The Minister of Finance, Honourable Alexander B. Chikwanda,
presented the Zambian 2014 National Budget on Friday 11 October
2013. Here we outline the some of the key international tax
changes.
Introduction of a 15% withholding tax on branch profits
repatriation
Previously, profit distributions by Zambian branches of foreign
companies were not subject to withholding tax. The 2014 budget
proposes to introduce a 15% withholding tax on profit distributions
by Zambian branches to their foreign head offices. It is
expected that the imposition of withholding tax may take effect as
early as 1 January 2014, we await further clarification on the
timing.
The introduction of the withholding tax on branch profit
repatriation aims to equalise the tax treatment between branches
and subsidiaries. The statutory rate of dividend withholding
tax is 15%. In the case of a company, the dividend withholding tax
may be reduced under the relevant double tax agreement.
However, for
