Taxpayer, a company did a job in Zimbabwe for which they invoiced the Zimbabwean company, then they got issued with a withholding tax certificate and the balance paid. According to Section 80 of the Zimbabwean income tax Act they are complied to do I woul
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Paragraph 2 of Article XII, of the RSA / Zambia treaty, reads as follows:
Where Federal tax is payable in respect of profits derived from sources within the Federation by a person ordinarily resident in the Union, the Union shall either impose no tax on such profits or, subject to such provisions (which shall not affect the general principle hereof) as may be enacted in the Union, shall allow the Federal tax as a credit against any Union tax payable in respect of such profits.
In terms of paragraph 1(g) of Article II, a “company shall be regarded as ordinarily resident in the Union if its business is managed and controlled in the Union”.
It is general practice that it is the country of residence of the taxpayer that must grant relief for the tax paid in the other country. This the RSA does in section 6quat. It doesn’t involve the refund of the foreign tax paid. The credit, or foreign tax rebate, merely reduces the RSA tax liability. It is claimed on the ITR14 and the taxpayer gets it on assessment.