According to recent reports, the income tax treaty between Botswana and Zambia entered into force on 14 August 2015. The treaty, signed 9 March 2013, is the first of its kind between the two countries.
The treaty covers Botswana income tax including taxation of capital gains, and Zambian income tax.
The treaty includes the provision that a permanent establishment will be deemed constituted if an enterprise furnishes services within a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries generally apply the credit method for the elimination of double taxation. A provision is also included for a tax sparing credit for tax that is exempted or reduced in accordance with the laws that establish schemes for the promotion of economic development in Botswana or Zambia, as the case may be, provided that such schemes have been mutually agreed by the competent authorities of the Contracting States as qualifying for the purpose of the provision.
The treaty applies with respect to withholding taxes from 1 October 2015, and for other taxes from 1 July 2016 in Botswana and 1 April 2016 in Zambia.
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