Frontier Markets Withholding Tax for Equities and Interest

909

One of the overlooked decisions when investing in equities, and in particular in frontier markets’ equities is tax leakage.  It may seem obvious, but taxes can make an attractive investment unattractive.  Investing in Frontier Markets are subject to significantly more risk in terms of legislative change having an impact on taxes.

Numerous sources have information on withholding taxes, but to date, we have been unable to find a comprehensive document that outlines Frontier Markets Withholding Tax for Equities and Interest in a simple one page table.  The closest thing to one table that we have found is the Dow Jones list, found here.  However, it is missing numerous names that we track.

Ernst & Young has a good tax guide, with more detailed information here.  However, it is not convenient or well formatted.

In an effort to provide you with a one-stop tax check, please see the list we have compiled below.  We will endeavour to update this list annually.

 

Dividends Interest
AFRICA
Botswana 15% 10%
Cameroon 17% 17%
Cote D’Ivoire 12% 15%
Gabon 15% 10%
Ghana 8% 8%
Kenya 10% 25%
Malawi 10% 15%
Mauritius 10% 10%
Nigeria 10% 10%
Rwanda 5% 5%
Tanzania 10% 10%
Uganda 15% 15%
Zambia 15% 15%
Zimbabwe 15% 10%
AMERICAS
Argentina 0% 15%
Bolivia 13% 13%
Chile 15% 15%
Colombia 33% 33%
Guatemala 0% 10%
Jamaica 33% 25%
Paraguay 15% 15%
Peru 5% 5%
Trinidad and Tobago 10% 10%
CENTRAL ASIA
Kazakhstan 15% 10%
Kyrgyzstan 10% 10%
Mongolia 10% 20%
EUROPE
Bosnia and Herzegovina 5% 10%
Bulgaria 5% 10%
Croatia 12% 15%
Cyprus 0% 0%
Estonia 0% 10%
Lithuania 15% 10%
Macedonia 10% 10%
Malta 0% 0%
Romania 16% 16%
Serbia 20% 20%
Slovakia 0% 19%
Slovenia 15% 15%
Ukraine 15% 15%
MIDDLE EAST
Bahrain 0% 0%
Egypt 0% 20%
Iraq 0% 15%
Jordan 0% 7%
Kuwait 5% 5%
Oman 10% 10%
Palestine 0% 5%
Qatar 0% 7%
Saudi Arabia 5% 15%
Syria 0% 8%
Tunisia 0% 20%
SOUTH ASIA
Bangladesh 20% 10%
Nepal 5% 15%
Pakistan 10% 10%
Sri Lanka 10% 15%
SOUTHEAST ASIA
Cambodia 14% 14%
Laos 10% 10%
Papua New Guinea 17% 15%
Philippines 30% 20%
Vietnam 0% 5%

A few notes on these rates.  These rates represent the ‘normal scenario’ for a taxable investor.  Varying tax-treaties between two countries, or special statuses for an investor may alter the payable rates meaningfully.

The table outlines how tax rates could significantly impact your investment decision.  As an example, Vietnam and Philippines are two similarly populated countries with close geographic proximity.  Vietnam may be lower down the ladder of economic development, but it offers a 0% dividend withholding tax compared to 30% in the Philippines.  Similarly, in Europe, Bulgaria has a 5% dividend withholding tax rate compared to 20% in Serbia.

As always, consult your own tax accountant before making an investment decision, but if you are forecasting returns, for any investment, we would advise factoring in tax leakage, when comparing investment opportunities.

2 COMMENTS

  1. I pick a few mistakes. In Laos interest earned on bank deposits is tax exempt , as well in Sri Lanka for foreign investors (google S.F.I.D.A. accounts). I don’t understand where did you get that 10% for Sri Lanka , as interest on debentures is tax exempt for everybody (citizens and foreigners) while interest on bank deposits for citizens is taxed at 2% or 8% depending on the amount earned. Oh, wait , now I remember, debentures issued before 2013 are actually taxed 10%.

Leave a Reply