company.
(5) The provisions of paragraphs (1), (2) and (3) of this Article shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment and the hoIding by virtue of which the dividends are paid is effectiveIy connected with a business carried on through that permanent establishment. In such a case, the provisions of Article 8 shall apply.
(6) If the recipient of a dividend owns 10 per cent or more of the class of shares in respect of which the dividend is paid then the reIief from tax provided for in paragraphs (1), (2) and (3) of this Article shall not apply to the dividend to the extent that it can have been paid only out of profits which the company paying the dividend earned or other income which it received in a period ending tweIve months or more before the reIevant date. For the purposes of this paragraph the term 'reIevant date' means the date on which the recipient of the dividend became the owner of 10 per cent or more of the class of shares in question:
Provided that this paragraph shall not apply if the shares were acquired for bona fide commercial reasons and not primarily for the purpose of securing the benefits of this Article.
(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 to persons who are not residents of that other State, or subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist whoIIy or partIy of profits or income arising in that other State."
[Am by SI 7 of 1983.]
ARTICLE 12
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 be taxed in the Contracting State in which it arises, and according to the Law of that State; but where such interest is paid to a resident of the other Contracting State who is subject to tax there is respect thereof the tax so charged in the Contracting State in which the interest arises shall not exceed 10 per cent of the gross amount of the interest.
(3) The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and other debt-claims of every kind at weII as all other income assimilated to income from money Ient by the taxation Law of the State in which the income arises.
(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment and the debt-claim from which the interest arises is effectiveIy connected with a business carried on through that permanent establishment. In such a case, the provisions of Article 8 shall apply.
(5) Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a poIiticaI subdivision, a IocaI authority or 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 that permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
(6) Any provision of the Law of one of the Contracting States which reIates only to interest paid to a non-resident company with or without any further requirement, shall not operate so as to require such interest paid to a company which is a resident of the other Contracting State to be Ieft out of account as a deduction in computing the taxabIe profits of the company paying the interest as being a dividend or distribution. The preceding sentence shall not however apply to interest received by a company which is a resident of one of the Contracting States in which more than 50 per cent of the voting power is controIIed, directly or indirectly, by a person or persons resident in the other Contracting State.
(7) Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 13
ROYALTIES
(1) RoyaIties 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 royaIties may be taxed in the Contracting State in which they arise and in accordance with the Law of that Contracting State; but where such royaIties are paid to a resident of the other Contracting State who is subject to tax there in respect thereof the tax so charged in the Contracting State in which the royaIties arise shall not exceed 10 per cent of the gross amount of the royaIties.
(3) The term "royaIties" 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 Iiterary, artistic or scientific work (including cinematograph fiIms, and fiIms or tapes for radio or teIevision broadcasting), any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commercial or scientific equipment, or for information concerning industriaI, commercial or scientific experience.
(4) The provisions of paragraph (2) of this Article shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State a permanent establishment and the right or property giving rise to the royaIties is effectiveIy connected with a business carried on through that permanent establishment. In such a case, the provisions of Article 8 shall apply.
(5) Any provision of the Law of a Contracting State which requires royaIties paid by a company to be Ieft out of account as a deduction in computing the company's taxabIe profits as being a dividend or distribution shall not operate in reIation to royaIties paid to a resident of the other Contracting State. The preceding sentence shall not however apply to royaIties derived by a company which is a resident of that other Contracting State where-
(a) the same persons participate directly or indirectly in the management or control of the company paying the royaIties and the company deriving the royaIties; and
(b) more than 50 per cent of the voting power in the company deriving the royaIties is controIIed directly or indirectly by a person or persons resident in the Contracting State in which the company paying the royaIties is resident.
(6) Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the royaIties paid, having regard to the use, right or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 14
CAPITAL GAINS
(1) Capital gains from the alienation of any 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 any property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing professionaI services, including such gains from the alienation of such a permanent establishment (aIone or together with the whole enterprise) or of such a fixed base, may be taxed in the other State.
(2) Notwithstanding the provisions of paragraph (1) of this Article, capital gains derived by a resident of a Contracting State from the alienation of ships and aircraft operated in internationaI traffic and movable property pertaining to the operation of such ships and aircraft shall be taxabIe only in that Contracting State.
(3) Capital gains from the alienation of any property other than those mentioned in paragraph (1) of this Article shall be taxabIe only in the Contracting State of which the alienator is a resident.
(4) The provisions of paragraph (3) of this Article shall not affect the right of a Contracting State to Ievy according to its own Law a tax on capital 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 first-mentioned Contracting State at any time during the five years immediateIy preceding the alienation of the property.
ARTICLE 15
INDEPENDENT PERSONAL SERVICES
(1) Income derived by a resident of a Contracting State in respect of professionaI services or other independent activities of a similar character shall be taxabIe 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 Contracting State but only so much of it as is attributable to that fixed base.
(2) The term "professionaI services" includes especially independent scientific, Iiterary, artistic, educationaI or teaching activities as weII as the independent activities of physicians, Lawyers, engineers, architects, dentists and accountants.
ARTICLE 16
EMPLOYMENTS
(1) Subject to the provisions of Articles 19, 20 and 21, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be taxabIe only in that State unless the empIoyment is exercised in the other Contracting State. If the empIoyment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1) of this Article, remuneration derived by a resident of a Contracting State in respect of an empIoyment exercised in the other Contracting State shall be taxabIe 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 the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an empIoyer 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 empIoyer has in the other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in respect of an empIoyment exercised aboard a ship or aircraft in internationaI traffic may be taxed in the Contracting State of which the person deriving the profits from the operation of the ship or aircraft is a resident.
ARTICLE 17
DIRECTORS' FEES
Directors' 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 Contracting State.
ARTICLE 18
ARTISTES AND ATHLETES
Notwithstanding the provisions of Articles 15 and 16, income derived by pubIic entertainers, such as theatre, motion picture, radio or teIevision artistes, and musicians, and by athletes, from their personaI activities as such may be taxed in the Contracting State in which those activities are exercised.
ARTICLE 19
PENSIONS
(1) Any pension (other than a pension of the kind referred to in paragraph (2) or paragraph (4) of Article 20) 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 payabIe periodically at stated times during Iife or during a specified or ascertainable period of time under an obIigation to make the payments in return for adequate and fuII consideration in money of money's worth.
ARTICLE 20
GOVERNMENTAL FUNCTIONS
(1) Remuneration (other than pensions) paid by the Government of a Contracting State to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from tax in the other Contracting State if the individual is not ordinariIy resident in that other Contracting State or is ordinariIy resident in that other Contracting State soIeIy for the purpose of rendering those services.
(2) Any pension paid by the Government of a Contracting State to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from tax in the other Contracting State if immediateIy prior to the cessation of the services to which the pension reIates the remuneration therefor was exempt from tax in that other Contracting State (whether under paragraph (1) of this Article or otherwise).
(3) The provisions of paragraphs (1) and (2) of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by the Government of either Contracting State for purposes of profit.
(4) Any pension paid to an individual for services rendered in the discharge of governmental functions which wouId have been exempt from tax in a Contracting State if the existing Agreement had continued in force shall be exempt from tax in that Contracting State under this Convention. In this paragraph the term "the existing Agreement" has the same meaning as in paragraph (7) of Article 29 of this Convention.
ARTICLE 21
RESEARCH PERSONNEL AND STUDENTS
(1) An individual who immediateIy before visiting one of the Contracting States is a resident of the other Contracting State and is temporariIy present in the first-mentioned Contracting State for a period not exceeding two years for the purpose of research, soIeIy as a recipient of a grant, allowance or award from a scientific, educationaI, reIigious or charitable organisation or under a technicaI assistance programme entered into by the Government of one of the Contracting States shall be exempt from tax in the first-mentioned Contracting State on-
(a) the amount of such grant, allowance or award; and
(b) any remuneration for personaI services rendered in the first-mentioned Contracting State provided such services are in connection with his research or are incidentaI thereto.
(2) Payments which a student or business apprentice who is or was formerIy a resident of a Contracting State and who is present in the other Contracting State soIeIy for the purpose of his education or training receives for the purpose of his maintenance, education or training, shall not be taxed in that other Contracting State provided that such payments are made to him from sources outside that other Contracting State.
(3) Remuneration which a student or business apprentice who is or was formerIy a resident of a Contracting State derives from an empIoyment which he exercises in the other Contracting State shall not be taxed in that other Contracting State provided that such empIoyment is directly reIated to his studies or training or the remuneration constitutes earnings reasonabIy necessary for his maintenance and education.
(4) The benefits of paragraphs (2) and (3) of this Article shall extend only for such period of time as may be reasonabIy or customariIy required to compIete the education or training undertaken but in no event shall any individual have the benefits of this Article for more than three consecutive years of assessment or charge years.
ARTICLE 22
INCOME NOT EXPRESSLY MENTIONED
Items of income of a resident of a Contracting State being income of a class or from sources not expressIy mentioned in the foregoing Articles of this Convention in respect of which he is subject to tax in that State shall be taxabIe only in that State. Provided that this Article shall not be construed as affecting the taxation of income attributable to a permanent establishment which a resident of one Contracting State has in the other Contracting State.
ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
(1) Subject to the provisions of the Law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payabIe in a territory outside the United Kingdom (which shall not affect the General principIe hereof)-
(a) Zambia tax payabIe under the Laws of Zambia and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within Zambia 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 Zambia tax is computed. Provided that in the case of a dividend the credit shall take into account only such tax in respect thereof as is additionaI to any tax payabIe by the company on the profits out of which the dividend is paid and is uItimateIy borne by the recipient without reference to any tax so payabIe.
(b) In the case of a dividend paid by a company which is a resident of Zambia to a company which is a resident of the United Kingdom and which controIs directly or indirectly at Ieast 10 per cent of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Zambia tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the Zambia tax payabIe by the company in respect of the profits out of which such dividend is paid.
(1A) For the purposes of paragraph (1) of this Article the term "Zambia tax payabIe" shall be deemed to include any amount which wouId have been payabIe as Zambia tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under-
(a) Sections 19 and 20 of the Pioneer Industries (ReIief from Income Tax) Act, Cap. 666, and section 20 (f) of the Industrial DeveIopment Act, 1977, so far as they were in force on, and have not been modified since, the date of signature of the ProtocoI amending this Convention or have been modified only in minor respects so as not to affect their General character; or
(b) any other provision which may subsequently be made granting an exemption or reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its General character:
Provided that reIief from United Kingdom tax shall not be given by virtue of this paragraph in respect of income from any source if the income arises in a period starting more than ten years after the exemption from, or reduction of, Zambia tax was first granted in respect of that source.
[Am by SI 9 of 1983, effective in the United Kingdom from 1st April 1980, as regards Corporation tax and 6th April 1980 as regards income Tax and Capital gains tax and in Zambia on 1st April 1980 for income tax purposes.]
(2) Subject to the provisions of the Law of Zambia regarding the allowance as a credit against Zambia tax of tax payabIe in a territory outside Zambia (which shall not affect the General principIe hereof)-
(a) United Kingdom tax payabIe under the Laws of the United Kingdom and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within the United Kingdom shall be allowed as a credit against any Zambia tax computed by reference to the same profits, income or chargeable gains by reference to which the United Kingdom tax is computed:
Provided that in the case of a dividend the credit shall take into account only such tax in respect thereof as is charged on the recipient under paragraph 2 or under paragraph (3)(a)(ii) of Article 11 and credit shall not be allowed in respect of any tax payabIe by the company on the profits out of which the dividend is paid.
[Am by SI 9 of 1983.]
(b) In the case of a dividend paid by a company which is a resident of the United Kingdom to a company which is a resident of Zambia and which controIs directly or indirectly at Ieast 10 per cent of the voting power in the United Kingdom company, the credit shall take into account (in addition to any United Kingdom tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the United Kingdom tax payabIe by the company in respect of the profits out of which such dividend is paid.
(3) For the purposes of paragraphs (1) and (2) of this Article 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 arise from sources in that other Contracting State.
ARTICLE 24
PERSONAL ALLOWANCES
(1) Subject to the provisions of paragraph (3) of this Article, individuals who are residents of Zambia shall be entitIed to the same personaI allowances, reIiefs and reductions for the purposes of United Kingdom tax as British subjects not resident in the United Kingdom.
(2) Subject to the provisions of paragraph (3) of this Article, individuals who are residents of the United Kingdom shall be entitIed to the same personaI allowances, reIiefs and reductions for the purposes of Zambia tax as Zambia citizens not resident in Zambia.
(3) Nothing in this Convention shall entitIe an individual who is a resident of a Contracting State and whose income from the other Contracting State consists soIeIy of dividends, interest or royaIties (or soIeIy of any combination thereof) to the personaI allowances, reIiefs and reductions of the kind referred to in this Article for the purposes of taxation in that other Contracting State.
ARTICLE 25
NON-DISCRIMINATION
(1) The nationaIs 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 nationaIs of that other State in the same circumstances 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 Iess favourabIy Ievied in that other State than the taxation Ievied on enterprises of that other State carrying on the same activities.
(3) Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 contained in this Article shall be construed as obIiging either Contracting State to grant to individuals not resident in that State any of the personaI allowances, reIiefs and reductions for tax purposes which are granted to individuals so resident, nor as obIiging Zambia to grant to non-nationaIs the reIief avaliable to Zambian nationaIs under section 42C of the Zambian Income Tax Act, 1966, nor as conferring any exemption from tax in a Contracting State in respect of dividends paid to a company which is a resident of the other Contracting State.
(5) In this Article the term "taxation" means taxes of every kind and description.
ARTICLE 26
MUTUAL AGREEMENT PROCEDURE
(1) Where a resident of a Contracting State considers that the actions of one or both of the Contracting States resuIt or wiII resuIt for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the nationaI Laws of those States, present his case to the competent authority of the Contracting State of which he is a resident.
(2) The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself abIe to arrive at an appropriate soIution, to resoIve the case by mutuaI agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention.
(3) The competent authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of the 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 27
EXCHANGE OF INFORMATION
The competent authorities of the Contracting States shall exchange such information (being information which is at their disposaI under their respective taxation Laws in the normaI course of administration) as is necessary for carrying out the provisions of this Convention or for the prevention of fraud or the administration of statutory provisions against IegaI avoidance in reIation to the taxes which are the subject of this Convention. Any information so exchanged shall be treated as secret but may be discIosed to persons (including a court or administrative body) concerned with assessment, coIIection, enforcement or prosecution in respect of taxes which are the subject of this Convention. No information shall be exchanged which wouId discIose any trade, business, industrial or professionaI secret or any trade process.
ARTICLE 28
TERRITORIAL EXTENSION
(1) This Convention may be extended, either in its entirety or with modifications, to any territory for whose internationaI relations the United Kingdom is responsibIe and which imposes taxes substantially similar in character to those to which this Convention applies. Any such extension shall take effect from such date and subject to such modifications and conditions, including conditions as to termination, as may be specified and agreed between the Contracting States in notes to be exchanged for this purpose.
(2) Unless otherwise agreed by both Contracting States, the termination of this Convention shall terminate the application of this Convention to any territory to which it has been extended under the provisions of this Article.
ARTICLE 29
ENTRY INTO FORCE
(1) This Convention shall come into force on the date when the Iast of all such things shall have been done in the United Kingdom and Zambia as are necessary to give the Convention the force of Law in the United Kingdom and Zambia respectively and shall thereupon have effect-
(a) in the United Kingdom-
(i) as respects income tax, surtax and capital gains tax, for any year of assessment beginning on or after 6th April, 1972;
(ii) as respects corporation tax, for any financial year beginning on or after 1st April, 1972;
(b) in Zambia-
as respects income for any charge year beginning on or after 1st April, 1972.
(2) The Governments of the Contracting States shall, as soon as possibIe, inform one another in writing of the date when the Iast of all such things shall have been done as are necessary to give the Convention the force of Law in the United Kingdom and Zambia respectively. The date specified by the Iast Government to fuIfiI this requirement, being the date on which the Convention shall come into force in accordance with paragraph (1), shall be confirmed in writing by the Government so notified.
(3) Subject to the provisions of paragraph (4) of this Article the existing Agreement shall cease to have effect as respects taxes to which this Convention in accordance with the provisions of paragraph (1) of this Article applies.
(4) Where any provision of the existing Agreement wouId have afforded any greater reIief from tax any such provision as aforesaid shall continue to have effect for any year of assessment or financial year or charge year beginning before the entry into force of this Convention.
(5) The existing Agreement shall terminate on the Iast date on which it has effect in accordance with the foregoing provisions of this Article.
(6) The termination of the existing Agreement as provided in paragraph (5) of this Article shall not revive the Arrangement made in 1947 between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Northern Rhodesia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. Upon the entry into force of this Convention that Arrangement shall terminate.
(7) In this Article the term "the existing Agreement" means the 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, that is to say the continuation, with effect from the dissoIution of the Federation of Rhodesia and Nyasaland on 1st January, 1964, in force subject to certain modifications between the Government of the United Kingdom and the Government of Northern Rhodesia and from the 24th October, 1964, when Northern Rhodesia became an independent Republic under the name of Zambia, between the Government of the United Kingdom and the Government of Zambia, of the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the former Federation of Rhodesia and Nyasaland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at London on 25th November, 1955, as amended by the SuppIementary Agreement between the Government of the United Kingdom and the Government of Zambia which was signed at Lusaka on 6th April, 1968.
ARTICLE 30
TERMINATION
(1) This Convention shall continue in effect indefiniteIy but the Government of either Contracting State may, on or before the thirtieth day of September in any calendar year after the year 1972, give notice of termination to the Government of the other Contracting State and, in such event, the Convention shall cease to be effective-
(a) in the United Kingdom-
(i) as respects income tax, surtax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;
(ii) as respects corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the notice is given;
(b) in Zambia-
as respects income for any charge year beginning on or after 1st April in the calendar year next following that in which the notice is given.
(2) The termination of this Convention shall not have the effect of reviving any agreement or arrangement terminated by this Convention.
[Sections 9 and 107]
[Currency mentioned in this regulation should be re-denominated as stipulated under S 4 of Re-denomination Act, 2012, read with S 29 of Bank of Zambia Act, 1996.]
Arrangement of Regulations
Regulation
4. Registrar to notify address for service
5. Place and sittings of Court
6. Member of Court barred by vested interest
11. Appellant to appear at hearing and procedure on non-attendance
13. Decision to be set forth in an orders
16. Admissibility of certain evidence
17. Power to summon witnesses and order production of documents
[Regulations by the Minister]
[Revised as a Consequence of the Amendments to Section 107 of the Act to fit into the application of the Law]
SI 126 of 1973.
These Regulations may be cited as the Tax Appeal Court Regulations.
In these Regulations unless the context otherwise requires-
"Appellant" means a person who under the Act has the right to appeal to the court and includes a legal practitioner or agent acting on his behalf;
"Chairman" means the Chairman of the Court appointed under section 107 of the Act and Deputy Chairman or Special Chairman shall be construed accordingly;
"Commissioner-General" means the Commissioner-General of the Zambia Revenue Authority;
"Registrar" means an Officer of the Court appointed under sub-section (8) of section 107 of the Act and Deputy Registrar shall be construed accordingly.
(1) The Registrar of the Court shall be the Chief Administrative Officer of the Court and shall in that capacity issue documents and accept service on behalf of the court.
(2) The Commissioner-General shall appoint such officers as may be necessary for the performance of the functions of the court.
4. Registrar to notify address for service
(1) The Registrar of the Court shall by Gazette notice notify his address for service of documents for the purposes of these Regulations and in his capacity as Registrar shall comply with the general and special directions of the court and the Chairman.
(2) The Registrar shall attend sittings of the court but shall not take part in the deliberations and consideration of the decisions of the court.
5. Place and sittings of Court
(1) The court shall sit in such place or places as may be appointed by the Chairman.
(2) The date of hearing of any appeal shall be determined by the Chairman and notice thereof shall be published by him in the Gazette at least one month prior to that date.
6. Member of Court barred by vested interest
A member of the court shall not sit as member, chairman or registrar if he has any interest, direct or indirect, personal or pecuniary in any matter before the court.
The court shall, subject to the provisions of the Act and these Regulations determine its own procedure.
Every Notice of Appeal to the court under section 109 of the Act shall be in duplicate and shall contain an address for service of notices or documents.
(1) An appellant shall, within 14 days after the date on which he gave written notice of appeal to the Commissioner in accordance with sub-section (1) of section 109 of the Act, serve on the Registrar a memorandum of appeal in quadruplicate, accompanied by the copies of the documents and the statement of facts required by sub-regulation (3) of this regulation.
(2) The Memorandum of Appeal shall be signed by the Appellant and shall set forth concisely each ground of appeal, without any argument or narrative, in separate paragraphs and the paragraphs shall be numbered consecutively.
(3) The Memorandum of Appeal shall be accompanied by-
(a) three copies of the assessment appealed against and of the written notice of the decision given by the Commissioner-General under section 108 of the Act; and
(b) three copies of the written notice of appeal; and
(c) a statement of facts in quadruplicate, signed by the appellant setting forth the facts on which the appeal is based and referring therein to any documentary or other evidence which the appellant proposes to adduce at the hearing of the appeal.
(4) Upon being served with the memorandum of appeal documents and a statement of facts in pursuance of sub-regulation (1), the Registrar shall transmit one memorandum of appeal and one statement of facts to the Commissioner-General.
The Appellant may, at any time before the appeal is called for hearing withdraw any appeal by serving a written notice to that effect on the Commissioner-General and the Registrar of the court.
11. Appellant to appear at hearing and procedure on non-attendance
(1) Every person who has appealed to the court shall appear in person or by a legal practitioner or agent on his behalf at the place, date and time fixed for the hearing of the appeal.
(2) Notwithstanding the provisions of sub-regulation (1), where at the place, date and time fixed for the hearing of an appeal by the court there is no appearance for the appellant, the court may hear and determine the appeal in the absence of the appellant.
On the hearing and determination of an appeal by the court, the procedure shall be in accordance with the following provisions:
(a) the appellant shall state the grounds of the appeal and may adduce any relevant evidence in support thereof;
(b) save with the consent of the court and upon such terms as the court may determine-
(i) the appellant shall not rely at the hearing on any ground of appeal other than those set forth in the memorandum of appeal; or
(ii) the appellant shall not adduce any evidence other than the evidence previously adduced to the Commissioner-General;
(c) at the conclusion of such statement and evidence, if any, the Commissioner-General shall be entitled to make his submissions and adduce any relevant evidence in support of his case;
(d) the appellant shall be entitled to reply to the submissions made and evidence adduced by the Commissioner-General but in his reply the appellant shall not introduce or rely on any ground of appeal or evidence not before the court;
(e) a witness called and examined by any party may be cross-examined by the other party to the appeal and, if so cross-examined, may be re-examined;
(f) a witness called and examined by the court may be cross-examined by any party to the appeal;
(g) the chairman or a member of the court shall be entitled at any stage of the hearing to ask such questions of the appellant or the Commissioner-General or any witness as he considers necessary for the determination of the appeal;
(h) before the court considers its decision, the parties to the appeal shall withdraw from the sitting and thereupon, unless the court adjourns to consider its decision, the court shall deliberate and consider its decision according to law;
(i) a record of all proceedings of the sitting, except the deliberations and consideration of the decision by the court, shall be kept and the decision of the court shall be recorded therein.
13. Decision to be set forth in an order
The court shall, within seven days after the date on which it gives its decision, issue an order setting forth its decision and the grounds thereof and the date thereof, and the order shall thereupon be served on the Commissioner-General and the person who appealed.
(1) On the hearing and determination of an appeal or any proceedings preliminary or incidental thereto, no fees shall be payable and costs shall not be allowed on either side save as may be allowed under sub-regulation (2) or ordered under regulation 17.
(2) When, on the dismissal of an appeal, the court is of the opinion that an appeal was vexatious or frivolous, it may order the person who appealed to pay to the Commissioner-General such costs, not exceeding five hundred thousand kwacha as the court may determine.
The court shall have power at any time to postpone or adjourn the hearing or determination of any appeal before it from time to time and on such terms, including any order as to costs, as it may determine.
16. Admissibility of certain evidence
Subject to the provisions of these Regulations, the court may admit any evidence adduced which is relevant to a question in issue, whether oral or documentary, and whether or not it is admissible under any law relating to the admissibility of evidence.
17. Power to summon witnesses and order production of documents
The court may, by notice in writing, require any person to appear before it to be examined and such person may be examined on any matter in question on the appeal, and may, by the same or a separate notice in writing, require any person to produce any book document or other record which may be in his possession or under his control relating to any such matter.
Either party to an Appeal may appeal to the High Court from the decision of the court on any question of law or a question of mixed law and fact but not on a question of fact alone.
[Regulation 5]
Date.......................................
Chairman,
Tax Appeal court,
P.O. Box
......................................................
NOTICE OF APPEAL
INCOME TAX ACT
[Section 109]
Name of Taxpayer......................................
Income Tax Charge Year ended 31st March, 19..........................................................................................................
*Assessment No.
*Date of Issue
*Determination dated.....................................
Being dissatisfied with the Commissioner-General's decision under the Income Tax Act, on the objection to the *assessment/determination details of which are given above an appeal is hereby made under section 109 of the Income Tax Act against the *assessment/determination on the following grounds:
The Commissioner-General's address for service is:
..............................................
"
Signature...............
(Appellant or Agent)
Address for service:
..........................
*Delete whichever is inappropriate.
" Enter address on assessment or determination.
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (IRELAND) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
2. Convention Made at Lusaka this 22nd day of JuIy, 1973
[Order by the President]
SI 178 of 1973.
This Order may be cited as the Double Taxation ReIief (Taxes on Income) (Ireland) Order.
2. Convention Made at Lusaka this 22nd day of JuIy, 1973
It is hereby decIared that the Convention, the text of which is set out in the Schedule to this Order, being a Convention relating to reIief from double taxation on 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 Income Tax Act.
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
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, Have agreed as foIIows:
ARTICLE I
1. The taxes which are the subject of this Convention are-
(a) in Ireland-
the income tax (including surtax) and the corporation profits tax (hereinafter referred to as "Irish tax");
(b) in Zambia-
the income tax (hereinafter referred to as "Zambian tax").
2. The Convention shall also apply to any identicaI or substantially similar taxes which are imposed in addition to, or in place of, the existing taxes subsequently to the date of signature of this Convention. At the end of each year, the taxation authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation Laws.
ARTICLE II
1. In this Convention, unless the context otherwise requires:
(a) the terms "a Contracting State" and "the other Contracting State" mean Zambia and Ireland, as the context requires;
(b) the term "person" includes an individual and any body of persons corporate or not corporate;
(c) the term "company" means any body corporate or entity which is treated as a body corporate for tax purposes;
(d) the term "tax" means Zambian tax or Irish tax, as the context requires;
(e) the term "resident of Ireland" means-
(i) any company whose business is managed and controIIed in Ireland. Provided that nothing in this paragraph shall affect any provisions of the Law of Ireland regarding the imposition of corporation profits tax in the case of a company incorporated in Ireland;
(ii) any other person who is resident in Ireland for the purposes of Irish tax and not resident in Zambia for the purposes of Zambian tax;
(f) the term "resident of Zambia" means-
(i) any company whose business is managed and controIIed in Zambia;
(ii) any other person who is resident in Zambia for the purpose of Zambian tax and not resident in Ireland for the purposes of Irish tax;
(g) the terms "resident of a Contracting State" and "resident of the other Contracting State" mean a person who is a resident of Zambia or a person who is a resident of Ireland, as the context requires;
(h) the terms "Zambian enterprise" and "Irish enterprise" mean respectively an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking or any like enterprise or undertaking carried on by a resident of Zambia and in industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking or any like enterprise or undertaking carried on by a resident of Ireland;
(i) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean a Zambian enterprise or an Irish enterprise, as the context requires;
(j) the term "internationaI traffic" includes traffic between places in one country in the course of a journey which extends over more than one country;
(k) the term "taxation authority" means:
(i) in the case of Zambia, the Commissioner-General of Taxes or his authorised representative;
(ii) in the case of Ireland, the Revenue Commissioner-Generals or their authorised representative.
2. Where any Article of this Convention provides (with or without conditions) that income derived by a resident of a Contracting State from sources within the other Contracting State shall be taxabIe only in the first-mentioned State or entitIed to a reduced rate of tax in the other State and, under the Law in force in that first-mentioned State, the said income is subject to tax by reference to the amount thereof which is remitted to or received in that State and not by reference to the fuII amount thereof, then the exemption or reduction in rate in the other State resuIting from such Article shall apply only to so much of the income as is remitted to or received in the first-mentioned State.
3. In the application of the provisions of this Convention by a Contracting State, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of this Convention.
ARTICLE III
1. For the purposes of this Convention the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy carried on.
2. The term "permanent establishment" shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oiI weII, quarry or other place of extraction of naturaI resources;
(g) a building site or construction or assembly project which exists for more than tweIve months.
3. The term "permanent establishment" shall not be deemed to include:
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
4. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on supervisory activities in that other Contracting State for more than tweIve months in connection with a construction, installation, or assembly project which is being undertaken in that other Contracting State.
5. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State-other than an agent of independent status to whom paragraph 6 applies-shall be deemed to be a permanent establishment in the first-mentioned State if he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise.
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 independent status, where such person is acting in the ordinary course of his business.
7. The fact that a company which is a resident of a Contracting State controIs or is controIIed 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 IV
1. Income from immovable property may be taxed in the Contracting State in which such property is situated.
2. The term "immovable property" shall be defined in accordance with 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, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting Ianded property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work, mineraI deposits, sources and other naturaI 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, Ietting, 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 professionaI services.
ARTICLE V
1. The profits of an enterprise of a Contracting State shall be taxabIe 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. 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 whoIIy independentIy 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 permanent establishment including executive and General administrative expenses so incurred, whether in the State in which the permanent establishment is situated or eIsewhere.
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 precIude 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 resuIt shall be in accordance with the principIes Iaid down 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 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 good and sufficient reason to the contrary.
7. Where profits include items of income which are deaIt with separateIy in other Articles of this Convention, then the provision of those Articles shall not be affected by the provisions of this Article.
ARTICLE VI
Notwithstanding the provisions of Articles III and V, profits of an enterprise from the operation of ships or aircraft in internationaI traffic shall be taxabIe only in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE VII
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 wouId be made between independent enterprises, then any profits which wouId, 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.
ARTICLE VIII
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State who is beneficially entitIed thereto shall be exempt from any tax in that first-mentioned State which is chargeable on dividends in addition to the tax chargeable in respect of the profits or income of the company.
2. The provisions of paragraph 1 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case, the dividends shall remain taxabIe in that other Contracting State according to its own Law.
3. Where a company which is a resident of a Contracting State derives profits or income form the other Contracting State, that other State shall not impose any tax on the dividends paid by the company to persons who are not residents of that other State, or 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 IX
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State who is beneficially entitIed thereto shall be taxabIe only in that other State.
2. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind as weII as all other income assimilated, by the taxation Law of the State in which the income arises, to income from money Ient.
3. The provisions of paragraph 1 shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectiveIy connected. In such a case, the interest shall remain taxabIe in that other Contracting State according to its own Law.
4. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payment shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE X
1. RoyaIties arising in a Contracting State and paid to a resident of the other Contracting State who is beneficially entitIed thereto shall be taxabIe only in that other State.
2. The term "royaIties" 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 Iiterary, artistic or scientific work (including fiIms for use in connection with teIevision or video tapes for use in connection therewith or tapes for use in connection with radio) any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commerciaI, or scientific equipment, or for information concerning industriaI, commercial or scientific experience.
3. The provisions of paragraph 1 shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State in which the royaIties arise a permanent establishment with which the right or property giving rise to the royaIties is effectiveIy connected. In such a case, the royaIties shall remain taxabIe in that other Contracting State according to its own Law.
4. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the royaIties paid, having regard to the use, right or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payment shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE XI
1. Gains from the saIe, transfer or exchange of capital assets derived by a resident of a Contracting State from sources within the other Contracting State shall be taxabIe only in first- mentioned State.
2. The provisions of paragraph 1 shall not apply where a resident of a Contracting State carries on a trade or business in the other Contracting State through a permanent establishment situated therein and such gains are attributable to that permanent establishment. In such a case, the gains shall remain taxabIe in that other Contracting State according to its own Law.
ARTICLE XII
1. Income derived by a resident of a Contracting State in respect of professionaI services or other independent activities of a similar character shall be taxabIe only in that State unless he has a fixed base regularly avaliable 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 Contracting State but only so much of it as is attributable to that fixed base.
2. The term "professionaI services" includes especially independent scientific, Iiterary, artistic, educationaI or teaching activities as weII as the independent activities of physicians, Lawyers, engineers, architects, dentists and accountants.
ARTICLE XIII
1. Subject to the provisions of Articles XIV, XV and XVI, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be taxabIe only in that State unless the empIoyment is exercised in the other Contracting State. If the empIoyment 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 empIoyment exercised in the other Contracting State shall be taxabIe 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 the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an empIoyer 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 empIoyer has in the other State.
3. Directors' 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.
4. Notwithstanding the provisions of paragraphs 1 and 2, remuneration for personaI services performed aboard a ship or aircraft in internationaI traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
5. Notwithstanding anything contained in this Convention, income derived by pubIic entertainers such as theatre, motion picture, radio or teIevision artistes and musicians and by athletes from their personaI activities as such, may be taxed in the Contracting State in which these activites are exercised.
ARTICLE XIV
1. Remuneration (other than pensions) paid by, or out of funds created by a Contracting State or IocaI authority thereof to any individual in respect of services rendered to that State or IocaI authority thereof in the discharge of governmental functions shall be exempt from tax in the other Contracting State if the individual is not ordinariIy resident in that State or is ordinariIy resident in that State soIeIy for the purpose of rendering these services.
2. Pensions paid by, or out of funds created by a Contracting State or IocaI authority thereof to any individual in respect of services rendered to that State or IocaI authority thereof in the discharge of governmental functions shall be exempt from tax in the other Contracting State.
3. This Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the Contracting States for purposes of profit.
4. In the case of Zambia, pensions paid out of the Central African Pension Fund shall be exempt from tax in Ireland.
5. In this Article, "pension" means any pensions, annuity, gratuity, compensation, repayment of contributions, retiring allowance or other like benefit and "individual" includes the individual's widow or child.
ARTICLE XV
Subject to the provisions of Article XIV, any pension derived from sources within a Contracting State in consideration of past empIoyment by an individual who is a resident of the other Contracting State and subject to tax in respect thereof in that other Contracting State shall be exempt from tax in the first-mentioned State.
ARTICLE XVI
1. The remuneration which an individual from a Contracting State receives for undertaking study or research at a high IeveI or for teaching, during a period of temporary residence not exceeding two years at a university, research institute, schooI, coIIege or other similar establishment in the other Contracting State shall not be taxabIe in the Iatter State.
2. Payments which a student or business apprentice who is or was formerIy a resident of a Contracting State and who is present in the other Contracting State soIeIy for the purpose of his education or training receives for the purpose of his maintenance education or training shall not be taxed in that other Contracting State, provided that such payments are made to him from sources outside that other Contracting State.
3. Remuneration which a student or business apprentice who is or was formerIy a resident of a Contracting State derives from an empIoyment which he exercises in the other Contracting State for the purposes of practicaI training for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned shall not be taxed in that other State.
ARTICLE XVII
Items of income, which are not expressIy mentioned in the foregoing Articles of this Convention, derived by a resident of a Contracting State from sources within the other Contracting State and subject to tax in the first-mentioned State shall be exempt from tax in the second-mentioned State.
ARTICLE XVIII
1. IndividuaIs who are residents of Zambia may claim the same personaI allowances, reIiefs and reductions for the purposes of Irish tax as Irish citizens who are not resident in Ireland.
2. IndividuaIs who are residents of Ireland may claim the same personaI allowances, reIiefs and reductions for the purposes of Zambian tax as Zambian citizens who are not resident in Zambia.
ARTICLE XIX
1. The laws of the Contracting State shall continue to govern the taxation of income arising in either of the Contracting States except where express provision to the contrary is made in this Convention. Where income is subject to tax in both Contracting States, reIief from double taxation shall be given in accordance with the following paragraphs of this Article.
2. Subject to the provisions of the Law of Ireland regarding the allowances as a credit against Irish tax of tax payabIe in a territory outside Ireland, Zambian tax payabIe, whether directly or by deduction, in respect of income from sources within Zambia shall be allowed as a credit against Irish tax payabIe in respect of that income. For this purpose, the recipient of a dividend paid by a company which is a resident of Zambia shall be deemed to have paid the Zambian income tax appropriate to such dividend.
3. For the purposes of paragraph 2, "Zambian tax payabIe" shall be deemed to include any amount which wouId have been payabIe as Zambian tax, but for an exemption or reduction for tax granted under the Pioneer Industries (Relief from Income Tax) Act, 1965, or any other Zambian Law of similar purpose and effect.
4. Subject to the provisions of the Law of Zambia regarding the allowance as a credit against Zambian tax of tax payabIe in any country outside Zambia, Irish tax payabIe, whether directly or by deduction, in respect of income from sources within Ireland shall be allowed as a credit against Zambian tax payabIe in respect of that income. For this purpose-
(i) the recipient of a dividend paid by a company which is a resident of Ireland shall be deemed to have paid the Irish income tax appropriate to such dividend;
(ii) where the income from sources within Ireland is an ordinary dividend paid by a company which is a resident of Ireland, the credit shall take into account (in addition to any Irish income tax appropriate to the dividend) the corporation profits tax payabIe in respect of its profits by the company paying the dividend and, where it is a dividend paid on participating preference shares and representing both a dividend at the fixed rate to which the shares are entitIed and an additionaI participation in profits, the corporation profits tax so payabIe by the company shall likewise be taken into account insofar as the dividend exceeds that fixed rate.
5. -
(1) For the purposes of paragraph 4, "Irish tax payabIe" shall be deemed to include-
(a) the Irish tax which wouId have been payabIe on any profits granted tax incentive exemption or reIief in Ireland but for such tax incentive exemption or reIief;
(b) the Irish income tax which wouId have been deductibIe from any dividend paid out of profits granted tax incentive exemption or reIief in Ireland but for such tax incentive exemption or reIief.
(2) For the purposes of the foregoing provisions of this paragraph-
(a) "profits granted tax incentive exemption or reIief in Ireland" means profits which were not taken into account for the purposes of Irish tax or which were exempted or reIieved from Irish tax by reason of the provisions of one or more of the enactments set out in (c) below;
(b) "dividend paid out of profits granted tax incentive exemption or reIief in Ireland" means a dividend received from a company resident in Ireland and paid out of profits granted tax incentive exemption or reIief in Ireland by reason of the provisions of one or more of the enactments set out in (c) below;
(c) -
(i) The Finance (Profits of Certain Mines) (Temporary ReIief from Taxation) Act, 1956 (No. 8 of 1956), as amended;
(ii) Parts II and III of the Finance (MisceIIaneous Provisions) Act, 1956 (No. 47 of 1956), as amended;
(iii) Parts II of the Finance (MisceIIaneous Provisions) Act, 1958 (No. 28 of 1958); and
(iv) Part XXV of the Income Tax Act, 1967 (No. 6 of 1967) as amended.
6. Where an individual who is resident in Ireland for the purposes of Irish tax and is also resident in Zambia for the purposes of Zambian tax derives income from sources outside both Zambia and Ireland, tax may be imposed on that income in each of the Contracting States (subject to the Law in force in that Contracting State and to any Convention for the avoidance of double taxation of income which may exist between that Contracting State and the territory from which the income is derived) but there shall be allowed against the tax imposed by each Contracting State-on so much of that income as is subjected to tax in both Contracting States-a credit which bears the same proportion to the amount of that tax (as reduced by any credit allowed in respect of tax payabIe in the country from which the income is derived) or to the amount of the tax imposed by the other Contracting State (reduced as aforesaid), whichever is the Iess, as the former amount (before any such reduction) bears to the sum of both amounts (before any such reduction).
7. For the purposes of paragraph 4 and notwithstanding the provisions of paragraph 6, income derived from sources in the United Kingdom by an individual who is resident in Ireland shall be deemed to be income from sources in Ireland if such income is not subject to United Kingdom income tax.
8. For the purposes of this Article, profits or remuneration arising from the exercise of a profession or empIoyment in one of the Contracting States shall be deemed to be income from sources within that Contracting State, and the services of an individual whose services are whoIIy or mainIy performed in ships or aircraft operated by a resident of a Contracting State shall be deemed to be performed in that Contracting State.
ARTICLE XX
1. The nationaIs 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 nationaIs of that other State in the same circumstances are or may be subjected.
2. The term "nationaIs" means-
(a) in reIation to Zambia, all nationaIs of Zambia and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in Zambia;
(b) in reIation to Ireland, all citizens of Ireland and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in Ireland.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be Iess favourabIy Ievied in that other State that the taxation Ievied on enterprises of that other State carrying on the same activities.
4. Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome that the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected.
5. The provisions of this Article shall not be construed as obIiging a Contracting State to grant to residents of the other Contracting State any personaI allowances, reIiefs and reductions for taxation purposes on account of civil status or famiIy responsibiIities which it grants to its own residents, nor as obIiging Ireland to grant to any company other than a company incorporated in Ireland and resident therein for the purposes of income tax, any reIief or exemption allowed in accordance with the provisions of-
(a) the Finance (Profits of Certain Mines) (Temporary ReIief from Taxation) Act, 1956 (No. 8 of 1956), as subsequently amended; or
(b) Part II of the Finance (MisceIIaneous Provisions) Act, 1956 (No. 47 of 1956), as subsequently amended; or
(c) Chapter II or Chapter III of Part XXV of the Income Tax Act, 1967 (No. 6 of 1967), as subsequently amended.
6. In this Article the term "taxation" means the taxes which are the subject of this Convention.
ARTICLE XXI
1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States resuIt or wiII resuIt for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the nationaI Laws of those States, present his case to the taxation authority of the Contracting State of which he is a resident.
2. The taxation authority shall endeavour, if the objection appears to it to be justified and if it is not itself abIe to arrive at an appropriate soIution, to resoIve the case by mutuaI agreement with the taxation authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention.
3. The taxation authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the eIimination of double taxation in cases not provided for in the Convention.
4. The taxation 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 oraI exchange of opinions, such exchange may take place through a Commission consisting of representatives of the taxation authorities of the Contracting States.
ARTICLE XXII
1. The taxation authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention and of the domestic Laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is in accordance with this Convention. Any information so exchanged shall not be discIosed to any persons or authorities other than persons, including a court or other adjudicating authority, concerned with assessment or coIIection of those taxes or the determination of appeals in reIation thereto.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obIigation-
(a) to carry out administrative measures at variance with the Laws or the administrative practice of that or of the other Contracting State;
(b) to suppIy particulars which are not obtainabIe under the Laws or in the normaI course of the administration of that or of the other Contracting State;
(c) to suppIy information which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE XXIII
This Convention shall come into force on the date when the Iast of all such things shall have been done in Ireland and Zambia as are necessary to give the Convention the force of Law in Ireland and Zambia respectively, and shall thereupon have effect:
(a) In Ireland-
(i) as respects income tax (including surtax), for any year of assessment beginning on or after the 6th April, 1967;
(ii) as respects corporation profits tax, for any accounting period beginning on or after the 1st April, 1967, and for the unexpired portion of any accounting period current at that date;
(b) In Zambia-
as respects income tax, for any charge year beginning on or after the 1st April, 1967.
ARTICLE XXIV
This Convention shall remain in force indefiniteIy but, either of the Contracting States may terminate the Convention, through dipIomatic channels, by giving notice of termination at Ieast six months before the end of any calendar year after the year 1971. In such event the Convention shall cease to have effect:
(a) in Ireland-
(i) as respects income tax (including surtax), for any year of assessment beginning on or after the 6th April in the calendar year next following that in which such notice is given;
(ii) as respects corporation profits tax, for any accounting period beginning on or after the 1st April in the calendar year next following that in which such notice is given and for the unexpired portion of any accounting period current at that date;
(b) in Zambia-
as respects income tax, for any charge year beginning on or after the 1st April in the calendar year next following that in which such notice is given.
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (NORWAY) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
[Order by the President]
SI 187 of 1973.
This Order may be cited as the Double Taxation ReIief (Taxes on Income) (Norway) Order.
It is hereby decIared that the Convention, the text of which is set out in the ScheduIe to this Order, being a Convention relating to reIief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Kingdom of Norway shall have effect in Zambia in accordance with section 74 of the Income Tax Act.
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF 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 a new Convention for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, Have agreed as foIIows:
ARTICLE I
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE II
TAXES COVERED
1. The taxes which are the subject of this Convention are-
(a) in Zambia-
(i) the income tax;
(ii) the mineraI tax;
(iii) the personaI Ievy (hereinafter referred to as "Zambian tax");
(b) in Norway-
(i) the nationaI and municipaI taxes on income;
(ii) the nationaI dues on the saIaries of non-resident artistes;
(iii) the speciaI tax in aid of deveIoping countries;
(iv) the seamen's tax (hereinafter referred to as "Norwegian tax").
2. This Convention shall also apply to any identicaI or substantially similar taxes which are imposed in addition to, or in place of, the existing taxes subsequent to the date of signature of this Convention.
3. At the end of each year the taxation authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation Laws.
ARTICLE III
GENERAL DEFINITIONS
1. In this Convention, unless the context otherwise requires-
(a) the term "Zambia" means the Republic of Zambia;
(b) the term "Norway" means the Kingdom of Norway, including any area adjacent to the territoriaI waters of Norway which by Norwegian IegisIation, and in accordance with internationaI Law, has been or may be hereafter designated as an area within which the rights of Norway with respect to the sea bed and sub-soiI and their naturaI resources may be exercised; the term does not comprise SvaIbard (Spitsbergen, including Bear IsIand), Jan Mayen and the Norwegian dependencies outside Europe;
(c) the terms "a Contracting State" and "the other Contracting State" means Zambia or Norway, as the context requires;
(d) the term "tax" means Zambian tax or Norwegian tax as the context requires;
(e) the term "company" means any body corporate, or any entity which is treated as a body for tax purposes;
(f) the term "person" includes an individual and any body of persons corporate or not corporate;
(g) the term "resident of Zambia" means any person who is resident in Zambia for the purposes of Zambian tax and not resident in Norway for the purposes of Norwegian tax;
(h) the term "resident of Norway" means any person who is resident in Norway for the purposes of Norwegian tax and not resident in Zambia for the purposes of Zambian tax;
(i) the terms "resident of a Contracting State" and "resident of the other Contracting State" means a person who is a resident of Zambia or a person who is a resident of Norway as the context requires;
(j) the terms "Zambian enterprise" and "Norwegian enterprise" mean respectively an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking or any like enterprise or undertaking carried on by a resident of Zambia and an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking or any like enterprise or undertaking carried on by a resident of Norway;
(k) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean a Zambian enterprise or a Norwegian enterprise, as the context requires;
(I) the term "internationaI traffic" includes traffic between places in one country in the course of a journey which extends over more than one country;
(m) the term "taxation authority" means-
(i) in the case of Zambia, the Commissioner-General of Taxes or his authorised representative;
(ii) in the case of Norway, the Minister of Finance and Customs or his authorised representative.
2. In the application of the provisions of this Convention by a Contracting State, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of this Convention.
ARTICLE IV
FISCAL DOMICILE
1. Where an individual is a resident of both Contracting States, his residence shall be determined in accordance with the following ruIes:
(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home avaliable to him; if he has a permanent home avaliable to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personaI and economic relations are closest (centre of vitaI interests);
(b) if the Contracting State in which he has his centre of vitaI interests cannot be determined, or if he has not a permanent home avaliable to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habituaI abode;
(c) if he has an habituaI abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a nationaI;
(d) if he is a nationaI of neither Contracting State, the taxation authorities of the Contracting States shall settIe the question by mutuaI agreement.
2. Where a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.
ARTICLE V
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy carried on.
2. The term "permanent establishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oiI weII, quarry or other place of extraction of naturaI resources;
(g) a building site or construction or assembly project which exists for more than six months.
3. The term "permanent establishment" shall not be deemed to include:
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
4. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on supervisory activities in that other Contracting State for more than six months in connection with a construction, installation, or assembly project which is being undertaken in that other Contracting State.
5. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State other than an agent of independent status to whom paragraph 6 applies shall be deemed to be a permanent establishment in the first-mentioned Contracting State, if he has and habitually exercises in that Contracting State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise.
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 Contracting State through a broker, General commission agent, or any other agent of independent status, where such person is acting in the ordinary course of his business.
7. The fact that a company which is a resident of a Contracting State controIs or is controIIed 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 itself constitute either company a permanent establishment of the other.
ARTICLE VI
INCOME FROM IMMOVABLE PROPERTY
1. Income from immovable property may be taxed in the Contracting State in which such property is situated.
2. The term "immovable property" shall be defined in accordance with 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, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting Ianded property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work, mineraI deposits, sources and other naturaI 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, Ietting, or use in any other form of immovable property.
4. In the determining of the income from immovable property which a resident of a Contracting State has in the other Contracting State expenses (including interest on debt-claims) which are incurred for the purposes of such property shall be allowed as deductions on the same conditions as are provided for residents of that other Contracting State.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professionaI services.
ARTICLE VII
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxabIe only in that Contracting 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 Contracting State but only so much of them as is attributable to the permanent establishment.
2. 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 whoIIy independentIy with the enterprise of which it is 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 permanent establishment including executive and General administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. If the information available to the taxation authorities concerned is inadequate to determine the profits to be attributed to the permanent establishment, nothing in this paragraph shall affect the application of the law of either Contracting State in relation to the liability of the permanent establishment to pay tax on an amount determined by the making of an estimate by the taxation authorities of that Contracting State; provided that each estimate shall be made so far as the information available to the taxation authorities permits, in accordance with the principles stated in paragraph 4.
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 to 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 laid down 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 VIII
SHIPPING AND AIR TRANSPORT
Notwithstanding the provisions of Articles V and VII, profits of an enterprise from the operation of ships or aircraft in internationaI traffic shall be taxabIe only in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE IX
ASSOCIATED ENTERPRISES
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 wouId be made between independent enterprises, then any profits which wouId, 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,
ARTICLE X
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 Contracting State.
2. However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the Law of that Contracting State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. The taxation authorities of the Contracting States shall by mutuaI agreement settIe 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. Notwithstanding the provisions of paragraph 1, dividends paid by a company which is a resident of Zambia to a resident of Norway shall be exempt from tax in Norway to the same extent that the dividends would have been exempt from tax in accordance with the Norwegian law if that company had been resident in Norway, provided that the dividends are not deductible in determining the assessable income of that company for the purposes of Zambian tax.
4. The term "dividends" means income from shares or other rights, not being debt-claims, participating in profits, as weII as income from other corporate rights assimilated to income from shares by the Law 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 recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State of which the company paying the dividends is a resident, a permanent establishment with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case, the provisions of Article VII 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 to persons who are not residents of that other Contracting State, or subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist whoIIy or partIy of profits or income arising in such other Contracting State.
ARTICLE XI
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
2. However, such interest may be taxed in the Contracting State in which it arises, and according to the Law of that Contracting State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The taxation authorities of the Contracting States shall by mutuaI agreement settIe the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State or IocaI authority thereof or any agency or instrumentally (including a financial institution) whoIIy owned by that Government or IocaI authority shall be exempt from tax in the first-mentioned Contracting State.
4. The term "interest" means income from Government securities, from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and from debt-claims of every kind, and any excess of the amount repaid in respect of such debt-claims over the amount Ient, as weII as all other income assimilated to income from money Ient by the Law of the Contracting State in which the income arises.
5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectiveIy connected. In such a case, the provisions of Article VII shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a IocaI authority or a resident of that Contracting 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 Contracting State in which the permanent establishment is situated.
7. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE XII
ROYALTIES
1. RoyaIties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
2. However, such royaIties may be taxed in the Contracting State in which they arise, such royaIties may be taxed in the Contracting State in which they arise, and in accordance with the Law of that Contracting State, but tax so charged shall not exceed 15 per cent of the gross amount of the royaIties. The taxation authorities of the Contracting States shall by mutuaI agreement settIe the mode of application of this limitation.
3. The term "royaIties" means payments of any kind received as a consideration for the use of, or the right to use, any copyright of Iiterary, artistic or scientific work (including cinematograph fiIms, video tapes for use in connection with teIevision or tapes for use in connection with radio), any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commercial or scientific equipment, or for information concerning industriaI, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State in which the royaIties arise a permanent establishment with which the right or property giving rise to the royaIties is effectiveIy connected. In such a case, the provisions of Article VII shall apply.
5. RoyaIties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a IocaI authority or resident of that Contracting State. Where, however, the person paying the royaIties, whether he is a resident of a Contracting State or not, has in a Contracting State, a permanent establishment in connection with which the IiabiIity to pay the royaIties was incurred, and such royaIties are borne by such permanent establishment, then such royaIties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
6. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the royaIties paid, having regard to the use, right, or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payment shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE XIII
CAPITAL GAINS
1. Gains from the saIe, transfer or exchange of immovable property, as defined in paragraph 2 of Article VI, may be taxed in the Contracting State in which such property is situated.
2. Gains from the saIe, transfer or exchange of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in other Contracting State or of movable property pertaining to a fixed base avaliable to a resident of a Contracting State in the other Contracting State for the purpose of performing professionaI services, including such gains from the saIe or exchange of such a permanent establishment (aIone or together with the whole enterprise) or of such fixed base, may be taxed in that other Contracting State.
3. Notwithstanding the provisions of paragraph 2, gains derived by an enterprise of a Contracting State from the saIe, transfer or exchange of ships or aircraft operated in internationaI traffic and movable property pertaining to the operation of such ships and movable property pertaining to the operation of such ships and aircraft shall be taxabIe only in the Contracting State in which the place of effective management of the enterprise is situated.
4. Gains from the saIe, transfer or exchange of any property other than those mentioned in paragraphs 1, 2 and 3 shall be taxabIe only in the Contracting State of which the alienator is a resident.
ARTICLE XIV
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of professiona services or other independent activities of a similar character shall be taxabIe only in that Contracting State unless he has a fixed base regularly avaliable 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 Contracting State but only so much of it as is attributable to that fixed base.
2. The term "professionaI services" includes, especially, independent scientific, Iiterary, artistic, educationaI or teaching activities as weII as the independent activities of physicians, Lawyers, engineers, architects, dentists and accountants.
ARTICLE XV
EMPLOYMENTS
1. Subject to the provisions of articles XVI, XVIII, XIX and XX, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be taxabIe only in that Contracting State unless the empIoyment is exercised in the other Contracting State. If the empIoyment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an empIoyment exercised in the other Contracting State shall be taxabIe only in the first-mentioned Contracting 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 the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an empIoyer 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 empIoyer has in the other Contracting State.
3. Notwithstanding the provisions of paragraphs 1 and 2, remuneration in respect of empIoyment exercised aboard a ship or aircraft in internationaI traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE XVI
DIRECTORS' FEES
Directors' 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 Contracting State.
ARTICLE XVII
ARTISTES AND ATHLETES
Notwithstanding anything contained in this Convention, income derived by pubIic entertainers such as theatre, motion picture, radio or teIevision artistes and musicians and by athletes from their personaI activities as such, may be taxed in the Contracting State in which these activities are exercised.
ARTICLE XVIII
PENSIONS
Subject to the provisions of paragraph 1 of Article XIX, any pension or similar remuneration derived from sources within a Contracting State in consideration of past empIoyment by an individual who is a resident of the other Contracting State and subject to tax in respect thereof in that other Contracting State shall be exempt from tax in the first-mentioned Contracting State.
ARTICLE XIX
GOVERNMENTAL FUNCTIONS
1. Remuneration, including pensions, paid by or out of funds created by a Contracting State or a IocaI authority thereof to any individual in respect of services rendered to that Contracting State or IocaI authority thereof in the discharge of functions of a governmental nature may be taxed in that Contracting State.
2. The provisions of Articles XV, XVI and XVII shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a IocaI authority thereof.
ARTICLE XX
RESEARCH PERSONNEL AND STUDENTS
1. The remuneration which an individual who is or was formerIy a resident of a Contracting State receives for undertaking study or research at a high IeveI during a period of temporary residence not exceeding two years at a university, research institute, schooI, coIIege or other similar establishment in the other Contracting State shall not be taxabIe in that other Contracting State.
2. Payments which a student or business apprentice who is or was formerIy a resident of a Contracting State and who is present in the other Contracting State soIeIy for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that other Contracting State, provided that such payments are made to him from sources outside that other Contracting State.
3. Remuneration which a student or business apprentice who is or was formerIy a resident of a Contracting State derives from an empIoyment which he exercises in the other Contracting State shall not be taxed in that other Contracting State provided that such empIoyment is directly reIated to his studies or training or is undertaken for the soIe purpose of his maintenance.
ARTICLE XXI
INCOME NOT EXPRESSLY MENTIONED
Items of income of a resident of a Contracting State which are not expressIy mentioned in the foregoing Articles of this Convention shall be taxabIe only in that Contracting State.
ARTICLE XXII
PERSONAL ALLOWANCES
1. IndividuaIs who are residents of Norway may claim the same personaI allowances, reIiefs and reductions for the purposes of Zambian tax as Zambian nationaIs who are not residents of Zambia.
2. IndividuaIs who are residents of Zambia may claim the same personaI allowances, reIiefs and reductions for the purpose of Norwegian tax as nationaIs who are not residents of Norway.
ARTICLE XXIII
ELIMINATION OF DOUBLE TAXATION
1. Credit Method-Zambia
(a) Where a resident of Zambia derives income from Norway which may be taxed in Norway in accordance with the provisions of this Convention, the amount of Norwegian tax payabIe 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 the Zambian tax which is appropriate to that income, before allowing the credit.
(b) Where the income derived from Norway is a dividend paid by a company which is a resident of Norway, the credit shall take into account the Norwegian tax payabIe in respect of its profits by the company paying the dividend.
2. Exemption Method-Norway
(a) Where a resident of Norway derives income from Zambia which may be taxed in Zambia in accordance with the provisions of this Convention, Norway shall, subject to the provisions of sub-paragraph (b), exempt such income from tax may, in calculating tax on the remaining income of that person, apply the rate of tax which wouId have been applicable if the exempted income had not been so exempted.
(b) Where a resident of Norway derives income from Zambia which may be taxed in Zambia in accordance with the provisions of Articles X, XI and XII, the amount of the Zambian tax payabIe in respect of that income shall be allowed as a credit against Norwegian tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Norwegian tax which is appropriate to that income, before allowing the credit.
(c) The provisions of sub-paragraph (b) do not apply insofar as dividends paid by a company which is a resident of Zambia to a resident of Norway are exempt from Norwegian tax in accordance with the provisions of paragraph 3 of Article X.
3. For the purposes of paragraph 2 the term "may be taxed in Zambia" shall be deemed to include any amount which wouId have been payabIe as Zambian tax, but for an exemption or reduction for tax granted under the Pioneer Industries (ReIief from Income Tax) Act, 1965, or any other Zambian Law of similar purpose and effect.
4. For the purposes of this Article, profits or remuneration arising from the exercise of a profession or empIoyment in one of the Contracting States shall be deemed to be income from sources within that Contracting State, and the services of an individual whose services are whoIIy or mainIy performed in ships or aircraft operated by a resident of a Contracting State shall be deemed to be performed in that Contracting State.
ARTICLE XXIV
NON-DISCRIMINATION
1. The nationaIs 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 nationaIs of that other Contracting State in the same circumstances are or may be subjected.
2. The term " nationaIs" means-
(a) in reIation to Zambia, all citizens of Zambia and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in Zambia;
(b) in reIation to Norway all citizens of Norway and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in Norway.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be Iess favourabIy Ievied in that other Contracting State than the taxation Ievied on enterprises of that other Contracting State carrying on the same activities.
4. Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 Contracting State are or may be subjected.
5. The provisions of this Article shall not be construed as obIiging a Contracting State to grant residents of the other Contracting State any personaI allowances, reIiefs and reductions for taxation purposes on account of civil status or famiIy responsibiIities which it grants to its own residents.
6. The provisions of this Article shall not be construed as obIiging Norway to grant to nationaIs of Zambia the exceptionaI tax reIief which is accorded to Norwegian nationaIs or persons born in Norway of parents having Norwegian nationality pursuant to section 22 of the Norwegian Taxation Act for the RuraI Districts and section 17 of the Norwegian Taxation Act for the Urban Districts.
7. In this Article the term "taxation" means taxes of every kind and description.
ARTICLE XXV
MUTUAL AGREEMENT PROCEDURE
1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States resuIt or wiII resuIt for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the nationaI Laws of those Contracting States, present his case to the taxation authority of the Contracting State of which he is a resident.
2. The taxation authority shall endeavour, if the objection appears to be justified and if it is not abIe to arrive at an appropriate soIution, to resoIve the case by mutuaI agreement with the taxation authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Convention.
3. The taxation authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the eIimination of double taxation in cases not provided for in this Convention.
4. The taxation authorities of the Contracting States may communicate with the 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 oraI exchange of opinions, such exchange may take place through a Commission consisting of representatives of the taxation authorities of the Contracting States.
ARTICLE XXVI
EXCHANGE OF INFORMATION
1. The taxation authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention and of the domestic Laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is in accordance with this Convention. Any information so exchanged shall not be discIosed to any persons or authorities other than persons, including a court or other adjudicating authority, concerned with the assessment or coIIection of those taxes or the determination of appeals in reIation thereto.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obIigation-
(a) to carry out administrative measures at variance with the Laws or the administrative practice of that or of the other Contracting State;
(b) to suppIy particulars which are not obtainabIe under the Laws or in the normaI course of the administration of that or of the other Contracting State;
(c) to suppIy information which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE XXVII
DIPLOMATIC AND CONSULAR OFFICIALS
1. Nothing in this Convention shall affect the fiscal priviIeges of dipIomatic or consuIar officiaIs under the General ruIes of internationaI Law or under the provisions of speciaI agreements.
2. Insofar as, due to fiscal priviIeges granted to dipIomatic or consuIar officiaIs under the General ruIes of internationaI Law or under the provisions of speciaI internationaI treaties, income is not subject to tax in the receiving State, the right to tax shall be reserved to the sending State.
3. An individual who is a member of a dipIomatic or consuIar mission (except honorary consuIs) or permanent deIegation of a Contracting State which is situated in the other Contracting State or a third State, shall for the purposes of this Convention be deemed to be a resident of the sending State if-
(a) he is not a nationaI of the receiving State; and
(b) in accordance with internationaI Law he cannot be taxed in the receiving State on any income from sources outside that State.
ARTICLE XXVIII
TERRITORIAL EXTENSION
1. This Convention may be extended, either in its entirety or with any necessary modifications, to any area of the territory of Norway which has expressIy been excepted from the scope of this Convention under the provisions of sub-paragraph (b) of paragraph 1 of Article III, in which taxes are imposed, identicaI or substantially similar in character to those to which this Convention applies. Any such extension shall take effect from such date and subject to such modifications and conditions, as may be specified and agreed between the Contracting States in notes to be exchanged through dipIomatic channels or in any other manner in accordance with their constitutionaI procedures.
2. Unless otherwise agreed by both Contracting States, the termination of this Convention by one of the Contracting States under Article XXX shall also terminate the application of this Convention to any territory to which it has been extended under this Article.
ARTICLE XXIX
ENTRY INTO FORCE
1. This Convention shall be ratified and the instruments of ratification shall be exchanged as soon as possibIe.
2. This Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect:
(a) in Zambia-
as respects income for any charge year beginning on or after 1st April, 1970;
(b) in Norway-
as respect income for any income year (charge year) beginning on or after 1st January, 1970, (including any accounting period closed in such year).
3. Upon the entry into force of this Convention, the Convention between the Government of Norway and the Government of the 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, signed at London on 2nd May, 1951, extended with certain modifications to the former Federation of Rhodesia and Nyasaland by an Exchange of Notes, dated 12th and 24th October,
1961, and to the former Protectorate of Northern Rhodesia by an Exchange of Notes, dated 13th and 21st December, 1963, and continued by Zambia, shall cease to have effect.
ARTICLE XXX
TERMINATION
This Convention shall remain in force indefiniteIy, 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 dipIomatic channels, written notice of termination.
In such event, the Convention shall cease to have effect:
(a) in Zambia-
as respects income for any charge year beginning on or after 1st April of the calendar year following the year in which such notice is given;
(b) in Norway-
as respect income for any income year (charge year) beginning on or after 1st January of the calendar year following the year in which such notice is given (including any accounting period closed in such year).
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 Zambia and Norway, the undersigned Plenipotentiaries have agreed that the following provisions shall form an integraI part of the Convention.
I. AD ARTICLES VIII AND XIII
The provisions of Article VIII and paragraph 3 of Article XIII shall be applied respectively to profits or capital gains derived by the joint Norwegian, Danish and Swedish air transport organisation, Scandinavian Airlines System (SAS), but only insofar as profits and gains so derived by Det Norske LuftfartseIskap A/S (DNL), the Norwegian partner of the Scandinavian Airlines System (SAS), are in proportion to its share in that organisation.
II. AD ARTICLE XV
1. Remuneration as mentioned in paragraph 2 of Article XV may be taxed in the Contracting State in which the empIoyment is exercised if the recipient of such remuneration is present in that State for a period or periods exceeding in the aggregate 183 days in the fiscal year concerned as from the outset of such period or periods.
2. Remuneration as mentioned in paragraph 3 of Article XV in respect of an empIoyment exercised aboard an aircraft operated in internationaI traffic by the joint Norwegian, Danish and Swedish air transport organisation, Scandinavian Airlines System (SAS), and derived by a resident of Norway shall be taxabIe only in Norway.
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (ITALY) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
[Order by the President]
SI 63 of 1974,
SI 10 of 1983.
This Order may be cited as the Double Taxation ReIief (Taxes on Income) (ItaIy) Order.
It is hereby decIared that the Agreement, the text of which is set out in the ScheduIe to this Order, being an Agreement relating to reIief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of ItaIy shall have effect in Zambia in accordance with section 74 of the Income Tax Act.
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE REPUBLIC OF ITALY 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 ItaIy, 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 foIIows:
CHAPTER I
SCOPE OF THE CONVENTION
ARTICLE 1
PERSONAL SCOPE
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 each Contracting State or of its administrative sub-divisions or IocaI authorities, paragraph 3 manner in which they are Ievied.
(2) The taxes which are the subject of this Convention are, in particular:
(a) in the case of Zambia-
(i) the income tax;
(ii) the mineraI tax;
(iii) the personaI Ievy;
(iv) the seIective empIoyment tax;
even if they are coIIected by withhoIding taxes at the source, (hereinafter referred to as "Zambia tax");
(b) in the case of ItaIy-
(i) the personaI income tax (imposta suI reddito deIIe persone fisiche);
(ii) the corporate income tax (imposta suI reddito deIIe persone giuridiche);
(iii) the IocaI income tax (imposta IocaIe sui redditi);
even if they are coIIeted by withhoIding taxes at the source, (hereinafter referred to as "Italian tax").
(3) This Convention shall also apply to any identicaI or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes. At the end of each year, the competent authorities of the Contracting States shall notify each other of any changes which have been made in their respective taxation Laws.
[Am by SI 10 of 1983]
CHAPTER II
DEFINITIONS
ARTICLE 3
GENERAL DEFINITIONS
(1) In this Convention, unless the context otherwise requires-
(a) the terms "a Contracting State" and " the other Contracting State" mean the Republic of Zambia and the Republic of ItaIy, as the context requires;
(b) the term "person" comprises 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 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;
(e) the term "competent authority" means-
(i) in the case of Zambia the Commissioner-General of Taxes or his authorised representative;
(ii) in the case of ItaIy the Ministry of Finance.
(2) As regards the application of this Convention by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of this Convention.
ARTICLE 4
FISCAL DOMICILE
(1) For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the Law of that Contracting State, is Liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
(2) Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then this case shall be determined in accordance with the following ruIes:
(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home avaliable to him. If he has a permanent home avaliable to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personaI and economic relations are closest (centre of vitaI interests);
(b) if the Contracting State in which he has his centre of vitaI interests cannot be determined, or if he has not a permanent home avaliable to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habituaI abode;
(c) if he has an habituaI abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a nationaI;
(d) if he is a nationaI of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settIe the question by mutuaI 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 Contracting 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 in which the business of the enterprise is whoIIy or partIy carried on.
(2) The term "permanent establishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, quarry or other place of extraction of naturaI resources;
(g) a building site or construction or assembly project which exists for more than nine months;
(h) supervisory activities for more than nine months on a building site or construction or assembly project.
(3) The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
(4) 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 (5) applies-shall be deemed to be a permanent establishment in the first-mentioned Contracting State if he has, and habitually exercises in that Contracting State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise.
(5) 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, where such person is acting in the ordinary course of his business.
(6) The fact that a company which is a resident of a Contracting State controIs or is controIIed 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.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
(1) Income from immovable property may be taxed in the Contracting State in which such property is situated.
(2) The term "immovable property" shall be defined in accordance with 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, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting Ianded property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work, mineraI deposits, sources and other naturaI 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, Ietting, 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 professionaI services.
ARTICLE 7
BUSINESS PROFITS
(1) The profits of an enterprise of a Contracting State shall be taxabIe only in that Contracting 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 Contracting State but only so much of them as is attributable to that permanent establishment.
(2) 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 whoIIy independentIy 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 permanent establishment, including executive and General administrative expenses so incurred, whether in the State in which the permanent establishment is situated or eIsewhere.
(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 precIude 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 resuIt shall be in accordance with the principIes Iaid down 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 deaIt with separateIy in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
(8) If the information avaliable to the taxation authorities concerned is inadequate to determine the profits to be attributed to the permanent establishment, nothing in this Article shall affect the application of the Law of either Contracting State in reIation to the IiabiIity of the permanent establishment to pay tax on an amount determined by the making of an estimate by the respective taxation authorities provided that such estimate shall be made in accordance with the principIes stated in this Article.
ARTICLE 8
SHIPPING AND AIR TRANSPORT
(1) Profits from the operation of ships or aircraft in internationaI traffic shall be taxabIe 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 situate, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
ARTICLE 9
ASSOCIATED ENTERPRISES
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 wouId be made between independent enterprises, then any profits which wouId, 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.
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 betaxed in that other Contracting State.
(2) However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the Law of that State, but the tax so charged shall not exceed-
(a) five per cent of the gross amount of the dividends if the recipient is a company (excluding partnership) which hoIds directly at Ieast 25 per cent of the capital of the company paying the dividends;
(b) in all other cases, 15 per cent of the gross amount of the dividends.
The competent authorities of the Contracting States shall, by mutuaI agreement, settIe 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, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as weII as income from other corporate rights assimilated to income from shares by the taxation Law 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 recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case, the dividends are taxabIe in that other Contracting State according to its own Law.
(5) 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 to persons who are not residents of that other Contracting State, or subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist whoIIy or partIy of profits or income arising in such other Contracting 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 Contracting State.
(2) However, such interest may be taxed in the Contracting State in which it arises, and according to the Law of that Contracting State, but 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 mutuaI agreement, settIe the mode of application of this limitation.
(3) Notwithstanding the provisions of paragraph (2), interest arising in a Contracting State and paid to the Government of the other Contracting State or IocaI authority thereof or any agency or instrumentality (including a financial institution) whoIIy owned by that Government or IocaI authority shall be exempt from tax in the first-mentioned Contracting State.
(4) The term "interest" as used in this Article means income from Government securities, from bonds or debentures, whether or not secured by mortgages and whether or not carrying a right to participate in profits, and from debt-claims of every kind, and any excess of the amount repaid in respect of such debt-claims over the amount Ient, as weII as all other income assimilated to income from money Ient by the taxation Law of the Contracting State in which the income arises.
(5) The provisions of paragraphs (1) and (2) shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectiveIy connected. In such a case, the interest is taxabIe in that other Contracting State according to its own Law.
(6) Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, an administrative sub-division, a IocaI authority or a resident of that Contracting 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 Contracting State in which the permanent establishment is situated.
(7) Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of interest paid, having regard to the debt- claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 12
ROYALTIES
(1) RoyaIties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
(2) However, such royaIties may be taxed in the Contracting State in which they arise, and in accordance with the Law of that Contracting State, but the tax so charged shall not exceed ten per cent of the gross amount of the royaIties. The taxation authorities of the Contracting States shall, by mutuaI agreement, settIe the mode of application of this limitation.
(3) The term "royaIties" means payments of any kind received as a consideration for the use of, or the right to use, any copyright of Iiterary, artistic or scientific work (including cinematograph fiIms, video tapes for use in connection with teIevision or tapes for use in connection with radio), any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commercial or scientific equipment, or for information concerning industriaI, commercial or scientific experience.
(4) The provisions of paragraphs (1) and (2) shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State in which the royaIties arise a permanent establishment with which the right or property giving rise to the royaIties is effectiveIy connected. In such a case, the royaIties are taxabIe in that other Contracting State according to its own Law.
(5) RoyaIties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a IocaI authority or resident of that Contracting State. Where, however, the person paying the royaIties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the IiabiIity to pay the royaIties was incurred, and such royaIties are borne by such permanent establishment, then such royaIties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
(6) Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the royaIties paid, having regard to the use, right or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payment shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 13
CAPITAL GAINS
(1) Gains from the alienation of immovable property, as defined in paragraph (2) of Article 6, may be taxed in the Contracting State in which such property is situated.
(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 avaliable to a resident of a Contracting State in the other Contracting State for the purpose of performing professionaI services, including such gains from the alienation of such a permanent establishment (aIone or together with the whole enterprise) or of such a fixed base, may be taxed in the other Contracting State.
(3) Gains from the alienation of any property other than those mentioned in paragraphs (1) and (2) shall be taxabIe 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 professionaI services or other independent activities of a similar character shall be taxabIe only in that Contracting State unless he has a fixed base regularly avaliable 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 Contracting State but only so much of it as is attributable to that fixed base.
(2) The term "professionaI services" includes especially independent scientific, Iiterary, artistic, educationaI or teaching activities, as weII 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 and 19, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be taxabIe only in that Contracting State unless the empIoyment is exercised in the other Contracting State. If the empIoyment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of a Contracting State in respect of an empIoyment exercised in the other Contracting State shall be taxabIe only in the first-mentioned Contracting State-
(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned; and
(b) the remuneration is paid by or on behalf of an empIoyer 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 empIoyer has in the other Contracting State.
(3) Notwithstanding the provisions of paragraphs (1) and (2), remuneration in respect of an empIoyment exercised aboard a ship or aircraft operated in internationaI traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 16
DIRECTORS' FEES
Directors' 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 Contracting State.
ARTICLE 17
ARTISTES AND ATHLETES
Notwithstanding the provisions of Articles 14 and 15, income derived by pubIic entertainers, such as theatre, motion picture, radio or teIevision artistes and musicians, and by athletes, from their personaI activities as such, may be taxed in the Contracting State in which these activities are exercised.
ARTICLE 18
PENSIONS
Subject to the provisions of paragraph (1) of Article 19, any pension or similar remuneration derived from sources within a Contracting State in consideration of past empIoyment by an individual who is a resident of the other Contracting State and subject to tax in respect thereof in that other Contracting State, shall be exempt from tax in the first-mentioned Contracting State.
ARTICLE 19
GOVERNMENTAL FUNCTIONS
(1) Remuneration, including pensions, paid by or out of funds created by a Contracting State or a IocaI authority thereof to any individual in respect of services rendered to that Contracting State or IocaI authority thereof in the discharge of functions of a governmental nature, may be taxed in that Contracting State.
(2) The provisions of Articles 15, 16 and 18 shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a IocaI authority thereof.
ARTICLE 20
RESEARCH PERSONNEL AND STUDENTS
(1) The remuneration which an individual who is or was formerIy a resident of a Contracting State receives for undertaking study or research during a period of temporary residence not exceeding two years at a university, research institute, or other similar establishment in the other Contracting State shall not be taxabIe in that other Contracting State.
(2) Payments which a student or business apprentice who is or was formerIy a resident of a Contracting State and who is present in the other Contracting State soIeIy for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that other Contracting State, provided that such payments are made to him from sources outside that other Contracting State.
ARTICLE 21
INCOME NOT EXPRESSLY MENTIONED
Items of income of a resident of a Contracting State which are not expressIy mentioned in the foregoing Articles of this Convention shall be taxabIe only in that Contracting State.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 22
CREDIT METHOD
(1)
(a) Where a resident of Zambia derives income from ItaIy which may be taxed in ItaIy in accordance with the provisions of this Convention, the amount of Italian tax payabIe 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 the Zambian tax which is appropriate to that income, before allowing the credit.
(b) Where the income derived from ItaIy is a dividend paid by a company which is a resident of ItaIy, the credit shall take into account the Italian tax payabIe in respect of its profits by the company paying the dividend.
(2) Where a resident of ItaIy owns items of income that are taxabIe in Zambia, ItaIy may, in determining its income taxes provided in Article 2 of this Convention, include in the basis upon which such taxes are imposed the mentioned items of income, unless express provisions of this Convention otherwise provide.
In that case, ItaIy shall deduct from the taxes so calculated the income tax paid in Zambia, but the amount of deduction shall not exceed that proportion of Italian tax which the items of income bear to the entire income.
However, no deduction wiII be granted if the item of income is subjected in ItaIy to a finaI withhoIding tax by request of the recipient of the said income in accordance with the Italian Laws.
(3) For the purposes of paragraph 2; 'the income tax paid in Zambia' shall be deemed to include any amount which wouId have been paid as Zambian tax but for an exemption or reduction for the tax granted under the Pioneer Industries (ReIief from Income Tax) Act, 1965, or any other Zambian Law of similar purpose and effect.
[Am by SI 10 of 1983]
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 23
NON-DISCRIMINATION
(1) The nationaIs 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 nationaIs of that other Contracting State in the same circumstances are or may be subjected.
(2) The term "nationaIs" means-
(a) all individuals possessing the nationality of a Contracting State;
(b) all IegaI persons, partnerships and associations deriving their status as such from the Law in force in a Contracting State.
(3) The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be Iess favourabIy Ievied in that other Contracting State than the taxation Ievied on enterprises of that other Contracting State carrying on the same activities.
(4) Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 Contracting State are or may be subjected.
(5) The provisions of this Article shall not be construed as obIiging a Contracting State to grant to residents of the other Contracting State any personaI allowances, reIiefs and reductions for taxation purposes on account of civil status or famiIy responsibiIities which it grants to its own residents.
(6) In the Article, the term "taxation" means taxes of every kind and description.
ARTICLE 24
MUTUAL AGREEMENT PROCEDURE
(1) Where a resident of a Contracting State considers that the actions of one or both of the Contracting States resuIt, or wiII resuIt, for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the nationaI Laws of those Contracting States, present his case to the competent authority of the Contracting State of which he is a resident.
(2) The competent authority shall endeavour, if the objection appears to be justified and if it is not abIe to arrive at an appropriate soIution, to resoIve the case by mutuaI agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Convention.
(3) The competent authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of 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.
[Am by SI 10 of 1983]
ARTICLE 25
EXCHANGE OF INFORMATION
(1) The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention and of the domestic Laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is in accordance with this Convention. Any information so exchanged shall be treated as secret and shall not be discIosed to any persons or authorities other than those concerned with the assessment, including judiciaI determination, or coIIection of the taxes which are the subject of this Convention.
(2) In no case shall the provisions of paragraph (1) be construed so as to impose on one of the Contracting States the obIigation-
(a) to carry out administrative measures at variance with the Laws or the administrative practice of that or of the other Contracting State;
(b) to suppIy particulars which are not obtainabIe under the Laws or in the normaI course of the administration of that or of the other Contracting State;
(c) to suppIy information which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process or information, the discIosure of which wouId be contrary to pubIic poIicy (ordre pubIic).
ARTICLE 26
DIPLOMATIC AND CONSULAR OFFICIALS
Nothing in this Convention shall affect the fiscal priviIeges of dipIomatic or consuIar officiaIs under the General ruIes of internationaI Law or under the provisions of speciaI agreements.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 27
ENTRY INTO FORCE
(1) This Convention shall be ratified and the instruments of ratification shall be exchanged as soon as possibIe.
(2) This Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect-
(a) in Zambia-
as respects income for any charge year commencing on or after the 1st April, 1971;
(b) in ItaIy-
as respects income assessable for the taxabIe period commencing on or after the 1st January, 1971.
(3) Claims for refund or credits arising in accordance with this Convention in respect of any tax payabIe by residents of either of the Contracting States shall be Iodged within two years from the date of entry into force of this Convention or from the date the tax was charged, whichever is Iater.
ARTICLE 28
TERMINATION
This Convention shall remain in force indefiniteIy, 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 dipIomatic channels, written notice of termination.
In such event the Convention shall cease to have effect-
(a) in Zambia-
as respects income for any charge year commencing on or after the 1st April in the calendar year next following that in which such notice is given;
(b) in ItaIy-
as respects income assessable for the taxabIe period commencing on or after the 1st January in the calendar year next following that in which such notice is given.
IN WITNESS WHEREOF the undersigned, being duIy authorised thereto, have signed this Convention.
Done at Lusaka this 27th day of October, 1972, in dupIicate in the EngIish and Italian Ianguages, each text being equally authentic.
For the Government of the Republic of ItaIy: DR GIROLAMO TROTTA
For the Government of the Republic of Zambia: J. M. MWANAKATWE
PROTOCOL
At the signing of the Convention between Zambia and ItaIy for the Avoidance of Double Taxation and the prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned have agreed upon the following provision which shall form an integraI part of the said Convention:
Notwithstanding the provisions of paragraph (2) of Article 27, the provisions of Article 8 shall be applicable as respects income derived during the taxabIe years beginning on or after the first day of January, 1967.
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (REPUBLIC OF GERMANY) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
[Order by the President]
SI 166 of 1974.
This Order may be cited as the Double Taxation ReIief (Taxes on Income) (Republic of Germany) Order.
It is hereby decIared that the Agreement, the text of which is set out in the ScheduIe hereto, being an agreement relating to reIief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of Germany, shall have effect in Zambia in accordance with the provisions of Section 74 of the Income Tax Act.
AGREEMENT BETWEEN THE REPUBLIC OF ZAMBIA AND THE FEDERAL REPUBLIC OF GERMANY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND CAPITAL
The Republic of Zambia and the FederaI Republic of Germany, Desiring to conclude an Agreement for the Avoidance of Double Taxation with respect to Taxes on Income and Capital, Have agreed as foIIows:
ARTICLE 1
PERSONAL SCOPE
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 each Contracting State or of its poIiticaI subdivisions or IocaI authorities, irrespective of the manner in which they are Ievied.
(2) There shall be regarded as taxes on income and on capital all taxes imposed on total income, on totalcapital, or on eIements of income or of Capital, including taxes on gains from the alienation of movable or immovable property, as weII as taxes on capital appreciation.
(3) The existing taxes to which this Agreement shall apply are, in particular-
(a) in the Republic of Germany-
(i) the Einkommensteuer (income tax) including the ErgÅ nzungsabgabe (surcharge) thereon;
(ii) the Kšrperschaftsteuer (corporation tax) including the ErgŠnzungsabgabe (surcharge) thereon;
(iii) the Vermšgensteuer (capital tax); and
(iv) the Gewerbesteuer (trade tax);
(hereinafter referred to as "German tax");
(b) in Zambia-
(i) the income tax;
(ii) the mineraI royalty tax; and
(iii) the personaI Ievy;
(hereinafter referred to as "Zambian tax").
(4) This Agreement shallalso apply to any identicaI or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes.
(5) The provisions of this Agreement in respect of taxation of income or capital shall likewise apply to the German trade tax, computed on a basis other than income or capital.
ARTICLE 3
GENERAL DEFINITIONS
(1) In this Agreement, unless the context otherwise requires-
(a) the term "FederaI Republic of Germany", when used in a geographicaI sense, means the territory in which the Basic Law for the Republic of Germany is in force, as weII as any area adjacent to the territoriaI waters of the FederaI Republic of Germany designated, in accordance with internationaI Law as reIated to the rights which the FederaI Republic of Germany may exercise with respect to the sea bed and sub-soiI and their naturaI resources, as domestic area for tax purposes;
(b) the term "Zambia" means the Republic of Zambia;
(c) the terms "a Contracting State" and "the other Contracting State" mean the FederaI Republic of Germany or Zambia, as the context requires;
(d) the term "person" includes an individual or a company;
(e) the term "company" means any body corporate or any entity, which is treated as a body corporate for tax purposes;
(f) the terms "resident of a Contracting State" and "resident of the other Contracting State" mean a person who is a resident of the FederaI Republic of Germany or a person who is a resident of Zambia, as the context requires;
(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 "nationaI" means-
(aa) in respect of the FederaI Republic of Germany any German in the meaning of Article 116, paragraph 1, of the Basic Law for the FederaI Republic of Germany and any IegaI person, partnership and association deriving its status as such from the Law in force in the FederaI Republic of Germany;
(bb) in respect of Zambia any citizen of Zambia and any IegaI person, partnership and association deriving its status as such from the Law in force in Zambia;
(i) the term "competent authority" means in the case of the FederaI Republic of Germany the FederaI Minister for Economics and Finance and in the case of Zambia the Commissioner- General of Taxes or his authorised representative.
(2) In the application of this Agreement by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of this Agreement.
ARTICLE 4
FISCAL DOMICILE
(1) For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the Law of that State, is Liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
(2) Where by reason of the provisions of paragraph (1) an individual is a resident of both
Contracting States, then this case shall be determined in accordance with the following ruIes:
(a) He shall be deemed to be a resident of the Contracting State in which he has a permanent home avaliable to him. If he has a permanent home avaliable to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personaI and economic relations are closest (centre of vitaI interests);
(b) If the Contracting State in which he has his centre of vitaI interests cannot be determined, or if he has not a permanent home avaliable to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habituaI abode;
(c) If he has an habituaI abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a nationaI;
(d) If he is a nationaI of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settIe the question by mutuaI agreement.
(3) Where by reason of the provisions of paragraph (1) a company is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting 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 in which the business of the enterprise is whoIIy or partIy carried on.
(2) The term "permanent establishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oiI weII, quarry or other place of extraction of naturaI resources;
(g) a building site or construction or assembly project which exists for more than nine months.
(3) The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
(4) 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 (5) applies-shall be deemed to be a permanent establishment in the first-mentioned State if he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise.
(5) 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, where such persons are acting in the ordinary course of their business.
(6) The fact that a company which is a resident of a Contracting State controIs or is controIIed 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 make either company a permanent establishment of the other.
ARTICLE 6
IMMOVABLE PROPERTY
(1) Income from immovable property may be taxed in the Contracting State in which such property is situated.
(2) The term "immovable property" shall be defined in accordance with 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, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting Ianded property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work, mineraI deposits, sources and other naturaI resources; ships, boats and aircraft shall not be regarded as immovable property.
(3) The provisions of paragraph (1) shall apply to incomes derived from the direct use, Ietting, 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 professionaI services.
ARTICLE 7
BUSINESS PROFITS
(1) The profits of an enterprise of a Contracting State shall be taxabIe 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) 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 whoIIy independentIy 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 permanent establishment including executive and General administrative expenses so incurred, whether in the State in which the permanent establishment is situated or eIsewhere.
(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 precIude 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 resuIt shall be in accordance with the principIes Iaid down 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 deaIt with separateIy in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
SHIPS AND AIRCRAFT
Profits from the operation of ships or aircraft in internationaI traffic shall be taxabIe only in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 9
ASSOCIATED ENTERPRISES
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, controlor 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 wouId be made between independent enterprises, then any profits which wouId, 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.
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 be taxed in the Contracting State of which the company paying the dividends is a resident and according to the Law of that State, but the tax so charged shall not exceed-
(a) 5 per cent of the gross amount of the dividends if the recipient is a company (excluding partnerships) which owns directly at Ieast 25 per cent of the capital of the company paying the dividends;
(b) in all other cases, 15 per cent of the gross amount of the dividends.
(3) Notwithstanding the provisions of paragraph (2) German tax on dividends paid to a company being a resident of Zambia by a company being a resident of the FederaI Republic of Germany, at Ieast 25 per cent of the capital of which is owned directly or indirectly by the former company itself, or by it together with other persons controIIing it or being under common control with it, shall not exceed 27 per cent of the gross amount of such dividends as Iong as the rate of German corporation tax on distributed profits is Iower than that on undistributed profits and the difference between those two rates is 15 percentage points or more.
(4) The term "dividends" as used in this Article means income from shares, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as weII as income from other corporate rights assimilated to income from shares by the taxation Law of the State of which the company making the distribution is a resident, and income derived by a sIeeping partner from his partnership as such and distributions on certificates of an investment-trust.
(5) The provisions of paragraphs (1) to (3) shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a 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 to persons who are not residents of that other State, or subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist whoIIy or partIy of profits or income arising in such other State.
ARTICLE 11
INTEREST
(1) Interest derived from a Contracting State by a resident of the other Contracting State shall be taxabIe in that other State.
(2) However, such interest may be taxed in the Contracting State from which it is derived, and according to the Law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of such interest.
(3) Notwithstanding the provisions of paragraph (2)-
(a) interest derived from the FederaI Republic of Germany and paid to the Zambian Government or the Bank of Zambia shall be exempt from German tax;
(b) interest derived from Zambia and paid to the German Government, the Deutsche Bundesbank, the KreditanstaIt fšr Wiederaufbau and the Deutsche GeseIIschaft fšr wirtschaftIiche Zusammenarbeit (EntwickIungsgeseIIschaft) m.b.H. shall be exempt from Zambian tax.
The competent authorities of the Contracting States shall determine by mutuaI agreement any other governmental institution to which this paragraph shall apply.
(4) The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind as weII as other income assimilated to income from money Ient by the taxation Law of the State from which the income is derived.
(5) The provisions of paragraphs (1) and (2) shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectiveIy connected. In such a case, the provisions of Article 7 shall apply.
(6) Interest shall be deemed to be derived from a Contracting State when the payer is that State itself, a poIiticaI subdivision or a IocaI authority or 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 be derived from the Contracting State in which the permanent establishment is situated.
(7) Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 12
ROYALTIES
(1) RoyaIties derived from a Contracting State by a resident of the other Contracting State shall be taxabIe only in that other State.
(2) However, such royaIties may be taxed in the Contracting State from which they are derived, and according to the Law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of such royaIties.
(3) The term "royaIties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copy-right of Iiterary, artistic or scientific work including cinematograph fiIms or tapes for teIevision or broadcasting, any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commercialor scientific equipment, or for information concerning industriaI, commercial or scientific experience.
(4) The provisions of paragraph (1) shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State in which the royaIties arise a permanent establishment with which the right or property giving rise to the royaIties is effectiveIy connected. In such a case, the provisions of Article 7 shall apply.
(5) RoyaIties shall be deemed to be derived from a Contracting State when the payer is that State itself, a poIiticaI subdivision or a IocaI authority thereof or a resident of that State. Where, however, the persons paying the royaIties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the IiabiIity to pay the royaIties was incurred, and such royaIties are borne by such permanent establishment, then such royaIties shall be deemed to be derived from the Contracting State in which the permanent establishment is situated.
(6) Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the royaIties paid, having regard to the use, right or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 13
CAPITAL GAINS
(1) Gains from the alienation of immovable property, as defined in paragraph (2) of Article 6, may be taxed in the Contracting State in which such property is situated.
(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 avaliable to a resident of a Contracting State in the other Contracting State for the purpose of performing professionaI services, including such gains from the alienation of such a permanent establishment (aIone or together with the whole enterprise) or of such a fixed base, may be taxed in the other State. However, gains from the alienation of movable property of the kind referred to in paragraph (3) of Article 22 shall be taxabIe only in the Contracting State in which such movable property is taxabIe according to the said Article.
(3) Gains from the alienation of any property other than those mentioned in paragraphs (1) and (2) shall be taxabIe 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 professionaI services or other independent services of a similar character shall be taxabIe only in that State unIess-
(a) he has a fixed base regularly avaliable to him in the other Contracting State for the purpose of performing his services, in which case so much of the income may be taxed in that other State as is attributable to that fixed base; or
(b) he is present in the other Contracting State for the purpose of performing his services for a period or periods exceeding in the aggregate 183 days in the calendar year concerned, in which case so much of the income may be taxed in that other State as is attributable to the services performed in that other State.
(2) The term "professionaI services" shall include especially independent scientific, Iiterary, artistic, educationaI or teaching services, as weII as the independent services of physicians, Lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
DEPENDENT PERSONAL SERVICES
(1) Subject to the provisions of Articles 16, 18 and 19, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be taxabIe only in that State unless the empIoyment is exercised in the other Contracting State. If the empIoyment 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 empIoyment exercised in the other Contracting State shall be taxabIe 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 the calendar year concerned, and
(b) the remuneration is paid by, or on behalf of, an empIoyer 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 empIoyer has in the other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in respect of an empIoyment exercised aboard a ship or aircraft in internationaI traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 16
DIRECTORS' FEES
Directors' 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 17
ARTISTS AND ATHLETES
(1) Notwithstanding the provisions of Articles 14 and 15, income derived by pubIic entertainers, such as theatre, motion picture, radio or teIevision artists, and musicians, and by athletes, from their personaI activities as such may be taxed in the Contracting State in which those activities are exercised.
(2) Notwithstanding anything contained in this Agreement, where the services of a pubIic entertainer or an athlete mentioned in paragraph (1) are provided in a Contracting State by an enterprise of the other Contracting State, the profits derived by that enterprise from providing those services may be taxed in the first-mentioned State.
(3) The provisions of paragraphs (1) and (2) shall not apply to services of pubIic entertainers and athletes, if their visit to a Contracting State is supported whoIIy or substantially from pubIic funds of the other Contracting State.
ARTICLE 18
PUBLIC FUNDS
(1) Remuneration other than pensions paid by, or out of funds created by, a Contracting State, a poIiticaI subdivision or a IocaI authority to any individual in respect of an empIoyment shall be taxabIe only in that State. If, however, the empIoyment is exercised in the other Contracting State by a nationaI of that State not being a nationaI of the first-mentioned State, the remuneration shall be taxabIe only in that other State.
(2) The provision of Articles 15, 16 and 17 shall apply to remuneration in respect of an empIoyment in connection with any business carried on by a Contracting State, a poIiticaI subdivision or a IocaI authority for the purpose of profits.
(3) The provisions of paragraph (1) shall likewise apply in respect of remuneration paid, under a deveIopment assistance programme of a Contracting State, a poIiticaI subdivision or a IocaI authority, out of funds exclusively suppIied by that State, those poIiticaI subdivisions or IocaI authorities, to any persons seconded to the other Contracting State with the consent of that other State.
ARTICLE 19
PENSIONS
Pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past empIoyment shall be taxabIe only in that State.
ARTICLE 20
TEACHERS AND STUDENTS
(1) A professor or teacher who is, or was immediateIy before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State for a period not exceeding two years for the purpose of carrying out advanced study or research or for teaching at a university, coIIege, schooI or other educationaI institution shall be exempt from tax in the first-mentioned State in respect of any remuneration which he receives for such work, provided that such remuneration is derived by him from outside that State.
(2) A student or business apprentice who is, or was immediateIy before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State soIeIy for the purpose of his education or training shall be exempt from tax in the first- mentioned State on-
(a) payments made to him by persons residing outside that first-mentioned State for the purposes of his maintenance, education or training; and
(b) remuneration not exceeding 6000 DM or the equivaIent in Zambian currency for a calendar year from personaI services undertaken in that first-mentioned State to suppIement resources avaliable to him for his maintenance and education.
The benefits of this paragraph shall extend only for such period of time as may be reasonabIy or customariIy required to compIete the education or training undertaken, but in no event shall any individual have the benefits of this paragraph for more than three consecutive years.
(3) An individual who is, or was immediateIy before visiting a Contracting State, a resident of the other Contracting State and who is temporariIy present in the first-mentioned State soIeIy for the purpose of study, research or training as a recipient of a grant, allowance or award from a scientific, educationaI, reIigious or charitable organisation or under a technicaI assistance programme entered into by the Government of a Contracting State shall, from the date of his first arrival in the first-mentioned State in connection with that visit, be exempt from tax in that State-
(a) on the amount of such grant, allowance or award; and
(b) on all remittances from abroad for the purposes of his maintenance, education or training.
ARTICLE 21
INCOME NOT EXPRESSLY MENTIONED
ARTICLE 22
CAPITAL
(1) Capital represented by immovable property, as defined in paragraph (2) of Article 6, may be taxed in the Contracting State in which such property is situated.
(2) Capital represented by movable property forming part of the business property of a permanent establishment of an enterprise, or by movable property pertaining to a fixed based used for the performance of professionaI services, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.
(3) Ships and aircraft operated in internationaI traffic and movable property pertaining to the operation of such ships and aircraft, shall be taxabIe only in the Contracting State in which the place of effective management of the enterprise is situated.
(4) All other eIements of capital of a resident of a Contracting State shall be taxabIe only in that State.
ARTICLE 23
ELIMINATION OF DOUBLE TAXATION
(1) Tax shall be determined in the case of a resident of the FederaI Republic of Germany as foIIows:
(a) Unless the provisions of sub-paragraph (b) apply, the there shall be excIuded from the basis upon which German tax is imposed, any item of income derived from Zambia and any item of capital situated within Zambia, which, according to this Agreement, may be taxed in Zambia. In the determination of its rate of tax applicable to any item of income or capital not so excIuded, the FederaI Republic of Germany wiII, however, take into account any item of income and any item of capital so excIuded.
The foregoing provisions shall likewise apply to dividends paid to a company being a resident of the FederaI Republic of Germany by a company being a resident of Zambia if at Ieast 25 per cent of the voting shares of the Zambian company is owned directly by the German company. There shall also be excIuded from the basis upon which German tax is imposed any sharehoIding, the dividends of which, if paid, wouId be excIuded from the basis upon which tax is imposed according to the immediateIy foregoing sentence.
(b) Subject to the provisions of German tax Law regarding credit for foreign tax, there shall be allowed as a credit against German income tax and corporation tax, including the surcharge thereon, payabIe in respect of the following items of income derived from Zambia, the Zambian tax paid under the Laws of Zambia and in accordance with this Agreement on-
(i) dividends to which sub-paragraph (a) does not apply;
(ii) interest to which paragraph (2) of Article 11 applies;
(iii) royaIties to which paragraph (2) of Article 12 applies;
(iv) remuneration to which Article 16 applies;
(v) income to which Article 17 applies.
The credit shall not, however, exceed that part of the German tax, as computed before the credit is given, which is appropriate to such items of income.
(2) Tax shall be determined in the case of a resident of Zambia as foIIows:
(a) Where a resident of Zambia derives income from the FederaI Republic of Germany which may be taxed in the FederaI Republic of Germany in accordance with the provisions of this Agreement, the amount of German tax payabIe in respect of that income shall be allowed as a credit against Zambian tax which is appropriate to that income, before allowing the credit.
(b) Where the income from the FederaI Republic of Germany is a dividend paid by a company which is a resident of the FederaI Republic of Germany, the credit shall take into account the German tax payabIe in respect of its profits by the company paying the dividend.
ARTICLE 24
NON-DISCRIMINATION
(1) The nationaIs 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 nationaIs of that other State in the same circumstances 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 Iess favourabIy Ievied in that other State than the taxation Ievied on enterprises of that other State carrying on the same activities.
This provision shall not be construed as obIiging a Contracting State to grant to residents of the other Contracting State any personaI allowances, reIiefs and reductions for taxation purposes on account of civil status or famiIy responsibiIities or any other personaI circumstances which it grants to its own residents.
(3) Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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) In this Article the term "taxation" means taxes of every kind and description.
ARTICLE 25
MUTUAL AGREEMENT PROCEDURE
(1) Where a resident of a Contracting State considers that the actions of one or both of the Contracting States resuIt or wiII resuIt for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the nationaI Laws of those States, present his case to the competent authority of the Contracting State of which he is a resident.
(2) The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself abIe to arrive at an appropriate soIution, to resoIve the case by mutuaI agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Agreement.
(3) The competent authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the eIimination 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 applying the provisions of this Agreement.
ARTICLE 26
EXCHANGE OF INFORMATION
(1) The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Agreement. Any information so exchanged shall be treated as secret and shall not be discIosed to any person, authorities or courts other than those concerned with the assessment or coIIection of the taxes which are the subject of this Agreement or the determination of appeals or the prosecution of offences in reIation thereto.
(2) In no case shall the provisions of paragraph (1) be construed so as to impose on one of the Contracting States the obIigation-
(a) to carry out administrative measures at variance with the Laws or the administrative practice of that or of the other Contracting State;
(b) to suppIy information which is not obtainabIe under the Laws or in the normaI course of the administration of that or of the other Contracting State;
(c) to suppIy information which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE 27
DIPLOMATIC AND CONSULAR PRIVILEGES
Nothing contained in this Agreement shall affect dipIomatic or consuIar priviIeges under the General ruIes of internationaI Law or under the provisions of speciaI agreements.
ARTICLE 28
LAND BERLIN
This Agreement shall also apply to Land BerIin, provided that the Government of the FederaI Republic of Germany has not made a contrary decIaration to the Government of the Republic of Zambia within three months from the date of entry into force of this Agreement.
ARTICLE 29
ENTRY INTO FORCE
(1) This Agreement shall be ratified and the instruments of ratification shall be exchanged at Lusaka as soon as possibIe.
(2) This Agreement shall enter into force on the day after the date of exchange of the instruments of ratification and shall have effect-
(a) in the FederaI Republic of Germany for any assessment period beginning on or after 1st January, 1971;
(b) in Zambia for any charge year commencing on or after 1st April, 1971.
ARTICLE 30
TERMINATION
This Agreement shall continue in effect indefiniteIy 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 to the other Contracting State, through dipIomatic channels, written notice of termination and, in such event, this Agreement shall cease to be effective-
(a) in the FederaI Republic of Germany for any assessment period following that in which the notice of termination is given;
(b) in Zambia for any charge year following that in which the notice of termination is given. In witness whereof the undersigned, being duIy authorised thereto by their respective Governments, have signed this Agreement.
PROTOCOL
The Republic of Zambia and the FederaI Republic of Germany have agreed at the signing at Bonn on the thirtieth day of May, 1973, of the Agreement between the two States for the Avoidance of Double Taxation with respect to taxes on income and capital upon the following provisions which shall form an integraI part of the said Agreement.
(1) With reference to Article 5:
an enterprise shall be deemed to have a permanent establishment in a Contracting State if it carries on supervisory activities in that State for more than nine months in connection with a building site or construction or assembly project, as defined in paragraph (2) (g) which is being undertaken in that State.
(2) With reference to Articles 6 to 21:
where any income, other than interest to which paragraph (3) of Article 11 applies, derived from outside of a Contracting State by a resident of that State is not subject to tax in that State by reason of its foreign origin, the provisions of these Articles shall not apply in the other Contracting State in respect of such income.
(3) With reference to Article 7:
if the information avaliable to the taxation authorities concerned is inadequate to determine the profits to be attributed to the permanent establishment, nothing in this Article shall affect the application of the Law of either Contracting State with respect of making an estimate by the taxation authorities of that Contracting State; provided that such estimate shall be aimed to estabIish taxation in accordance with the principIes stated in this Article.
(4) With reference to Article 23:
notwithstanding the provisions of paragraph (1) sub-paragraph (a), of Article 23 of the Agreement, the provisions of paragraph (1) sub-paragraph (b) of that Article shall apply likewise to the profits of, and to the capital represented by property forming part of the business property of, a permanent establishment; to dividends paid by, and to the share-hoIding in, a company; or to gains referred to in paragraph (2) of Article 13 of the Agreement; provided that the resident of the FederaI Republic of Germany concerned does not prove that the receipts of the permanent establishment or company are derived exclusively or almost exclusively-
(a) from producing or seIIing goods and merchandise, giving technicaI advice or rendering engineering services, or doing banking or insurance business, within Zambia, or
(b) from dividends paid by one or more companies, being residents of Zambia, more than 25 per cent of the capital of which is owned by the first-mentioned company, which themseIves derive their receipts exclusively or almost exclusively from producing or seIIing goods or merchandise, giving technicaI advice or rendering engineering services, or doing banking or insurance business, within Zambia.
(5) With reference to Article 24:
nothing contained in this Article shall be construed nor as obIiging Zambia to grant to non-nationaIs the reIief avaliable to Zambian nationaIs under section 42C of the Zambian Income Tax Act, 1966, nor as conferring any exemption from tax in the Contracting State in respect of dividends paid to a company which is a resident of the other Contracting State.
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (KINGDOM OF DENMARK) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
[Order by the President]
SI 178 of 1974.
This Order may be cited as the Double Taxation ReIief (Taxes on Income) (Kingdom of Denmark) Order.
It is hereby decIared that the Agreement, the text of which is set out in the ScheduIe hereto, being an Agreement relating to reIief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Kingdom of Denmark, shall have effect in Zambia in accordance with the provisions of section 74 of the Income Tax Act.
[Paragraph 2]
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE KINGDOM OF DENMARK 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 Denmark, Desiring to conclude a new Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as foIIows:
ARTICLE I
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE II
TAXES COVERED
1. The taxes which are the subject of this Convention are-
(a) in Zambia-
(i) the income tax;
(ii) the mineraI royalty tax;
(iii) the personaI Ievy; (hereinafter referred to as "Zambian tax");
(b) in Denmark-
(i) the income taxes to the State:
(1) the ordinary income tax to the State;
(2) the oId age pension contribution;
(3) the seamen tax;
(4) the speciaI income tax;
(5) the tax on dividends;
(ii) the communaI income taxes:
(1) the ordinary municipaI income tax;
(2) the church tax;
(3) the municipaI income tax to the County; (hereinafter referred to as "Danish tax").
2. This Convention shall also apply to any identicaI or substantially similar taxes which are imposed in addition to, or in place of, the existing taxes subsequent to the date of signature of this Convention.
3. At the end of each year the competent authorities of the Contracting States shall notify to each other any substantial changes which have been made in their respective taxation Laws.
ARTICLE III
GENERAL DEFINITIONS
1. In this Convention, unless the context otherwise requires-
(a) the term "Zambia" means the Republic of Zambia;
(b) the term "Denmark" means the Kingdom of Denmark, including any area within which, under the Laws of Denmark and in accordance with internationaI Law, the sovereign rights of Denmark with respect to the expIoration and expIoitation of the naturaI resources of the continentaI sheIf may be exercised; the term does not comprise the Faroe Islands and GreenIand;
(c) the terms "a Contracting State" and "the other Contracting State" mean Zambia or Denmark as the context requires;
(d) the term "tax" means Zambian tax or Danish tax, 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 "person" includes an individual and any body of persons corporate or not corporate;
(g) the terms "resident of a Contracting State" and "resident of the other Contracting State" mean a person who is a resident of Zambia or a person who is a resident of Denmark as the context requires;
(h) the terms "Zambian enterprise" and "Danish enterprise" mean respectively an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking or any like enterprise or undertaking carried on by a resident of Zambia and an industriaI, mining, commerciaI, pIantation, agricuItural or pastoraI enterprise or undertaking or any like enterprise or undertaking carried on by a resident of Denmark;
(i) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean a Zambian enterprise or a Danish enterprise, as the context requires;
(j) the term "internationaI traffic" means any voyage of a ship or aircraft operated by an enterprise of a Contracting State, except where the voyage is confined soIeIy to places within the other Contracting State;
(k) the term "competent authority" means-
(i) in the case of Zambia, the Commissioner-General of Taxes or his authorised representative;
(ii) in the case of Denmark, the Minister of Finance or his authorised representative;
2. In the application of the provisions of this Convention by a Contracting State, any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the Laws of that Contracting State relating to the taxes which are the subject of this Convention.
ARTICLE IV
FISCAL DOMICILE
1. For the purpose of this Convention, the term "resident of a Contracting State" means, subject to the provisions of paragraphs 2 and 3 of this Article, any person who, under the Law of that State, is Liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. The terms "resident of Zambia" and "resident of Denmark" shall be construed accordingly.
2. Where by reason of the provisions of paragraph 1 of this Article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following ruIes:
(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home avaliable to him. If he has a permanent home avaliable to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personaI and economic relations are closest (centre of vitaI interests);
(b) if the Contracting State in which he has his centre of vitaI interests cannot be determined, or if he has not a permanent home avaliable to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habituaI abode;
(c) if he has an habituaI abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a nationaI;
(d) if he is a nationaI of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settIe the question by mutuaI agreement.
3. Where by reason of the provisions of paragraph 1 of this Article a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State, in which its place of effective management is situated.
ARTICLE V
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy carried on.
2. The term "permanent establishment" shall include especially-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, oiI weII, quarry or other place of extraction of naturaI resources;
(g) a building site or construction or assembly project which exists for more than six months.
3. The term "permanent establishment" shall not be deemed to include-
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.
4. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on supervisory activities in that other Contracting State for more than six months in connection with a construction, installation, or assembly project which is being undertaken in that other Contracting State.
5. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State-other than an agent of independent status to whom paragraph 6 applies-shall be deemed to be a permanent establishment in the first-mentioned Contracting State, if he has and habitually exercises in that Contracting State, an authority to conclude contracts in the name of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise.
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 Contracting State through a broker, General commission agent, or any other agent of independent status, where such person is acting in the ordinary course of his business.
7. The fact that a company which is a resident of a Contracting State controIs or is controIIed 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 for either company a permanent establishment of the other.
ARTICLE VI
INCOME FROM IMMOVABLE PROPERTY
1. Income from immovable property may be taxed in the Contracting State in which such property is situated.
2. The term "immovable property" shall be defined in accordance with 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, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting Ianded property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work mineraI deposits, sources and other naturaI 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, Ietting, or use in any other form of immovable property.
4. In the determining of the income from immovable property which a resident of a Contracting State has in the other Contracting State expenses (including interest on debt-claims) which are incurred for the purposes of such property shall be allowed as deductions on the same conditions as are provided for residents of that other Contracting State.
5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professionaI services.
ARTICLE VII
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxabIe only in that Contracting 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 Contracting State but only so much of them as is attributable to that permanent establishment.
2. 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 whoIIy independentIy 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 permanent establishment including executive and General administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or eIsewhere. If the information avaliable to the competent authorities concerned is inadequate to determine the profits to be attributed to the permanent establishment, nothing in this paragraph shall affect the application of the Law of either Contracting State in reIation to the IiabiIity of the permanent establishment to pay tax on an amount determined by the making of an estimate by the competent authorities of that Contracting State; provided that each estimate shall be made so far as the information avaliable to the competent authorities permits, in accordance with the principIes stated in paragraph 4.
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 precIude 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 resuIt shall be in accordance with the principIes Iaid down 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 deaIt with separateIy in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE VIII
SHIPPING AND AIR TRANSPORT
1. Notwithstanding the provisions of Articles V and VII, profits of an enterprise from the operation of ships or aircraft in internationaI traffic shall be taxabIe 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, 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.
ARTICLE IX
ASSOCIATED ENTERPRISES
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 wouId be made between independent enterprises, then any profits which wouId, 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.
ARTICLE X
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 Contracting State.
2. However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the Law of that Contracting State, but the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. The competent authorities of the Contracting States shall by mutuaI agreement settIe 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" means income from shares or other rights, not being debt-claims, participating in profits, as weII as income from other corporate rights assimilated to income from shares by the Law 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 recipient of the dividends, being a resident of a Contracting State has in the other Contracting State of which the company paying the dividends is a resident, a permanent establishment with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a case, the provisions of Article VII 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 to persons who are not residents of that other Contracting State, or subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist whoIIy or partIy of profits or income arising in such other Contracting State.
ARTICLE XI
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
2. However, such interest may be taxed in the Contracting State in which it arises, and according to the Law of that Contracting State, but 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 mutuaI agreement settIe the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State of IocaI authority thereof or any agency or instrumentality (including a financial institution) whoIIy owned by that Government or IocaI authority shall be exempt from tax in the first-mentioned Contracting State.
4. The term "interest" means income from Government securities, from bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and from debt-claims of every kind and any excess of the amount repaid in respect of such debt-claims over the amount Ient, as weII as all other income assimilated to income from money Ient by the Law of the Contracting State in which the income arises.
5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectiveIy connected. In such a case, the provisions of Article VII shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a IocaI authority or a resident of that Contracting 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 Contracting State in which the permanent establishment is situated.
7. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE XII
ROYALTIES
1. RoyaIties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
2. However, such royaIties may be taxed in the Contracting State in which they arise, and in accordance with the Law of that Contracting State, but tax so charged shall not exceed 15 per cent of the gross amount of the royaIties. The competent authorities of the Contracting States shall by mutuaI agreement settIe the mode of application of this limitation.
3. The term "royaIties" means payments of any kind received as a consideration for the use of, or the right to use, any copyright of Iiterary, artistic or scientific work (including cinematograph fiIms, video tapes for use in connection with teIevision or tapes for use in connection with radio), any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commerciaI, or scientific equipment, or for information concerning industriaI, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State in which the royaIties arise a permanent establishment with which the right or property giving rise to the royaIties is effectiveIy connected. In such a case, the provisions of Article VII shall apply.
5. RoyaIties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a IocaI authority or resident of that Contracting State. Where, however, the person paying the royaIties, whether he is a resident of a Contracting State or not, has in a Contracting State, a permanent establishment in connection with which the IiabiIity to pay the royaIties was incurred, and such royaIties are borne by such permanent establishment, then such royaIties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
6. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the royaIties paid, having regard to the use, right or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast-mentioned amount. In that case, the excess part of the payment shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE XIII
CAPITAL GAINS
1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article VI, may be taxed in the Contracting State in which such property is situated.
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 avaliable to a resident of a Contracting State in the other Contracting State for the purpose of performing professionaI services, including such gains from the alienation of such a permanent establishment (aIone or together with the whole enterprise) or of such fixed base, may be taxed in that other Contracting State.
3. Notwithstanding the provisions of paragraph 2, gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in internationaI traffic and movable property pertaining to the operation of such ships and aircraft shall be taxabIe only in the Contracting State in which the place of effective management of the enterprise is situated.
4. Gains from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3 shall be taxabIe only in the Contracting State of which the alienator is a resident.
ARTICLE XIV
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of professionaI services or other independent activities of a similar character shall be taxabIe only in that Contracting State unless he has a fixed base regularly avaliable 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 Contracting State but only so much of it as is attributable to that fixed base.
2. The term "professionaI services" includes, especially, independent scientific, Iiterary, artistic, educationaI or teaching activities as weII as the independent activities of physicians, Lawyers, engineers, architects, dentists and accountants.
ARTICLE XV
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles XVI, XVIII, XIX and XX, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be taxabIe only in that Contracting State unless the empIoyment is exercised in the other Contracting State. If the empIoyment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an empIoyment exercised in the other Contracting State shall be taxabIe only in the first-mentioned Contracting 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 the income year or charge year concerned; and
(b) the remuneration is paid by, or on behalf of, an empIoyer 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 empIoyer has in the other Contracting State.
3. Notwithstanding the provisions of paragraphs 1 and 2, remuneration in respect of empIoyment exercised aboard a ship or aircraft in internationaI traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE XVI
DIRECTORS' FEES
Directors' 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 Contracting State.
ARTICLE XVII
ARTISTES AND ATHLETES
Notwithstanding anything contained in this Convention, income derived by pubIic entertainers such as theatre, motion picture, radio or teIevision artistes and musicians and by athletes from their personaI activities as such, may be taxed in the Contracting State in which these activities are exercised.
ARTICLE XVIII
PENSIONS
Subject to the provisions of paragraph 1 of Article XIX, any pension or similar remuneration derived from sources within a Contracting State in consideration of past empIoyment by an individual who is a resident of the other Contracting State and subject to tax in respect of that other Contracting State shall be exempt from tax in the first-mentioned Contracting State.
ARTICLE XIX
GOVERNMENTAL FUNCTIONS
1. Remuneration, including pensions, paid by or out of funds created by a Contracting State or a IocaI authority thereof to any individual in respect of services rendered to that Contracting State or IocaI authority thereof in the discharge of functions of a governmental nature shall be taxabIe only in that Contracting State.
2. The provisions of Articles XV, XVI and XVIII shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by one of the Contracting States or a IocaI authority thereof.
ARTICLE XX
RESEARCH PERSONNEL AND STUDENTS
1. The remuneration which an individual who is or was formerIy a resident of a Contracting State receives for undertaking study or research at a high IeveI during a period of temporary residence not exceeding two years at a university, research institute, schooI, coIIege or other similar establishment in the other Contracting State shall not be taxabIe in that other Contracting State.
2. Payments which a student or business apprentice who is or was formerIy a resident of a Contracting State and who is present in the other Contracting State soIeIy for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that other Contracting State, provided that such payments are made to him from sources outside that other Contracting State.
3. Remuneration which a student or business apprentice who is or was formerIy a resident of a Contracting State derives from an empIoyment which he exercises in the other Contracting State shall not be taxed in that other Contracting State, provided that such empIoyment is directly reIated to his studies or training or is undertaken for the soIe purpose of his maintenance.
ARTICLE XXI
INCOME NOT EXPRESSLY MENTIONED
Items of income of a resident of a Contracting State which are not expressIy mentioned in the foregoing Articles of this Convention shall be taxabIe only in that Contracting State.
ARTICLE XXII
PERSONAL ALLOWANCES
1. IndividuaIs who are residents of Denmark may claim the same personaI allowances, reIiefs and reductions for the purposes of Zambian tax as Zambian nationaIs who are not residents of Zambia.
2. IndividuaIs who are residents of Zambia may claim the same personaI allowances, reIiefs and reductions for the purposes of Danish tax as Danish nationaIs who are not residents of Denmark.
ARTICLE XXIII
ELIMINATION OF DOUBLE TAXATION (CREDIT METHOD)
1. -
(a) Where a resident of Zambia derives income from Denmark which may be taxed in Denmark in accordance with the Laws of Denmark and the provisions of this Convention, the amount of Danish tax payabIe 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 the Zambian tax payabIe under the Laws of Zambia which is appropriate to that income, before allowing the credit.
(b) Where the income derived from Denmark is a dividend paid by a company which is a resident of Denmark, the credit shall take into account the Danish tax payabIe in respect of its profits by the company paying the dividend.
2 .-
(a) Where a resident of Denmark derives income from Zambia which may be taxed in Zambia in accordance with the Laws of Zambia and the provisions of this Convention, the amount of Zambian tax payabIe in respect of that income shall be allowed as a credit against Danish tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Danish tax payabIe under the Laws of Denmark which is appropriate to that income, before allowing the credit.
(b) Where the income derived from Zambia is a dividend paid by a company which is a resident of Zambia, the credit shall take into account the Zambian tax payabIe in respect of its profits by the company paying the dividend.
3. For the purposes of paragraph 2 the term "may be taxed in Zambia" shall be deemed to include any amount which wouId have been payabIe as Zambian tax, but for an exemption or reduction for tax granted under the Pioneer Industries (ReIief from Income Tax) Act, 1965, or any other Zambian Law of similar purpose and effect.
ARTICLE XXIV
NON-DISCRIMINATION
1. The nationaIs 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 nationaIs of that other Contracting State in the same circumstances are or may be subjected.
2. The term "nationaIs" means-
(a) all individuals possessing the nationality of a Contracting State;
(b) all IegaI persons, partnerships and associations deriving their status as such from the Law in force in a Contracting State.
3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be Iess favourabIy Ievied in that other Contracting State than the taxation Ievied on enterprises of that other Contracting State carrying on the same activities.
4. Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 Contracting State are or may be subjected.
5. Nothing contained in this Article shall be construed as obIiging either Contracting State to grant to individuals not resident in that State any of the personaI allowances, reIiefs and reductions for tax purposes which are granted to individuals so resident, nor as obIiging Zambia to grant to non-nationaIs the reIief avaliable to Zambian nationaIs under section 42C of the Zambian Income Tax Act, 1966.
6. In this Article the term "taxation" means taxes of every kind and description.
ARTICLE XXV
MUTUAL AGREEMENT PROCEDURE
1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States resuIt or wiII resuIt for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the nationaI Laws of those Contracting States, present his case to the competent authority of the Contracting State of which he is a resident.
2. The competent authority shall endeavour, if the objection appears to be justified and if it is not abIe to arrive at an appropriate soIution, to resoIve the case by mutuaI agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with this Convention.
3. The competent authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of this Convention. They may also consult together for the eIimination 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 XXVI
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention and of the domestic Laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is in accordance with this Convention. Any information so exchanged shall not be discIosed to any persons or authorities other than persons, including a court or other adjudicating authority, concerned with the assessment or coIIection of those taxes or the determination of appeals in reIation thereto.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obIigation-
(a) to carry out administrative measures at variance with the Laws or the administrative practice of that or of the other Contracting State;
(b) to suppIy particulars which are not obtainabIe under the Laws or in the normaI course of the administration of that or of the other Contracting State;
(c) to suppIy information which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process, or information, the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE XXVII
DIPLOMATIC AND CONSULAR OFFICIALS
1. Nothing in this Convention shall affect the fiscal priviIeges of dipIomatic or consuIar officiaIs under the General ruIes of internationaI Law or under the provisions of speciaI agreements.
2. Insofar as, due to fiscal priviIeges granted to dipIomatic or consuIar officiaIs under the General ruIes of internationaI Law or under the provisions of speciaI internationaI treaties, income is not subject to tax in the receiving State, the right to tax shall be reserved to the sending State.
3. An individual who is a member of a dipIomatic or consuIar mission (except honorary consuIs) or permanent deIegation of a Contracting State which is situated in the other Contracting State or a third State, shall for the purposes of this Convention be deemed to be a resident of the sending State if-
(a) he is not a nationaI of the receiving State; and
(b) in accordance with internationaI Law he cannot be taxed in the receiving State on any income from sources outside that State.
ARTICLE XXVIII
TERRITORIAL EXTENSION
1. This Convention may be extended, either in its entirety or with any necessary modifications, to any area of the territory of Denmark which has expressIy been excepted from the scope of this Convention under the provisions of sub-paragraph (b) of paragraph 1 of Article III, in which taxes are imposed, identicaI or substantially similar in character to those to which this Convention applies. Any such extensions shall take effect from such date and subject to such modifications and conditions as may be specified and agreed between the Contracting States in notes to be exchanged through dipIomatic channels or in any other manner in accordance with their constitutionaI procedures.
2. Unless otherwise agreed by both Contracting States, the termination of this Convention by one of the Contracting States under Article XXX shall also terminate the application of this Convention to any territory to which it has been extended under this Article.
ARTICLE XXIX
ENTRY INTO FORCE
1. The Convention shall enter into force after the exchange of notes confirming that each of the Contracting States has compIeted the constitutionaI procedures required for such entry into force in the respective States and the Convention shall then have effect for the first time-
(a) in Zambia-
as respects income for any charge year beginning on or after 1st April, 1972;
(b) in Denmark- 1972.
as respects income for any income year (charge year) beginning on or after 1st January,
2. Upon the entry into force of this Convention, the Convention between the Government of Denmark and the Government of the 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, signed at London on 27th March, 1950, extended with certain modifications to the former Federation of Rhodesia and Nyasaland by an Exchange of Notes, dated 17th January, 1959, and to the former Protectorate of Northern Rhodesia by an Exchange of Notes, dated 21st January, 1964, and continued by Zambia, shall cease to have effect.
ARTICLE XXX
TERMINATION
1. This Convention shall remain in force indefiniteIy, 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 dipIomatic channels, written notice of termination.
2. In such event, the Convention shall cease to have effect-
(a) in Zambia-
as respects income for any charge year beginning on or after 1st April of the calendar year following the year in which such notice is given;
(b) in Denmark-
as respects income for any income year (charge year) beginning on or after 1st January of the calendar year following the year in which such notice is given.
In witness whereof the undersigned being duIy authorised thereto have signed this Convention and have affixed thereto their seaIs.
Done at Lusaka this 13th day of September, 1973, in dupIicate in the EngIish and Danish Ianguages, both texts being equally authentic.
For the Government of the Republic of Zambia: J.M. MWANAKATWE
For the Government of the Kingdom of Denmark: ERIC SKOV
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 Zambia and Denmark, the undersigned Plenipotentiaries have agreed that the following provisions shall form an integraI part of the Convention.
I. Ad Articles VIII and XIII
The provisions of Article VIII and paragraph 3 of Article XIII shall be applied respectively to profits or capital gains derived by the joint Danish, Norwegian and Swedish air transport organisation the Scandinavian Airlines System (SAS), but only insofar as profits and gains so derived by Det Danske LuftfartsseIskab A/S (DDL), the Danish partner of the Scandinavian Airlines System (SAS), are in proportion to its share in that organisation.
II. Ad Article XI
The provisions of paragraph 3 of Article XI shall apply to the following financial institution whoIIy financed by the Danish Government: The Industriallsation Fund for DeveIoping Countries, Copenhagen (Industriallserings-fonden for udvikIingsIandene, Kobenhavn).
III. Ad Article XV
1. Remuneration as mentioned in paragraph 2 of Article XV may be taxed in the Contracting State in which the empIoyment is exercised if the recipient of such remuneration is present in that State for a period or periods exceeding in the aggregate 183 days in the income year or charge year concerned, as from the outset of such period or periods.
2. Remuneration as mentioned in paragraph 3 of Article XV in respect of an empIoyment exercised aboard an aircraft operated in internationaI traffic by the joint Danish, Norwegian and Swedish air transport organisation the Scandinavian Airlines System (SAS), and derived by a resident of Denmark shall be taxabIe only in Denmark.
IV. Ad Article XXX
The termination of the present Convention as provided for in paragraph 2 of Article XXX shall not revive the Convention referred to in paragraph 2 of Article XXIX.
Done at Lusaka this 13th day of September, 1973, in dupIicate in the EngIish and Danish Ianguages, both texts being equally authentic.
For the Government of the Republic of Zambia: J.M. MWANAKATWE
For the Government of the Kingdom of Denmark: ERIC SKOV
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (INDIA) ORDER
[Section 74]
[Currency mentioned in this regulation should be re-denominated as stipulated under S 4 of Re-denomination Act, 2012, read with S 29 of Bank of Zambia Act, 1996.]
Arrangement of Paragraphs
Paragraph
[Order by the President]
SI 159 of 1983.
This Order may be cited as the Double Taxation ReIief (Taxes on Income) (India) Order.
It is hereby decIared that the Convention, the text of which is set out in the ScheduIe hereto, being a Convention relating to reIief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of India, shall have effect in Zambia in accordance with section 74 of the Income Tax Act.
[Paragraph 2]
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE REPUBLIC OF INDIA 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 India. 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 foIIows:
CHAPTER I
SCOPE OF THE CONVENTION
ARTICLE 1
PERSONAL SCOPE
This Convention shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. The taxes to which this Convention shall apply are:
(a) In the case of India:
(i) the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961); and
(ii) the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (hereinafter referred to as "Indian tax").
(b) In the case of Zambia:
(i) the income tax;
(ii) the mineraI royalty tax; and
(iii) the personaI Ievy
(hereinafter referred to as "Zambian tax").
2. The Convention shall also apply to any identicaI or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Convention in addition to, or in place of, the taxes referred to in paragraph 1 of this Article.
3. At the end of each year, the competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation Laws which are the subject of this Convention, and furnish copies of reIevant enactments and reguIations.
CHAPTER II
DEFINITIONS
ARTICLE 3
GENERAL DEFINITIONS
1. In this Convention, unless the context otherwise requires:
(a) the terms "a Contracting State" and "the other Contracting State" mean India or Zambia, as the context requires;
(b) the term "tax" means Indian tax or Zambian tax, as the context requires, but shall not include any amount which is payabIe in respect of any defauIt or omission in reIation to the taxes to which this Convention applies or which represents a penaIty imposed relating to those taxes;
(c) the term "person" includes individuals, companies and all other entities which are treated as taxabIe units under the taxation Laws in force in the respective Contracting States;
(d) the term "company" means any body corporate or any entity which is treated as a company under the taxation Laws in force in the respective Contracting State;
(e) 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;
(f) the term "competent authority" means the in the case of India, the Central Government in the Ministry of Finance (Department of Revenue); and in the case of Zambia, the Commissioner-General of Taxes or his authorised representative;
(g) the term "nationaIs" means:
(1) in respect of India:
all individuals possessing the nationality of India and all IegaI persons, partnerships and associations deriving their status from the Law in force in India;
(2) in respect of Zambia:
all individuals possessing the nationality of Zambia and all IegaI persons, partnerships and associations deriving their status as such from the Law in force in Zambia.
2. In the application of the provisions of this Convention by one of the Contracting States, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the Laws in force in that State relating to the taxes which are the subject of this Convention.
ARTICLE 4
FISCAL DOMICILE
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 taxation therein by reason of his domicile, residence, place of management or any other criterion of similar nature.
2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his residentiaI status for the purposes of this Convention shall be determined in accordance with the following ruIes:
(a) He shall be deemed to be a resident of the Contracting State in which he has a permanent home avaliable to him. If he has a permanent home avaliable to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personaI and economic relations are closer (hereinafter referred to as his "centre of vitaI interests");
(b) If the Contracting State in which he has his centre of vitaI interests cannot be determined, or if he does not have a permanent home avaliable to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habituaI abode;
(c) If he has an habituaI abode in both Contracting States or neither of them, he shall be deemed to be a resident of the Contracting State of which he is a nationaI;
(d) If he is a nationaI of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settIe the question by mutuaI agreement.
3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both the Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purpose of this Convention, the term "permanent establishment" means a fixed place of business in which the business of the enterprise is whoIIy or partIy 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 mine, a quarry, an oiI fieId or other place of extraction of naturaI resources;
(g) a farm, pIantation or other place where agricuItural, forestry, pIantation or reIated activities are carried on;
(h) a building site or construction or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than 9 months;
(i) a warehouse or other faciIities for the maintenance of a stock of goods or merchandise belonging to the enterprise from which orders are fiIIed.
3. The term "permanent establishment" shall not be deemed to include:
(a) the use of faciIities soIeIy 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 soIeIy for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise soIeIy for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business soIeIy for the purpose of purchasing goods or merchandise, or for coIIecting information, for the enterprise;
(e) the maintenance of a fixed place of business soIeIy for the purpose of advertising, for the suppIy of information or for scientific research, being activities soIeIy of a preparatory or auxiliary character, in the trade or business of the enterprise.
4. A person acting in a Contracting State for or on behalf of an enterprise of the other Contracting State other than an agent of an independent status to whom the provisions of paragraph 6 apply shall be deemed to be a permanent establishment of that enterprise in the first mentioned State if:
(i) he has, and habitually exercises in that State, an authority to conclude contracts for or on behalf of the enterprise, unless his activities are Iimited to the purchase of goods or merchandise for the enterprise; or
(ii) he has no such authority but he habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to that enterprise from which he regularly fuIfiIs orders on behalf of the enterprise.
5. 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 coIIects premiums in the territory of that other State or insures risks situated therein through an empIoyee or through a representative who is not an agent of independent status within the meaning of paragraph 6.
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, where such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted whoIIy or almost whoIIy on behalf of that enterprise, he wouId 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 controIs or is controIIed 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 for either company a permanent establishment of the other.
8. An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on a business which consists of providing the services of pubIic entertainers (such as theatre, motion picture, radio or teIevision artistes and musicians) or athletes in that Contracting State unless the enterprise is directly or indirectly supported whoIIy or substantially, from the pubIic funds of the Government of the first-mentioned Contracting State in connection with the provision of such services.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income from immovable property may be taxed in the Contracting State in which such property is situated.
2. The term "immovable property" shall be defined in accordance with the Law and usage of the Contracting State in which the property is situated. The term shall in any case include property accessory to immovable property, Iivestock and equipment used in agriculture and forestry, rights to which the provisions of General Law respecting Ianded property apply, usufruct of immovable property and rights to variabIe or fixed payments as consideration for the working of, or the right to work, mineraI deposits, oiI weIIs, quarries and other places of extraction of naturaI 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, Ietting, 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 professionaI services.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxabIe only in that Contracting 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 Contracting State but only so much of them as is attributable to that permanent establishment.
2. If an enterprise of a Contracting State, which has a permanent establishment in the other Contracting State, seIIs goods or merchandise of the same or similar kind as those soId by the permanent establishment or renders services of the same or similar kind as those rendered by the permanent establishment, the profits of such activities may be attributed to the permanent establishment unless the enterprise proves that such sales or services are not attributable to the activity of the permanent establishment.
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 whoIIy independentIy with the enterprise of which it is a permanent establishment. In any case, where the correct amount of profits attributable to a permanent establishment is incapabIe of determination or the ascertainment thereof presents exceptionaI difficuIties, the profits attributable to the permanent establishment may be estimated on a reasonabIe basis.
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 the total profits of the enterprise to its various parts, nothing in paragraph 3 shall precIude that Contracting State from determining the profits to be by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the resuIt shall be in accordance with the principIes Iaid down in this Article.
5. 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 eIsewhere, but this does not include any expenses which, under the Law of that State, wouId not be allowed to be deducted by an enterprise of that State.
6. 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 purpose of export to the enterprise of which it is the permanent establishment.
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. The term "business profits" means income derived by an enterprise from the carrying on of trade or business; but does not include income in the form of rents, royaIties (including rents or royaIties in respect of cinematographic fiIms or video tapes for teIevision), fees for technicaI services, management charges, or remuneration or fees for providing services of technicaI or other personneI, interests, dividends, capital gains, remuneration for Iabour or personaI (including professionaI) services or income from the operation of ships or aircraft.
ARTICLE 8
AIR TRANSPORT
1. Profits derived by an enterprise of a Contracting State from the operation of aircraft in internationaI traffic shall be taxabIe only in the Contracting State in which the place of effective management of the enterprise is situated.
2. The provisions of paragraph 1 of this Article shall also apply to a share of profits from the operation of aircraft in internationaI traffic derived by an enterprise of a Contracting State through participation in a pooIed service, in a joint air transport operation or in an internationaI operating agency.
3. For the purpose of paragraph 1, interest on funds connected with the operation of aircraft in internationaI traffic shall be regarded as income from the operation of such aircraft, and the provisions of Article 11 shall not apply in reIation to such interest.
ARTICLE 9
ASSOCIATED ENTERPRISES
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 wouId be made between independent enterprises, then any profits which wouId, 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 the enterprise and taxed accordingly.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is 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 Law of that State, but the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividends if the recipient is a company which owns at Ieast 25 per cent of the shares of the company paying the dividends during the period of six months immediateIy preceding the date of payment of the dividends;
(b) 15 per cent of the gross amount of the dividends in all other cases.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as weII as income from other corporate rights assimilated to income from shares or any other item which is deemed to be a dividend or distribution of a company by the taxation Law 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 recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the hoIding by virtue of which the dividends are paid is effectiveIy connected. In such a 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 to persons who are not residents of that other State, or subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist whoIIy or partIy of profits or income arising in that 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 Law of that State, but 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 IocaI authority thereof, the Central Bank of that other Contracting State, or any agency whoIIy owned by that Government or IocaI authority shall be exempt from tax of the first-mentioned Contracting State. The competent authorities of the Contracting States may determine by mutuaI agreement any other governmental institution to which this paragraph shall apply.
4. The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and other debt-claims of every kind as weII as all other income assimilated to income from money Ient by the taxation Law of the Contracting State in which the income arises.
5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectiveIy connected. In such a case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a poIiticaI sub-division, a IocaI authority or 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 that permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
7. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 12
ROYALTIES
1. RoyaIties 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 royaIties may also be taxed in the Contracting State in which they arise, and according to the Law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royaIties.
3. The term "royaIties" 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 Iiterary, artistic or scientific work (including cinematograph fiIms and fiIms or tapes for radio or teIevision broadcasting), any patent, trade mark, design or modeI, pIan, secret formula or process, or for the use of, or the right to use, industriaI, commercialor scientific equipment, or for information concerning industriaI, commercialor scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royaIties, being a resident of a Contracting State, has in the other Contracting State in which the royaIties arise a permanent establishment with which the right or property giving rise to the royaIties is effectiveIy connected. In such a case, the provisions of Article 7 shall apply.
5. RoyaIties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a poIiticaI sub-division, a IocaI authority or a resident of that State. Where, however, the person paying the royaIties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the IiabiIity to pay the royaIties was incurred, and such royaIties are borne by such permanent establishment, then such royaIties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
6. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of royaIties paid, having regard to the use, right or information for which they are paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 13
CAPITAL GAINS
1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6 may be taxed in the Contracting State in which such property is situated.
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 avaliable to a resident of a Contracting State in the other Contracting State for the purpose of performing professionaI services, including such gains from the alienation of such a permanent establishment (aIone or together with the whole enterprise) or of such a fixed base, may be taxed in that other State.
3. Notwithstanding the provisions of paragraph 2, gains derived by an enterprise of a Contracting State from the alienation of ships and aircraft which it operates in internationaI traffic and movable property pertaining to the operation of such ships and aircraft shall be taxabIe only in that State.
4. Gains derived by a resident of a Contracting State from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3 shall be taxabIe only in that State.
5. The term "alienation" means the saIe, exchange, transfer, or reIinquishment of the property or the extinguishment of any rights therein or the compuIsory acquisition thereof under any Law in force in the respective Contracting States.
ARTICLE 14
MANAGEMENT AND CONSULTANCY FEES
1. Management and consultancy fees 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 fees may be taxed in the Contracting State in which they arise, and according to the Law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the fees.
3. The term "management and consultancy fees" as used in this Article means payments of any kind of any person, other than to an empIoyee of the person making the payments, in consideration for any services of a manageriaI, technicaI or consultancy nature.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the management and consultancy fees, being a resident of a Contracting State, has in the other Contracting State in which the fees arise a permanent establishment with which the services giving rise to the fees are effectiveIy connected. In such a case, the provisions of Article 7 shall apply.
5. Management and consultancy fees shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a poIiticaI sub-division, a IocaI authority or a resident of that State. Where, however, the person paying the fees, whether he is a resident of that State or not, has in a Contracting State permanent establishment in connection with which the IiabiIity to pay the fees was incurred and such fees are borne by such permanent establishment, then such fees shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
6. Where, owing to a speciaI relationship between the payer and the recipient or between both of them and some other person, the amount of the management and consultancy fees paid, having regard to the services for which it is paid, exceeds the amount which wouId have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the Iast mentioned amount. In that case, the excess part of the payments shall remain taxabIe according to the Law of each Contracting State, due regard being had to the other provisions of this Convention.
ARTICLE 15
INDEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Article 16, income derived by a resident of a Contracting State in respect of professionaI services or other independent activities of a similar character shall be taxabIe only in that State unIess:
(a) he has a fixed base regularly avaliable to him in the other Contracting State for the purposes of performing his activities, in which case so much of the income may be taxed in that other State as is attributable to that fixed base; or
(b) he is present in the other Contracting State for the purpose of performing his activities for a period or periods exceeding in the aggregate 183 days in the reIevant "previous year" in the case of India and in the reIevant "charge year" in the case of Zambia and in which case so much of the income may be taxed in that other State as is attributable to the activities performed in that other State;
(c) his remuneration for his services or activities in the other Contracting State derived from residents of that Contracting State exceeds K10,000 or its equivaIent in Indian currency in the taxabIe year (not including traveI expenses directly reIated to the services or activities in the other Contracting State), notwithstanding that his stay in that State is for a period or periods amounting to Iess than 183 days during the taxabIe year.
2. The term "professionaI services" includes independent scientific, Iiterary, artistic, educationaI or teaching activities as weII as the independent activities of physicians, Lawyers, engineers, architects, dentists and accountants.
ARTICLE 16
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 17, 18, 19, 20, 21 and 22, saIaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an empIoyment shall be taxabIe only in that State unless the empIoyment is exercised in the other Contracting State. If the empIoyment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an empIoyment exercised in the other Contracting State shall be taxabIe only in the first-mentioned Contracting State if:
(a) the recipient is present in the other Contracting State for a period not exceeding in the aggregate 183 days in the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an empIoyer 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 empIoyer has in the other Contracting State.
3. Notwithstanding the provisions of paragraphs 1 and 2, remuneration in respect of empIoyment exercised aboard a ship or aircraft in internationaI traffic may be taxed only in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 17
DIRECTORS' FEES
Directors' 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 Contracting State.
ARTICLE 18
ARTISTES AND ATHLETES
1. Notwithstanding the provisions of Articles 15 and 16, income derived by pubIic entertainers (such as theatre, motion picture, radio or teIevision artistes and musicians) or athletes, from their personaI activities as such may be taxed in the Contracting State in which these activities are exercised:
Provided that such income shall not be taxed in the said Contracting State if the visit of the pubIic entertainers or athletes to that State is supported whoIIy or substantially, from the pubIic funds of the Government of the other Contracting State.
2. For the purposes of this Article, the term "Government" includes a State Government, a poIiticaI sub-division, or a IocaI or statutory authority of either Contracting State.
ARTICLE 19
GOVERNMENTAL FUNCTIONS
1. Remuneration paid by or out of funds created by a Contracting State, a poIiticaI sub-division or a IocaI authority thereof, to a citizen of that State in respect of an empIoyment shall be taxabIe only in that State.
2. Any pension paid by or out of funds created by a Contracting State, a poIiticaI sub-division, or a IocaI authority thereof, to any individual may be taxed in that Contracting State.
3. The provisions of paragraph 1 of this Article shall not apply to payments in respect of services rendered in connection with any business carried on by the Government of either of the Contracting States for the purposes of profit.
4. For the purposes of this Article, the term "Government" shall include any State Government or IocaI authority of either Contracting State and in particular the Reserve Bank of India and the Bank of Zambia.
ARTICLE 20
NON-GOVERNMENT PENSIONS AND ANNUITIES
1. Any pension (other than a pension referred to in Article 9) or annuity derived by a resident of a Contracting State from sources within the other Contracting State may be taxed only in the first-mentioned Contracting State.
2. The term "pension" means a periodic payment made in consideration of services rendered in the past or by way of compensation for injuries received in the course of performance of services.
3. The term "annuity" means a stated sum payabIe periodically at stated times, during the Iife or during a specified or ascertainable period of time, under an obIigation to make the payments in return for adequate and fuII consideration in money or money's worth.
ARTICLE 21
RESEARCH PERSONNEL, STUDENTS AND BUSINESS APPRENTICES
1. -
(a) An individual who is a resident of one of the Contracting States at the time he becomes temporariIy present in the other Contracting State for the primary purpose of:
(i) studying at a University or other recognised educationaI institution in that other Contracting State, or
(ii) securing training required to qualify him to practice a profession or professionaI speciality, or
(iii) studying or doing research as a recipient of a grant, allowance, or award from a GovernmentaI, reIigious charitable, scientific, Iiterary, or educationaI organisation, shall be exempt from tax by that other Contracting State with respect to amounts described in sub-paragraph (b) for a period not exceeding 5 taxabIe years from the date of his arrival in that other Contracting State.
(b) The amounts referred to in sub-paragraph (a) are-
(i) gifts abroad for the purpose of his maintenance, education, study, research, or training; (ii) the grant, allowance, or award; and
(iii) income from personaI services performed in that other Contracting State in an amount not in excess of 1,500 Zambian Kwacha or its equivaIent Indian Rupees for any taxabIe year.
2. An individual who is a resident of one of the Contracting States and who is temporariIy present in that other Contracting State as an empIoyee of, or under contract with, a resident of the first-mentioned Contracting State, for the primary purpose of-
(a) acquiring technicaI, professionaI, or business experience from a person other than that resident of the first-mentioned Contracting State or other than a person, reIated to such resident; or
(b) studying at a University or other recognised educationaI institution in that other Contracting State;
shall be exempt from tax in that other Contracting State for a period not exceeding 1 year with respect to his income from personaI services in an aggregate amount not in excess of 2,500 Zambian Kwacha or its equivaIent Indian Rupees.
3. An individual who is a resident of one of the Contracting States and who is temporariIy present in that other Contracting State for a period not exceeding 1 year, as a participant in a programme sponsored by the Government of that other Contracting State, for the primary purpose of training, research, or study shall be exempt from tax in that other Contracting State with respect to his income from personaI services in respect of such training, research, or study performed in that other Contracting State in an aggregate amount not in excess of 3,500 Zambian Kwacha or its equivaIent Indian Rupees.
ARTICLE 22
PROFESSORS AND TEACHERS
1. A professor or teacher who is, or was immediateIy before visiting a Contracting State, a resident of the other Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State for a period not exceeding two years for the purpose of carrying out advanced study or research or for teaching at a university, coIIege, schooI or other educationaI institution shall be exempt from tax in the first-mentioned State in respect of any remuneration which he receives for such work provided that such remuneration is derived by him from outside that State.
2. This Article shall not apply to income from research if such research is undertaken primariIy for the private benefit of a specific person or persons.
3. For the purposes of this Article and Article 21, an individual shall be deemed to be a resident of a Contracting State if he is resident in that Contracting State in the "previous year" or the "charge year", as the case may be, in which he visits the other Contracting State or in the immediateIy preceding "previous year" or the "charge year".
ARTICLE 23
INCOME NOT EXPRESSLY MENTIONED
Items of income of a resident of a Contracting State, wherever arising' not deaIt with in the foregoing Articles of this Convention shall be taxabIe only in that State except that if such income arises in the other Contracting State, it may also be taxed in that other State.
CHAPTER IV
METHOD FOR ELIMINATION OF DOUBLE TAXATION
ARTICLE 24
AVOIDANCE OF DOUBLE TAXATION
1. The Laws in force in either of the Contracting States wiII continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention.
2. -
(a) The amount of Zambian tax payabIe, under the Laws of Zambia and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of income from sources within Zambia which has been subjected to tax both in India and Zambia, shall be allowed as a credit against the Indian tax payabIe in respect of such income provided that such credit shall not exceed Indian tax (as computed before allowing any such credit), which is appropriate to the income derived from sources within Zambia; so, however, that where such resident is a company by which surtax is payabIe in India, the credit aforesaid shall be allowed in the first instance against income-tax payabIe by the company in India, and as to the balance, if any, against surtax payabIe by it in India.
(b) For the purpose of the credit referred to in sub-paragraph (a) above, the term "Zambian tax payabIe" shall be deemed to include any amount which wouId have been payabIe as Zambian tax for any year but for any provisions granting an exemption or reduction of tax which the competent authorities of the Contracting States agree to be for the purpose of economic deveIopment.
(c) The amount of Indian tax payabIe, under the Laws of India and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of Zambia in respect of income from sources within India which has been subjected to tax both in India and Zambia shall be allowed as a credit against Zambian tax payabIe in respect of such income provided that such credit shall not exceed the Zambian tax (as computed before allowing any such credit), which is appropriate to the income derived from sources within India.
(d) For the purposes of the credit referred to in sub-paragraph (a) above, the term "Indian tax payabIe" shall be deemed to include any amount by which Indian tax has been reduced by the speciaI incentive measures set forth in the following sections of the Income-tax Act, 1961:
(i) Section 10(4)-relating to exemption from tax on interest payabIe to a non-resident on any security notified by the Government of India;
(ii) Section 10(4)-relating to exemption from tax on interest payabIe to a non- resident on moneys in a Non-resident (ExternaI) Account;
(iii) Section 10(15)(iv)-relating to exemption from tax of (a) a non-resident in respect of moneys Ient by him to the Government or IocaI authority in India; (b) an approved foreign financial institution in respect of interest on moneys Ient by it to an industrialu ndertaking in India under a Ioan agreement; and (c) a non-resident in respect of interest on moneys Ient or credit faciIities allowed by him to an industrialu ndertaking in India for the purchase outside India of raw materiaIs or capital pIant and machinery or for industrial deveIopment in India;
(iv) Section 32A-relating to investment allowance in respect of ships, aircrafts, machinery or pIant; bushes;
(v) Section 33A-relating to deveIopment allowance for pIanting or repIanting of tea
(vi) Section 35C-relating to the agricuItural deveIopment allowance;
(vii) Section 54E-relating to capital gains; shares;
(viii) Section 80CC-relating to deduction in respect of investment in certain new
(ix) Section 80HH-relating to deduction in respect of profits and gains from newIy estabIished industrial undertakings or hoteI business in backward areas;
(x) Section 80J-relating to deduction in respect of profits and gains from eIigibIe industrial undertakings or ships or hoteIs;
(xi) Section 80K-relating to deduction in respect of dividends attributable to profits and gains from eIigibIe industrial undertakings or ships or hoteIs;
(xii) Any other provisions which may subsequently be enacted granting an exemption or reduction of tax which the competent authorities of the Contracting States agree to be for the purposes of economic deveIopment.
3. Income which, in accordance with the provisions of this Convention is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State.
CHAPTER V
SPECIAL PROVISIONS
ARTICLE 25
NON-DISCRIMINATION
1. The nationaIs 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 nationaIs of that other State in the same circumstances 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 Iess favourabIy Ievied in that other State than the taxation Ievied on enterprises of that other State carrying on the same activities in the same circumstances.
3. Nothing contained in this Article shall be construed as obIiging a Contracting State to grant to persons not resident in that State any personaI allowances, reIiefs and reductions for taxation purposes which are by Law avaliable only to persons who are so resident.
4. Enterprises of a Contracting State, the capital of which is whoIIy or partIy owned or controIIed, directly or indirectly by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting 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 in the same circumstances.
5. In this Article, the term "taxation" means taxes which are the subject of this Convention.
ARTICLE 26
MUTUAL AGREEMENT PROCEDURE
1. Where a resident of a Contracting State considers that the actions of one or both of the Contracting States resuIt or wiII resuIt for him in taxation not in accordance with this Convention, he may notwithstanding the remedies provided by the nationaI Laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself abIe to arrive at appropriate soIution, to resoIve the case by mutuaI agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention. Any agreement reached shall be impIemented notwithstanding any time Iimits in the nationaI Laws of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resoIve by mutuaI agreement any difficuIties or doubts arising as to the interpretation or application of the Convention. They may also consult each other for the eIimination of double taxation in cases not provided for in the 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. When it seems advisable in order to reach agreement to have an oraI exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.
ARTICLE 27
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information or document as is necessary for carrying out the provisions of this Convention or for the prevention of evasion of taxes which are the subject of this Convention. Any information or documents so exchanged shall be treated as secret but may be discIosed to persons (including a court or other authorities) concerned with the assessment, coIIection, enforcement, investigation or prosecution in respect of the taxes which are the subject of this Convention, or to persons with respect to whom the information or document reIates.
2. The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases. The competent authorities of the Contracting States shall agree from time to time on the Iist of the information or documents which shall be furnished on a routine basis.
3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obIigation:
(a) to carry out administrative measures at variance with the Laws or administrative practice of that or of the other Contracting State;
(b) to suppIy information or documents which are not obtainabIe under the Laws or in the normaI course of the administration of that or of the other Contracting State;
(c) to suppIy information or documents which wouId discIose any trade, business, industriaI, commercial or professionaI secret or trade process or information the discIosure of which wouId be contrary to pubIic poIicy.
ARTICLE 28
DIPLOMATIC AND CONSULAR ACTIVITIES
Nothing in this Convention shall affect the fiscal priviIeges of dipIomatic or consuIar officiaIs under the General ruIes of internationaI Law or under the provisions of speciaI agreements.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 29
ENTRY INTO FORCE
1. This Convention shall come into force on the date when the Iast of all such things shall have been done in India and Zambia as are necessary to give the Convention the force of Law in India and Zambia respectively.
2. The Contracting States shall notify each other of the compIetion of the requirements mentioned in paragraph 1 of this Article. The exchange of dipIomatic notes certifying that this requirement has been compIeted shall take place at Lusaka.
3. Upon the exchange of such dipIomatic notes, this Convention shall have effect:
(a) In India, in respect of income assessable for any assessment year commencing on or after the 1st day of April, 1979.
(b) In Zambia, in respect of income arising for any charge year commencing on or after the 1st day of April, 1979.
ARTICLE 30
TERMINATION
This Convention shall continue in effect indefiniteIy 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 the other Contracting State through dipIomatic channels, written notice of termination, and in such event this Convention shall cease to be effective:
(a) in Zambia, in respect of income assessable for the assessment year commencing on the 1st day of April in the second calendar year next following the calendar year in which the notice is given, and subsequent years;
(b) in India, in respect of income arising for the year of income next following the calendar year in which the notice of termination is given, and subsequent years.
IN WITNESS WHEREOF the undersigned, being duIy authorised thereto, have signed the present Convention.
Done in dupIicate at Lusaka this 5th day of June, one thousand nine hundred and eighty-one in EngIish Ianguage.
For the Government of the Republic of Zambia: K.S.K. MUSOKOTWANE
For the Government of the Republic of India: KEDAR PANDAY
DOUBLE TAXATION RELIEF (TAXES ON INCOME) (REPUBLIC OF FINLAND) ORDER
[Section 74]
Arrangement of Paragraphs
Paragraph
SI 77 of 1985.
This Order may be cited as the Double Taxation Relief (Taxes on Income) (Republic of Finland) Order.
It is hereby declared that the Convention, the text of which is set out in the Schedule hereto, being a Convention relating to relief for double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of Finland, shall have effect in Zambia in accordance with section 74 of the Income Tax Act.
[Paragraph 2]
CONVENTION BETWEEN ZAMBIA AND FINLAND 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 Republic of Zambia and the Government of the Republic of Finland, desiring to conclude a Convention 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
PERSONAL SCOPE
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 on capital imposed on behalf of each Contracting State or of its public communities 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 the Convention shall apply are-
(a) in Finland:
(i) the state income and capital tax;
(ii) the communal tax;
(iii) the church tax;
(iv) the sailors' tax; and
(v) the tax withheld at source from non-residents' income;
(hereinafter referred to as Finnish tax);
(b) in Zambia:
(i) the income tax;
(ii) the mineral tax;
(iii) the personal levy;
(hereinafter referred to as Zambian tax).
4. The 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 to each other any significant changes which have been made in their respective taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. In this Convention, unless the context otherwise requires:
(a) The term "Finland" means the Republic of Finland and, when used in a geographical sense, means the territory of the Republic of Finland, and any area adjacent to the territorial waters of the Republic of Finland within which, under the laws of Finland and in accordance with international law, the rights of Finland with respect to the exploration and exploitation of the natural resources of the sea bed and its sub-soil may be exercised;
(b) the term "Zambia" means the Republic of Zambia;
(c) the terms "a Contracting State" and "the other Contracting State" mean Finland or Zambia, as the context requires;
(d) the term "person" comprises 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 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 "national" means any individual possessing the nationality of a Contracting State, and any legal person, partnership and association deriving its status as such from the laws in force in a Contracting State;
(h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise which 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;
(i) the term "competent authority" means:
(i) in Finland, the Ministry of Finance or its authorised representative.
(ii) in Zambia, the Commissioner-General of Taxes or his authorised representative.
2. As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies.
ARTICLE 4
FISCAL DOMICILE
1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. An undivided estate of a deceased person shall be deemed to be a resident of the Contracting State of which the deceased was a resident at the time of his death according to the preceding sentence or the provisions of paragraph 2. However, this term does not include any person who is liable to taxation in that Contracting 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 of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closet (centre of vital interests);
(b) If the Contracting 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 Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
(c) If he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;
(d) If he is a national of both Contracting 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 Contracting 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" shall include especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil well, a quarry or any other place of extraction of natural resources.
3. A building site or a construction, assembly or installation project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activity lasts for a period of more than six months.
4. The furnishing of services, including management or consultancy services, by an enterprise of a Contracting State through employees or other personnel, where activities of that nature continue (for the same or a connected project) in the other Contracting State for a period or periods aggregating more than 3 months within any 12-month period shall constitute a permanent establishment in that other State.
5. 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 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;
(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.
6. 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 the provisions of paragraph 8 apply-shall be deemed to be a permanent establishment in the first-mentioned State if:
(a) he has, and habitually exercise in that State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for that enterprise, or
(b) he has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.
7. 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 an employee or through a representative who is not an agent of an independent status within the meaning of paragraph 8.
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 State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business.
9. 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 from immovable property including income from agriculture or forestry may be taxed in the Contracting State in which such property is situated.
2. -
(a) The term "immovable property" shall, subject to the provisions of sub-paragraphs (b) and (c), be defined in accordance with the law of the Contracting State in which the property in question is situated.
(b) The term "immovable property" 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.
(c) 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. Where the ownership of shares or other corporate rights in a company entitles the owner of such shares or corporate rights to the enjoyment of immovable property owned by the company, the income from the direct use, letting, or use in any other form of such right to enjoyment may be taxed in the Contracting State in which the immovable property is situated.
5. 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.
The provisions of paragraph 4 shall likewise apply to the income from a right of enjoyment referred to in that paragraph of an enterprise and to income from such right of enjoyment used for the performance of independent personal services.
6. In determining the income from immovable property which a resident of a Contracting State has in the other Contracting State expenses (including interest on debt-claims) which are incurred for the purposes of such property shall be allowed as deductions on the same conditions as they are allowed to residents of that other 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 is attributable to that permanent establishment and to sales of goods or merchandise, or the supply of services, where such sales or services are of the same kind as, or of a similar kind to, those effected through 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 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 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 embodied 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 in international transport 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. The provisions of paragraph 1 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
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.
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 law of that State, but if the recipient is the beneficial owner of the dividends 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 (excluding 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.
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 taxation law of the State of which the company making the distribution is a resident.
4. The provisions of paragraph 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 a 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, or 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 law of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 15 per cent of the gross amount of the interest. The competent authorities of the Contracting State 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 the Government of the other Contracting State or a public community or a local authority thereof or any agency or instrumentality (including a financial institution) wholly owned by that Government or public community or local authority shall be exempt from tax in the first-mentioned 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 debtors' profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to 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 a case 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 the State itself, a public community, a local authority or 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 the 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.
7. Where, owing to a special relationship between the payer and the beneficial owner of between both of them and some other person, the amount of the interest paid, 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 the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that 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 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, royalties of the kind referred to in sub-paragraph (b), (c) and (d) of paragraph 3 may also be taxed in the Contracting State in which they arise, and according to the law of that State, but the tax so charged shall not exceed 5 per cent, in the case of royalties referred to in sub-paragraphs (b), and 15 per cent, in the case of royalties referred to in sub-paragraphs (c) and (d), 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:
(a) for the use of, or the right to use, any copyright of literary, artistic or scientific work;
(b) for the use of, or the right to use, any copyright of any cinematograph films, and films or tapes for television or radio broadcasting;
(c) for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or any industrial, commercial or scientific equipment; or
(d) for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the recipient 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 a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a public community, a local authority or 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 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.
6. Where, owing to a special relationship between the payer and the recipient 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 recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that 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 Convention.
ARTICLE 13
CAPITAL GAINS
1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated.
2. Gains from the alienation of shares or other corporate rights referred to in paragraph 4 of Article 6, may be taxed in the Contracting State in which the immovable property owned by the company is situated.
3. 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 together with the whole enterprise) or of such a fixed base, may be taxed in the other State. However, gains from the alienation of movable property of the kind referred to in paragraph 4 of Article 22 shall be taxable only in the Contracting State in which such movable property is taxable according to the said Article.
4. Gains from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by an individual resident of a Contracting State in respect of his professional services or other independent activities of a similar character shall be taxable only in that state unless:
(a) he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his services or activities, in which case so much or the income may be taxed in that other State as is attributable to that fixed base; or
(b) he is present in the other Contracting State for the purpose of performing his services or activities for a period or periods amounting to or exceeding in the aggregate 183 days in the taxable year concerned, in which case so much of the income may be taxed in that other State as is attributable to the services or activities performed in that other State.
2. The term "professional services or other independent activities" 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 and 20; 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 the calendar 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 in respect of an employment exercised aboard a ship or aircraft in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 16
DIRECTORS' FEES
Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or another similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 17
ARTISTES AND ATHLETES
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 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, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
ARTICLE 18
PENSIONS
1. Any pension (other than a pension of the kind referred to in paragraph 2) or any annuity derived by an individual who is a resident of a Contracting State from sources within the other Contracting State may be taxed in that other State.
2. Subject to the provisions of paragraph 2 of Article 19, pensions and other payments made under the social security legislation of a Contracting State shall be taxable only in that State.
3. The term "pension" means a periodic payment made in consideration of services rendered in the past or by way of compensation or injuries received during the course of an employment.
4. 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 payment in return for adequate and full compensation in money or money' worth.
ARTICLE 19
GOVERNMENT SERVICE
1. -
(a) Remuneration, other than a pension, paid by a Contracting State or a public community or a local authority thereof to any individual in respect of services rendered to that State or community or local authority thereof shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the Contracting State of which the recipient is a resident if the services are rendered in that State and the Recipient:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of performing the services.
2. -
(a) Any pension paid by, or out of funds created by, a Contracting State or a public community or a local authority thereof to any individual in respect of services rendered to that State or community or local authority thereof shall be taxable only in that State.
(b) However, such pension shall be taxable only in the Contracting State of which the recipient is a resident if he is a national of that State.
3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with any business carried on by a Contracting State or a public community or a local authority thereof.
ARTICLE 20
STUDENTS
1. Payments which a student or business, technical, agricultural or forestry 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 his maintenance, education or training shall not be taxed in that State, provided that such payments are made to him from sources outside the State.
2. A student at a university or other institution for higher education in a Contracting State, or a business, technical, agricultural or forestry apprentice who is or was immediately before visiting the other Contracting State a resident of the first-mentioned State and who is present in the other State for a period or periods not exceeding in the aggregate 365 days in any continuous period of two years, shall not be taxed in that other State in respect of remuneration for services rendered in that State, provided that the services are in connection with his studies or training and the remuneration constitutes earnings necessary for his maintenance.
ARTICLE 21
OTHER INCOME
1. Items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. However, where such item of income arises in the other Contracting State such income may be taxed in that other 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 and income from shares or other corporate rights referred to in paragraph 4 of Article 6, if the recipient of the 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 a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
ARTICLE 22
CAPITAL
1. Capital represented by immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated.
2. Shares or other corporate rights referred to in paragraph 4 of Article 6 may be taxed in the Contracting State in which the immovable property owned by the company is situated.
3. Capital represented by movable property forming part of the business property of a permanent establishment of an enterprise, or by movable property pertaining to a fixed base for the performance of independent personal services, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.
4. Ships and aircraft operated in international traffic, and movable property pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
5. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.
ARTICLE 23
PERSONAL ALLOWANCES
1. Individuals who are residents of Finland may claim the same personal allowance, reliefs and reductions for the purposes of Zambian nationals who are not residents of Zambia.
2. Individuals who are residents of Zambia may claim the same personal allowances, reliefs and reductions for the purposes of Finnish tax as Finnish nationals who are not residents of Finland.
ARTICLE 24
ELIMINATION OF DOUBLE TAXATION
(a) Where a resident of Finland derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Zambia, Finland shall, where the provisions of sub-paragraph (b) are not applicable, allow:
(i) as a deduction from the taxes on income of that person, an amount equal to the taxes on income paid in Zambia.
(ii) as a deduction from the tax on capital of that person, an amount equal to the taxes on capital paid in Zambia.
The deduction in either case shall not; however, exceed that part of the taxes on income or on capital, as computed before the deduction is given, which is appropriate, as the case may be, to the income or the capital which may be taxed in Zambia.
Notwithstanding the provisions of sub-paragraph (a), dividends paid by a company which is a resident of Zambia to a company which is a resident of Finland shall be exempt from Finnish tax to the extent that the dividends would have been exempt from tax under Finnish taxation law if both companies had been residents of Finland.
Notwithstanding any other provision of this Convention, an individual who is a resident of Zambia and under Finnish nation law with respect to the Finnish taxes referred to in article 2 also is regarded as a resident of Finland may be taxed in Finland. However, Finland shall allow any Zambian tax paid on the income or capital as a deduction from Finnish tax in accordance with the provisions of paragraph 1. The provisions of this paragraph shall apply only to nationals of Finland.
Subject to the existing provisions of the law of Zambia regarding the allowance as a credit against Zambian tax of tax payable in a territory outside Zambia and to any subsequent modification of these provisions, which shall not affect the general principle hereof, tax payable under the laws of Finland whether directly or by deduction, on profits, income or chargeable gains from sources within Finland shall be allowed as a credit against any Zambian tax computed by reference to the same profits, income or chargeable gains by reference to which the Finnish tax is computed.
However, in the case of a dividend the credit against Zambian tax shall take into account only such Finnish tax payable in respect thereof as is additional to Finnish tax payable by the company on its profits out of which the dividend is paid and is ultimately borne by the recipient of the dividend.
ARTICLE 25
NON-DISCRIMINATION
1. The nationals of a Contracting State, whether or not they are residents of one of the Contracting States, 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.
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 condition 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 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 Contracting 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. In this Article the term "taxation" means taxes of every kind and description.
ARTICLE 26
MUTUAL AGREEMENT PROCEDURE
1. Where a resident of a Contracting State 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 convention, he may notwithstanding the remedies provided by the national laws 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 25, 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 giving rise to taxation not in accordance with the 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 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 Convention. Any agreement reached shall be implemented notwithstanding any time limits in the national laws 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 the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the 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. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.
ARTICLE 27
EXCHANGE OF INFORMATION
1. The Competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is not contrary to this Convention. 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 laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Convention. Such persons or authorities shall use the information only for such purposes. These persons or authorities 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 one of the Contracting States the obligation:
(a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting States;
(b) to supply particulars which are 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 policy (order public).
ARTICLE 28
DIPLOMATIC AND CONSULAR OFFICIALS
Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements.
ARTICLE 29
ENTRY INTO FORCE
1. The Governments of the Contracting States shall notify to each other that the constitutional requirements for the entry into force of this Convention have been complied with.
2. The Convention shall enter into force 30 days after the date of the later of the notifications referred to in paragraph 1 and its provisions shall have effect:
(a) in Finland:
(i) in respect of taxes withheld at source, to amounts derived on or after 1 January in the calendar year next following the year in which the Convention enters into force;
(ii) in respect of other taxes on income, taxes on capital and taxes chargeable for any taxable year beginning on or after 1 January in the calendar year next following the year in which the Convention enters into force;
(b) in Zambia with respect to income and chargeable gains for charge years beginning after 31st March in the year following the year in which the Convention enters into force.
ARTICLE 30
TERMINATION
This Convention shall remain in force until terminated by one of the Contracting States. 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 following after the period of five years from the date on which the Convention enters into force. In such event the Convention shall cease to have effect:
(a) in Finland:
(i) in respect of taxes withheld at source, to amounts derived on or after 1 January in the calendar year next following the year in which the notice is given;
(ii) in respect of other taxes on income, and taxes on capital, to taxes chargeable for any taxable year beginning on or after 1st January in the calendar year next following the year in which the notice is given;
(b) in Zambia with respect to income and chargeable gains for charge years beginning after 31st March in the year next following the year in which the notice is given.
PROTOCOL
At the signing today of the Convention between Zambia and Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on Income and on capital the undersigned have agreed upon the following provisions which shall form an integral part of the Convention: with reference to paragraph 1 of Article 4, it is understood that the term "resident of a Contracting State" where that Contracting State is Zambia, includes any person who, under the law of Zambia concerning the taxes to which the Convention applies, is regarded as being a resident of Zambia, notwithstanding that he may not be liable to taxation by reason of his being a resident of Zambia.
INCOME TAX (PETROLEUM OPERATIONS) REGULATIONS
[Section 9]
Arrangement of Paragraphs
Paragraph
3. Income from petroleum operations to be taxed separately
4. Determination of assessable income
[Regulations by the Minister]
SI 98 of 1985.
These Regulations may be cited as the Income Tax (Petroleum Operations) Regulations.
In these Regulations unless the context otherwise requires-
"capital expenditure" means expenditure of a capital nature as determined pursuant to the terms of a contract;
"contract" and "contractor" shall have the meaning assigned thereto in the Petroleum (Exportation and Production) Act;
"expenditure" means net expenditure, in relation to petroleum operations, after taking into account any rebates of returns from expenditure;
"gross income" means the sum of all proceeds of sales and the monetary equivalent of the value of other dispositions of petroleum produced and save and not used in petroleum operations and any other proceeds derived from petroleum operations;
"operating expenditure" means expenditure of a non-capital nature as determined pursuant to the terms of a contract;
"petroleum operations" shall have the meaning assigned thereto in the Petroleum (Exploration and Production) Act.
3. Income from petroleum operations to be taxed separately
(1) The determination of the assessable income of a contract from petroleum operations and the assessment of tax thereon shall be made separately from the determination of assessable income and the assessment of tax on income from other sources.
(2) The rules and procedures provided for in these Regulations shall apply only to the income and expenditure of a contractor from petroleum operations.
4. Determination of assessable income
(1) The determination of assessable income pursuant to the Income Tax Act shall be made by deducting from a contractor's gross income from petroleum operations during a charge year all allowable expenditure incurred or deemed incurred by such contractor in such charge year but excluding any expenditure previously deducted from gross income in any previous charge year.
(2) Allowable expenditures which may be taken as a deduction from the gross income of a contractor in any charge year shall include-
(a) all operating expenditures incurred by such contractor in that year;
(b) the amount of any capital allowances in respect of capital expenditure of such contractor which may be deductible in that year;
(c) an amount in respect of any operating loss incurred to the extent provided in section 30 of the Act;
(d) any other expenditures which are specifically allowable as a deduction in that charge year against such contractor's gross income pursuant of his contract.
(3) Allowable expenditures shall not include any expenditure of a contractor for which no deduction may be made pursuant to the terms of his contract.
Capital allowances in respect of the capital expenditure of a contractor shall be determined pursuant to the terms of his contract.
In the event that a contractor at any time comprises more than one person in the form of a partnership, joint venture, unincorporated association or other combination of persons, the determination of assessable income, and the assessment of tax thereon, in that charge year, shall be made on the basis of the assessable income and tax liability of each person comprising such contractor.
INCOME TAX (JOB CREDITS) REGULATIONS
[Section 90A]
Arrangement of Paragraphs
Paragraph
4. Job credits to partnerships
5. Excess of job credits not to be carried forward
6. Job credits to be given once in respect of same employee
[Regulations by the Minister]
SI 111 of 1986.
These Regulations may be cited as the Income Tax (Job Credits) Regulations.
In these Regulations unless the context otherwise requires-
"business as a manufacturer" shall have the meaning ascribed thereto in section 34 of the Act;
"job credit" means an amount equivalent to such percentage of the total basic wages and salaries payable in any charge year during a qualifying period, and in respect of such employees, as is hereinafter provided;
"qualifying employee" means an individual who-
(a) is a Zambian citizen;
(b) immediately prior to commencing his employment with a qualifying employer, was not holding a similar employment or office;
(c) had been employed by a qualifying employer on a substantially full-time basis for the whole of a charge year; and
(d) if a director of a company, is also in full-time service of such company;
"qualifying business" means a business as a manufacturer;
"qualifying employer" means an employer engaged in a qualifying business;
"qualifying period" means any period of four consecutive charge years, the first of such periods commencing on 1st April 1980.
Subject to the provisions of these Regulations-
(a) where an employer had commenced a qualifying business before 1st April, 1980, and the number of qualifying employees employed by him in any charge year during the qualifying period exceeds the number of qualifying employees in the charge year immediately preceding, he shall be allowed, against the tax chargeable on him for that charge year, job credits in an amount equivalent to five per centum of the total basic wages and salaries payable to such additional number;
(b) where an employer commences a qualifying business on or after 1st April, 1980, he shall be allowed, against the tax chargeable on him for that charge year, job credits calculated as follows:
(i) for the first charge year of the qualifying period, an amount equivalent to 10 per centum of the total basic wages and salaries payable to all qualifying employees during such charge year;
(ii) with respect to the second and subsequent charge years of the qualifying period, he shall be subject to the provisions of sub-paragraph (a) as if he had commenced the qualifying business before 1st April, 1980.
4. Job credits to partnerships
Where the qualifying business is a partnership, the amount of job credits shall be allowed against the tax chargeable on each partner in the same proportion as that partner's income from the partnership bears to the total income of the partnership.
5. Excess of job credits not to be carried forward
Where the total amount of job credits allowable in a charge year is in excess of the amount of tax chargeable in such charge year the excess shall not be carried forward or allowed in any subsequent charge year.
6. Job credits to be given once in respect of same employee
Once a qualifying employer has been allowed job credits in respect of a qualifying employee, such employer shall not be allowed any job credits in respect of the same employee in any subsequent charge year of the qualifying period.
INCOME TAX (LOW-COST HOUSING) NOTICE
[Fifth Schedule (1)]
[Currency mentioned in this regulation should be re-denominated as stipulated under S 4 of Re-denomination Act, 2012, read with S 29 of Bank of Zambia Act, 1996.]
Arrangement of Paragraphs
Paragraph
2. Limits for low-cost housing
SI 78 of 1987.
This Notice may be cited as the Income Tax (Low-Cost Housing) Notice.
2. Limits for low-cost housing
For the purpose of Part I of the Fifth Schedule to the Income Tax Act, a housing unit shall qualify as an industrial building if-
(a) in the case of a housing unit constructed or acquired before the 1st April, 1975, the cost of such housing unit does not exceed three thousand kwacha; or
(b) in the case of a housing unit constructed or acquired on or after the 1st April, 1975, the cost of such housing unit does not exceed four thousand kwacha; or
(c) in the case of a housing unit constructed or acquired on or after the 1st April, 1980, the cost of such housing unit does not exceed ten thousand kwacha; or
(d) in the case of a housing unit constructed or acquired on or after the 1st April, 1987, the cost of such housing unit does not exceed twenty thousand kwacha.
INCOME TAX (ZAMBIA APPOINTMENTS LIMITED EMPLOYEES) (EXEMPTION APPROVAL) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
[Order by the Minister]
SI 134 of 1994.
This Order may be cited as the Income Tax (Zambia Appointments Limited Employees) (Exemption Approval) Order.
In this Order-
"seconded expatriate mining employee" means an employee of the Company, or of any foreign subsidiary of the Company, who-
(a) under an agreement entered into before 1st April, 1994, was seconded to Zambia Consolidated Copper Mines Limited or any subsidiary thereof;
(b) is not a Zambian citizen; and
(c) is resident in the Republic solely for the purpose of the secondment;
"the Company" means Zambia Appointments Limited, a company registered under the laws of the United Kingdom of Great Britain and Northern Ireland.
There shall be exempt from tax pursuant to sub-paragraph (d) of paragraph 3 in Part II of the Second Schedule to the Act-
(a) the salary, gratuity, educational allowances and payments in commutation of leave paid outside the Republic by the Company or by any foreign subsidiary of the Company to or on account of any seconded expatriate mining employee; and
(b) any payment, made by the trustees of any pension or superannuation fund established or administered outside the Republic, to or on account of any such employee.
For the purposes of the exemption contained in paragraph 3, the Company and any foreign subsidiary thereof are hereby approved for the purposes of sub-paragraph (d) of paragraph 3 in Part II of the Second Schedule to the Act.
INCOME TAX (FOREIGN ORGANISATIONS) (APPROVAL AND EXEMPTION) ORDER, 1996
[Section 15]
Arrangement of Paragraphs
Paragraph
2. Approval of foreign organisation
SI 197 of 1996.
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 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 in Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Financial Agreement between Barclays Bank Zambia Limited, Standard Chartered Bank Limited and Stanbic Bank Zambia Limited (as Borrowers) on the one part and European Investment Bank (as Lender) on the other part, for a loan of ten million European Currency Units (ECU 10,000,000) under the industrial credit facility of the Lome Convention.
INCOME TAX (FUND INVESTMENT SERVICES LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
2. Approval and exemption from specific taxes
[Order by the Minister]
SI 51 of 1997.
This Order may be cited as the Income Tax (Fund Investment Services Limited) (Approval and Exemption) Order.
2. Approval and exemption from specific taxes
(1) The Fund Investment Services Limited, is hereby approved for the purpose of exemption from tax under the Second Schedule to the Act as set out in sub-paragraph (2).
(2) Fund Investment Services Limited is exempt from the payment of-
(a) company tax;
(b) withholding tax on management fees;
(c) withholding tax on dividends received from any investee company; and
(d) withholding tax on interest received from any investee company.
INCOME TAX (ZAMBIA VENTURE CAPITAL FUND LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
2. Approval and exemption from specific taxes
[Order by the Minister]
SI 52 of 1997.
This Order may be cited as the Income Tax (Zambia Venture Capital Fund Limited) (Approval and Exemption) Order.
2. Approval and exemption from specific taxes
(1) The Zambia Venture Capital Fund Limited, is hereby approved for the purpose of exemption from tax under the Second Schedule to the Act as set out in sub-paragraph (2).
(2) The Zambia Venture Capital Fund Limited is exempt from payment of-
(a) company tax;
(b) withholding tax on dividends received from any investee company; and
(c) withholding tax on interest received from any investee company.
INCOME TAX (FOREIGN ORGANISATIONS) (APPROVAL AND EXEMPTION) ORDER, 1997
[Section 15]
Arrangement of Paragraphs
Paragraph
2. Approval of foreign organisations
[Order by the Minister]
SI 82 of 1997.
This Order may be cited as the Income Tax (Foreign Organisations) (Approval and Exemption) Order.
2. Approval of foreign organisations
With respect to the Agreement described in the Schedule to this Order, L. Hojgaard & Schultz; Joint Venture 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 pursuant to paragraph 5 of Part III of the Second Schedule to the Act, and the emoluments payable to any foreign employee temporarily employed in the Republic shall be exempt from tax pursuant to sub-paragraph (c) of paragraph 3 of Part II of the said Second Schedule to the Act.
[Paragraph 5]
The Agreement between the Republic of Zambia and L. Hojgaard & Schultz; Joint Venture, dated the 18th December, 1996, relating to the rehabilitation of the Kapiri Mposhi-Serenje Road section of the Great North Road.
INCOME TAX (SECURITIES AND EXCHANGE COMMISSION) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
SI 132 of 1998.
This Order may be cited as the Income Tax (Securities and Exchange Commission) (Approval and Exemption) Order.
The Securities and Exchange Commission, is hereby approved for the purpose of exemption from tax.
These shall be exempt from tax, pursuant to sub-paragraph (5) of paragraph 5 of Part III of the Second Schedule to the Act, income earned by the Securities and Exchange Commission.
INCOME TAX ACT (FOREIGN EXEMPTIONS) ORDER
[Section 15]
[Currency mentioned in this regulation should be re-denominated as stipulated under S 4 of Re-denomination Act, 2012, read with S 29 of Bank of Zambia Act, 1996.]
Arrangement of Paragraphs
Paragraph
2. Approval of foreign Organisation
SI 154 of 1998.
This Order may be cited as the Income Tax Act (Foreign Exemptions) 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 (c) of paragraph 4 in Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The financing Agreement between Barclays Bank Zambia Limited (Standard Chartered Bank and Stanbic Bank of Zambia Limited (as borrowers) on the one part and European Investment Bank (as under) on the other part, for a loan of 15 million European currency units (ECU 15,000,000) under the Industrial Credit Facility of the Lome Convention.
INCOME TAX (FOREIGN ORGANISATIONS) (EXEMPTION AND APPROVAL) ORDER, 1999
[Section 15]
Arrangement of Paragraphs
Paragraph
2. Approval of foreign Organisations
SI 42 of 1999.
This Order may be cited as the Income Tax (Foreign Organisations)(Exemption and Approval) Order.
2. Approval of foreign Organisations
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 exempted from tax pursuant to sub-paragraph (c) of paragraph 4 of Part II of the Second Schedule to the Act.
[Paragraph 2]
The Power Rehabilitation Project Victoria Falls Hydroelectric Power Station Subsidiary Loan Agreement between the Republic of Zambia and Zambia Electricity Supply Corporation Limited and the European Investment Bank for an amount not exceeding Sixteen Million ECUS (European Currency) for the Financing of the ZESCO Victoria Falls Project.
INCOME TAX (BODY CORPORATE) (EXEMPTION AND APPROVAL) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
SI 68 of 1999.
This order may be cited as the Income Tax (Body Corporate)(Exemption and Approval) Order.
The Lusaka Stock Exchange Company Limited is hereby approved for the purpose of exemption from tax.
The income of the body corporate approved in paragraph 2 is exempt from tax pursuant to paragraph 5(5) of Part III of the Second Schedule to the Act.
{/mprestriction}