tax ENSight | 31 January 2017

Africa tax in brief

by Celia Becker

ANGOLA: Budget Bill, 2017 approved and adopted by National Assembly

On 17 November 2016, the National Assembly approved the Budget Bill, 2017. The final version of Budget Law, 2017 was adopted by the National Assembly on 14 December 2016.

BURKINA FASO: Finance Law, 2017 adopted by National Assembly

On 22 December 2016, the National Assembly adopted the Finance Law, 2017, which introduces tax changes to the current applicable law.

BURUNDI: Budget Bill, 2017 approved by Council of Ministers

On 16 November 2016, the Council of Ministers approved the Budget Bill, 2017, which was adopted by the National Assembly on 22 December 2016. According to official announcements, the Budget Law will introduce, inter alia, increased tax rates on the following:

  • corporate and individual income, including capital gains;
  • mobile phone calls, which are subject to the tax on national calls at the rate of BIF52 per minute (previously, BIF42 per minute). However, telephone calls are no longer subject to value-added tax (“VAT”) and general consumption tax;
  • transport and vehicles are subject to the tax on fuel consumption, which replaces both the flat-rate tax on transport and the tax on vehicles. The tax on fuel consumption applies at the rate of BIF100 per litre; and
  • sugar, which is subject to general consumption tax at the rate of BIF800 per kilogram (previously, BIF600 per kilogram).

Further details will be reported upon the Budget Law's official publication.

CAMEROON: Budget Law, 2017 adopted by Parliament

On 3 December 2016, Parliament approved the Budget Bill for 2017. The Budget Bill is submitted to the Senate for a second reading and ratification, without any major amendments. Details of the budget will be reported as they become available.

GHANA: 2016 Tax regulations published

On 7 November 2016, the Ministry of Finance published regulations on income tax, VAT and excise duty. The regulations were gazetted on 4 July 2016 and entered into force on 3 August 2016.

GHANA: Online pension portal launched

On 20 December 2016, the Social Security and National Insurance Trust launched an online pension (ePension) portal aimed at offering improved service in pension collection through an e-governance platform. The portal provides online facilities for registration, pension management, pension return filing and pension payments.

GHANA: Guidelines issued for exemption of withholding taxes on specified supplies

On 29 December 2016, the Ghana Revenue Authority issued guidelines for granting exemption from withholding taxes (the “guidelines”) under section 116(5C) of the Income Tax Act, 2015.

The guidelines, applicable to persons making payments for the supply of goods, works and services, set out various requirements to be met in order to entitle such persons to exemption from the obligation to withhold and remit tax on those payments.

Upon showing good cause and having a satisfactory tax record, the Commissioner-General may issue exemptions in writing if the applicant has:

  • registered for all relevant taxes, unless exempted by law. Also, the applicant's shareholders, directors and employees must have tax identification numbers;
  • kept and maintained adequate and reliable business records in the country;
  • submitted notice of particulars of contracts entered into with non-residents within 30 days from the date of such entry. Non-compliance with this requirement disqualifies the taxpayer for at least 12 months;
  • submitted all relevant tax returns by their due dates. This requirement applies to, among others, the applicant's directors and expatriate employees;
  • in the case of a company, submitted its estimated chargeable income and taxes for the current year of assessment and/or has been provisionally assessed for the current year, where applicable;
  • paid all taxes by their due date;
  • been audited for a period within the last three years. However, if the audit uncovers non-compliance with any tax provisions, the taxpayer will be disqualified from grant or renewal of exemption for at least 12 months;
  • submitted lists of particulars of all quarterly payments which would have, but for the exemption, been subject to withholding tax; and
  • demonstrated that withholding tax on such payments would lead to cash flow problems or payment of taxes with part of working capital.

In addition to the instances of disqualification stated within the items above, if the applicant:

  • issues a dishonoured cheque, he/she will be disqualified for the next two years;
  • has defaulted on payment term arrangements, he/she will be disqualified for at least 12 months; or
  • fails to include third-party information on transactions undertaken by the taxpayer in his business records and/or financial statements, he/she will be disqualified for at least 12 months.

All applications should be submitted to the taxpayers' tax office, stating the projected turnover, chargeable income and tax for the current year.

GHANA: Trade Facilitation Agreement ratified

On 4 January 2017, Ghana submitted its instrument of acceptance to the World Trade Organization (“WTO”) for ratification of the Trade Facilitation Agreement (“TFA”).

The TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.

The TFA will enter into force upon formal acceptance by two-thirds of the WTO members.

IVORY COAST: Budget Law, 2017 adopted by Parliament

On 28 November 2016, Parliament approved the Budget Bill for 2017. Details of the Budget will be reported as they become available.

IVORY COAST: Inclusive framework for implementing measures against BEPS joined

According to an Organization for Economic Cooperation and Development (“OECD”) press release of 6 January 2017, the Ivory Coast joined the inclusive framework for the global implementation of the Base Erosion and Profit Shifting (“BEPS”) Project. The inclusive framework was proposed by the OECD and endorsed by the G20 in February 2016. Under this framework, all state and non-state jurisdictions that commit to the BEPS Project will participate as BEPS associates of the OECD's Committee on Fiscal Affairs.

LIBERIA: Tax Amendment Act, 2016 enacted

On 5 October 2016, the Liberia Tax Amendment Act, 2016 was enacted by the legislature. Significant amendments to the Revenue Code of Liberia, 2000 include:

  • a presumptive income tax (in lieu of corporate income tax) is imposed at a rate of 4% on the gross income of insurance companies that derive over 30% of their business from life insurance;
  • companies are liable to the standard income tax rate of 25% or minimum tax at 2% of gross income, whichever is greater, provided that where the minimum tax applies:
    • the excess of minimum tax paid over the standard income tax due in a year of assessment (“YOA”) is considered a tax credit and may be carried forward to offset the standard income tax liability in the succeeding YOA;
    • the remainder of the tax credit that is not fully absorbed in the succeeding YOA may be carried forward for a maximum period of four years;
    • a tax credit that is carried forward may not reduce the standard income tax due for the YOA below the amount of minimum tax computed for the referenced YOA;
    • the effective date for the charge of minimum tax is the YOA beginning on 1 January 2016; and
    • the Minister of Finance is empowered to issue regulations reducing the minimum tax rate for specific sectors to a range between 0.5% and 1.5%.
  • the rate of goods tax is increased from 7% to 10%;
  • the additional surtax on telecommunications services is reduced from 8% to 5%;
  • the definition of gambling services is revised to include “other games of chance offered to the public”.
  • a definition of “telecommunications services” is provided;
  • the Minister of Finance is empowered to provide specificity by issuing regulations for the imposition of services tax on mobile communications services;
  • the excise duty rate on tobacco and tobacco products is increased from 35% to 80%;
  • presumptive (turnover) taxpayers are required to make quarterly advance payments of tax equal to 4% of gross income received during the quarter;
  • a tax credit is to be granted for overpaid advance taxes for years of assessment that include the period 15 October 2013 to 31 December 2015, which may be carried forward indefinitely and used to offset the standard income tax liability;
  • the tax credit granted for overpaid advance taxes is not refundable and does not accrue interest;
  • the administrative procedures for advance payment of income tax are revised as follows:
    • quarterly advance tax payments must equal 2% of gross income for the quarter or 8% of gross income per annum;
    • carry-forward tax credits granted for the payment of minimum tax in a prior YOA cannot be used to offset the advance tax liability of the current YOA; and
    • presumptive taxpayers whose tax rate is 4% are required to make quarterly advance payments equal to 4% of gross income per annum.

MALI: Budget for 2017 adopted

On 16 December 2016, Parliament adopted the Budget for 2017. Details will be reported upon the Budget's official publication.

MAURITANIA: Budget for 2017 adopted by government

On 11 November 2016, the government adopted the Budget for 2017. Subsequently, the Budget 2017 will be presented to Parliament.

MAURITANIA: Public-Private Partnerships Bill adopted by government

On 27 October 2016, the government examined and adopted the Bill on Public-Private Partnerships (“PPP”). The PPP Bill is aimed at governing the scope of PPP contracts, correcting identified infrastructural gaps and encouraging foreign investments in infrastructure.

MAURITIUS: Inclusive framework for implementing measures against BEPS joined

According to an OECD press release of 25 November 2016, Mauritius joined the inclusive framework for the global implementation of the Base Erosion and Profit Shifting Project on 24 November 2016.

MOZAMBIQUE: Trade Facilitation Agreement ratified

On 6 January 2017, Mozambique submitted its instrument of acceptance to the WTO for ratification of the TFA, which will enter into force upon formal acceptance by two-thirds of the WTO members.

NIGER: Business and Investment Regulatory Framework Bill adopted

On 1 December 2016, the Council of Ministers adopted a bill of decrees and laws to be integrated within the regulatory framework provided for business and investment in Niger. The main bill of decrees and laws, which is effective as from 2 December 2016 as part of the regulatory framework of Niger for business and investment, proposes:

  • a draft decree introducing a reviewed version of the Public Procurement and Public Services Delegation Code (amending Decree No. 2013-569 /PRN/PM of 20 December 2013) in line with the recent West African Economic and Monetary Union regulations and recommendations aiming to solve the problems relating to the code and improvements by member countries regarding public investments;
  • a draft law authorising the ratification of the Economic Community of West African States (“ECOWAS”) Additional Convention No. A/SP1/5/90 (the “Additional Convention”), which establishes a mechanism within the ECOWAS area to guarantee inter-state road transit operations. The Additional Convention introduces a chain of national guarantees regarding duties, taxes and penalties that may be incurred in the territory of member states crossed during the inter-state transit of goods;
  • a draft law authorising the ratification of the ECOWAS Additional Protocol No. A/P/SP1/7/93 on the free movement of persons, the right of residence and establishment, which was adopted on 30 June 1989 at Ouagadougou;
  • a draft of a law that authorises the ratification of ECOWAS Protocol No. A/P2/7/96, which introduces common VAT rules in the member states. The Protocol was signed on July 27 1996 in Abuja, but harmonisation efforts were still pending regarding the VAT regime. According to official announcements, VAT changes are to be enacted within the Finance Law, 2017.

NIGER: Finance Bill, 2017 adopted by National Assembly

On 27 November 2016, the National Assembly adopted the Finance Bill, 2017, which contains tax amendments to the corporate and individual taxation regimes. Further details will be reported upon publication of the Bill.

NIGERIA: National Assembly debates Companies Income Tax Act (Amendment) Bill, 2015

On 16 November 2016, the Companies Income Tax Act (Amendment) Bill, 2015 passed the second reading in the Senate. The Bill, if passed into law, proposes to provide the following additional tax incentives to companies:

  • tax holiday increase for companies engaged in the mining of solid minerals and gas utilisation (downstream operations) from three years to five years;
  • provision of a 10-year tax holiday for new companies located in areas without government-provided infrastructure (electricity, water or tarred roads);
  • reduction of the distance requirement to qualify for rural investment allowance from 20 kilometres to 10 kilometres for businesses located in areas without government-provided infrastructure;
  • increase in the rate of rural investment allowance to be claimed on tarred roads from 15% to 20%;
  • repeal the investment tax relief granted for the unavailability of telephone infrastructure; and
  • increase in the rate of investment tax relief to be claimed on tarred roads from 15% to 20%.

NIGERIA: Value Added Tax (Amendment) Bill, 2015 passed by National Assembly

On 13 October 2016, the Value Added Tax (Amendment) Bill, 2015, which originated in the House of Representatives was concurrently passed by the Senate. The Bill contains upwardly revised penalties and punishment for the commission of VAT offences.

The Bill was passed by the Senate without further amendments but has yet to receive presidential assent. These revised penalties will apply from the date of presidential assent unless stated otherwise.
 
NIGERIA: 2017 Budget presented to National Assembly

On 14 December 2016, the President presented the 2017 Budget to a joint session of the National Assembly. The Budget contains the following proposals:

  • reviving the export expansion grant scheme for the provision of tax credits to exporters;
  • providing funds for the expansion of the existing, and the development of new, export processing zones and special economic zones;
  • improving the attractiveness of the investment climate by simplifying and hastening the process of obtaining business approvals;
  • substituting joint venture cash calls in the oil and gas industry with a new funding mechanism which allows for cost recovery;
  • increasing public-private partnerships for the development and delivery of critical infrastructure;
  • promoting import substitution by creating a manufacturing hub focusing on the optimisation and utilisation of local content; and
  • protecting small and medium-sized enterprises by incentivising local manufacturers.

OHADA: OHADA Treaty and Uniforms Acts official English version published

On 12 December 2016, the Organisation pour l'Harmonisation en Afrique du Droit des Affaires (“OHADA”) issued a press release announcing that the OHADA Treaty and the Uniforms Acts, consisting of the following, have been translated and are now available in English:

  • Treaty on the Harmonization in Africa of Business Law
  • Uniform Act on General Commercial Law
  • Uniform Act on Commercial Companies and the Economic Interest Group
  • Uniform Act on Bankruptcy Proceedings
  • Uniform Act on Cooperatives
  • Uniform Act on Simplified Debt Collection Procedures and Enforcement Proceedings
  • Uniform Act on the Organization and Harmonization of Companies Accounting

The official English version is binding on the OHADA member states.

SENEGAL: New Mining Code published

Parliament adopted the new Mining Code on 30 October 2016. The new code was published on 8 November 2016 (in French only) on the website of the Extractive Industry Transparency Initiatives for Senegal.

Significant amendments include:

  • terminology simplification by cancelling the distinction between “mining concession” and “exploitation licence”;
  • extension of the prospecting licence from three years to four years, renewable twice;
  • shortening of the validity period of the exploitation licence from 25 to 20 years;
  • allocation of 0.5% of the mining companies' net sales tax to support local authorities;
  • payment of 20% of the state revenues from mining operations to a support and equalisation fund for local authorities; and
  • establishment of a rehabilitation of mining sites fund financed by all holders of exploitation licences.

SENEGAL: Budget for 2017 adopted

On 10 December 2016, Parliament adopted the Budget for 2017. Further details will be reported upon the Budget's official publication.

UGANDA: Income Tax Amendment Bill (2016) passed by Parliament

On 15 November 2016, the Income Tax (Amendment) Bill, 2016 was passed by Parliament for the second time. The Bill was initially passed by Parliament on 14 April 2016, however, the President declined to assent, and referred the Bill back to Parliament for further debate and amendments.

The Bill was passed by Parliament without further amendments but has yet to receive presidential assent. Further details will be reported in due course.

ZAMBIA: 2017 Draft Budget presented to National Assembly

On 11 November 2016, the Minister of Finance presented the 2017 Draft Budget to the National Assembly. Significant proposed measures include:

  • increasing the capital allowance rate on machinery and equipment used in farming and agro-processing from 50% to 100%;
  • Revising the individual income bands and tax rates as follows:

  • introducing a skills development levy at a rate of 0.5% on the total emoluments paid by an employer;
  • increasing the advance income tax rate on imports from 6% to 15%;
  • restructuring the current turnover tax regime by replacing the flat tax rate of 3% by progressive tax rates;
  • permitting imported copper concentrates and ores to qualify for the VAT deferment scheme;
  • discontinuing the deductibility of input VAT:
    • incurred by suppliers on all supplies, including capital goods prior to registration for VAT purposes; and
    • on petrol (except when for resale).
  • restricting the deductible input VAT on diesel to a maximum of 90% (except when for resale);
  • abolishing the VAT group registration scheme;
  • repealing the claim of input VAT on domestic refrigeration equipment, air conditioners, mobile phones, motor vehicle parts, digital satellites, television sets, decoders, video players, curtains and construction of dwelling houses for staff, except where the products are meant for resale or are the main input in the business;
  • mandating all VAT-registered suppliers to use electronic fiscal devices;
  • exempting fish feed and fish seed from VAT;
  • appointing taxpayers to withhold VAT at source;
  • amending the due dates for the submission of tax returns as follows:
    • for pay-as-you-earn tax: from the 14th day to the 10th day of every month;
    • for provisional income tax: from the 14th day to the 10th day of the month following the end of every quarter;
    • for VAT: from the 21st day to the 16th day of every month;
    • for excise duty: from the 20th day to the 15th day of every month; and
    • for final income tax and payment of balance of tax: from the 21st day to the 30th day of every month;
  • replacing the existing general penalties on late submission of turnover tax returns by specific monthly penalties;
  • requiring taxpayers to obtain a tax clearance certificate from the Zambia Revenue Authority for purchasing and changing ownership of a motor vehicle; and
  • mandating registered financial institutions to require taxpayer identification numbers from account holders.

ZIMBABWE: 2017 National Budget presented to Parliament

On 8 December 2016, the Minister of Finance and Economic Development presented the 2017 National Budget to Parliament. The proposed measures are effective from 1 January 2017 unless otherwise indicated and include:

  • revising the presumptive tax rates downwards;
  • extending the limitation on the deductibility of general administration and management fees incurred on transactions between associated companies;
  • cancelling the exemption granted to deemed dividends arising from disallowed interest expenses (ie interest incurred on a domestic loan in excess of the debt-to-equity ratio);
  • providing a definition of the term “permanent establishment” to allow for the taxation of a non-resident company on the profits attributable to a permanent establishment;
  • exempting the fees paid to non-executive directors from non-resident tax;
  • for purposes of capital gains tax, amending the definition of “chargeable specified assets” to include gains realised on the disposal of intangible property;
  • granting the following incentives to companies operating in special economic zones engaged in production for export subject to certain conditions:
    • a five-year corporate tax holiday;
    • a special investment allowance on capital equipment;
    • a flat employee tax rate of 15% for expatriates;
    • an exemption from non-resident tax for fees, royalties and dividends; and
    • duty-free importation of capital equipment, raw materials and intermediate products;
  • exempting the supply of banking and payment solutions from VAT subject to registration under the National Payments Systems Act;
  • imposing the standard rate of 15% on various food items that are currently exempt or zero-rated, including meat products, rice, margarine and potatoes;
  • reducing the VAT rate on the supply of pipeline transportation, storage and handling services for purposes of delivery of fuel through the pipeline to zero;
  • requiring that provisional and presumptive taxes be accounted for on a monthly basis rather than a quarterly basis.

ZIMBABWE: Treaty with China enters into force

On 29 September 2016, the China/Zimbabwe Income Tax Treaty, 2015 entered into force and generally applies from 1 January 2017. Provisions include:

  • a residence tie-breaker clause, in terms of which, in the case of dual resident companies, residency is allocated to the state in which the place of effective management is situated;
  • a permanent establishment definition that includes a building site, construction, assembly or installation project continuing for more than 12 months, the furnishing of services, including consultancy services, within a contracting state for period/s exceeding 183 days within a 12-month period and a dependent agent acting on behalf of an enterprise in a contracting state;
  • a maximum withholding tax rate on dividends of 2.5% if the beneficial owner is a company resident in the other state which holds at least 25% of the capital of the company paying the dividend and 7.5% in other cases;
  • a maximum withholding tax rate on interest and royalty payments of 7.5%;
  • no article dealing specifically with technical fees; and
  • in respect of capital gains, gains derived by a resident of a contracting state (State A) from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other contracting state (State B) may be taxed in State B.

ZIMBABWE: Treaty with South Africa enters into force

The new South Africa/Zimbabwe Income Tax Treaty, 2015 entered into force on 1 December 2016, replacing the South Africa/Zimbabwe Income Tax Treaty, 1965. The new treaty generally applies from 1 February 2017 for withholding taxes and with regards to other taxes in respect of years of assessment commencing on or after 1 January 2017.

Highlights of the new treaty include:

  • the introduction of a residence tie-breaker clause, in terms of which the competent authorities of the states shall endeavour to determine the country of residence by mutual agreement where an entity is a resident of both contracting states;
  • a new definition of a permanent establishment which includes a building site, construction, assembly or installation project continuing for more than six months, the furnishing of services, including consultancy services, within a contracting state for period/s exceeding 183 days within a 12-month period and a dependent agent acting on behalf of an enterprise in a contracting state;
  • providing that dividends paid by a resident of a contracting state may be subject to a maximum withholding tax rate of 5% in such state if the beneficial owner is a company resident in the other state which holds at least 25% of the capital of the company paying the dividend. A withholding tax rate of 10% applies in other cases. No relief from dividend withholding tax is available under the current treaty;
  • reducing the withholding tax rate on interest payments from South Africa to Zimbabwe to 5%;
  • providing for a reduction on the withholding tax rate on royalties from 15% to 10%;
  • introducing an article 13 dealing specifically with technical fees, which is defined as payments of any kind in consideration for any service of an administrative, technical, managerial or consultancy nature. Such technical fees may be taxed in the state in which it arises at a rate not exceeding 5% of the gross amount of the fees; and
  • whereas the current treaty does not contain any provisions specifically addressing the treatment of capital gains, in terms of article 14 of the new treaty gains derived by a resident of a contracting state (State A) from the alienation of immovable property situated in the other state (State B), or from the shares in a company the assets of which consist directly or indirectly of such property, may be taxed in State B.

Sources include IBFD’s Tax Research Platform; https://allafrica.com; http://tax-news.com

 

Celia Becker

Africa regulatory and business intelligence | executive
cbecker@ENSafrica.com
cell: +27 82 886 8744

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