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.
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%.
Thanks for your note.
As we mentioned, this is the general rates. Your country may or may not have a tax treaty with the countries specified.
As to our sources, This KPMG report (page 2) indicates Laos’ withholding tax rate for dividends and interest.
https://www.kpmg.com/Global/en/services/Tax/regional-tax-centers/asia-pacific-tax-centre/Documents/CountryProfiles/Laos.pdf
With respect to Sri Lanka, we used this report from Deloitte.
http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-srilankahighlights-2014.pdf