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tax | 10 Sep 2019
BY Celia Becker
ENSight

tax


Africa tax in brief

GHANA: Mid-year budget statement presented to Parliament

On 29 July 2019, the Minister of Finance and Economic Planning presented the 2019 mid-year budget statement for the six months ending 31 December 2019 to Parliament.

The government announced an increase in the Communication Service Tax from 6% to 9% on an ad valorem rate and requested increases in the Road Fund Levy, the Energy Debt Recovery Levy and the Price Stabilisation and Recovery Levy. However, the Luxury Vehicle Levy is to be withdrawn.

ETHIOPIA: Directive on implementation of capital gains tax issued

On 30 June 2019, the Minister of Finance issued Directive No. 8/2019 on the Implementation of Taxation of Gains on Disposal of Certain Investment Assets, which became effective on 30 August 2019. The Directive provides as follows:

  • gains from the disposal of immovable assets are subject to capital gains tax at a rate of 15%, while gains on the disposal of shares and bonds are subject to 30% tax;
  • where companies sell their shares for an amount that exceeds their par value, the gain will be included in the companies' business income;
  • where an asset is held entirely for the purpose of deriving rental income, or is used as a business asset by a taxpayer, the consideration from the disposal that exceeds the net book value of the asset at the time of disposal will be included in the rental or business income of the taxpayer while the consideration that exceeds the cost of the asset will be subject to capital gains tax;
  • the cost of an immovable asset will be adjusted for inflation in accordance with the inflation rate that is released by the Ministry of Finance annually; and
  • a taxpayer who is required by law to keep books of accounts must provide the tax authority with information regarding the acquisition date and costs of the asset, the amount of depreciation deductions made against the asset and the consideration from the disposal of the asset. Where the tax authority rejects the document submitted by the taxpayer to prove the consideration, it may use the fair market value of the asset for computing the taxable gain.

ETHIOPIA: Parliament enacts customs (amendment) proclamation

On 31 July 2019, the parliament enacted a customs amendment proclamation amending Customs Proclamation No. 859/2014. The proclamation will be effective upon its publication in the Federal Negarit Gazette and provides that:

  • the Customs Commission may allow modification of the customs declaration of goods where the declarant applies for the change prior to the release of the goods and provides sufficient reasons;
  • the Commission may order a cargo tracking device to be installed on the carriage of goods to control and track the movement of goods to customs destinations and crossings;
  • only the Ministry of Finance may grant duty-free rights and privileges on imports and exports of goods and the powers previously granted by law to other government bodies to allow duty-free rights are transferred to the Ministry of Finance. Duty-free rights obtained from project agreements signed by government bodies will be effective only where they are approved by the Ministry of Finance;
  • a person who has transferred temporarily imported goods to a third party that has no similar rights will be required to pay the taxes and duties payable on the goods without prejudice to the forfeiture of the security furnished to the Commission upon importation; and
  • a person who uses temporarily imported goods for purposes other than the purposes the goods are intended to serve is liable to a penalty of 50% of the taxes and duties payable on the re-export of the goods.

NAMIBIA: Namibia joins the Inclusive Framework for implementing measures against BEPS

Namibia has joined the Inclusive Framework for the global implementation of the Base Erosion and Profit Shifting (BEPS) Project. The Inclusive Framework has now been joined by a total of 134 countries.

NAMIBIA: VAT exemption for farmers on imports of certain goods

On 23 July 2019, the Minister of Finance granted a value added tax (VAT) exemption with effect from 23 July 2019 to farmers on the importation of the following goods, following the declaration of a state of emergency due to the country-wide drought:

  • roughage, such as lucerne, grass teff or other wheat straw, oats straw/hay, maize hay, sorghum and silage; and
  • energy and protein concentrates, such as cotton oil cake, sunflower oil cake, maize chop, wheat bran, soya oil cake, full fat soya, maize meal, whole maize kernels, molasses, wheat, barley, oats, sunflower hulls, soya hulls whole cotton seed and maize bran.

The exemption only applies to individual farmers (importers) who directly import the goods for their own use and not for the purpose of reselling.

RWANDA: Parliament approves new Tax Procedure Code and Law on Excise Duty

On 31 July and 1 August 2019, the parliament (Chamber of Deputies) approved the Law on Excise Duty and the new Tax Procedure Code, implementing the measures announced during the Budget speech of 13 June 2019.

Once signed into law by the President and gazetted, the new Law on Excise Duty and Tax Procedure Code will repeal the current law and code.

SEYCHELLES: Regulations on long-service allowances exemption published

On 8 August 2019, the Revenue Commission published the Income and Non-Monetary Benefits Tax (Amendment of Second Schedule) Regulations, 2019 which were issued through Statutory Instrument 46 of 2019 and gazetted on 29 July 2019. In terms of the Regulations:

In terms of the Regulations long-service allowances paid to employees, whether working in the public or private sector, are tax exempt. The monthly exempt amounts vary from SCR 500 for service of 5-10 years to SCR 4 000 for more than 40 years of service.

UGANDA: National Social Security Fund Bill tabled

On 13 August 2019, the National Social Security Fund Bill, 2019 was tabled before the parliament of Uganda and proposes inter alia the following amendments to the National Social Security Act, Cap 222:

  • expanding social security coverage by providing for mandatory contribution by all workers, regardless of the size of the enterprise or the number of employees and allowing voluntary contributions to the National Social Security Fund (NSSF);
  • the appointment of a stakeholder board by the Minister of Finance, consisting of representatives from the government, employers and employees;
  • empowering the NSSF to recover from a third party any sum owed to a defaulting contributing employer so as to cover the contribution, penalty or interest charged;
  • providing for mid-term access to voluntary contributions;
  • deferring taxes on contributions and scheme income to the time of payment of benefits; and
  • allowing for a tax exemption for member contributions not exceeding 30% of the member's income.

ZAMBIA: Sales tax implementation postponed further

On 2 August 2019, the Minister of Finance moved that parliament should withdraw the Sales Tax Bill (N.A.B Number 7 of 2019) from the current sitting of the parliament. The Bill is to be re-introduced during the Budget session commencing in September 2019 and will be implemented in January 2020.

ZIMBABWE: Finance Bill (No. 2) 2019 approved by parliament

On 1 August 2019, the parliament approved Finance Bill (No. 2) 2019. Significant amendments include:

  • the following new thresholds and rates of individual taxation applicable from 1 August to 31 December 2019:

 

 Monthly income     (ZWD)

 Tax rate   (%)

 Monthly income   (USD)

 up to 700

 0

 up to 70

 701 – 3 000

 20

 71 – 300

 3 001 – 10 000

 25

 301 – 1 000

 10 001 – 20 000

 30

 1 001 – 2 000

 20 001 – 30 000

 35

 2 001 – 3 000

 over 30 000

 40

 over 3 000

 

  • the following new mining royalty rates, effective from 1 August 2019:
    • gold produced by small scale miners: 2%
    • gold produced by other miners and sold for a price below USD 1,200 per ounce: 3%; and
    • gold produced by other miners and sold for a price above USD 1,200 per ounce: 5%
  • an amendment of the definition of "minerals" in the Income Tax Act (Chapter 23:11) to bring it in line with that under the Mines and Minerals Act;
  • with effect from 1 August 2019 thin capitalisation rules will no longer apply to loans contracted by a public entity through a government credit facility as defined in the Public Entities Corporate Governance Act (Chapter 10:31);
  • for purposes of the intermediated money transfer tax (IMTT), levied at 2%, with effect from 1 August 2019:
    • the maximum amount of IMTT tax is increased from ZWD 10 000 to ZWD 15 000 per transaction;
    • the exempt amount is increased from ZWD 10 to ZWD 20;
    • the flat rate cap for a single transaction is increased from ZWD 500 000 to ZWD 750 000; and
    • the definition of "financial institution" is extended to include a bank, an operator of a mobile money transfer platform and a mobile money transfer agent; and
  • taxpayers trading in foreign currency are required to pay the taxes in foreign currency.

 

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

Celia Becker: Executive – Africa Business Intelligence

For further detail on the above, please contact cbecker@ensafrica.com.