Africa Tax in Brief
CAMEROON: Treaty with South Africa enters into force
On 13 July 2017, the Cameroon/South Africa Income Tax Treaty, 2015 entered into force and generally applies from 1 January 2018.
GHANA: Value-added tax (“VAT”) on selected medical supplies abolished
In terms of the VAT (Exemption of Active Ingredients, Selected Inputs and Selected Drugs or Pharmaceuticals) (Amendment) Regulations 2017, presented to Parliament on 1 August 2017, the 17.5% VAT/National Health Insurance Levy on selected imported medicines that are not produced locally, is abolished pursuant to the Budget for 2017.
KENYA: 2017 Employer’s Guide to PAYE published
The Kenya Revenue Authority recently published the 2017 edition of the Employer’s Guide to Pay-As- You-Earn (“PAYE”), incorporating amendments effected by the Tax Procedures Act, 2015 and amendments to the Income Tax Act from 2009 to 2016.
The guide provides clarity and guidance regarding:
- the application of the KES4 000 tax-free benefit of canteen meals provided to staff members and the separate KES3 000 tax free non-cash benefit available per month;
- exempt bonuses, overtime allowances and retirement benefits available to employees earning less than KES11 180 per month;
- the exemption for employer-paid gratuity to registered pension schemes of less than KES240 000 per annum; and
- the age limit for medical benefits provided to employees.
MALAWI: Tax Amendment Acts, 2017 published
The Taxation (Amendment) Act, 2017, the VAT (Amendment) Act, 2017 and the Customs and Excise (Amendment) Act, 2017 were published in the Malawi Official Gazette on 25 July 2017, giving effect to the tax measures contained in the 2017/18 Budget.
Key amendments, effective from 1 July 2017, include:
- increasing the tax rate for ecclesiastical, charitable, educational institutions and trusts from 25% to 30%;
- increasing the penalties and interest for various offences under the Taxation Act and VAT Act, but at the same time, empowering the Commissioner General to waive interest and penalties due on unpaid taxes;
- exempting from VAT dairy produce, bird's eggs, natural honey and infant's milk, animal or vegetable fats and oil and their cleavage products, prepared edible fats and animal or vegetable waxes; and
- introducing an excise duty on airtime, television subscriptions, gaming and betting (including lotteries).
NAMIBIA: Tax Arrears Incentive Program renewed
On 4 September 2017, the Ministry of Finance published a Public Notice informing taxpayers that a second and last Tax Arrear Recovery Incentive Program will be implemented from 11 September 2017 to 11 March 2018 in terms of which 100% of penalties and 70% of interest on unpaid taxes will be waived, provided that certain requirements are met.
The incentive programme is available to all taxes administered by the Inland Revenue Department, including income tax, VAT, import VAT, employee's tax, stamp duty, non-resident's shareholders tax and tax on royalties.
Application forms for registration to partake in the incentive programme can be obtained from any office of the Inland Revenue Department or downloaded from their website.
NIGERIA: Multilateral agreements to prevent base erosion and profit shifting and introduce common reporting standards signed
On 17 August 2017, Nigeria became a signatory to the Organisation for Economic Cooperation and Development’s (“OECD’s”) Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLC”) and the Multilateral Agreement for the Common Reporting Standard (the “CRS”). Both instruments may require ratification by the National Assembly to have the force of law in Nigeria.
In terms of the MLC, amendments are to be made to Nigeria’s existing double tax treaties to limit treaty abuse and tax avoidance, whereas the CRS will allow Nigeria to exchange information regarding taxpayers, including their names, addresses, tax identification numbers and account balances at the end of a reporting period.
NIGERIA: Public notice regarding “reasonable removable expenses” issued
The Lagos State Internal Revenue Service recently issued a Public Notice clarifying the definition of “reasonable removal expenses” qualifying for exemption in terms of section 4(3)(c) of the Personal Income Tax Act, where an employee is moving to take up new employment or relocating to a new employment location.
The Public Notice does not provide thresholds of a reasonable amount of expenses, but stipulates the following conditions to be met in order to qualify for exemption:
- the expenses must have been actually incurred;
- the expenses must be of a reasonable amount;
- the payment of expenses must be properly documented; and
- the movement from one place to another must be necessary.
Documents and information to be maintained by the company to substantiate the expenses include:
- name and address of the employee;
- date and reason for the relocation/removal;
- distance (km) involved; and
- receipts of the actual expenses.
Further, any amount paid to the employee as a temporary subsistence allowance which covers expenses already incurred by the employer shall be taxed as it would amount to duplication.
In order to obtain certainty for tax deductibility of such removal expenses and temporary subsistence allowances, companies may submit their staff policy and guidelines, as well as their per diem rates for pre-approval to the Lagos State Internal Revenue Service.
SIERRA LEONE: Finance Act, 2017 enacted
On 1 June 2017, the 2017 Finance Bill was signed into law by the President as the Finance Act 2017, which became effective from 1 January 2017.
The Finance Act gives effect to the tax measures proposed in the Budget for 2017 and introduces the following further changes:
- increasing the “continuity of business” threshold required to qualify for exemption from capital gains tax in the case of a merger, amalgamation or reorganisation from 25% to 75%;
- imposing a royalty tax of 0.25% on the gross revenue from the sale of all gaming and lottery products;
- implementing the African Union levy on all non-exempt imports; and
- repealing and replacing the National Health Insurance levy with the National Free Health Care levy which will be imposed at the rate of 0.5% on all payments to contractors (both local and foreign) for the supply of goods and services.
TANZANIA: Collection of gaming tax public notice issued
The Tanzania Revenue Authority issued a public notice on 10 August 2017, announcing that with effect from 1 July 2017, it has taken over responsibility for assessing and collecting gaming taxes from the Gaming Board of Tanzania, in line with the provisions of the 2017 Finance Act. Taxpayers are required to make payments of gaming taxes due on specific activities to the Tanzania Revenue Authority using the specified codes.
TANZANIA: Excise Duty Act, 2017 enacted
On 4 July 2017, the Excise Duty Act, 2017 was enacted for the administration of excise duties in Zanzibar. The Act:
- imposes excise duties on imported excisable goods and local excisable services as listed in the First Schedule and Second Schedule to the Act, respectively;
- lists taxable events and the corresponding taxable persons;
- establishes the excisable value for imported goods as the value declared and determined under the provisions of the East African Community Customs Management Act, including the import duty paid thereon;
- institutes the excisable value for excisable services as either the fee, commission or charge payable for the service (if supplied by a registered person at arm's length) or the open market value of the service, excluding any value added tax paid; and
- exempts certain goods and persons from excise duties.
TANZANIA: Tax Administration Regulations issued
The Tax Administration (General) (Amendment) Regulations, 2017, the Tax Administration (Electronic Revenue Collection System) Regulations 2017 and the Road Traffic (Motor Vehicles Registration) (Amendment) Regulations, 2017 were published in the Official Gazette on 29 June 2017 to give effect to the following tax measures contained in the 2017/18 Budget, with effect from 1 July 2017:
- empowering the Commissioner General of the Tanzania Revenue Authority to establish and maintain an escrow account to ease the refund of import duties paid by importers of industrial sugar under the duty remission scheme;
- launching and providing for the administration of the Electronic Revenue Collection System (e-RCS) to ensure proper assessment and collection of taxes by the Tanzania Revenue Authority; and
- abolishing the annual motor vehicle licence fee and revising the licence fees payable upon registration of motor vehicles.
UGANDA: Taxpayer block management system introduced
On 24 August 2017, the Uganda Revenue Authority announced the phased implementation of a Block Management System which will segment taxpayers into blocks according to their defined geographic business locations demarcated by streets and key buildings, with designated Uganda Revenue Authority staff per block assisting taxpayers in various tax administrative and compliance issues.
The Block Management System has already been launched in the Kampala Central Division on 1 August 2017.
ZAMBIA: Amended Transfer Pricing Regulations published
The Zambia Revenue Authority has published the draft Income Tax (Transfer Pricing) (Documentation) Regulations, 2017 and the Income Tax (Transfer Pricing) (Amendment) Regulations, 2017 to amend the original Transfer Pricing Regulations published in 2000.
In terms of the proposed Documentation Regulations, taxpayers with a turnover exceeding approximately USD2.2-million who enter into transactions with associated persons are required to prepare transfer pricing documentation contemporaneously with related party transactions with effect from the tax year ending 31 December 2017.
The Transfer Pricing Amendment Regulations are also to become effective from the tax year ending 31 December 2017. In terms of these Regulations:
- they are to be interpreted consistent with the OECD and United Nations transfer pricing guidelines, but in the event of inconsistencies with the Zambian Income Tax Act and these Regulations, the Income Tax Act and Regulations will prevail; and
- provision is made for the application of a transfer pricing method other than the stated approved methods, with the approval of the Zambia Revenue Authority.
Sources include IBFD’s Tax Research Platform www.allafrica.com; http://tax-news.com
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