The new income tax treaty between Norway and Zambia was signed on 17 December 2015. Once in force and effective, the treaty will replace the 1971 income tax treaty between the two countries, which currently applies.
The treaty covers Norwegian national tax on income, county municipal tax on income, municipal tax on income, and national tax on remuneration to non-resident artistes. It covers Zambian income tax.
If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement based on its place of effective management, place of incorporation and any other relevant factors. If no agreement is reached, any relief or exemption from tax provided by the treaty will not apply unless agreed upon by the competent authorities.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or a connected project for a period or periods aggregating more than 183 days within any 12-month period.
The beneficial provisions of Articles 10 (Dividends), 11 (Interest) and 12 (Royalties) will not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims or other rights in respect of which the dividends, interest or royalties are paid was to take advantage of those Articles by means of that creation or assignment. The limitation is included in each of those Articles.
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 apply the credit method for the elimination of double taxation.
The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.
The 1971 income tax treaty between the two countries will terminate and cease to have effect from the date the new treaty is effective.
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