BY Celia Becker
Africa Tax in Brief
AFRICA: African Tax Administration Forum publishes COVID-19 Pandemic Tax Administration and Policy Developments Guide
The African Tax Administration Forum (“ATAF”) has published the Tax Administration and Policy Developments in Response to the COVID-19 Pandemic Guide to assist African jurisdictions to limit the impact of the pandemic on their ability to raise tax revenue.
Recommendations are provided in respect of tax relief measures, non-tax relief measures, business continuity, enterprise risk management, tax fraud and customs revenue, which can be customised to any country's unique set of circumstances.
The guide was prepared based on input provided by African tax administrations, obtained through surveys and virtual engagements and follows the suggested COVID-19 Measures for Revenue Authorities Guide published on 8 April 2020.
AFRICA: Tunisian Parliament Approves African Continental Free Trade Area Agreement
The Tunisian Parliament approved the African Continental Free Trade Area Agreement (“ACFTA”) on 22 July 2020. To date, the ACFTA has been signed by 54 countries and entered into force on 30 May 2019.
ANGOLA: Various tax codes amended
Law No. 26/20 of 20 July 2020 amends the Industrial Tax Code with effect from 19 August 2020. Significant amendments include:
- reducing the standard industrial tax rate from 30% to 25%;
- applying a 35% tax rate to insurance and banking entities, telecommunications operators and Angolan oil companies;
- increasing the final withholding tax rate on services provided by non-resident entities from 6.5% to 15%, except in cases where a double taxation treaty applies;
- extending the carry-forward period for tax losses from three years to five years; and
- amending the tax rates, fees and rules relating to the merger, division or liquidation of companies.
Law no. 28/2020 of 22 July 2020 approved several amendments to the Personal Income Tax Code with effect from 21 August 2020, including:
- broadening the tax base to include all work-related rights, benefits and pecuniary or financial advantages earned by employees or service providers not included in the main remuneration;
- including rent allowances, severance payments and cashier allowances in the taxable base for personal income tax;
- exempting profits distributed to shareholders of legal persons (either with or without a commercial form) from personal income tax;
- in respect of Group A taxpayers, amending tax brackets from AKZ70 000 to more than AKZ10 000 001 (previously, AKZ35 000 to AKZ230 001 and above) and the progressive tax rates from 10% to 25% (previously 7% to 17%).
- Group B taxpayers is subject to a 6.5% personal income tax withholding in respect of the gross amount of income paid by entities with organised accounts (previously only 70% of the amount of the services provided was subject to withholding tax). Other self-employment income is taxed at a 25% flat rate (previously 15%);
- Group C taxpayers earning business income not subject to withholding tax is taxed at a flat rate of 25% (previously 30%);
- non-resident service providers are subject to a 15% final withholding tax on income earned.
Law 20/20 of 9 July 2020 approves the Property Tax Code, which applies with effect from 8 August 2020 and provides for property tax to be levied at the following rates:
- urban properties: up to 0.5% depending on the value of the real estate;
- plots of land for construction: 0.6%;
- rural properties: hectare’s value or the sum of each hectare’s value;
- leasehold properties: 25% of the taxable income; and
- properties unoccupied for more than one year and plots of land for construction for which the useful and effective use criteria are not met for three consecutive or six interpolated years: additional taxation of 50% of the amount of the tax due.
BOTSWANA: Government defers payment of tax payable during the period of the COVID-19 pandemic to 2021
The Income Tax (COVID-19) (Deferment of Self-Assessment) Order 2020 published on 4 May 2020 under Statutory Instrument No. 73 of 2020, which took effect on 1 March 2020, provides that during the period of the COVID-19 pandemic, taxpayers with a valid tax clearance certificate are eligible for deferment of taxes payable between 1 March and 30 September 2020, inter alia, as follows:
- in respect of corporate tax payable in advance in four quarterly instalments, the taxpayer shall, for any two quarters in the period of the pandemic, make a payment of quarterly instalments equal to 25% of the instalment;
- in respect of the balance of the corporate tax not paid during the pandemic period, the taxpayer shall make a payment equal to 25% of the balance due.
Amounts not paid in this period shall be deferred and paid between 1 March and 31 December 2021. No interest will be charged on the deferred amounts if the payments are made within a stipulated time. Interest will, however, be charged at a rate of 1.5% compounded for each month or part of a month during which the amount remains unpaid.
BOTSWANA: Validity of tax clearance certificates extended
As per a public notice issued by the Botswana Unified Revenue Service (“BURS”), the validity of all tax clearance certificates that expired or are due to expire during the period commencing on 1 April 2020 and ending on 31 March 2021, are extended to 31 March 2021.
REPUBLIC OF CONGO: COVID-19 pandemic: Parliament Adopts Amending Financial Law for 2020
The Parliament of the Republic of Congo adopted an amending financial law for the 2020 fiscal year on 23 May 2020, implementing the tax measures announced on 15 April 2020.
EQUATORIAL GUINEA: Government implements COVID-19 pandemic emergency tax measures
The government, through Decree 43 of 31 March 2020 (Decree 43/2020), has implemented a series of tax measures to mitigate the economic impact of the COVID-19 pandemic, including a special declaration system for regularising tax debts, negotiating tax debts with oil companies and measures to support small and medium-sized enterprises that are not in the oil sector.
In addition, until 30 September 2020, a 100% relief from social security contributions will also be granted to companies operating in food distribution and commercialisation, as well as to companies that hire new employees in order to enhance their labour force to comply with the regulations issued by the health authorities.
KENYA: Convention and Protocol on Mutual Administrative Assistance in Tax Matters enter into force
On 1 November 2020, the multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, will enter into force in respect of Kenya, following Kenya depositing its instrument of ratification with the OECD on 22 July 2020. The convention and the amending protocol will generally apply from 1 January 2021 for Kenya.
KENYA: Public notice on fringe benefit tax, the deemed interest rate and low interest rate issued
As per a public notice issued by the Kenya Revenue Authority on 15 July 2020, the following interest rates are applicable for the relevant periods:
- market interest rate for purposes of fringe benefit tax: 7%, applicable for the months of July, August and September 2020;
- deemed interest rate: 7%, applicable for the months of July, August and September 2020. Withholding tax at the rate of 15% on the deemed interest shall be deducted and paid to the Commissioner by 20th of the month following the month of computation; and
- low interest benefit:7%, applicable for the period from July 2020 to December 2020.
KENYA: Insurance agency and brokerage services to remain exempt from VAT pending the hearing of a petition filed by the Association of Kenya Insurers
In a ruling delivered on 16 July 2020, the High Court granted interim orders to suspend value-added tax (“VAT”) on insurance agency and brokerage services pending the hearing and determination of the main constitutional petition filed by the Association of Kenya Insurers (“AKI”).
The AKI petition challenges the amendment introduced by the Tax Laws (Amendment) Act, 2020 deleting insurance agency and insurance brokerage services from the list of exempt supplies under Paragraph 10 of Part II of the First Schedule to the VAT Act, 2013 with effect from 25 April 2020.
AKI have challenged the amendment as being unconstitutional on the grounds that:
The court granted the interim conservatory orders on the grounds that:
- AKI presented an arguable case as to whether they were granted an adequate opportunity for public participation and whether the period provided for public participation was sufficient;
- failure to grant the conservatory orders would prejudice AKI members as they would have already paid the VAT and would not be able to get it back; and
- granting the conservatory orders protects AKI's members' constitutional rights under Articles 27 and 40 of the Constitution of Kenya, 2010 which provide for equality, freedom from discrimination and the right of property.
KENYA: Kenya gazettes tax treaty with Mauritius
On 30 June 2020, Kenya gazetted the new Kenya - Mauritius Income Tax Treaty (2019), by way of Legal Notice No. 114 of 2020, as published in Official Gazette Supplement No. 106 of 30 June 2020, as Legislative Supplement No. 67 of 2020.
The Legal Notice has been published afresh after the High Court on 15 March 2019 declared a previous Legal Notice (No. 59 of 2014) gazetting the Kenya - Mauritius Income Tax Treaty (2012) to be invalid.
KENYA: Government Gazettes Law regulating registration and practice of tax agents
The Cabinet Secretary for National Treasury has published the Tax Procedures (Tax Agents) Regulations, 2020 to regulate the registration and practice of tax agents in Kenya through Legal Notice No. 111 of 2020 in Gazette Volume CXXII – No. 126 of 3 July 2020 as Legislative Supplement No. 100 of 2020.
LESOTHO: Introduction of indirect IVCF functionality in ASYCUDA
A news release issued by the Lesotho Revenue Authority (“LRA”) on 14 July 2020 provides that the LRA has augmented the Import VAT Credit Facility (“IVCF”) to cater for indirect imports from South Africa by VAT vendors. The IVCF:
- allows VAT-registered commercial importers who purchase goods on credit for tax invoices in excess of ZAR10 000 from South Africa and make indirect import into Lesotho to have their import VAT payment deferred at the time of importation; and
- is available only to VAT-registered commercial importers who would have applied and whose applications have been approved.
NIGERIA: COVID-19 pandemic - Deadline for companies income tax returns extended
The Federal Inland Revenue Service (“FIRS”) has extended the deadline for the filing of Companies Income Tax returns for companies with December yearends from 31 July 2020 to 7 August 2020 via the FIRS official Twitter account on 30 July 2020.
NIGERIA: Stamp duty to be charged on technology, e-commerce and cross-border transactions
On 20 July 2020, the FIRS published a public notice providing clarifications on the administration of the Stamp Duties Act, the scope of which had been expanded by Finance Act 2019.
Prior to the amendment, electronic transactions were not dutiable, but stamp duty is now applicable to technology, e-commerce and cross-border transactions, in line with global practice and current economic realities.
NIGERIA: COVID-19 pandemic - Final extension for the waiver of interest and penalties on outstanding tax liabilities allowed
The FIRS announced the final extension for the waiver of interest and penalties on tax liabilities from 30 June to 31 August 2020.
The waiver applies to taxpayers with outstanding tax liabilities arising from:
- tax audit;
- tax audit investigation desk review assessments; and
- approved instalment payment plans under the voluntary asset and income declaration scheme (VAIDS) and such other plans that are yet to be fully liquidated.
No further extension will be granted and tax debtors are advised to settle outstanding tax liabilities within the announced timeframe to enjoy the waiver of accumulated interest and penalties.
TANZANIA: Finance Act 2020 amending several Tax Acts adopted
The Tanzania Finance Act, 2020 amending various tax laws, was assented to by the president on 16 June 2020 and published in the Official Gazette of Tanzania No.8. Vol. 101 of 19 June 2020. It became effective on 1 July 2020.
Significant proposed amendments include those announced in the 2020/21 Budget and reported on in July, as well as inter alia:
Corporate income tax
- limiting the deductibility of the realized foreign exchange loss from non-interest bearing loans to the amount attributable to not more than 70% of the obligation;
- limiting the deductibility of the previous year's unrelieved losses to a maximum of 70% of the income of the particular year of income before deductibility of such losses;
- taxing investment income earned by a non-resident person conducting investment activities in Tanzania. An amendment to the Companies Act, Cap 423 also introduced, inter alia, the mandatory disclosure of the beneficial owners of the company.
Sources include IBFD’s Tax Research Platform; www.allafrica.com; http://tax-news.com
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