NEGOTIATIONS OF NEW DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN MAURITIUS AND ZAMBIA
The Governments of Mauritius and Zambia have initiated negotiations for a new double taxation avoidance agreement (DTAA) following the termination of the current DTAA by Zambia by way of a notice of termination given to Mauritius in June 2020.
The current DTAA which has been in force since 15 June 2012 will cease to have effect on 31 December 2020 in Zambia and 1 July 2021 in Mauritius.
The current DTAA covers income from a number of specific sources and provides for a reduced rate of withholding tax on dividends (5% - where the beneficial owner holds at least 25% of the capital of the payor), interest (10%) and royalties (5%).
It is anticipated that the new DTAA will increase these rates and provide for anti-abuse provisions to prevent the benefits of the DTAA being used solely to avoid tax.
The negotiations of the new DTAA between Mauritius and Zambia offer an opportunity for both contracting states to modernise their current tax arrangements to reflect the current international standard and norms.