Emerging Markets Rates and Currencies Handbook

outside the country, proof of payment must be readily available upon request from the Central Bank. Trade Flows For amounts greater than USD5,000 being remitted outside the country, proof of payment must be readily available upon request from the Central Bank. Capital Flow and FDI No restrictions. Additional Comments Over the last few years, FX illiquidity has been a recurring challenge in the country. Since June 2020, mining entities are required to pay all taxes in USD (previously paid in LCY) directly to the Central Bank. This has generally concentrated supply of USD with the Central Bank who support the FX market during episodes of tight USD liquidity conditions. Citibank Zambia Limited Stand No. 4646 Addis Abba Roundabout, P.O. Box 30037, Lusaka, Zambia FX Sales Contact: +2602 1144 4400 Tax Summary – Zambia Zambia W/H Tax • 20% WHT • Under certain tax treaties may be reduced • 15% WHT • WHT Exemption on interest payable to local FIs licensed under the Banking and Financial Services Act, 2017 , approved pension schemes and individuals. • 20% Offshore • 15% Local • 20%WHT on dividends to non-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 • 16% VAT on GRA-related revenues • N/A • 16% VAT on GRA-related revenues • 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 Country Deductibility and Considerations Inter-Co Debt Offshore Local Borrowing Derivatives Equities Bank Loans Offshore