#### Source: Author's calculation using data from IMF CDIS database

##### Assumptions & Limitations

- • strong assumption made in the study is that FDI flows and stocks are not influenced by • strong assumption made in the study is that FDI flows and stocks are not influenced by changes in negotiated withholding tax rates in DTTs. Therefore, the estimates need to be taken with caution as they are but indicative
- • income is distributed across countries in a similar fashion to FDI stock • income is distributed across countries in a similar fashion to FDI stock
- • revenue effects associated with dividend and interest payments only. FDI incomes • revenue effects associated with dividend and interest payments only. FDI incomes related to royalty payments and capital gains are excluded. This is mainly because the majority of revenue losses in developing countries are mainly due to DTT rules relating to dividend and interest payments (ActionAid, 2018).
- • the case of Mozambique and Nigeria, we used FDI stocks as reported by the countries • the case of Mozambique and Nigeria, we used FDI stocks as reported by the countries themselves. However, due to data availability constraints, for Malawi we used FDI stocks mirror data reported by treaty partners in IMF CDIS.
- • the basis of all data sources, the study managed to obtain data as latest as 2017 for FDI • the basis of all data sources, the study managed to obtain data as latest as 2017 for FDI stocks, income and domestic rates
- • DTT network is limited. As of August, 2019, Malawi had the following active DTTs: • DTT network is limited. As of August, 2019, Malawi had the following active DTTs: France, Norway, South Africa, United Kingdom and Switzerland (PWC, 2019). Most noteworthy, Malawi is currently renegotiating its DTT with Netherlands while those with Zimbabwe, Seychelles, Zambia, Botswana, Lesotho were signed but not yet in force. DTTs with Mauritius is being re-negotiated while those with Morocco and Portugal await ratification and signing by the Minister of Finance.
- • DTTs that are in force include with the following countries: Botswana, India, Italy, • DTTs that are in force include with the following countries: Botswana, India, Italy, Macau, Mauritius, Portugal, South Africa, United Arab Emirates and Vietnam (PWC, 2019)
- • has DTTs with the following partner countries: Belgium, Canada, China, P.R.: Mainland, • has DTTs with the following partner countries: Belgium, Canada, China, P.R.: Mainland, Czech Republic, France, Mauritius, Netherlands, Pakistan, Philippines, Romania, Slovak Republic, South Africa, Spain and United Kingdom. DTTs with South Korea and Sweden are still being ratified. (PWC, 2019).

##### Findings

Table 2: Revenue loss due to low WHT on Dividends and Interests

Country	Revenue Forgone (2017) (US$)
Malawi	1,715,259.26
Mozambique	6,100,399.81
Nigeria	4,472,044.46

#### Source: Author's calculations

##### References

ActionAid (2016) Mistreated: The Tax Treaties That are Depriving the World's Poorest Countries of Vital Revenue. ActionAid (2018) Making tax work for girls' education: How and why governments can reduce tax incentives to invest more in girls' education. Norad. Deloitte (2019) Corporate Tax Rates, 2019. EY (2019) Worldwide Corporate Tax Guide 2018.

4