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Zambia-Mauritius tax treaty provides new alternatives for investing into Zambia
 

Zambia-Mauritius tax treaty provides new alternatives for investing into Zambia

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Zambia has entered into a tax treaty with Mauritius, opening up alternative investment structuring opportunities. If a company holds its Zambian investment through Mauritius, the treaty — combined ...

Zambia has entered into a tax treaty with Mauritius, opening up alternative investment structuring opportunities. If a company holds its Zambian investment through Mauritius, the treaty — combined with the attractive holding-company regime in Mauritius — might bring down the tax bill. Find out more.

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    Zambia-Mauritius tax treaty provides new alternatives for investing into Zambia Zambia-Mauritius tax treaty provides new alternatives for investing into Zambia Document Transcript

    • African Tax Newsalert Zambia-Mauritius tax treaty provides new alternatives for investing into Zambia February 25, 2013 In brief The tax treaty between Zambia and Mauritius, which entered into force on June 4, 2012, will provide alternative investment structuring opportunities to US multinationals with planned or existing investments in Zambia. When a US company holds its Zambian investment through Mauritius, the treaty — combined with the attractive Mauritius holding company regime — may reduce the cost of doing business in Zambia. In detail royalties - 5% Zambia levies withholding tax on dividends and interest at a general rate of 15%. The withholding tax rate on management fees and royalties to non-residents without a permanent establishment in Zambia is 20%. management fees - 0% However, the treaty with Mauritius reduces the withholding tax to the following rates: dividends - 5% (if investing company has at least 25% interest) interest - 10% If a Mauritian company that holds a Zambian investment also holds a Mauritian Category 1 Global Business Company (GBC1) license, it will qualify for preferential tax treatment under Mauritian domestic tax laws. The preferences include: income taxed at an effective rate of 0% t0 3% no withholding tax on dividends, interest, and royalties paid to nonresidents. The treaty applies to amounts paid on or after August 1, 2012, and with respect to tax years beginning on or after August 1, 2012. The takeaway Because taxpayers may qualify for reduced withholding tax rates without being subject to an additional layer of Mauritian tax, US multinationals with planned or existing investments in Zambia may wish to consider holding those investments through a Mauritian entity. www.pwc.com
    • African Tax Newsalert Let’s talk For a deeper discussion, please contact: International Tax Services, United States Norman Mekgoe +1 646 471 7761 norman.x.mekgoe@us.pwc.com Gilles de Vignemont +1 646 471 1301 gilles.j.de.vignemont@us.pwc.com International Tax Services, Zambia Jyoti Mistry +260 (211) 256471/2 jyoti.mistry@zm.pwc.com International Tax Services, Mauritius Anthony Leung Shing +230 404 5000 anthony.leung.shing@mu.pwc.com © 2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers (a Delaware limited liability partnership), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. SOLICITATION This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 2 pwc