The COMESA region, with support of the ACP Business Climate Facility (BizClim), held a three day forum in Lusaka on Double Taxation Agreements from 7th to 9th February 2012. The forum, which was highly interactive, attracted 40 senior officials from COMESA Member States who are involved in negotiating double taxation agreements.
A COMESA Business Survey conducted in 2009/10 revealed the interest of the COMESA private sector in further negotiations of DTAs among COMESA countries and based on the findings of the survey, the COMESA Council of Ministers decided that the Secretariat should assist member States in negotiations and signing of the double taxation agreement among themselves with a view to fostering cross border trade and investment in the region.
The Forum of experts agreed on the COMESA model on Double Taxation Agreements to be used as a guide tool in the negotiating process of DTAs among the COMESA and third party countries. They noted that only 26 Double Taxation Agreements have been signed among the 19 COMESA countries while a total of 214 DTAs have been negotiated and signed by COMESA countries with both COMESA and non-COMESA countries. This shows that there is an urgent need for COMESA countries to sign more new DTAs among themselves with a view to promote cross border trade and investment in the region.
Double taxation arises when governments generally tax same incomes in both investing and host economies. This means that the income is taxed in the territory where the income is generated and in the country where the taxpayer originates from.
The experts initiated consultations among themselves for further negotiations of DTAs and requested the support from the Secretariat to more this agenda forward.
Over 3, 000 double taxation agreements have been made between countries all over the World. In addition to avoiding or mitigating this double taxation they try to provide certainty of treatment for cross-border trade, they give rules to establish in which country a taxpayer is resident for tax purposes, they aim to prevent discrimination against foreign businesses and they aim to prevent discrimination against foreign businesses and they set up procedures for resolving disputes.
Prior to agreeing on the COMESA model on DTAs, the Forum addressed the OECD, UN and SADC Model regarding new developments on key selected provisions.
In line with the COMESA-EAC-SADC Tripartite, the COMESA region has adopted most provisions from the SADC model in order to have commonalities given the fact that eight COMESA countries also have the Southern African Development Community (SADC) membership.