On the 14 December 2015, Solwezi Municipal Council passed a resolution to “enhance service provision to communities affected by mining activities”. This resolution followed a proposal to invest property rates collected by the council from mining companies within mining host communities.
It is against this backdrop that YAD working with Publish What You Pay Zambia (PWYPZ), decided to initiate the development of this briefing paper, which gives a contextual analysis and provides guidelines for the implementation and realization of the resolution passed by Solwezi Municipal Council.
Double taxation arises when two or more tax jurisdictions overlap, such that the same item of income or profit is subject to tax in each. Double Taxation Agreements were therefore instituted as an international tax instrument for avoiding double taxation of the same income or capital to the same taxpayer in the same period in two jurisdictions and promoting international tax compliance and information sharing. However, in recent years, there has been increasing global debate regarding the effectiveness of double taxation agreements.
This policy brief provides an overview of DTAs within the international taxation framework with a particular focus on those signed by Zimbabwe and partner countries. It therefore interrogates the implications of DTAs on social and economic rights of citizens of Zimbabwe in particular and developing countries in general as well as key recommendations for Zimbabwe.
Countries rich in oil, gas and minerals often fail to secure a fair share of their natural resource wealth. Revenue loss from the extractive sector is particularly significant given the large
number of countries that depend on natural resource revenues for a substantial portion of their annual budgets. Companies employ a wide range of strategies to minimize their payments to
governments. Their efforts to avoid tax are facilitated by weak institutions, inadequate policies and regulations, badly negotiated contracts, and insufficient government monitoring and auditing.
This report, by PWYP Canada, responds to a persistent question: is my government receiving its fair share of revenues from extractive sector projects? While no single report can specify what constitutes a fair share for every resource project, by identifying and illustrating the common pathways to government revenue loss in the extractive sector, this report will help stakeholders pinpoint mechanisms and policies that can safeguard critical revenues.
Cross border taxation methods and reverse tax credit
This report introduces the reader to a much-neglected area of international taxation, tax credits, and shows how a more active utilization of tax credits and one of its accompanying features, withholding tax, can fix some of the issues we have with multinational companies not paying taxes.
In addition, the report shows how by reversing the principles of tax credits and applying them unilaterally to cross-border transactions on the cost side, one is able to effectively negate the negative effects of multinational companies not paying taxes.
An application of reverse tax credits on cross-border transactions can effectively restore the taxation of multinational companies to where it does not matter whether the companies use low- or no-tax jurisdictions anymore.
This report is thus about increasing the international tax toolbox, and reversing the situation where countries feel they have to participate in the downward spiral of tax competition. It shows that by tweaking international tax mechanisms, it is possible to unilaterally fix the tax situation of many multinational companies.
Reverse Tax Credit is for application with subsidiaries in a country with cross-border cost transactions, while a more active application of withholding tax and tax credits works wonders with cross-border transactions without active representation in the country.