Africa tax in brief
KENYA: Compulsory electronic tax filings
The Kenya Revenue Authority recently issued a public notice informing all taxpayers that, with effect from 1 August 2015, manual filing of tax returns will no longer be accepted. All income tax, value added tax ("VAT") and pay-as-you-earn ("PAYE") returns are to be filed using the electronic iTax platform.
KENYA: Withholding tax on services rendered under power purchase agreement
Following publication of Legal Notice No. 165 of 2015 on 19 August 2015, all payments for services rendered by non-residents under a power purchase agreement are exempt from withholding tax. The exact extent of application of this exemption is still to be confirmed.
MAURITIUS: Withholding tax on non-resident directors
The Mauritius Revenue Authority (“MRA”) issued a circular on 4 May 2015, directing that companies holding a Category 2 Global Business Licence (“GBL2”) under the Financial Services Act 2007 (“FSA”) are required to withhold tax under the PAYE system at the rate of 15% on fees to non-resident directors.
Although, in terms of the general provisions Income Tax Act 1995 ("ITA"): (1) fees payable to any company directors or by a statutory body to any of the members of its Board, Council, Commission, Committee or any other body are subject to tax under the PAYE system and (2) directors’ fees and other similar payments derived by an individual in his capacity as a director of a Mauritian company are considered to be Mauritian sourced income irrespective of where the duties have been performed, the Second Schedule to the ITA provides for an exemption in respect of any amount paid by a GBL2 company to a non-resident.
This has been highlighted to the MRA by Mauritian tax advisors and it is understood that the MRA is reconsidering its point of view on this matter.
MAURITIUS: Recent amendments to the Income Tax Act 1995
The Finance (Miscellaneous Provisions) Act 2015 (“FMPA 2015”) effected inter alia the following amendments to the ITA:
- The Alternative Minimum Tax, previously levied when the tax payable by a company was less than 7.5% of its book profit for that year at the lower of 7.5% of the book profit or 10% of the dividends declared, is removed with effect from the 2015/2016 year of assessment.
- Although the special levy on Banks (introduced in 2013) was supposed to apply only for a period of two years, in terms of the FMPA 2015 for the 2015/2016, 2016/2017 and 2017/2018 years of assessment, the special levy will be calculated as follows:
- 10% of the chargeable income in respect of banking transactions other than non-residents and Global Business License (“GBL”) companies (Segment A); and
- 3.4% of the book profit and 1% of the operating income in respect of banking transactions with non-residents and corporations holding a GBL under the FSA ("Segment B).
- With effect from the 2018/2019 year of assessment, the special levy on both Segment A and Segment B will be calculated as 1.7% of book profit and 0.5% of operating income.
- The solidarity levy of 5% of book profits and 1.5% of turnover applicable to telephone service providers, which was intended to apply only until 31 December 2014, will continue to be levied for the 2015/2016, 2016/2017 and 2017/2018 years of assessment.
NIGERIA: New acting Executive Chairman of FIRS appointed
Mr Babatunde Fowler has been appointed as the new acting Executive Chairman of the Federal Inland Revenue Service (“FIRS”) on 20 August 2015. Mr Fowler indicated that his primary objective will be increasing the tax revenue collection by FIRS and his administration will focus on:
- full compliance by the organised private sector;
- restructuring of the FIRS to focus on specific non-oil sectors of the economy in order to reduce its reliance on oil;
- collaboration with the State Boards of Internal Revenue to share and exchange information;
- demanding the payment of advance corporate tax of 30% of any interim dividend paid;
- using external tax consultants to carry out tax audits to complement the FIRS’ capacity;
- enhancing tax administration technology to simplify compliance;
- potentially introducing tax amnesty for previously unregistered taxpayers who register voluntarily;
- regular review of FIRS Circulars to ensure they don’t become outdated;
- regular interaction with stakeholders, including taxpayers, tax consultants, professional bodies, the organised private sector and law makers in an attempt to improve the tax system; and
- improving revenue collection and expanding the tax base, instead of introducing new taxes or increasing tax rates.
UGANDA: Amendments to taxes in the extractive industries
The Uganda Income Tax (Amendment) Act, 2015, which became effective on 1 July 2015, introduced a number of changes to taxes applicable in the petroleum industry. The newly introduced section 89GG of the Income Tax Act provides that a non-resident contractor who derives a fee for the provision of services (referred to as a “service fee”) to a licensee (companies licensed for mining or petroleum operations) in respect of mining or petroleum operations is liable to pay non-resident contractor tax at the rate of 10% (previously 15%).
The following amendments to the VAT Act also provide for relief:
- Contractors providing goods and services that are particular to the mining and/or petroleum sector would not be required to collect VAT from licensees, as such VAT will be deemed to have been paid, and neither party would include such VAT in their monthly calculations.
- Reverse-charge VAT applicable on imported services consumed by a contractor or licensee is now allowable as a VAT input credit and should therefore no longer represent an additional cost for either contractors or licensees.
TANZANIA: Tax Administration Act effective from 1 July 2015
The Tanzanian Tax Administration Act 2015 (“TAA”) came into force on 1 July 2015. The new Act addresses the interpretation of tax laws, the relationship between the Tanzania Revenue Authority, taxpayers and tax consultants, communication and documentation, tax returns, access to information and assets, assessments and objections, payment, recovery, remission and refund of tax, interest, penalties and offences, tax proceedings, transition and saving provisions and consequential amendments to other legislation.
The TAA consolidates administrative provisions in a single Act and the relevant tax administration provisions previously included in existing tax legislation have been repealed.
TANZANIA: Monthly Skills Development Levy returns required
The TAA introduced an amendment to the Vocational Education and Training Act, Cap 82 in terms of which every employer shall, on or before the seventh day of each month, file a return in respect of its Skills Development Levy obligations, setting out the total gross monthly emoluments payable by the employer to employees in respect of the preceding month and the levy payable with respect thereto.
Sources include IBFD, IHS and other
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