INCOME TAX ACT: INDEX TO SUBSIDIARY LEGISLATION - 2
Income Tax (Transfer Pricing) Regulations
Income Tax (Foreign Organisations) (Approval and Exemption) Order, 2001
Income Tax (Foreign Organisation) (Approval and Exemption) Order
Income Tax (Zambia Electronic Clearing House Limited) (Approval and Exemption) Order
Income Tax (Tax Clearance) (Exemption) Regulations, 2006
Income Tax (Advance Tax) (Exemption) Regulation
Income Tax (Foreign Personnel) (Approval and Exemption) Order, 2007
Income Tax (Foreign Personnel) (Approval and Exemption) Order, 2008
Income Tax (Foreign Organisations) (Approval and Exemption) Order, 2009
Income Tax (Turnover Tax) Regulations
Income Tax (Tazama Petroleum Products Company Limited) (Approval and Exemption) Order
Income Tax (Sino-Metals Leach Zambia Limited) (Rebate) Regulations
Income Tax (Double Taxation Relief) (Taxes on Income) (People's Republic of China) Order
Income Tax (Tax Clearance) (Exemption) Regulations, 2011
Income Tax (China-Africa Development Fund) (Approval and Exemption) Order
Income Tax (Foreign Personnel) (Approval and Exemption) Order
Income Tax (Foreign Personnel) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Mauritius) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Seychelles) Order
Income Tax (Pay as You Earn) Regulations
Income Tax (European Investment Bank) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Botswana) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Ireland) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Netherlands) Order
Income Tax (Agence Française De Development and PROPARCO) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (Kingdom of Norway) Order
Income Tax (Overseas Private Investment Corporation) (Approval and Exemption) Order
Income Tax (African Management Services Company) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (The Kingdom of Morocco) Order
Income Tax (Tax Agent) (Terms and Conditions) Regulations
Income Tax (Konoike Construction Company Limited) (Approval and Exemption) Order
Income Tax (Royal Haskoning DHV (PTY) Limited) (Approval and Exemption) Order
Income Tax (Remission) (Ndola Lime Company Limited) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (The Swiss Confederation) Order
Income Tax (John Snow Health Zambia Limited) (Approval and Exemption) Order
Income Tax (Double Taxation Relief) (Taxes on Income) (United Arab Emirates) Order
INCOME TAX (TRANSFER PRICING) REGULATIONS
[Section 97D(4), (6)]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Provisions supplementary to section 97C(3)
4. Participation in management control or capital of person
5. Direct participants
6. Indirect participants
7. Major participants
8. Meaning of ‘connected person’ and other expressions
9. Joinder of second taxpayer in certain appeals
10. Determination of arm's length principle
11. Comparability
12. Transfer pricing methods
13. Choice of transfer pricing method
14. Selection of tested party
15. Evaluation of person's combined controlled transactions
16. Arm's length range
17. Services between associated persons
18. Transactions involving intangible property
19. Corresponding adjustments
20. Consistency with Organisation for Economic Cooperation and Development
21. Provision of documentation on controlled transaction
22. Maintenance of information
23. Request for information
SI 20 of 2000,
SI 24 of 2018,
SI 107 of 2021.
These Regulation may be cited as the Income Tax (Transfer Pricing) Regulations.
In these Regulations, unless the context otherwise requires—
"Appeals Regulations" means the Revenue Appeals Tribunal Regulations, 1998;
"appropriate allocation method" means a method that allocates total group cost among members of a group in a way that is proportional to the benefits or expected benefits to each member of the group;
[Ins by reg 2(a) of SI 24 of 2018.]
"arm’s length conditions" has the meaning assigned to the term in the Act;
[Ins by reg 2(a) of SI 24 of 2018.]
"associated person" has the meaning assigned to the word under section 97C of the Act;
[Ins by reg 2(a) of SI 24 of 2018.]
"Commissioner-General" has the meaning assigned to the word in the Zambia Revenue Authority Act;
[Ins by reg 2(a) of SI 24 of 2018.]
"comparable transactions" means transactions that are comparable in accordance with regulation 11;
[Ins by reg 2(a) of SI 24 of 2018.]
"comparable uncontrolled price method" means the method which consists of comparing the price charged for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction;
[Ins by reg 2(a) of SI 24 of 2018.]
"comparability factors" means factors specified in regulation 11;
[Ins by reg 2(a) of SI 24 of 2018.]
"controlled transaction" is a transaction between associated persons;
[Ins by reg 2(a) of SI 24 of 2018.]
"cost contributions arrangement" means an arrangement among persons to—
(a) share the costs and risks of developing, producing or obtaining assets, services or rights; and
(b) determine the nature and extent of the interests of each participant in the results of the activity of developing, producing or obtaining the assets, services or rights;
[Ins by reg 2(a) of SI 24 of 2018.]
"cost plus method" means the method which consists of comparing the mark up on those costs directly and indirectly incurred in the supply of property or services in a controlled transaction with the mark up on those costs directly and indirectly incurred in the supply of property or services in a comparable uncontrolled transaction;
[Ins by reg 2(a) of SI 24 of 2018.]
"financial indicator" means in relation to the—
(a) comparable uncontrolled price method, the price;
(b) cost plus method, the mark up on costs;
(c) resale price method, the resale margin;
(d) transaction net margin method, the net profit margin; and
(e) transactional profit split method, the division of the operating profit and loss;
[Ins by reg 2(a) of SI 24 of 2018.]
"information" includes a document and electronic information;
[Ins by reg 2(a) of SI 24 of 2018.]
"low value added service" means a service that—
(a) is not provided by any member of the group to unrelated customers;
(b) does not use or create valuable intangible property; and
(c) does not involve the assumption, control or creation of significant risks;
[Ins by reg 2(a) of SI 24 of 2018.]
"multi-national enterprise" means a business entity that is part of a multi-national enterprise group;
[Ins by reg 2(a) of SI 24 of 2018.]
"multi-national enterprise group" means a group of associated business entities established in two or more countries;
[Ins by reg 2(a) of SI 24 of 2018.]
"resale price method" means the method which consists of comparing the resale margin that a purchaser of property in a controlled transaction earns from reselling that property in an uncontrolled transaction with the resale margin that is earned in comparable uncontrolled purchase and resale transactions;
[Ins by reg 2(a) of SI 24 of 2018.]
"total group costs" means the direct and indirect costs incurred by connected persons in providing the service to members of the group of companies to which a Zambia taxpayer belongs;
[Ins by reg 2(a) of SI 24 of 2018.]
"transactional net margin method" means the method which consists of comparing the net profit margin relative to an appropriate base which includes costs, sales, assets that a person achieves in a controlled transaction with the net profit margin relative to the same base achieved in comparable uncontrolled transactions;
[Ins by reg 2(a) of SI 24 of 2018.]
"transactional profit split method" means the method which consists of allocating to each associated person participating in a controlled transaction the portion of common profit (or loss) derived from such transaction that an independent person would expect to earn from engaging in a comparable uncontrolled transaction;
[Ins by reg 2(a) of SI 24 of 2018.]
"uncontrolled transaction" is transaction between independent persons; and
[Ins by reg 2(a) of SI 24 of 2018.]
"Unit Trust" has the meaning assigned to it by section 72 of the Security Act.
3. Provisions supplementary to section 97C(3)
(1) In sub-section (3) of section 97C, and in this regulation, any reference to an arrangement or agreement includes a reference—
(a) to a transaction an understanding and mutual practice; and
(b) to an arrangement or agreement whether or not it is, or is intended to be, legally enforceable.
(2) For the purpose of sub-section (3) of section 97C, a series of arrangements shall not be prevented from being regarded as a series of arrangements by means of which conditions have been made or imposed as between any two persons by reason of either or both of the following matters:
(a) that there is no arrangement in the series to which both those persons are parties; and
(b) that there is one or more arrangements in the series to which neither of those persons is a party.
4. Participation in management control or capital of person
For the purposes of section 97C, a person participates directly or indirectly in the management, control or capital of a second person at a particular time if, and only if, the first person is at that time—
(a) a direct participant in the second person within the meaning of regulation 5; or
(b) an indirect participant in the second person within the meaning of regulation 6 or 7.
(1) A person is a direct participant in a second person at any time if at that time that second person is a body corporate or partnership controlled by the first person.
(2) For the purpose of sub-regulation (1) ‘control’—
(a) in relation to a body corporate, means the powers of a person to secure—
(i) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate; or
(ii) by virtue of any powers conferred by the articles of association of other body corporate;
that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person; and
(b) in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.
(1) A person in an indirect participant in a second person at a particular time if the first person would be taken to be a direct participant in the second person at that time if the rights and powers attributed to the first person included all the rights and powers specified in sub-regulation (2).
(2) The rights and powers to be attributed as specified in sub-regulation referred to as the potential participant, are—
(a) rights and powers which the potential participant—
(i) is entitled to acquire at a future date; or
(ii) will, at a future date, become entitled to acquire;
(b) rights and powers of other persons to the extent that they are right or powers in accordance with sub-regulation (3);
(c) rights and powers of any other person with whom the potential participant is connected; and
(d) rights and powers which for the purpose of sub-regulation (1) would be attributed to another person with whom the potential participant is connected, if that connected person were himself the potential participant.
(3) For the purpose of sub-regulation (2) the rights and powers of any person are in accordance with this regulation to the extent that—
(a) they are required, or may be required, to be exercised on behalf of, under the direction of, or for the benefit of, the potential participant; and
(b) where a loan has been made by one person to another they are not confined to rights an powers conferred in relation to property of the borrower by the terms of any security relating to the loan.
(4) In paragraph (b) to (d) of sub-regulation (2) and sub-regulation (3), the references to a person’s rights and powers include references to any power which the person—
(a) is entitled to acquire at a future date; or
(b) will, at a future date, become entitled to acquire.
(5) In paragraph (d) of sub-regulation (2), the reference to rights and powers which would be attributed to a connected person if the connected person were the indirect participant includes a reference to rights and powers which, by applying that sub-regulation wherever one person is connected with another, would be so attributed to the connected person through a number of person each of whom is connected with at least one of the others.
(1) A person is an indirect participant in a second person at a particular time if the first person is, at that time, a major participant in the second person, in this regulation referred to as the subordinate, and the subordinate is a body corporate or partnership.
(2) For the purposes of this regulation a person is a major participant in the subordinate at a particular time if at that time—
(a) that person together with another person controls the subordinate; and
(b) those two person each has interests, rights and powers representing at least 40 per cent of the holding, rights and powers in respect of which they, taken together, control the subordinate:
Provided that any question whether paragraph (a) or (b) is satisfied for any two persons shall be determined after attributing to an indirect participant for the purpose of sub-regulation (1) of regulation 6.
(3) For the purpose of sub-regulation (2) ‘control’ has the meaning assigned to it in regulation 5.
8. Meaning of ‘connected person’ and other expressions
(1) For the purposes of regulation 6, two person connected with each other if—
(a) one of them is an individual and the other is that person’s spouse, a relative of that person or of that person’s spouse, or the spouse of such a relative; or
(b) one of them is a trustee of a settlement and the other is—
(i) a person who in relation to that settlement is a settler; or
(ii) a person who is connected with a person falling within sub-paragraph (i).
(2) for the purpose of sub-regulation (1)—
"relative" means a brother, sister, ancestor or lineal descendant; and
"settlement" and "settler" have the meaning assigned to them in section 19 disregarding paragraph (ii) of that section.
(3) References in regulations 4 to 7—
(a) to rights and powers of a person; or
(b) to rights and powers which a person is or will become entitled to acquire.
Include references to rights or powers which are exercisable by that person, or when acquired by that person will be exercisable, only jointly with one or more other persons.
(4) Regulation 4 to 7 and this regulation shall be effected as if—
(a) a unit trust were a company that is a body corporate;
(b) the rights of the participants in the unit trust were shares in the company that the trust is deemed to be;
(c) rights and powers of a person in the capacity of a person entitled to act for the purposes of the unit trust were rights and powers of the unit trust; and
(d) provision made or imposed as between any person in such a capacity and another person were made or imposed as between the unit trust and that other person.
9. Joinder of second taxpayer in certain appeals
(1) This regulation applies where a person, in this regulation referred to as ‘the appellant’, appeals against an assessment to the Revenue Appeals Tribunal and the ground or one of the grounds of the appeal relates to the question whether section 97A applies in relation to any computation relevant to the assessment or whether any computation has made in accordance with that section, and in this regulation that computation is referred to as the relevant computation.
(2) Where the appellant is the first taxpayer in relation to the relevant computation, the person who is the second taxpayer in relation to that computation may be joined as a party to the appeal.
(3) For the purposes of this regulation any reference to the first taxpayer or the second taxpayer shall be construed in accordance with section 97A.
(4) Where the grounds of appeal or one of them is that sub-section (2) of section 97A does not apply in relation to the relevant computation, sub-section (2) of section 97A shall be deemed to apply in determining whether any person is the first taxpayer or second taxpayer in relation to that computation for the purposes of this regulation, but not for the purposes of any appeal.
(5) A second taxpayer shall only be joined as a party to an appeal, so far as the appeal concerns the computation in relation to which that person is the second taxpayer, if that person gives notice, referred to in this regulation as a joinder notice, complying with sub-regulations (8) and (9) within 30 days of the date on which the appellant gave notice of appeal to the Registrar of the Revenue Appeals Tribunal.
(6) The second taxpayer shall give a copy of the joinder notice to the Commissioner General and to the appellant within seven days of the date the notice is given to the Registrar.
(7) The Appeals Regulations shall apply to a joinder notice or a notice purporting to be a joinder notice and to the second taxpayer as they apply in relation of appeal lodged or purporting to be lodged in accordance with regulation 6 of the Appeals Regulations and to the appellant, however described, subject to the following provisions:
(a) regulation 6 of the Appeals Regulations shall not apply;
(b) the Registrar shall not be required to copy the joinder notice to the Commissioner General under sub-regulation (1) of regulation 7 of the Appeals Regulations;
(c) regulation 12 of the Appeals Regulations shall apply to the copy of the joinder notice required by sub-regulation (6) in addition to the joinder notice itself;
(d) where the appellant has appealed against the assessment on more than one ground—
(i) sub-regulation (1) of regulation 8 of the Appeals Regulations shall apply in relation to the second taxpayer’s joinder notice separately from its application to the appellant’s appeal so that the Commissioner General shall lodge, in accordance with sub-regulation (1) or regulation 8, a separate statement of case in response to the joinder notice;
(ii) the Commissioner General and the first taxpayer may produce a separate list of documents to the Registrar for the purposes of sub-regulation (1) of regulation 10 of the Appeals Regulations within seven days of being given the second taxpayer’s joinder notice, and where such a list is produced, the Registrar shall copy that list, instead of the other list, to the second taxpayer in accordance with sub-regulation (2) of regulation 10.
(8) A joinder notice given by a person complies with this sub-regulation if—
(a) it states the name and address of that person;
(b) it identifies the appellant in the appeal to which that person wishes to be joined;
(c) it identifies the assessment and the computation in relation to which that person is the second taxpayer; and
(d) it states the grounds on which the second taxpayer appeals against the assessment, so far as the assessment relates to that computation.
(9) For the purposes of paragraph (a) of sub-regulation (8) the address to be given by the second taxpayer is—
(a) if the second taxpayer carries on a business—
(i) the address of the second taxpayer’s principal place of business in Zambia; or
(ii) if there is no such place, the address of the second taxpayer’s principal place of business outside Zambia; or
(b) if the second taxpayer does not carry on a business—
(i) the address of the second taxpayer’s only or main residence in Zambia; or
(ii) if there is no such place, the address of the second taxpayer’s only or main residence outside Zambia;
and if sub-paragraph (ii) of paragraph (a) or sub-paragraph (ii) of paragraph (b) applies, the joinder notice shall include the name of a person by whom and an address at which service of documents may be effected in Zambia for the purposes of the appeal.
10. Determination of arm's length principle
The Commissioner-General shall cause the determination of whether the conditions of a controlled transaction are consistent with the arm’s length principle specified in section 97A(1) of the Act and the quantum of any adjustment made under section 97A(3) of the Act, in accordance with the provisions of these Regulations.
[Reg 10 ins by reg 3 of SI 24 of 2018; am by reg 2 of SI 107 of 2021.]
(1) An uncontrolled transaction is comparable to a controlled transaction within the meaning of section 97A(1) of the Act when—
[Reg 11(1) am by reg 3 of SI 107 of 2021.]
(a) there are no significant differences between that uncontrolled transaction and a controlled transaction that could materially affect the financial indicator being examined under the appropriate transfer pricing method; or
(b) such differences exist, if a reasonably accurate adjustment is made to the relevant financial indicator of the controlled transaction in order to eliminate the effects of those differences on the comparison.
(2) The Commissioner-General, in causing to be determined whether two or more transactions are comparable, shall consider the following factors to the extent that they are economically relevant to the facts and circumstances of the transactions—
(a) the characteristics of the property or services transferred or supplied;
(b) the functions undertaken by each person with respect to the transactions while taking into account assets used and risks assumed;
(c) the contractual terms of the transactions;
(d) the economic circumstances in which the transactions take place; and
(e) the business strategies pursued by the person and associated person in relation to those transactions.
[Reg 11 ins by reg 3 of SI 24 of 2018.]
(1) The Commissioner-General shall cause to be determined the arm’s length remuneration of a controlled transaction by applying the most appropriate transfer pricing method to the circumstances of the case.
(2) The Commissioner-General shall cause to be selected the most appropriate transfer pricing method from among the approved transfer pricing methods set out in sub-regulation (3), taking into consideration the—
(a) respective strengths and weaknesses of the methods in the circumstance of the case;
(b) appropriateness of the approved transfer pricing method, having regard to the nature of the controlled transaction, determined through an analysis of the functions undertaken by each person in that controlled transaction and taking into account assets used and risks assumed;
(c) availability of reliable information needed to apply the selected transfer pricing method or other transfer pricing methods; and
(d) degree of comparability between controlled and uncontrolled transactions, including the reliability of comparability adjustments, if any, that may be required to eliminate differences between them.
(3) For the purposes of sub-regulation (1), the following transfer pricing methods may be used—
(a) comparable uncontrolled price method;
(b) resale price method;
(c) cost plus method;
(d) transactional net margin method; or
(e) transactional profit split method.
(4) When it is possible to determine an arm’s length remuneration for some of the functions performed by the associated persons in connection with the transaction using one of the approved methods described in sub-regulations (3)(a), (b), (c) or (d), the transactional profit split method shall be applied based on the common residual profit that results once such functions are so remunerated.
(5) The Commissioner-General shall, cause the determination where, taking account of the criteria described in sub-regulation (1), the comparable uncontrolled price method under sub-regulation (3)(b), (c), (d) or (e) can be applied with equal reliability, of arm’s length conditions to be made using the comparable uncontrolled price method.
(6) The Commissioner-General shall, where, taking account of the criteria described in sub-regulation (2), the methods under sub-regulation (3)(a), (b) or (c) and the methods under sub-regulation (3)(d) and (e) can be applied with equal reliability, cause the determination of arm’s length conditions to be made using any of the methods under sub-regulation (3)(a), (b) or (c).
[Reg 12 ins by reg 3 of SI 24 of 2018.]
13. Choice of transfer pricing method
(1) A person may choose only one method to determine the arm’s length remuneration for a given controlled transaction.
(2) A person may apply a transfer pricing method other than the methods under regulation 12(3) where that person can establish that—
(a) none of the methods can be reasonably applied to determine arm’s length conditions for the controlled transaction; and
(b) such other method yields a result consistent with that which would be achieved by independent persons engaging in comparable uncontrolled transactions under comparable circumstances.
(3) A person may apply in writing to the Commissioner-General for use of a method other than those under regulation 12(3), and where the Commissioner-General is satisfied, the Commissioner-General shall grant approval.
(4) The Commissioner-General’s examination of whether the conditions of a person’s controlled transactions are consistent with the arm’s length principle shall be based on the transfer pricing method applied by that person where that person has used a transfer pricing method which satisfies the provisions of this Regulation, to establish the remuneration of a controlled transaction.
(5) The application of the comparable uncontrolled price method shall in relation to transactions involving the acquisition of new or used assets by persons from connected persons not resident in Zambia, require—
(a) the invoice payment for the acquisition of the asset;
(b) proof of when the asset was purchased from an independent third party; and
(c) delivery notice.
(6) The Commissioner-General shall in the case of a used asset, require the subsequent application of the decline in value already amortised since the asset was purchased, as allowed under accounting principles generally accepted in Zambia.
(7) Despite sub-regulations (5) and (6), a technical appraisal may be performed by a third-party expert not employed by the company providing details of the characteristics, scope and other conditions considered in the appraisal, for the purposes of this Regulation—
(a) where an asset is sold in a different state from the one in which it was purchased, excepting ordinary wear and tear;
(b) where there is no third-party invoice; or
(c) in the case of an asset built or assembled using a number of components with several invoices.
[Reg 13 ins by reg 3 of SI 24 of 2018.]
(1) A person shall when applying a cost plus, resale price or transactional net margin method provided under regulation 12(3), select a party, referred to as the "tested party", to the transaction in respect of which a financial indicator, markup on costs, gross margin, or net profit indicator, is tested under the most appropriate transfer pricing method under the circumstances.
(2) A person shall select the tested party in a manner consistent with the functional analysis of the transaction.
(3) A tested party is the party in respect of which—
(a) a transfer pricing method may be applied in the most reliable manner;
(b) the most reliable comparables can be found; and
(c) has the less complex functions.
(4) The Commissioner-General shall, require the financial information on the tested party in addition to the information under sub-regulation (14), irrespective of whether the tested party is a domestic or foreign entity where the most appropriate transfer pricing method in the circumstances of the case, is determined following the provisions of sub-regulation (6) is a one-sided method.
(5) A person shall where the most appropriate method is a cost plus, resale price or transactional net margin method and the tested party is the foreign entity, require sufficient information to be able to reliably apply the selected method to the foreign tested party and to enable a review by the Commissioner-General of the application of the method to the foreign tested party.
[Reg 14 ins by reg 3 of SI 24 of 2018.]
15. Evaluation of person’s combined controlled transactions
If a person carries out, under the same or similar circumstances, two or more controlled transactions that are economically closely linked to one another or form a continuum that cannot reliably be analysed separately, those transactions may be combined to—
(a) perform the comparability analysis provided under regulation 11; and
(b) apply the transfer pricing methods provided in regulation 12.
[Reg 15 ins by reg 3 of SI 24 of 2018.]
(1) For the purposes of these Regulations, an arm’s length range is a range of relevant financial indicator figures including prices, margins or profit shares produced by the application of the most appropriate transfer pricing method as provided under regulation 12, to a number of uncontrolled transactions, each of which is relatively equally comparable to the controlled transaction based on a comparability analysis conducted in accordance with regulation 11, except that in some cases, not all comparable transactions examined will have a relatively equal degree of comparability.
(2) A controlled transaction, or a set of transactions that are combined under regulation 15, shall not be subject to an adjustment under section 97A of the Act where the relevant financial indicator derived from the controlled transaction or set of transactions and being tested under the appropriate transfer pricing method is within the arm’s length range.
(3) Where it is possible to determine that an uncontrolled transaction has a lesser degree of comparability than another, those transactions shall be eliminated.
(4) Where every effort has been made to exclude points that have a lesser degree of comparability, and what is arrived at is a range of figures for which it is considered, given the process used for selecting comparables and limitations in information available on comparables, that some comparability defects remain that cannot be identified or quantified, those transactions shall not be adjusted.
(5) In the cases referred to in sub-regulation (4), where the range includes a sizeable number of observations, a person shall use the interquartile range to enhance the reliability of the analysis.
(6) The Commissioner-General shall, where the relevant financial indicator derived from a controlled transaction, or from a set of controlled transactions that are combined under regulation 13, falls outside the arm’s length range, adjust the indicator pursuant to section 97A(3), and that adjustment shall be to a point in the arm’s length range that best reflects the circumstances of the case.
(7) Despite sub-regulation (6), the Commissioner-General may, in the absence of persuasive evidence for the selection of a particular point in the range, select the midpoint in the range.
[Reg 16 ins by reg 3 of SI 24 of 2018.]
17. Services between associated persons
(1) A service charge between associated persons shall be considered consistent with the arm’s length principle where—
(a) it is charged for a service that is actually rendered;
(b) the service provided or rendered was expected to provide the recipient of the service with economic or commercial value to enhance the recipient’s commercial position;
(c) it is charged for a service that an independent person in comparable circumstances would have been willing to pay for if performed for it by an independent person, or would have performed inhouse for itself; and
(d) the amount of the charge corresponds to that which would have been agreed between independent persons for comparable services in comparable circumstances.
(2) A service charge made to a person shall not be consistent with the arm’s length principle where it is made by an associated person solely because of the shareholder’s ownership interest in one or more other group members, including for any of the following costs incurred or activities undertaken by that associated person—
(a) costs or activities relating to the juridical structure of the parent company of that person, such as meetings of shareholders of the parent, issuing of shares in the parent company and costs of the parent company’s supervisory board;
(b) costs or activities relating to reporting requirements of the parent company of that person, including the consolidation of reports; and
(c) costs or activities related to raising funds for the acquisition of participations, unless those participations are directly or indirectly acquired by that person and the acquisition benefits or is expected to benefit that first-mentioned person.
(3) Subject to the provisions of regulation 15, a person shall, where it is possible to identify specific services provided by that person to an associated person, determine whether the service charge is consistent with the arm’s length principle for each specific service.
(4) Where a service is rendered by a person to various associated persons jointly and it is not possible to identify a specific service provided to each of them, the total service charge shall be allocated among the associated persons that benefit or expect to benefit from the services in accordance with a reasonable allocation criteria under these Regulations.
(5) For the purpose of sub-regulation (4), allocation criteria shall be viewed as reasonable where they are based on a variable or variables that—
(a) take into account the nature of the services, the circumstances under which they are provided and the benefits obtained or that were expected to be obtained by the persons for which the services are intended;
(b) relate exclusively to uncontrolled transactions; and
(c) are capable of being measured in a reasonably reliable manner.
(6) An amount charged for the provision of a low value added service between connected persons shall be considered as arm’s length if—
(a) the amount is based on an allocation to each person that receives a low value added service of the total group costs of providing the services;
(b) the allocation of these costs is based on an appropriate allocation method;
(c) the cost plus method is applied to these costs; and
(d) the markup on these costs is five per cent.
[Reg 17 ins by reg 3 of SI 24 of 2018.]
18. Transactions involving intangible property
(1) The determination of arm’s length conditions for controlled transactions involving licenses, sales or other transfers of intangible property between associated persons shall take into account both the perspective of the transferor of the property and the perspective of the transferee, including the pricing at which a comparable independent enterprise would be willing to transfer the property and the value and usefulness of the intangible property to the transferee in its business.
(2) A person shall, in applying the provisions of regulation 11 to a transaction involving the license, sale or other transfer of intangible property, consider any special factors relevant to the comparability of the controlled and uncontrolled transactions, including—
(a) the expected benefits from the intangible property;
(b) the commercial alternatives otherwise available to the acquirer or licensee derived from the intangible property;
(c) any geographic limitations on the exercise of rights to the intangible property;
(d) the exclusive or non-exclusive character of the rights transferred; and
(e) whether the transferee has the right to participate in further developments of the intangible property by the transferor.
(3) For the purposes of this regulation—
"intangible property" includes any property which is not a physical or a financial asset, and is capable of being owned or controlled for use in commercial activities and includes patent, invention, secret formula or process, design, model, plan, trademarks, know-how, or marketing intangibles.
[Reg 18 ins by reg 3 of SI 24 of 2018.]
(1) The Commissioner-General shall, after a request is made by a person, examine the consistency of an adjustment with the arm’s length principle of section 97A(2) of the Act, consulting as necessary with the competent authority of the other country where—
(a) an adjustment to the conditions of transactions between any person and an associated person is made or proposed by a tax administration in a country other than Zambia;
(b) the adjustment results in the taxation in that other country of an amount of profits on which the person has already been charged tax in Zambia; and
(c) the country making or proposing the adjustment has a tax treaty with Zambia that reflects an intention to provide for the relief of economic double taxation.
(2) The Commissioner-General shall, if the adjustment proposed or made by the other country is consistent with the arm’s length principle both in principle and as regards the amount, make a corresponding adjustment to the amount of the tax charged in Zambia to that person on those profits, in order to eliminate the economic double taxation that would result from the inclusion of the same profits in the taxable income of both the person and the associated person.
(3) For purposes of this regulation—
"economic double taxation" means the taxation of the same income twice in the hands of two different taxpayers.
[Reg 19 ins by reg 3 of SI 24 of 2018.]
20. Consistency with Organisation for Economic Cooperation and Development
(1) These Regulations shall be construed in a manner consistent with—
(a) the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations as supplemented and updated from time to time; and
(b) the United Nations (UN) Practical Manual on Transfer Pricing for Developing Countries as supplemented and updated from time to time.
(2) Where there is any inconsistency between the Act, these Regulations and the OECD Guidelines or the UN manual referred to in this regulation, the Act and these Regulations shall prevail to the extent of the inconsistency.
[Reg 20 ins by reg 3 of SI 24 of 2018.]
21. Provision of documentation on controlled transaction
(1) A person participating in a controlled transaction shall prepare on an annual basis and have in place contemporaneous documentation that verifies that the conditions in its controlled transactions for the relevant tax year are consistent with the arm’s length principle.
(2) This regulation does not apply to a person whose annual turnover is below twenty million Kwacha in any charge year.
(3) The threshold referred to in sub-regulation (2) shall not apply to a multi-national enterprise.
(4) The contemporaneous documentation referred to in sub-regulation (1) shall include records and documents that describe—
(a) the controlled transaction, including the nature, terms and price of each controlled transaction, details of property transferred or services provided and the quantum and the value of each respective transaction;
(b) the identity of associated persons involved in each controlled transaction and the relationship with the associated person;
(c) a detailed comparability analysis of the person and associated person with respect to each documented category of controlled transaction, including the functions performed, risks borne, tangible and intangible assets used, and any changes made compared to prior years;
(d) the details of other controlled transactions that directly or indirectly affect the pricing of the subject controlled transaction;
(e) a record of the economic forecasts, budgets or other financial estimates prepared by the person for that person’s business as a whole, or separately for each division or product that may have a bearing on a controlled transaction;
(f) uncontrolled transactions and information on financial indicators for unrelated parties relied on in the transfer pricing analysis, including a description of the comparables search methodology, a record of the nature, terms and conditions relating to any uncontrolled transaction with unrelated parties relied upon in the transfer pricing analysis;
(g) the details of any comparability adjustments performed indicating whether they have been performed on the tested party on the comparable uncontrolled transaction or both;
(h) the transfer pricing methods considered in determining the arm’s length price in relation to each transaction or class of transaction, the method selected as the most appropriate method why that method was selected and how that method was applied in each controlled transaction;
(i) which associated person is selected as the tested party and an explanation for the choice of the tested party;
(j) a summary of financial information used and the assumptions made in applying the transfer pricing methodology;
(k) the reasons for performing a multiyear analysis, where applicable;
(l) the assumptions, policies and price negotiations, if any, which have critically affected the determination of the arm’s length price;
(m) details of the adjustments, if any, made to the transfer price to align it with arm’s length price and consequent adjustment made to the total income for tax purposes;
(n) the reasons for concluding that the controlled transactions were conducted on an arm’s length basis based on the application of the selected transfer pricing method;
(o) information and allocation schedules showing how the financial data used in applying the transfer pricing method may be tied to the annual financial statements of the taxpayer;
(p) summarised schedules of relevant financial data for comparables used in the analysis; and
(q) any other information including information relating to the associated person that may be relevant for determination of the arm’s length price.
(5) The records and documents referred to in sub-regulation (3) shall be provided to the Commissioner-General upon request.
(6) For the purposes of this regulation—
"contemporaneous documentation" means documentation which is generated when a person is developing or implementing a controlled transaction.
[Reg 21 ins by reg 3 of SI 24 of 2018.]
22. Maintenance of information
(1) A person who engages in a controlled transaction shall maintain information in respect of the transaction, the associated person and the transfer pricing method used.
(2) The information maintained under sub-regulation (1) shall include—
(a) a description of the management structure of the local entity to which local management reports are sent and the geographical location of senior executives;
(b) a profile of the multi-national group which the person is a part of and the name, address, legal status and country of tax residence of each of the persons comprised in the group with which controlled transactions have been made and the details pertaining to the ownership of the companies;
(c) a detailed description of the business of the person, the industry in which that person operates and the business of associated persons with whom that person has controlled transactions; and
(d) a statement on whether the person has been involved in or affected by business restructuring or intangible transfers in the current or immediate past year and explanation of aspects of the transactions affecting that person.
(3) The information kept under sub-regulation (2) shall be prepared by the due date of the annual return submission, but shall not be submitted with that return.
(4) The information maintained under sub-regulation (1) shall include—
(a) a chart illustrating the multi-national enterprise’s legal and ownership structure and the geographical location of operating entities comprising that enterprise;
(b) general written description of the multi-national enterprise’s business including—
(i) important drivers of business profit;
(ii) the supply chain for the group’s five largest product or service offerings by turnover and any other products or services accounting for more than five per cent of group turnover;
(iii) important service arrangements between members of the multi-national enterprise group, other than research and development services, including a description of the capabilities of the principal locations providing important services, and the transfer pricing policies for allocating services costs and determining prices to be paid for intragroup services;
(iv) the main geographic markets for the group’s products and services that are referred to in regulation 6(2)(b);
(v) a brief functional analysis of the principal contributions to value creation by individual entities within the group, including key functions performed, important risks assumed and important assets used; and
(vi) important business restructuring transactions, acquisitions and divestitures that occur during a financial year;
(c) a genera
(d) a list of intangibles or groups of intangibles of the multi-national enterprise group that are important for transfer pricing purposes and which entities legally own them;
(e) a list of important agreements among identified associated persons related to intangibles, including cost contribution arrangements, principal research service agreements and licence agreements;
(f) a general description of the group’s transfer pricing policies related to research and development and intangibles;
(g) a general description of any important transfers of interests in intangibles among associated persons during the fiscal year concerned, including the entities, countries, and compensation involved;
(h) a general description of how the group is financed, including important financing arrangements with unrelated lenders;
(i) the identification of any members of the group that provide a central financing function for the group, including the country under which laws the entity is organised and the place of effective management of such entities;
(j) a general description of the multi-national entity group’s general transfer pricing policies related to financing arrangements between associated enterprises;
(k) the group’s annual consolidated financial statement for the financial year concerned if otherwise prepared for financial reporting, regulatory, internal management, tax or other purposes; and
[Reg 22 ins by reg 3 of SI 24 of 2018.]
(1) The Commissioner-General may, by notice in writing, request a person to submit the information kept for purposes of these Regulations.
(2) A person shall, within 30 days from the date of issue of the notice referred to in sub-regulation (1), provide the information to the Commissioner-General.
(3) Where a document required for purposes of these Regulations is not in English, the person required to submit it shall, at the person’s own expense, produce a translation in English, prepared and certified by a translator before a Notary Public.
(4) A person who fails to furnish any information to the Commissioner-General upon receipt of a notice under sub-regulation (1), commits an offence and is liable, upon conviction, to the penalties specified in the Act.
(5) The obligation of a taxpayer to provide documentation is without prejudice to the power of the Commissioner-General to request additional information that in the course of audit procedures the Commissioner-General considers necessary to carry out the Commissioner-General’s functions.
[Reg 23 ins by reg 3 of SI 24 of 2018.]
INCOME TAX (FOREIGN ORGANISATIONS) (APPROVAL AND EXEMPTION) ORDER, 2001
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 66 of 2001.
This Order may be cited as the Income Tax (Foreign Organisations) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule to this Order, the European Investment Bank is hereby approved for the purposes of exemption from tax.
The income and emoluments of the foreign organisation approved in paragraph 2 of this order accruing under the Agreement described in Schedule to this Order shall be exempt from tax under sub-paragraph (b) of paragraph 4 in Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Finance Contract between Barclays Bank of Zambia Limited, Indo-Zambia Bank Limited, Industrial Credit Company Limited, Stanbic Bank Zambia Limited and ULC Zambia Limited (Borrowers) on the one part and European Investment Bank (as Lender) on the other part, for a loan facility ("credit") in the amount of eight million Euros (ECU 8,000,000) under the Mining Sector Diversification Programme financed by the 8th European Development Fund (SYSMIN funds).
INCOME TAX (FOREIGN ORGANISATION) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 100 of 2001.
This Order may be cited as the Income Tax (Foreign Organisation) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule to this Order, the European Investment Bank is hereby approved for the purpose of exemption from tax.
The income and emoluments of the foreign organisation approved in paragraph 2 of this Order accruing under the Agreement described in the Schedule to this Order shall be exempt from tax under sub-paragraph (b) of paragraph 4 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Finance contract between African Banking Corporation Zambia Limited Barclays Bank of Zambia Limited, Indo-Zambia Bank Limited, Industrial Credit Company Limited, Stanbic Bank Zambia Limited and Standard Chartered Bank Zambia plc (as Borrowers) on the one part and the European Investment Bank (as Lender) on the other part, for a loan facility ("credit") in the amount of 20 million Euros (ECU 20,000,000) under the Capital Investment Line Global Loan II A (CIL II) of the Lome Convention.
INCOME TAX (ZAMBIA ELECTRONIC CLEARING HOUSE LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval and exemption from tax
SI 55 of 2004.
This Order may be cited as the Income Tax (Zambia Electronic Clearing House Limited) (Approval and Exemption) Order.
2. Approval and exemption from tax
(1) The Zambia Electronic Clearing House Limited is hereby approved for the purpose of exemption from tax.
(2) The income of the company approved in sub-paragraph (1) shall be exempt from tax under sub-paragraph (2) of paragraph 5 of Part III of the Second Schedule to the Act.
INCOME TAX (TAX CLEARANCE) (EXEMPTION) REGULATIONS, 2006
[section 81B]
Arrangement of Regulations
Regulation
1. Title
2. Exemption of goods or services from the requirement to produce a tax clearance certificate
3. Exemption of agricultural products from the requirement to produce a tax clearance certificate
4. Revocation of S.I. No. 5 and 23 of 2006
SI 40 of 2006.
These Regulations may be cited as the Income Tax (Tax Clearance) (Exemption) Regulations.*
2. Exemption of goods or services from the requirement to produce a tax clearance certificate
Where goods or services of a value not exceeding 2,00,000 kwacha per transaction are supplied by any person or partnership, no tax clearance certificate shall be required.
3. Exemption of agricultural products from the requirement to produce a tax clearance certificate
Notwithstanding regulation 2, where agricultural products of a value not exceeding one million, five hundred thousand kwacha per transaction are supplied by any person or partnership, no tax clearance certificate shall be required.
4. Revocation of S.I. No. 5 and 23 of 2006
The Income Tax (Withholding Tax) (Exemption) Regulations are hereby revoked.
INCOME TAX (ADVANCE TAX) (EXEMPTION) REGULATIONS
[Section 81C]
Arrangement of Regulations
Regulation
1. Title
2. Exemptions from advance tax
SI 29 of 2007.
These Regulations may be cited as the Income Tax (Advance Tax) (Exemption) Regulations.*
2. Exemptions from advance tax
The persons, partnerships and organisations set out in the Schedule to these Regulations shall be exempt from paying advance tax.
[Regulation 2]
EXEMPT PERSONS, PARTNERSHIPS AND ORGANISATIONS
1. Government Ministries.
2. Any organisation whose income is exempt from tax under paragraph 4 of Part II of the Second Schedule to the Income Tax Act.
3. Any Organisation whose income is exempt from tax under paragraph 5 of Part III of the Second a Schedule to the Income Tax Act.
4. Any charitable institution or body of persons or trust whose income is exempt from tax under sub-paragraph (1) of paragraph 6 of Part III of the Second Schedule to the Income Tax Act.
5. Any other person or partnership importing goods for commercial purposes provided that, that person or partnership has—
(a) a valid tax clearance certificate; and
(b) a taxpayer identification number (TPIN) issued by the Commissioner-General.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER, 2007
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign personnel
3. Exemption from tax
SI 94 of 2007.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.
2. Approval of foreign personnel
With respect to the Agreement described in the Schedule to this Order, any income received by expatriate staff of the Centre for infectious Disease Research in Zambia is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph 2 shall be exempt from tax pursuant to sub-paragraph (c) of paragraph 3 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the University of Alabama at Birmingham through the Centre for Infectious Disease Research in Zambia and the Ministry of Health on behalf of the Republic of Zambia dated 20th June, 2005, regarding the provisions of AIDS prevention and treatment services, and other health care services, to the people of Zambia.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER, 2008
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign personnel
3. Exemption from tax
SI 82 of 2008.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.
2. Approval of foreign personnel
With respect to the Agreement described in the Schedule to this Order, any income received by expatriate staff employed under the Danish Waster Sector Programme Support, Zambia 2006-2010, is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph (2) shall be exempt from tax pursuant to sub-paragraph (c) of paragraphs (3) of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the Government of the Kingdom of Denmark and the Minister of Finance and National Planning on behalf of the Government of the Republic of Zambia dated 22nd December, 2005, regarding Danish assistance to the Waster Sector Programme Support, Zambia, 2006-2010.
INCOME TAX (FOREIGN ORGANISATIONS) (APPROVAL AND EXEMPTION) ORDER, 2009
[section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval and exemption from tax
SI 2 of 2009.
This Order may be cited as the Income Tax (Foreign Organisations) (Approval and Exemption) Order.
2. Approval and exemption from tax
(1) The following Organisations are hereby approved for the purpose of exemption from tax—
(a) the African Development bank; and
(b) the African Export Import Bank.
(2) The Income of the institutions approved in paragraph (2) of this Order shall be exempt from tax under sub-paragraph (5) of paragraph 5 of part III of the Second Schedule to the Act.
INCOME TAX (TURNOVER TAX) REGULATIONS
[Section 64A]
Arrangement of Regulations
Regulation
1. Title
2. Interpretation
3. Notification of receipt of income
4. Payment and refund of turnover tax
5. Assessment of turnover tax
6. Change from income tax to turnover tax or vice versa
7. Returns
8. Retention of records liability
9. Cessation of liability to pay turnover tax
10. Penalties
SI 47 of 2009,
SI 75 of 2009,
SI 95 of 2013,
SI 70 of 2014,
SI 108 of 2021.
These Regulations may be cited as the Income Tax (Turnover Tax) Regulations.
In these Regulations, unless the context otherwise requires—
"income tax month" means any calendar month of a respective charge year;
[Ins by reg 2(a) of SI 75 of 2009.]
"return" means a return under Regulation 7; and
[Am by reg 2(b) of SI 75 of 2009.]
"turnover" includes gross earnings, income, revenue, takings, yield or proceeds, but does not include interest, royalties or dividends.
[Subs by reg 2 of SI 108 of 2021.]
3. Notification of receipt of income
A person liable to pay turnover tax under sub-section (2) of section 64A of the Act shall, within 30 days of receipt of any income, notify the Commissioner-General of the receipt of the income.
[Reg 3 subs by reg 3 of SI 75 of 2009.]
4. Payment and refund of turnover tax
(1)Turnover tax shall be due and payable on the 14th day of the month following the end of the income tax month or within such other period as the Commissioner-General may, in a particular case, determine.
(2) Where the Commissioner-General determines that a person has paid an amount in excess of the turnover tax due, the Commissioner-General shall cause the excess to be refunded to the person.
(1)The Commissioner-General may make an assessment in respect of the person liable to pay turnover tax at the end of the charge year.
(2) Notwithstanding sub-regulation (1), the Commissioner-General may make an assessment in respect of the person liable to pay turnover tax, before the end of the charge year if—
(a) the Commissioner-General has reasonable grounds to believe that the person is about to leave the Republic; and
(b) a return has not been submitted by the person.
6. Change from income tax to turnover tax or vice versa
A change by any person from income tax to turnover tax, or vice versa, shall take effect at the beginning of the charge year or on such other date as the Commissioner-General, by notice determine.
(1) A person liable to pay turnover tax for any charge year shall furnish, to the Commissioner-General, a return of turnover and such particulars as may be required for the purposes of ascertaining the turnover chargeable, and the tax liable due, under the Act
(2) A return of turnover for purposes of sub-regulation (1) may be submitted manually within five days from the end of the income tax month to which it relates.
[Reg 7(2) subs by reg 2 of 95 of 2013, reg 3 of SI 70 of 2014.]
(3) An electronic return shall be lodged within 14 days from the end of the income tax month to which it relates.
[Reg 7(3) subs by reg 3 of SI 70 of 2014.]
8. Retention of records liability
(1) A person shall retain, in the English language, records relating to the business carried on by the person, as may be required by the Commissioner-General to determine the person's turnover tax.
(2) The records under sub-regulation (1) shall be retained for a period of six years from the date of issue of each particular record.
9. Cessation of liability to pay turnover tax
A person shall cease to be liable to pay turnover tax under the following circumstances—
(a) if the person is adjudged bankrupt;
(b) in the case of a sole proprietor, upon the death of the person;
(c) upon the winding up of the person's business; or
(d) any other circumstances as may be determine by the Commissioner-General
A person who contravenes these Regulations commits and offence and is liable to the penalties provided for under the Act.
[Regulation 7(2)]
[Form to be completed in triplicate]
Zambia Revenue Authority
Domestic Taxes Division
INCOME TAX ACT
The Income Tax (Turnover Tax) Regulations, 2009
TURNOVER TAX RETURN
FULL NAMES OF TAXPAYER | PERIOD |
POSTAL ADDRESS | TPIN |
PHYSICAL ADDRESS | ACCOUNT NO. |
SOURCE OF INCOME
(e.g.: farming, manufacturing, rental etc)
AMOUNT OF TURNOVER IN KWACHA
SOURCE 1 | K |
SOURCE 2 | K |
SOURCE 3 | K |
SOURCE 4 | K |
SOURCE 5 | K |
SOURCE 6 | K |
WITHHOLDING TA DEDUCTED
(To be completed in month 12)
TOTAL WITHHOLDING TAX DEDUCTED K
DECLARATION
I declare that the information given is true and correct
Name:…………………………………. Capacity………………………………..
Signature………………………………. Date:…………………………………….
FOR OFFICIAL USE ONLY
DATE RECEIVED | CHEQUE No. | AMOUNT K…………............. |
OFFICIAL NAME | OFFICE'S SIGNATURE | RECEIPT No………………… |
INCOME TAX (TAZAMA PETROLEUM PRODUCTS COMPANY LIMITED) (APPROVAL AND EXEMPTION) ORDER
[Section 14]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval and exemption from tax
SI 12 of 2010.
This Order may be cited as the Income Tax (Tazama Petroleum Products Company Limited) (Approval and Exemption) Order.
2. Approval and exemption from tax
(1) The Tazama Petroleum Products Company Limited is hereby approved for the purpose of exemption from tax.
(2) The Income of the company approved in sub-paragraph (1) shall be exempt from tax under sub-paragraph 5 of paragraph 5 of Part III of the Second Schedule to the Act.
INCOME TAX (SINO-METALS LEACH ZAMBIA LIMITED) (REBATE) REGULATIONS
[Section 15A]
Arrangement of Regulations
Regulation
1. Title
2. Effective date
3. Rebate of income tax
SI 43 of 2010.
These Regulations may be cited as the Income Tax (Sino-Metals Leach Zambia Limited) (Rebate) Regulations.
These Regulations shall be deemed to have come into effect on 1st April, 2005.
The Minister hereby grants a rebate of the income tax payable, in respect of the operations of Sino-Metals Leach Zambia Limited, for the charge years covering the period from 1st April, 2005, to 31st March, 2009.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (PEOPLE'S REPUBLIC OF CHINA) ORDER
[Section 76]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 81 of 2010.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (People's Republic of China) Order.*
It is hereby declared that the Agreement, the text of which is set out in the schedule to this Order, being an Agreement relating to relief from double taxation on income made between the Government of the Republic of Zambia and the Government of the People's Republic of China shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of Zambia and the Government of the People's Republic of China.
Desiring to conclude an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on income
(hereinafter referred to as "the Agreement").
ARTICLE 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or its local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which the Agreement shall apply are in particular:
(a) in Zambia:
(i) the income tax (hereinafter referred to as "Zambian tax");
(b) in China:
(i) the individual income tax;
(ii) the enterprise income tax; (hereinafter referred to as "Chinese tax").
4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement to, or in place of, the existing taxes. The competent authorities of the Contracting states shall notify each other of any significant changes which have been made in their taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires—
(a) the term "Zambia" means the Republic of Zambia; or any area within which Zambia, in accordance with International Law, may exercise sovereign right or jurisdiction;
(b) the term "China" means the Peoples Republic of China, when used in geographical sense, means all the territory of the Peoples Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply, and any area beyond its territorial sea, within which the Peoples Republic of China has sovereign rights of exploration for and exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with international law and its internal law:
(c) the term "person" includes an individual, a company and any other body of persons;
(d) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(e) the term "enterprise" applies to the carrying on of any business;
(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State,
(h) the term "competent authority" means, in the case of Zambia, the Commissioner-General of the Zambian Revenue Authority or the authorised representative, and in the case of China, the State Administration of Taxation or its authorised representative;
(i) the term "national" in relation to a Contracting State means
(ii) any individual possessing the nationality of a Contracting State; and
(iii) any legal person, partnership or association deriving its status as such form the laws in force in a Contracting State; and
(j) the term "business" includes the performance of professional services and of other activities of an independent character.
2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires,
have the meaning which it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the
applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of incorporation, place of effective management or any other criterion of a similar nature, and also includes that State and any local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States,
he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither of them. he shall be deemed to be a resident only of the State of which he is a national; and
(d) if he is a national or both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a
resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources.
3. The term "permanent establishment" likewise encompasses:
(a) a building site, or construction, assembly or installation project or supervisory activities in connection therewith, but only if such site, project or activities last more than 9 months;
(b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged for such purpose, but only if activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods aggregating more than 183 days within any 12 month period.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e),
provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting in a Contracting State on behalf of an enterprise of the other Contracting State, and has, and habitually exercises, in that Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that Contracting State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
3. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic particularly include:
(a) profits from the rental on a bareboat basis of ships or aircraft; and
(b) profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise. Where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.
4. The provisions of paragraphs 1, 2 and 3 of this Article shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISES
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b) the same persons participate directly or indirectly in the management. Control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises. but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting state includes in the profits of an enterprise of that state and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned state if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the dividends. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to, or on loans guaranteed or insured by, the Government or a local authority, the Central Bank or any financial institution wholly owned by the Government of the other Contracting State shall be exempt from tax in the first-mentioned State.
4. The "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with Which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematography films, or films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2, shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.
3. Gains from the alienation of ships or aircraft operated in international traffic by an enterprise of a Contracting State, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Contracting State.
4. Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.
5. Gains from the alienation of any property, other than that referred to in paragraphs 1 to 4, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. lf the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal year concerned;
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State, may be taxed in that Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 15
DIRECTORS' FEES
Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 16
ARTISTES AND SPORTSMEN
1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.
3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the first-mentioned Contracting State or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.
ARTICLE 17
PENSIONS
1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, pensions paid and other similar payments made by the Government of a Contracting State or a local authority thereof under a public welfare scheme of the social security system of that State shall be taxable only in that State.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority, shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that state; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.
(b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.
ARTICLE 19
STUDENT, APPRENTICES AND BUSINESS TRAINEES
A student, or business apprentice who is present in a Contracting State solely for the purpose of the students or business apprentices education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the purposes of the students or business apprentices maintenance, education or training.
ARTICLE 20
OTHER INCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right of property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
ARTICLE 21
METHODS FOR ELIMINATION OF DOUBLE TAXATION
1. In Zambia, double taxation shall be eliminated as follows:
In Zambia, where a resident of Zambia derives income from China which may be taxed in China in accordance with the provisions of this Agreement, the amount of the tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
2. In China, in accordance with the provisions of the law of China, double taxation shall be eliminated as follows:
(a) Where a resident of China derives income from Zambia, the amount of tax on that income payable in Zambia in accordance with the provisions of this Agreement may be credited against the Chinese tax imposed on that resident. The amount of the credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China.
(b) Where the income derived from Zambia is dividend paid by a company which is a resident of Zambia to a company which is a resident of China and which owns not less than 10 per cent of the shares of the company paying the dividend, the credit shall take into account the tax paid to Zambia by the company paying the dividend in respect of its income.
ARTICLE 22
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
5. The provisions of the Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.
ARTICLE 23
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic lav, of those States, present his case to the competent authority of the Contracting State of which he is a resident or if his case comes under paragraph 1 of Article 22, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavor to resolve by mutual Agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of paragraphs 2 and 3. When it seems advisable for reaching an agreement, representatives of the competent authorities of the Contracting States may meet together for an oral exchange of opinions.
ARTICLE 24
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States or their local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (order public).
4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.
ARTICLE 25
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
ARTICLE 26
ENTRY INTO FORCE
This Agreement shall enter into force on the thirtieth day of the latter of the notification through which the Contracting States shall notify each other that the internal legal procedures for the entry into force of this Agreement have been complied with and its provisions shall have effect with respect to income derived during the taxable years beginning on or after the first day of January next following that in which this Agreement enters into force.
ARTICLE 27
TERMINATION
This Agreement shall continue in effect indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give written notice of termination to the other Contracting State through the diplomatic channels. In such event, this Agreement shall cease to have effect with respect to income derived during the taxable years beginning on or after the first day of January in the calendar year next following that in which the notice of termination is given
INCOME TAX (TAX CLEARANCE) (EXEMPTION) REGULATIONS, 2011
[Section 81B]
Arrangement of Regulations
Regulation
1. Title
2. Exemption of goods or services from production of tax clearance certificate
3. Exemption
SI 33 of 2011.
These Regulations may be cited as the Income Tax (Tax Clearance) (Exemption) Regulations.
2. Exemption of goods or services from production of tax clearance certificate
A tax clearance certificate shall not be required where goods or services of a value not exceeding 2,00,000 kwacha per transaction are supplied by any person or partnership.
Notwithstanding regulation 2, a tax clearance certificate shall not be required where agricultural products of a value not exceeding 10 million kwacha per transaction are supplied by any person or partnership.
INCOME TAX (CHINA-AFRICA DEVELOPMENT FUND) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 34 of 2011.
This Order may be cited as the Income Tax (China-Africa Development Fund) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule, China-Africa Development Fund is hereby approved for the purpose of exemption from tax.
The income of the organisation approved in paragraph 2 shall be exempt from tax pursuant to sub-paragraph (5) of paragraph 5 of Part III of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between China-Africa Development Fund and the Government of the Republic of Zambia dated 10th January, 2011 regarding the establishment of the regional representative office of China-Africa Development Fund.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign personnel
3. Exemption from tax
SI 35 of 2011.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.*
2. Approval of foreign personnel
With respect to the Agreement described in the Schedule, any income received by the expatriate staff of China-Africa Development Fund is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph 2 shall be exempt from tax pursuant to sub-paragraph (c) of paragraph 3 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the China-Africa Development Fund and the Government of the Republic of Zambia dated 10th January, 2011 regarding the establishment of the regional representative office of China-Africa Development Fund.
INCOME TAX (SECRETARIAT OF THE INTERNATIONAL CONFERENCE ON THE GREAT LAKES REGION CENTRE) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of foreign organisation
3. Exemption from tax
SI 66 of 2011.
This Order may be cited as the Tax (Secretariat of the International Conference on the Great Lakes Region Centre) (Approval and Exemption) Order.
2. Approval of foreign organisation
With respect to the Agreement described in the Schedule the Secretariat of the International Conference on the Great Lakes Region Centre is hereby approved for the purpose of exemption from tax.
The income of the organisation approved in paragraph 2, accruing under the Agreement described in the Schedule, shall be exempt from tax pursuant to sub-paragraph (5) of paragraph 5 of Part III of the Second Schedule to that Act.
[Paragraph 2]
AGREEMENT
The Memorandum of Understanding between the Secretariat of the International Conference on the Great Lakes Region Centre and the Government of the Republic of Zambia through the Ministry of Finance and National Planning, dated 24th March, 2011, regarding the establishment of the head office of the Secretariat of the International Conference on the Great Lakes Region Centre.
INCOME TAX (FOREIGN PERSONNEL) (APPROVAL AND EXEMPTION) ORDER
[Section 15]
Arrangement of Paragraphs
Paragraph
1. Title
2. Approval of personnel emoluments
3. Exemption from tax
SI 67 of 2011.
This Order may be cited as the Income Tax (Foreign Personnel) (Approval and Exemption) Order.*
2. Approval of personnel emoluments
With respect to the Agreement described in the Schedule, any income received by expatriate staff of the Secretariat of the International Conference on the Great Lakes Region, Zambia Head Office, is hereby approved for the purpose of exemption from tax.
The emoluments payable to any foreign employee temporarily employed in the Republic of Zambia by the organisation approved in paragraph 2 shall be exempted form tax pursuant to sub-paragraph (c) of paragraph 3 of Part II of the Second Schedule to the Act.
[Paragraph 2]
AGREEMENT
The Agreement between the Secretariat of the International Conference on the Great Lakes Region, and the Government of the Republic of Zambia through the Ministry of Finance and National Planning, dated 24th March, 2011, regarding the establishment of the head office of the Secretariat of the International Conference on the Great Lakes Region in the Republic of Zambia.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (REPUBLIC OF MAURITIUS) ORDER
[Section 76]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 105 of 2011.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Mauritius) Order.
It is hereby declared that the Agreement, the text of which is set out in the Schedule, being an Agreement relating to the relief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of Mauritius shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
Agreement between the government of the Republic of Zambia and the government of the Republic of Mauritius for the avoidance of Double Taxation and the prevention of fiscal evasion with respect to taxes on income.
The Government of the Republic of Zambia and the Government of the Republic of Mauritius.
Desiring to promote and strengthen the economic relations between the two countries through the avoidance of double taxation with respect to taxes on income, Have agreed as follows.
ARTICLE 1
PERSON COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income.
3. The existing taxes to which the Agreement shall apply are in particular:
(a) in Mauritius, the income tax; (hereinafter referred to as "Mauritius tax")
(b) in Zambia—
(i) the income Tax;
(ii) the mineral royalty; and
(iii) the personal levy (hereinafter referred to as "Zambian tax")
4. This Agreement shall apply also to any other taxes of a substantially similar character which are imposed by either Contracting State after the date of signature of this Agreement in addition to, or in place of, the existing taxes.
5. The competent authorities of the Contracting States shall notify each other of changes which have been made in their respective taxation laws, and if it seems desirable to amend any Article of this Agreement, without affecting the general principles thereof, the necessary amendments may be made by mutual consent by means of an Exchange of Notes.
ARTICLE 3
GENERAL DEFINITIONS
1. In this Agreement, unless the context otherwise requires:
(a) the term "Mauritius" means the Republic of Mauritius and includes:
(i) all the territories and island which, in accordance with the laws of Mauritius constitute the State of Mauritius;
(ii) the territorial sea of Mauritius; and
(iii) any area outside the territorial sea of Mauritius which in accordance with international law has been or may hereafter be designated, under the laws of Mauritius, as an area, including the Continental Shelf, within which the rights of Mauritius with respect to the sea, the sea bed and sub soil and their natural resources may be exercised;
(b) the term "Zambia": means the Republic of Zambia or any area within which Zambia, in accordance with international law, may exercise sovereign rights or jurisdiction;
(c) the terms "a Contracting State" and the other "Contracting State" means the Mauritius or Zambia, as the context requires;
(d) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;
(e) the term "competent authority" means
(i) in Mauritius, the Commissioner of Income Tax or his authorised representative; and
(ii) in Zambia, the Commissioner General of the Zambia Revenue Authority or his authorised representative;
(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" means respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(g) the term "international traffic" means any transport by a ship, aircraft or rail or road transport vehicle operated by an enterprise which has its place of effective management in a Contracting State, except when the ship, aircraft or rail or road transport vehicle is operated solely between places in the other Contracting State;
(h) the term "national" means any individual having the citizenship of a Contracting State any legal person, partnership (societe) or association deriving its status as such from the laws in force in a Contracting State;
(i) the term "person" includes an individual, a company, a trust and any other body of persons which is treated as an entity for tax purposes; and
(j) the term "tax" means Mauritius tax or Zambian tax, as the context requires.
2. As regard the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature and also includes that State and any local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then this status shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him. If he as a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interest cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he an habitual abode;
(c) if the individual has an habitual abode in both States or in neither of them, he shall be deemed to be a resident solely of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise if wholly or partly carried on.
2. The term "permanent establishment" shall include:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a warehouse, in relation to a person providing storage facilities for others;
(g) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and
(h) an installation or structure used for the exploration for natural resources.
3. The term "permanent establishment" likewise encompasses a building site or a construction, installation or assembly project, or supervisory activities in connection therewith only if the site, project or activity, lasts more than 9 months.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of proceeding by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise; and
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person acting in a Contracting State on behalf of an enterprise of the other Contracting State (Other than an agent of an independent status to whom paragraph 6 applies of this Article applies) notwithstanding that he has no fixed place of business in the first mentioned State shall be deemed to be a permanent establishment in that State if he has, and habitually exercises, a general authority in the first mentioned State to conclude contracts in the name of the enterprise, unless his activities are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
ARTICLE 6
INCOME FORM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable property, including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.
4. The provisions of paragraph 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
ARTICLE 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purpose of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, but this does not include any expenses which, under the law of that State would not be allowed to be deducted by an enterprise of that State.
4. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase of that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
INTERNATIONAL TRAFFIC
1. Profits of an enterprise from the operation or rental of ships, aircraft or rail or road transport vehicles in international traffic and rental of containers and related equipment which is incidental to the operation ships, aircraft, rail or road transport vehicles in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
2. If the place of effective management of a shipping enterprise is abroad a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat, or, if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident.
3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
ASSOCIATED ENTERPRISE
1. Where:
(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprise had been those which would have been made between independent enterprise, then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States if necessary consult each other.
ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 5 per cent of the gross amount of the dividend if the beneficial owner is a company which holds at least 25 per cent of the capital of the company paying the dividends; or
(b) 15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares or other rights, not being debt claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in the other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 13, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
ARTICLE 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the government of the other Contracting State or local authority thereof, the Central Bank of the other Contracting State, or any agency wholly owned by that Government or local authority shall be exempt from tax in the first mentioned Contracting State. The competent authorities of the Contracting States may determine by mutual agreement any other government institutions to which this paragraph may apply.
4. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article. The term "interest" shall not include any item which is treated as a dividend under the provisions of Article 10 of this Agreement.
5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 13, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then, such interest shall be deemed to arise in the State in which the permanent establishment is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or mode, computer programme, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 13, as the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties shall be deemed to arise in the State in which the permanent establishment is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
ARTICLE 13
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 14
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 15, 16, 17, 18 and 19 salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal year concerned, and
(b) the remuneration is paid by, or no behalf of an employer who is not a resident of the others State, and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or rail or road transport vehicle operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.
ARTICLE 15
DIRECTOR’S FEES
Director’s fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
ARTICLE 16
ENTERTAINERS AND ATHLETES
1. Notwithstanding the provisions of Articles 13 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 13, and 14, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3. Notwithstanding the provisions of paragraphs 1 and 2, income derived from activities, referred to in paragraph 1, performed under a cultural agreement or arrangement between Contracting States shall be exempt from tax in the Contracting State in which the activities are exercised if the visit to that State is wholly or substantially supported by funds of either Contracting State, a local authority or public institution thereof.
ARTICLE 17
PENSIONS AND ANNUITIES
1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration and annuities arising in a Contracting State and paid in consideration of past employment to a resident of the other Contracting State, shall be taxable only in that other State.
2. The term "annuity" means a stated sum payable periodically at stated time during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.
3. Notwithstanding the provisions of paragraph 1 pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a local authority thereof shall be taxable only in that State.
ARTICLE 18
GOVERNMENT SERVICE
1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a local authority or statutory body thereof to an individual in respect of services rendered to that State or subdivision or authority or body shall be taxable only in that State.
(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any person paid by, or out of funds created by, a Contracting State or a local authority or statutory body thereof to an individual in respect of services rendered to that State or authority or body shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a local authority or statutory body thereof.
ARTICLE 19
PROFESSORS AND TEACHERS
1. Notwithstanding the provisions of Article 14, a professor or teacher who makes a temporary visit to one of the Contracting States for a period not exceeding two years for the purpose of teaching or carrying out research at a university, college, school or other educational institution in that State and who is, or immediately before such visit was, a resident of the other Contracting State shall, in respect of remuneration for such teaching or research, be exempt from tax in the first mentioned State, provided that such remuneration is derived by him from outside that State.
2. The provisions of this Article shall not apply to income from research if such research is undertaken not in the public interest but wholly or mainly for the private benefit of a specific persons or person.
ARTICLE 20
STUDENT, APPRENTICES AND BUSINESS TRAINEES
A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first mentioned State on payments received from outside that first mentioned State for the purposes of the student’s maintenance, education or training.
ARTICLE 21
OTHER INCOME
1. Subject to the provisions of paragraph 2 of this Article, items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraphs 1 shall not apply to income if the receipt of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and a right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 13, as the case may be, shall apply.
ARTICLE 22
ELIMINATION OF DOUBLE TAXATION
Double Taxation shall be eliminated as follows:
1. In the case of Mauritius:
(a) Where a resident of Mauritius derives income from Zambia the amount of tax on that income payable in Zambia in accordance with the provisions of this Agreement may be credited against the Mauritius tax imposed on that resident.
(b) Where a company which is a resident of Zambia pays a dividend to a resident of Mauritius who controls, directly or indirectly, at least 5% of the capital of the company paying the dividend, the credit shall take into account (in addition to any Zambian tax for which credit may be allowed under the provisions of sub paragraph (a) of this paragraph) the Zambian tax payable by the first mentioned company in respect of the profits out of which such dividends is paid.
Provided that any credit allowed under sub paragraph (a) and (b) shall not exceed the Mauritius tax (as computed before allowing any such credit), which is appropriate to the profits or income derived from sources within Zambia.
2. In the case of Zambia:
(a) Where a resident of Zambia derives income from Mauritius which may be taxed in Mauritius in accordance with the provisions of the Agreement, the amount of the foreign tax payable in respect of that income shall be allowed as a credit against Zambian tax imposed on that resident. The amount of credit, however, shall not exceed that part of Zambian tax which is appropriate to that income.
3. For the purposes of allowance as a credit the tax payable in Mauritius or Zambian, as the context requires, shall be deemed to include the amount of tax which is otherwise payable in either of the two Contracting States but has been reduced or waived by either State in order to promote its economic development.
ARTICLE 23
NON-DISCRIMINATION
1. The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment with an enterprise of a Contracting State has in the other Contracting State not be less favourable levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.
3. Enterprises of Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first mentioned State are or may be subjected.
4. Nothing in this Article shall not be construed as obliging a Contracting State to grant to resident of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
5. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first mentioned State.
6. In this Article the term "taxation" means taxes which are subject of this Agreement.
ARTICLE 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting States, result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present a case to the competent authority of the Contracting State of which he is a resident or, if the case comes under paragraph 1 of Article 23, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.
ARTICLE 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by this Agreement in so far as the taxation there under is not contrary to the Agreement. The exchange of information is not restricted by Article 1. Any information so exchanged shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determine of appeals in relation to, the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at variance with the laws and the administrative practice of that or of the other Contracting State;
(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
ARTICLE 26
MEMBERS OF THE DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreement.
ARTICLE 27
ENTRY INTO FORCE
1. Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the entering into force of this Agreement. The Agreement shall enter into force on the date of receipt of the later of these notifications.
2. The provisions of the Agreement shall apply:
(a) in Mauritius, on income for any income year beginning on or after the first day of July next following the date upon which this Agreement enters into force; and
(b) in Zambia,
(i) with regard to other taxes withheld at source, in respect of amounts paid or credited on or after the first day of the second month next following the date upon which the Agreement enters into force.
(ii) with regard to other taxes, in respect of taxable years beginning on or after the first day of the second month next following the date upon which the Agreement enters into force.
ARTICLE 28
TERMINATION
1. This Agreement shall remain in force indefinitely but either of the Contracting States may terminate the Agreement through the diplomatic channels, by giving to the other Contracting State written notice of termination not later than 30 June of any calendar year starting five years after the year in which the Agreement entered into force.
2. In such even the Agreement shall cease to have effect:
(a) in Mauritius, on income for any income year beginning on or after the first day of July next following the calendar year in which such notice is given; and
(b) in Zambia:
(i) with regard to other taxes withheld at source, in respect of amounts paid or credited after the end of the calendar year in which such notice is given; and
(ii) with regard to other taxes, in respect of taxable years beginning after the end of the calendar year in which such notice is given.
INCOME TAX (DOUBLE TAXATION RELIEF) (TAXES ON INCOME) (REPUBLIC OF SEYCHELLES) ORDER
[Section 76]
Arrangement of Paragraphs
Paragraph
1. Title
2. Double taxation agreement
SI 106 of 2011.
This Order may be cited as the Income Tax (Double Taxation Relief) (Taxes on Income) (Republic of Seychelles) Order.
It is hereby declared that the Agreement, the text of which is set out in the Schedule to this Order, being an Agreement relating to the relief from double taxation on income made between the Government of the Republic of Zambia and the Government of the Republic of Seychelles shall have effect in Zambia in accordance with section 74 of the Act.
[Paragraph 2]
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA AND THE GOVERNMENT OF THE REPUBLIC OF SEYCHELLES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
PREAMBLE
The Government of the Republic of Zambia and the Government of the Republic of Seychelles desiring to promote and strengthen the economic relations between the two countries:
Have agreed as follows:
ARTICLE 1
PERSON COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State, political subdivision or of its local authorities irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income.
3. The existing taxes to which this Agreement shall apply are:
(a) in Zambia:
the Income Tax;
(hereinafter referred to as " the Seychelles tax")
(b) in Seychelles
(i) the Business Tax; and
(ii) the Petroleum Income Tax
(hereinafter referred to as "Seychelles tax")
4. This Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
(a) the term "Zambia" means the Republic of Zambia or any area within which Zambia, in accordance with International law, may exercise sovereign rights or jurisdiction.
(b) the term "Seychelles" means the territory of the Republic of Seychelles including its exclusive economic zone and continental shelf where Seychelles exercises sovereign rights and jurisdiction in conformity with the provisions of the United Nations Convention on the Law of the Sea;
(c) the terms "a Contracting State" and the other "Contracting State" means the Republic of Zambia or the Republic of Seychelles as the context requires;
(d) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;
(e) the term "competent authority" means
(i) in Zambia the Commissioner General of the Zambian Revenue Authority or his authorised representative;
(ii) in Seychelles, the Minister of Finance or his authorised representative
(f) the terms "enterprise" applies to the carrying on of any business;
(g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(h) the term "international traffic" means any transport by a ship, aircraft operated by an enterprise of a Contracting State, except when the ship, aircraft is operated solely between places in the other Contracting State;
(i) the term "national" means;
(ii) any individual possessing the nationality of a contracting state; and
(iii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;
(i) the term "person" includes an individual, a company and any other body of persons which is treated as an entity for tax purposes; and
(j) the term "business" includes the performance of professional services and of other activities of an independent character.
2. As regards the application of the provisions of the Agreement at any time by a Contracting State, any terms not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
ARTICLE 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of registration or any other criterion of a similar nature and also includes that State, political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources situated in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then this status shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him. If he as a permanent home available to him in both Contracting States, he shall be deemed to be a resident with which his personal and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interest cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which has an habitual abode;
(c) if the individual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.
ARTICLE 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise if wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction, exploitation or exploration of natural resources.
3. The term "permanent establishment" likewise encompasses:
(a) a building site or a construction, assembly or installation project or supervisory activity in connection with such site or activity, but only where such site, project or activity continues for a period of more than 183 day;
(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue for the same or a connected project within the Contracting State for a period or periods aggregating more than 183 days within any 12 month period.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of proceeding by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for enterprise, any other activity of a preparatory or auxiliary character; and
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting on behalf of an enterprise and has, and habitually exercises, in Contracting State an authority to conclude contracts in the name of the enterprises, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
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