Emerging Markets Rates and Currencies Handbook

219 Citi | Emerging Markets Currencies Handbook 2021 Zambia Subsidiary Funding — Tax Consideration Tax Summary — Zambia Item Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equity W/H Tax 20% WHT • Under certain tax treaties may be reduced 20% WHT Under certain tax treaties may be reduced 15% WHT 2020 Budget: WHT Exemption on interest payable to local FIs licensed under the Banking and Financial Services Act, 2017. 20% Offshore 15% Local 20% WHT on dividends to residents • Under certain tax treaties may be reduced 15% WHT on dividends to residents Deductibility of interests Generally deductible, if loan is for business purposes (or production of another source of income) Thin cap rules: Deductibility of interest is limited to 30% EBITDA. Exceptions: businesses on turnover tax system and FI’s under the Banking & Financial Services Act. Any unrelieved interest may be carried forward (up to 5 years) for deduction if total interest deducted <= 30% of the EBITDA for the year Transfer pricing rules apply (i.e. arms length rule) N/A N/A Deductibility of FX losses FX losses are only deductible if they are revenue in nature and realised • Exception: FX losses of capital nature on borrowings for construction of industrial/commercial building are deductible N/A FX losses are only deductible if they are revenue in nature and realised • Exception: FX losses of capital nature on borrowings for construction of industrial/commercial building are deductible Other taxes, duties N/A N/A N/A N/A N/A Comments N/A N/A N/A N/A N/A Note: Citigroup Inc. and any of its affiliates do not provide accounting, tax, or legal advice. Please seek advice from a relevant licensed advisor. Source: Relevant legislation, publicly available sources.