Income Tax (Transfer Pricing) Regulations, 2000

1. These Regulations may be cited as the Income Tax (Transfer Title · Pricing) Regulations, 2000.

2. In these Regulations, unless the context otherwise requires­ "Appeals Regulations" means the Revenue Appeals Tribunal Regulations, 1998; and "unit trust" has the meaning assigned to it by sectionseventy­ two of the Securities Ac,t.

3. ( 1) In subsection (3) of section ninety-seven C ,and in this regulation, any reference to an arn\{1gement or agreement includes a reference- · · r ' I I ( a) to a transaction. en understanding and mutuaJ-practice; and . . (b) to an arrangement or agreement whether o_r not it is, or is intended to be, legally enforceable. (2) For the purposes of subsection (3) of section ninety-seven C, a series of arrangements shall not be prevented from being regarded as a series of arrangements by means of which conditions have been made or imposed asbetween any two persons by reason of either or both of the following matters: Interpreta­ tion S.l. No. 143 of 1998 Cap. 354 Provisions supplemen­ tary to section 97C (3) ( a) that there is no .arrapgement in the series to which both · · those persoi1s are parties; and ( b) that there is one or more artarigements in the series to which neither of those persons is a party. Copies·oflhis Statlllo1)' lnstrwnent can be obtained from the Government Printer, P. 0. Box 30136, 10101, Lusaka. Price K2,()()() each. '' ' . . 46 Participation in manage­ ment, control or capital of person Direct panicipants \. ! ' Statutory lnstrume1Zts 1 8th February, 2000 · 4. For the purposes of section ninety-sevell C, a person partici­ pates directly or indirectly in the management, control or capital of a second person at a particular time if, and only if, the first person is at that time- ( a) a direct participant in the second person within the mean­ ing of regulation 5; or (b) an indirect participa11t in the s�cond person witliin the ,- meaning of regulation 6 or 7. . · S. ( 1) · A person is a direct participant in a second person at any time if at 'that time that second person is a body corporate or pa1t1iership controlled by the first person. (2) For the purposes of sub-regulation(])" control"� ( a) in relation to a body.corporate, means the power of a person to secure- (i) by means·_ofthe holding.of shares or the possession of voting power in or in relation to that or any other body corporate; or (ii) by virtue of any powers conferred by the articles of association or other document reguiating that or any other body corporate_; that.the affairs of the fir;t-mentioned body corporate are conducted in accordance With the wishes of that person; and ·. . . (b) in relation to·a_partnership, means the right to a share of more than one-halfof the assets, or of more than one-half of the inco.me; of the partnership. Indirect participaius

6. ( 1) A person is_ an indirect participant in a second person at a particular time if the first. person· would be taken to be a direct participant in the second person at that time if the rights and powers 'attributed to. the first person included all the rights and powers specified in sub-regulation (2). (2) The rights and powers to be attributed as spedfied in sub­ regulation ( 1) · to a person, in this regulation referred to as the potential participant, are---: / a) rights and powers which. the potential participant­ (i) is entitled to acquire at a future date; or (ii) will, at a future date, become entitled to acquire; -..,, ,, Ii I J ': ,· ,, 1, I: II i' ii ,, I: ,, • ., ( , 18th February, 2000 Statutory lnstrwizents 47 (b) rights and powers of other persons to the extent thar they are rights or· powers in accordance with sub-regulation (3); . . (c) rights and powers of any other person with whom the potential participant is connected; and ( d) rights and powers which forthe purpose of sub-regulation ( l ) would.be attributed to another person with whom the potential pa,ticipant is connected, if that connected person were himself the po'tential participant. (3) For th_e purpose of sub-regulation (2) the rights and powers .of any person are in accordance with this regulation to the extent that- ( a) they are required, or may be required, to be'exercised on · behalfo( under the direction of, 01' for the benefit of, the potential p�rticipant; and (b) where a loan h·as been made by one person to another they are not confined to rights and powers conferred in relation Id property of.the borrower by the terms of any security relating to the loan. . (4) In paragraphs (b) to (d) cif sub-regulation' (2) arid sub­ regulation (3), the references to a person's rights and powers include references to any rights or powers which the person- (a) is entitled to acquire at a future date; or (b) will, at a fut�re date, become.entitled to acquire. (5) In paragraph ( d) of sub-regulation (2), the reference to rights and powers which would be attributed to a connected person if the connected person were (he.indirect participant includes a reference to rights and powers which, by applyi°ng that sub-regulation wher­ ever one person is connected with another, would be so attributed to the connected person through a numberof persons each of whcini is connected ·with at leas/ one·ofthe at.hers.

7. ( 1) A person is an ind.irect participant in a second person at Major participanls a particu.lartime if the firs\ person is, at that time, a major participant . rson;'in this regulation·referred to as the subbrdi- in the second pe nate, and the subordinate is a body. corporate cir partnership. (2) For the purposes of this reg�iatio� a person. is a major. participant in 'the subordinate at"a particular time if at that time- ( a) th�t person to�eth�r with another· p�rson. c�ntrol� tl;e . : subordinate; a·nct · 48 Statuto1y Instruments 18th February, 2000 Meaning of '' connected · person " and 'other expressions (b) those two· persons· each has interests, rights and powers representing at least forty per cent of the holdings, rights· and powers in respect of which they, tal.<en together, control the subordinate: Provided that any question whether paragraph ( a) or ( b) is satisfied �or a_ny two persons shall be deter­ mined _after atiributin)i to each of the persons ,ill the rights and powe_rs attributed to an indirect participant for the purposes 6f sub-regulation (I) of regulation 6. (3) For the purposes of sub-regulation (2) "control " has the meaning assigned to it in regulation 5.

8. (I) For the purposes of regulation 6, two persons are con­ nected with each other if- (a) on�of them _is an indiyidual and the other is that person's sp_ouse, a relative of that person or of that person's spouse, or the spouse of such a relative; or•. . , (b) one of the_m is a trustee of a settlement and the other is-· (i) a person. who in relation to that settlement is a settlor; 'Or (ii) a person who is connected with a person falling within sub-paragraph (i). (2) For the purposes of sub-regulation (I)- ,, relative" means a brother, sister, ancestor or lineal descen­ dant; and " settlement " and." settlor " have the meaning assigned tci" them in section n�eteen disregarding paragraph (ii) of that section; .... (3) References in regulations 4 ·10 1- (a) to rights m1d_ powers of a person; or (b) to rights and po.we�s. which a person is or will become entitled to acqufre. include references to rights or powers which are exercisable by that person, or when acquired by that person will be exercisable, only jointly with one 01'. more other persons. (4) Regulations 4 to 7, �nd this regulation shall be effect as if­ ( a) a unit trust were a company that is a body corporate; (h) the'rights of the participants in the unit trust were shares in the' company that the trust is deemed to be; I \ ,· ;.1 I X1h l'eilruary, 2000 Sratwory lnstrumems 49 Joinder of second taxpayer in certain appeals • • ( ,· / rights and powers of a person in the capacity of a person c111i1lcd lo act for the purposes of the unit, trust were rights and powers of the unit trust; and /,// pl'tlvision made or imposed as between any person in such "c1paci1y and another person were made or imposed as he1wccn the �nit trust and'that other person, " I 11 Thi, rq:11lation applies where a person, in this regulation rd,·rn·d lo"·' .. lhc appellant", appeals against an assessment to the R,:vi,u,c t\ppc:ils Tribunal and the ground or one of the grounds of 1h,· :ippe:il rd:ites to the question whether section ninety-seven A :111111 i,•.,o.; i11 n·l:11 ic,n to any computation relevant to the assessment or wl11:lhc1 :111y computation has been made in accordance wi�h that �l·t·lior1. :111d i11 1hi� regulation that computation is referred to as. the ll0h:v11111 l'Ulllplllalion. I .1 l WI ,n,· I he appellant is the first taxpayer in relation to the rclcvnnl l'll111putation, the person who is the second taxpayer in r,·lnl io11 I" th:,1 computatibn may be joined as a party to the appeal. (:I) l'"r the purposes of this regulation any reference to the first taxpayer rn· lhc second taxpayer shall be construed in accordance with :,iL'l.."lio1111i1wty-seven A. !'I l Where 1h" grounds of appeal or one of them is th�t Sl!b­ s,·c1in11 ( 2) Ill' section ninety-seven A does not apply in relation to the r1'i<'vn111 ,,0111pulation, subsection (2) of section ninety-seven A shall he dcc111cd lo apply in determining whether any person is the first 111xpnycr or second taxpayer in relation to that computation for the p11rp?scs ol' this regulation, but not for the purposes of any appeal. ( �) t\ second taxpayer shall only be joined as a party to an app,·:i I.'" l':ir as the appeal concerns the computation in relation to whkh 1li:11 person is the second taxpayer, if that person gives notice, rcfo1n·d lo i11 this regulation as ajoinder notice, complying with sub­ rcg11la1 iu11s (8) and (9) within thirty days of the date on which the appellant gave notice of appeal to the Registrar of the Revenue Appeals Tribunal. ((1) The second taxpayer shall give a copy of the joinder notice lo the Commission,;r-General and 'to the appellant within seven days 01· the date the notice is given to the Registrar. (7) The Appeals Regulati,ons shall apply to ajoinder notice or a notice purporting to be ajoinder notice and to the second taxpayer as they apply in relation to a notice of appeal lodged or purporting 10 be lodged in accordance with regulation 6 of the Appeals 50 Statutory Instruments 1 8th F'ebruary, 2000 B.egulations·and to the appellant, however described, subject to the following provisions: (a) regulation 6 of the Appeals Regulations shall not apply; (/,) the Registrar shall not be required to copy the joinder notic,; to the Commissioner-General under sub-regulation ( I ) of regulation 'I of the Appeals Regulations; (c) regulation 1 2 of the Appeals Regulations shall apply to the �opy of the joindernotice required by sub-regulation ( 6) in addition tu thejoinder notice itself; (d) where the appellant has appealed against the assessment on more than one ground- ( i) sub-regulation ( 1 ) of regulation 8 of the Appeals Regulations shall apply in relation to the second ta·xpayer's joinder notice separately. from its application to the appellant's appeal so that the Commissioner-General shall lodge, in accor­ dance with sub-regulation ( I ) or regulation 8. a separate statement of .case in response to the Joinder notice; · / (ii) the Commissioner-General and the first taxpayer niay produce a separate list of documents to the Reg'istrar. for the purposes of sub-regulation ( I ) of regulation 1 0 of the Appeals Regulati01is · within seven days of being given the second taxpayer's joinder notice, and where such a list is produced, the Registrar shall copy that I ist, instead of the other list, to the second taxpayer in accordance with sub-regulation (2) of Regu­ lation 1 0 . . . . (8) Ajoinder notice give_n by a person complies with this sub­ regulation if- ·r a) it statys the na_me_ and address .of that person; (I,) it identifies the ·appellant in the appeal to which that person wishes fo be joined; ( c) it identifies the assessment and the computation in relation to_ which that person is the second taxpayer: and ( d) it �tates the grounds on which the second taxpayer appea'!s against the assessment, so far as the assessment rel\ltes to that computation. ' , ' .. -.,• 1 8th February, 2000 Statuio,y lnstrum�nts 5 1 (9) For the purposes of paragraph ( a) of sub-regulation (8) the address to �e given by the second taxpayer is- ( a) if the second' taxpayer carries on a business- , . (i) the address of the second taxpayer's principal place of business in Zambia; or (ii) if there is no such phice, the address of the second taxpayer's prinqipal place of business outside Zambia; or (b) if the second taxpayer does not carry on a business- (i) ·the address of the second taxpayer's only or main · res:id!!nce in Zambia; or · (ii) if there is no such place, the address of the second taxpayer' s .only or main residence outside · . Zambia; and if sub-paragraph (ii) of paragraph ( a) or sub-paragni.ph (ii) o_f paragraph (b) applies; the joinder notice shall include the name of a person by ·whom and an address at which sefvice _cif documents may be effected in Zambia · for the purposes · of the appeal. LUSAKA _ 7th February, 2000 [MFB. i"03/12/1] DR K. KALUMBA, · Minister of Finance and Economic · Development · 52 Statutory Instruments 1 8th Februar)', 2000 •·