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International Tax Services
Doing business in Zambia
March 2013
Agenda
Page
1 Zambia at a glance 1
2 Zambia’s economic outlook 5
3 Government policies and budget 18
4 Key growth drivers 22
5 Tax and investment incentives 28
6 Practical considerations of investing in Zambia 37
7 South African investment into Zambia 40
8 Hot Topics 42
PwC
March 2013
Zambia at a glance
1
Section 1
Doing business in Zambia •
PwC
March 2013
Background on Zambia General Facts
• Population: 13.5 million (SA: 50.5m) (World Bank)
• Area: 752,614 square km SA: 1,219,912 km2
• Major languages: English (official, used for business), Nyanja, Bemba
• Centrally located with eight neighbouring countries
• Currency: Kwacha
This was rebased on 1 January 2013
1 000 Old Kwacha (ZMK) = 1 New Kwacha (ZMW)
1 ZAR: 0.58678 ZMW (rate utilised per Oanda.com, 12 March 2013)
2
Doing business in Zambia •
Section 1 – Zambia at a glance
REPUBLIC OF ZAMBIA
PwC
March 2013
Background on Zambia General Facts
• Capital city: Lusaka
• Other notable cities: Kitwe, Ndola, Kabwe, Chingola, Mufulira, Luanshya, Livingstone
Of these, most are in the Copperbelt province
• President Michael Chilufya Sata was elected in 2011
• Politically stable
3
Doing business in Zambia •
Section 1 – Zambia at a glance
President Michael Sata
(Source: Times of Zambia)
• Major trade agreements:
- Africa Growth Opportunity Act
- Southern African Development Community
- Common Market for Eastern and Southern Africa
(Source: Wikipedia)
PwC
March 2013
Background on Zambia Economic Facts
• Well endowed with minerals – much of them unexploited
− World’s 7 th largest producer of copper
− World’s 2 nd largest producer of cobalt
4
Doing business in Zambia •
Section 1 – Zambia at a glance
Nkana mine (Source: Wikipedia)
• Has seen a decade of strong growth, averaging 6.7% since 2008
• Has a track record of fiscal discipline with deficits averaging 3.1% of GDP between 2007 and 2011
• External debt ratios generally low and liquidity ratios high
• Inflation has been in single digits for the last 3 years
• No exchange controls over last 20 years
PwC
March 2013
Zambia’s economic outlook
5
Section 2
Doing business in Zambia •
Africa’s time …....
7 of the top 10 fastest growing economies between 2001 and 2010 were African countries and are forecast to be in top 10 fastest growing between 2011 and 2015.
Ghana Avg GDP growth
p.a. 2011 - 2015
Population
(m) 2010
7.0% 24.4
Nigeria Avg GDP growth
p.a. 2011 - 2015
Population
(m) 2010
6.8% 158.4
Congo Avg GDP growth
p.a. 2011 -2015
Population
(m) 2010
7.0% 4.3
Ethiopia Avg GDP growth
p.a. 2011 - 2015
Populatio
n (m) 2010
8.1% 82.7
Zambia Avg GDP growth
p.a. 2011 - 2015
Populatio
n (m) 2010
6.9% 12.9
Mozambique Avg GDP growth
p.a. 2011 - 2015
Populatio
n (m) 2010
7.7% 23.4
(Source: Economist, IMF, UN – Department of Economic and Social Affairs)
Avg GDP growth
p.a. 2011 - 2015
Populatio
n (m) 2010
7.2% 44.8
Tanzania
PwC
March 2013
Economic outlook
7
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
Bank Lending rates
• 2012 Interest rate 9% prime
• Bank lending rates down from 24% in 2011 to 16% in 2012/13
• SNDP average target of less than 20% for the period 2011 to 2015
• Bank lending rates capped at 18.25% in Jan 2013
Inflation
• 2012 Inflation was 7.3% 2013 Inflation projected to close at 6.5%
• SNDP average inflation targeted at less than 10% for the period 2011 to 2015
Other
Import cover
• Targeted at 4 months cover
Government borrowing
• To be limited to 1.5% of GDP
GDP
• 2012 GDP was 6.9% 2013 GDP projected to close at 7.1%
• SNDP average GDP growth target is over 6% for the period 2011 to 2015
• Fitch forecast GDP growth expected to be between 7.7% and 7.9% for 2013-2014
PwC
March 2013
GDP growth rates
-1
0
1
2
3
4
5
6
7
8
2008 2009 2010 2011 2012* 2013*
GD
P g
ro
wth
%
Zambia
Africa
Global
8
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
PwC
March 2013
Economic outlook
• Global demand for raw materials and commodities from the BRIC’s and other emerging economies on the increase after the 2008/9 Global Financial Crisis
• Copper production expected to grow from 890,000mt to 1.5m metric tonnes by 2015
• Significant increase also expected in the production of other minerals manganese, iron ore, coal, uranium, and gold
• Greater diversification – move away from copper dependency – to agriculture, energy, infrastructure and manufacturing
• More private sector participation through the PPP initiatives
• Significant increase in foreign direct investment (FDI)
• SNDP focus on mining, energy, agriculture & manufacturing sectors
9
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
PwC
March 2013
Economic outlook
• In July 2011 the World Bank classified Zambia as:
− one of the top 5 destinations for FDI in Sub-Saharan Africa; and
− Middle Income Country from an LDC
• In 2012, Forbes magazine placed Zambia as amongst Africa’s 5 best investment destinations
• Successful Eurobond issue of US $750m in 2012 – oversubscribed by 24 times
• Credit lending increased by 24% y-o-y in 2012
• Non performing loans (commercial) reduced from 16% in 2010 to 8.6% in 2012
• February 2013, Zambia achieved a B+ credit rating from Fitch
• Stable political and social environment
10
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
PwC
March 2013
Economic outlook Doing Business 2013
• The World Bank runs a survey each year called “Doing Business”. This survey ranks each of 185 countries in how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with all the relevant regulations.
• These rankings do not tell the whole story, but give an indication of whether the government has created a regulatory environment conductive to operating a business or not. (Ranking being 1 the best, to 185 being the worst of the countries analysed).
11
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
Zambia Mozambique SA
Ranking in 2013 94 146 39
Ranking in 2012 90 139 41
PwC
March 2013
Economic outlook Doing Business 2013
12
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
Topic Rankings Zambia
2013
Mozambique
2013
SA
2013
Starting a business 74 96 53
Dealing with construction permits 151 135 39
Getting electricity 151 174 150
Registering property 96 155 79
Getting credit 12 129 1
Protecting investors 82 49 10
Paying taxes 47 105 32
Trading across borders 156 134 115
Enforcing contracts 89 132 82
Resolving insolvency and
employing workers
99 147 84
TOTAL RANKING 94 146 39
PwC
March 2013
Economic outlook Doing Business 2013
13
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
World Bank. 2013. Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises. Washington, DC: World Bank Group. DOI: 10.1596/978-0-8213-9615-5. License: Creative Commons Attribution CC BY 3.0
PwC
March 2013
FDI Flows into Zambia
14
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
Investing in Zambia Source: World Investment Report 2012
616
1324
939
695
1729
1982
0
500
1000
1500
2000
2500
2006 2007 2008 2009 2010 2011
US $ (million)
PPP
PwC
March 2013
FDI trend breakdown
15
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
2010 FDI flow by sector
Agriculture
Mining
manufacturing
Wholesale and retail trade
Tourism
Transport &Communication
Construction
Real Estates
Bank and Non Bank Fin Insts
Financial & Insurance
Accomodation & Food
Other
PwC
March 2013
FDI trends in Zambia Sector analysis
16
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
Sector Number of projects (2007-2012)
Manufacturing 403
Service 129
Tourism 119
Agriculture 108
Mining 97
Construction 93
Transport 81
Real Estate 80
Health 24
ICT 23
Energy 14
Education 11
Finance 07
PwC
March 2013
FDI Flows Distribution of flows among African Economies
17
Doing business in Zambia •
Section 2 – Zambia’s economic outlook
Source: United Nations Conference on Trade And Development: World Investment Report 2012. http://unctad.org/en/PublicationsLibrary/wir2012_embargoed_en.pdf
Regional trends: Africa • Zambia ranks in the second tier of
inflow FDI measured of between $2 to $2.9 billion.
PwC
March 2013
Government policies and budget
18
Section 3
Doing business in Zambia •
PwC
March 2013
Government focus
2012 Election pledge –
“To make Zambia a better place for all”
- To achieve a more equitable distribution of wealth derived from mineral resources
- To put more money in peoples pockets
2013 Budget
“Delivering Inclusive development and social justice”
- Employment creation
- Reduce the cost of doing business
- Improve infrastructure
- Diversification strategy
- Improve transparency, reduce corruption
19
Doing business in Zambia •
Section 3 – Government policies and budget
PwC
March 2013
20
Doing business in Zambia •
Section 3 – Government policies and budget
2013 budget Key measures
Creation of 200,000 jobs
Improve road, rail and energy infrastructure - 91% of the proceeds from US $750M Eurobond issue to be allocated to this
Launching the Link Zambia 8000 project
Farmer input support program extended to crops other than maize
Zambia to co-host 2013 UN World Tourism Organisation Conference
PwC
March 2013
21
Doing business in Zambia •
Section 3 – Government policies and budget
Key measures 2012 and 2013
• Increased mineral royalty rate from 3% to 6%
• Increase in minimum wages by 67%
• Financial measures
reduction in statutory liquid ratios
SI 33 all domestic transactions in Kwacha
introduction of a policy rate to provide reference rate followed by interest rate caps for commercial banks to reduce cost of borrowing
January 2013 –rebasing of Kwacha
Increase Tier 1 capital requirements for foreign banks from US $10m to US $100m
PwC
March 2013
Key growth drivers
22
Section 4
Doing business in Zambia •
PwC
March 2013
Key growth drivers
Mining and quarrying
Copper production in 2011 was 816,000mt (amount achieved in the early 1970’s – 720,000mt) 2012 estimated at 890,000mt
Sector will continue to be the major contributor to Zambia’s economic growth
23
Doing business in Zambia •
Section 4 – Key growth drivers
Focus will be on:
increased exploration projects
sustainable production and management of mineral resources
increased productivity and better Govt. control over operations of MNC’s
focus on other ores; manganese, iron ore, uranium, nickel, coal, gold
value-add in country key priority
PwC
March 2013
Key growth drivers
Energy
GRZ has lined up a number of programs to foster growth in this sector, including:
Rural Electrification
Development of Strategic Petroleum Reserves
Renewable and Alternative Energy Development
Building of new 1600MW hydro
Thermal power coming on stream – investment of US $1.4bn
Exploration permits granted for oil prospecting
24
Doing business in Zambia •
Section 4 – Key growth drivers
PwC
March 2013
Key growth drivers
• Favourable tax regime –corporate tax rate of 10%, additional allowances (farm improvement and farm works allowances of 100%), ZDA incentives
• Significant activity in terms of commercial developments in tobacco, cotton, wheat, maize, soya beans, fisheries and poultry
• Zambia has the highest underground water content of any country in Sub Saharan Africa
25
Doing business in Zambia •
Section 4 – Key growth drivers
Agriculture & Livestock
• GRZ’s strategic programs to include:
Irrigation Development sub program
Farm Block Development
Fisheries and livestock development (restocking of livestock in other parts of the country)
Better support to small scale famers through various programmes from cooperating partners
Source: Zambia Weekly Week 7, Volume 4, Issue 6, 15 February
PwC
March 2013
Key growth drivers
26
Doing business in Zambia •
Section 4 – Key growth drivers
Manufacturing and construction
• Key objectives include:
expansion of industrial base
increase in value addition
facilitation of private sector development
• Growth in this sector will be driven mainly by the creation of Multi Facility Economic Zones (“MFEZ”) and Industrial Parks
• Operational MFEZ areas include:
Lusaka East – light industries
Lumwana – light and heavy industries
Chambeshi – light and heavy industries (developer - China Non Ferrous Metals)
Lusaka South – under PPP framework
Sub-Saharan Gemstone Exchange Industrial Park, Ndola
Roma Industrial Park
PwC
March 2013
Projects per sector
27
Doing business in Zambia •
Section 4 – Key growth drivers
Sector Companies investing or exploring investment
Mining • Kalimbila Mine (copper) – Trident, New Sentinnel and Reginald
• Mulyashi Mine (copper) – CNMC • Barricks Chimiwungo pit • Exploration – VALE, Anglo Exploration, Rio Tinto, African
Rainbow.
Energy Energy development and distribution projects: • Itezhi Tezhi project • Kafue Gorge Lower power station • North Bank power station
Agriculture • Alliance One • JTI • Zambia Tobacco Leaf • Cargill • Dunavants • Mpongwe • Zambia Sugar
PwC
March 2013
Tax and investment incentives
28
Section 5
Doing business in Zambia •
PwC
March 2013
Tax regime -general
29
Doing business in Zambia •
Section 5 – Tax and investment incentives
* With the exception of minerals, electricity, services and cotton lint exported without an export permit from Minister of Commerce. ** Subject to application of a tax treaty.
General tax rates Rate (2013)
Corporate tax rate 35%
Telecommunication companies • income less than ZMK 250,000, apx. US$ 50,000 • income exceeds ZMW 250,000
35% 40%
Listings New listings on LuSE * New listings on LuSE > 33% shares taken up by Zambians *
2% discount 7% discount
Withholding tax ** • Dividends • Interest payments • Royalties • Management fees
15% 15% 20% 20%
Carry forward of Trading losses • Non-mining companies • Hydro and thermo power generation companies
5 years 10 years
PwC
March 2013
Zambian tax Specific tax rates for Mining
30
Doing business in Zambia •
Section 5 – Tax and investment incentives
Mining companies Rate (2013)
Corporate rate 30%
Variable profit tax (applicable when taxable income from mining operations exceeds 8% of the gross sales)
Up to 15%
Withholding tax * • Dividends • Interest payments • Royalties • Management fees
0% 15% 20% 20%
Mineral royalty 6%
Property Transfer Tax (transfer of mineral rights) 10%
Carry forward of trading losses • Konkola Copper Mines Plc • From mining operations • Prospecting and exploration companies
20 years 10 years 5 years
* Subject to application of a tax treaty.
PwC
March 2013
Zambian tax Specific tax rates for Farming
31
Doing business in Zambia •
Section 5 – Tax and investment incentives
Farming business Rate (2013)
Corporate rate 10%
Export of non-traditional products 15%
Capital deduction • Farming improvement / Farm Works allowance
100%
Implements, machinery and plant: • Used for farming, manufacturing, tourism and leasing • Carry forward of Trading tax losses
50% 5 years
PwC
March 2013
Investment incentives ZDA incentives – Fiscal incentives
32
Doing business in Zambia •
Section 5 – Tax and investment incentives
Zambia Development Agency (ZDA)
The ZDA offers fiscal and non-fiscal incentives to investors that invest at least US$500,000 in a priority sector/product
Fiscal incentives
• 0% tax rate on dividends for the first 5 years
• 0% tax on profits for the first 5 years
• For years 6 to 8, only 50% of profits are taxable
• Years 9 & 10, only 75 % of profits are taxable
• 0% customs duty rate on raw materials, capital goods, machinery
• Deferment of import VAT on imported machinery and equipment including trucks and specialised motor vehicles
• Priority sectors include: horticulture, food processing, manufacturing of engineering products involving metals, processing beverages.
PwC
March 2013
Investment incentives ZDA incentives – Non fiscal incentives
33
Doing business in Zambia •
Section 5 – Tax and investment incentives
Non fiscal incentives
• Investors, who invest at least US $ 250,000, are entitled to an Investor Permit and up to 5 employment permits for expatriates
Free facilitation/ assistance with the following:
• Land acquisition
• Obtaining facilities and amenities required for their investment e.g. water, electric power, communication services
• Regularizing immigration status
• Acquiring other licenses required to operate the business
• Access to any care assistance
PwC
March 2013
Countries with a DTA with Zambia:
DTA’s with Zambia
Section 5 – Tax and investment incentives
34
Doing business in Zambia •
• Canada
• China
• Denmark
• Finland
• France
• Germany
• India
• Ireland
• Italy
• Japan
• Kenya
• Mauritius
• Netherlands
• Norway
• South Africa
• Sweden
• Switzerland
• Tanzania
• Uganda
• United Kingdom
PwC
March 2013
Zambian tax treaty network in Africa
Section 5 – Tax and investment incentives
35
Doing business in Zambia •
5 DTA in force
Summary
Without DTA
Zambia
Libreville
Kananga
Ndola
Nacala
Dar es Salaam
Zanzibar
Mombasa
Beira
Kalemie
Antananarivo
Maputo
Lusaka
Bulawayo
Harare
Gaborone
Johannesburg
Durban
Port Elizabeth
Maseru
Mbabane
Cape Town
Luderitz
Walvis Bay
Windhoek
Namibe
Menongue
Lobito
Malanje
Lilongwe
Mbeya
Lake Tanganyika
Luanda
Kinshasa
Brazzaville
Pointe-Noire
Toliara
Pretoria
Agadez
Zinder
Faya-Largeau
N' Djamena Maiduguri
Kano
Abuja
Khartoum
Al Fashir
Asmara
Addis
Ababa
Port Sudan
Malabo
Yaounde
Bangui
Djibouti
Berbera
Mogadishu
Kisangani
Bujumbura
Nairobi
Kampala
Kigali
Bechar
Tripoli
Al Jawf
Oran
Algiers Tunis
Cairo
Aswan
Constantine Rabat
Marrakech
Casablanca
Laâyoune
Tombouctou Nema
Nouakchott
Tamanrasset
Niamey Bamako
Alexandria
Banghazi
Abidjan
Accra
Loma
Porto-Novo
Ouagadougou
Lagos
Dakar
Monrovia
Freetown
Banjul
Conakry
Bissau
TANZANIA
BURUNDI
EQUATORIAL GUINEA
ANGOLA
REPUBLIC
OF THE
CONGO
MALAWI
ZAMBIA MOZAMBIQUE
MADAGASCAR
ZIMBABWE
BOTSWANA
SWAZILAND
LESOTHO
SOUTH AFRICA
NAMIBIA
ANGOLA
NIGER
CHAD
SUDAN
ETHIOPIA
DJIBOUTI
ERITREA
UGANDA
SOMALIA
KENYA
DEMOCRATIC
REPUBLIC
OF THE CONGO
(ZAIRE)
CENTRAL
AFRICAN
REPUBLIC
RWANDA GABON
NIGERIA
CAMEROON
TUNISIA
MOROCCO
WESTERN SAHARA
ALGERIA
MALI
LIBYA EGYPT
BENIN
TOGO CÔTE
D’IVOIRE
BURKINA FASO GUINEA
SENEGAL
GHANA
LIBERIA
MAURITANIA
SIERRA LEONE
THE GAMBIA
GUINEA BISSAU
Lake
Nyasa
Lake
Victoria
Mediterranean Sea
Red Sea
Indian Ocean
Indian Ocean
Atlantic Ocean
SOUTH
SUDAN
MAURITIUS
Port
Louis
Juba
Wau
COMORES
MAYOTTE
CAPE VERDE
Common points of entry into the
African continent
PwC
March 2013
Double Tax Agreements
36
Doing business in Zambia •
Section 5 – Tax and investment incentives
Recipient Dividend WHT
Interest WHT
Royalty WHT
Management & consultancy
fees WHT
Mauritius 5/15 % 10% 5% 0%
South Africa 15% 15% 20% 20%
South Africa:
• The SA – Zambia treaty entered into force on 1 April 1953
• Treaty terms can be unclear and do not always provide relief
• Relief may be available for interest and royalties paid
Mauritius:
• The Mauritius – Zambia treaty entered into force on 4 June 2012
• Management & consultancy fee of 0% is dependent on the interpretation of the treaty terms
PwC
March 2013
Practical considerations of investing in Zambia
37
Section 6
Doing business in Zambia •
PwC
March 2013
Practical considerations of investing
Registering a Business
• Business entities in Zambia must be registered / established in line with the requirements of the Companies Act 1994, as amended
• Generally most businesses register and operate through either:
A private company limited by shares; or
A branch of a foreign company
• Consider:
Minimum share capital
Director’s residence
38
Doing business in Zambia •
Section 6 – Practical considerations of investing in Zambia
PwC
March 2013
Registering a business in Zambia
Other considerations
Other registrations:
Before beginning to trade, the entity will be required to register with the Zambia Revenue Authority (ZRA) to obtain:
• Tax Payer Identification Number (TPIN); Company income tax number; VAT and PAYE
Registration also required with the National Pension Scheme Authority and the Workers Compensation Fund Control Board
Immigration:
An individual entering Zambia for business purposes would also require the correct permit
Opening a Business Account:
This can be a complex process with detailed information requirements
39
Doing business in Zambia •
Section 6 – Practical considerations of investing in Zambia
PwC
March 2013
South African investment into Zambia
40
Section 7
Doing business in Zambia •
PwC
March 2013
Considerations for SA investment into Zambia Tax considerations
• Tax residency / effective management
• High tax CFC’s exempt
• Permanent Establishment
• Controlled Foreign Company (CFC) legislation
• Generally HTE or FBE exempt
• Foreign dividends
• Section 10B – exempt or 15%
• Treaty exemption on interest - SARS ruling Nov 2012
• Tax credits
• Rebate or deduction
• Via Headquarter Company or Mauritius
41
Doing business in Zambia •
Section 7 – South African investment into Zambia
Investment
PwC
March 2013
Hot Topics
42
Section 8
Doing business in Zambia •
PwC
March 2013
Recent - Current issues
• Approach to policy making under new administration is less clear and appears to be haphazard and abrupt
• February 2013 – Bank of Zambia Bill – Introduction of Foreign exchange Controls?
• Proposed Amendments to Companies Act could –
- Lead to restrictions in foreign owned firms
- Curb their right to borrow funds locally
• ZRA under pressure to increase collections
• Recent spate of reports on multinational tax planning exercise have an impact
• Development of a transfer pricing unit
• Assistance from Norway and UK with tax audits and investigations
43
Doing business in Zambia •
Section 8 – Hot Topics
PwC
March 2013
Bank of Zambia Bill Risk of introduction of foreign exchange controls
• Risk of foreign exchange controls being introduced
• Bill introduced in February 2013, indicating:
• The Bank of Zambia will regulate and monitor operation of foreign exchange system. Including:
• Foreign exchange inflows and outflows
• Imports and exports of goods
• International transactions and services
• International transfers to and from non-residents
• Profits or dividends received in respect of investments abroad
• Borrowing and trade credit for non-residents
• Investment of equity and debt securities from abroad
• Receipt of principal and interest on loans to non-residents
• International money transfers into and out of Zambia
44
Doing business in Zambia •
Section 8 – Hot Topics
PwC
March 2013
Bank of Zambia Bill
• The Bank will also prescribe the maximum rate of interest and other charges that financial service providers may impose on banking transactions
• Penalties of about 540,000,000 Kwacha (USD about 10,8 million) / imprisonment
45
Doing business in Zambia •
Section 8 – Hot Topics
PwC
March 2013
Statutory Instruments SI 33 and 78
Restriction on use of foreign currency
• A company or individual cannot quote, demand, pay or receive foreign currency as legal tender for a domestic transaction
• Cannot engage in any pricing mechanism to avoid this or hedge against a foreign currency
• Domestic transaction definition:
46
Doing business in Zambia •
Section 8 – Hot Topics
Buying or selling offering to buy or sell goods or services between persons within the Republic
PwC
March 2013
Challenges
• Legislation outdated – not consolidated since 1990’s
• Generic and does not cater for modern day business – therefore need to exercise much judgement and discretion
• Commissioner General has significant discretionary powers
• Only government printers allowed to distribute legislation
• Difficult to obtain copies of old amendments and SIs
• Need to approach Ministry of Legal Affairs and Justice to determine intent of certain provisions
• Self assessment system – but no statutory limit for confirmation of assessment – creates uncertainty
• Lack of resources at ZRA
• No provisions for specific advanced clearings
• Advanced clearings not always binding
47
Doing business in Zambia •
Section 8 – Hot Topics
PwC
March 2013
Importance of tax compliance and social impressions Companies in the media
48
Doing business in Zambia •
Section 8 – Hot Topics
Tax avoidance
• Recent companies in the news for tax avoidance have included Google, Amazon and Starbucks. This has resulted in global publicity when looking at multi-national organisations in the light of tax evasion.
• Companies have been tried in the media
• Large amounts of money involved
• Tax structuring and planning versus tax avoidance. Tax structuring called into question, especially where there is no substance behind the transactions taking place.
• Tax treaties may, in practice, be stretched by local jurisdictions in order to prevent low tax concessions. (E.g. the definition of “royalties”.)
• A UK organisation called ActionAid is leading a protest against “legalised” tax avoidance methods that international companies are using through structuring, utilisation of tax treaties and tax haven jurisdictions.
PwC
March 2013
Importance of tax and social input Zambian tax news
49
Doing business in Zambia •
Section 8 – Hot Topics
PwC
March 2013
Doing Business in Zambia
50
Doing business in Zambia •
Section 8 – Hot Topics
Questions &
Answers ?
Jyoti Mistry Partner – Tax Services T: +260 (211) 256471/2 Ext 4023 M: +260 977 740641 E: [email protected]
Elandre Brandt Partner – International Taxation T: +27 11 797 5822 M: +27 83 326 7933 E: [email protected]
Key Contacts
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