ZAMBIA Trends and Developments Contributed by: Mulenga Chiteba and Constance Namatai Mwango, Mulenga Mundashi Legal Practitioners
lines and the revised 2022 OECD Transfer Pric - ing Guidelines. These guidelines offer a stand - ardised three-tiered approach for transfer pricing documentation. The three-tiered approach structure consists of: • a master file containing standardised informa - tion relevant for all multinational enterprise (MNE) group members; • a local file referring specifically to material; • transactions of the local taxpayer; and • a country-by-country report containing cer - tain information relating to the global alloca - tion of the MNE group’s income and taxes paid together with certain indicators of the location of economic activity within the MNE group. The Transfer Pricing Regulations provide that a country-by-country report shall be filed by the ultimate parent entity that is resident in Zambia for tax purposes. An ultimate parent entity has been defined as a constituent of a multinational enterprise group who: (i) directly or indirectly owns a sufficient interest in one or more con - stituent entities of the multinational enterprise group and is required to prepare consolidated financial statements under the accounting prin - ciples generally applied in the constituent enti - ty’s state of tax residence; and (ii) has an annual group revenue exceeding ZMW4.795 billion or EUR750 million in the immediately preceding accounting year. Such a report should be filed on or before 12 months after the last day of the multinational enterprise group’s accounting year. Notification filing The Transfer Pricing Regulations also require a constituent entity that is not the ultimate parent entity or surrogate parent entity of the multina - tional enterprise group to notify the Commis - sioner-General of the identity and tax residence
of the reporting entity on or before the last day of the accounting year of the multinational enter - prise group. A country-by-country report may also be filed by a constituent entity which is not an ultimate par - ent entity of a multinational enterprise group with respect to the accounting year of a multinational enterprise group where the following conditions are satisfied: • the entity is resident for tax purposes in the Republic; and • either: (a) the ultimate parent entity of the multina - tional enterprise group is not obligated to file a country-by-country report in its state of tax residence; (b) the state in which the ultimate parent entity is resident for tax purposes has a current international agreement with the Republic but does not have a qualify - ing competent authority agreement with Zambia; or (c) there is a systemic failure in the state of tax residence of the ultimate parent entity and the Commissioner-General notifies the constituent entity resident for tax pur - poses in Zambia. It is worth noting that Zambia currently does not have any competent authority agreement in force that allows for the automatic exchange of country-by-country reports. Information to be included in a country-by- country report A country-by-country report with respect to a multinational enterprise group shall contain aggregate information with regard to each state in which the multinational enterprise group oper - ates. This information shall include the following:
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