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Africa Tax in Brief

AFRICA UNION: Somalia approves the African Continental Free Trade Area Agreement

On 13 August 2020, the Somalian Cabinet approved the African Continental Free Trade Area Agreement (AfCFTA), which has so far been signed by 54 countries and entered into force on 30 May 2019.

ANGOLA: Angola VAT and customs duties introduced on various products

The Law of Revision of the Angolan State Budget for 2020 was published by Law no. 31/20 of 11 August 2020 and entered in force on the same date. The law introduces value-added tax (“VAT”) at a general rate of 14% on the operation of gambling and games of chance, its commissions and all other connected operations. A reduced rate of 5% applies to the importation and supply of goods of the cesta básica and the re-importation of exported goods, in the same state in which they were exported, provided that these goods are exempt from customs duties.

The export of nationalised merchandise (ie, food, medicines and medical equipment) is now subject to the payment of customs duties at a rate of 70% of the customs value. Imported foods such as meat, butter and vegetables are also to be subject to customs duties.

ANGOLA: Special regime for regularisation of tax obligations established

Angola established a special regime for the regularisation of tax obligations in the case of tax debts that are subject to a court procedure for processes that commenced before 31 March 2020. Under this regime, taxpayers are granted an option to pay their debts without paying interest or fines. Taxpayers will also be granted a 30% waiver of the tax debt if they abandon the judicial process and pay the debt within 60 days from 11 August 2020. The payment can also be made in instalments up to a maximum period of six months, but the first instalment should be equal to or be in excess of 50% of the debt obligation.

ANGOLA: Legal regime of self-invoicing amended

Presidential Decree No. 194/20 (Legal Regime of Self-Invoicing) of 24 July 2020 amends the self-invoicing regime provided for in the Legal Regime of Invoices and Equivalent Documents, approved by Presidential Decree No. 292/18 of 3 December 2018 and applies to the acquisition of products and services from the agriculture, forestry, aquaculture, apiculture, poultry, fisheries, livestock and other sectors where the transfer of goods or provision of services is carried out by natural persons with no capacity to issue invoices or equivalent documents.

BENIN: COVID-19 tax and financial relief introduced for certain businesses

The Benin Ministry of Finance has adopted the Ministry of Finance Order No 548/MEF/CAB/SGM/DGI/DLC, providing a series of measures to provide tax and financial relief for specific businesses and economic activities affected by the COVID-19 pandemic including:

  • allowing taxpayers to deduct all donations made to the state to fight the COVID-19 pandemic for the 2020 income tax year;
  • exempting public transport companies from motor vehicle taxes and granting a credit for 2021 taxes for companies that have already paid those taxes in 2020;
  • accelerating refunds of VAT credits;
  • providing support of CFA4.98-billion to craftsmen and small traders; and
  • subsidising the interest rate on loans to agricultural businesses as well as small and medium-sized enterprises, enabling them to borrow at 12%, instead of 20%.

BOTSWANA/LESOTHO: Treaty Between Botswana and Lesotho enters into force

According to a press release of 26 August 2020, published by the Lesotho Revenue Authority, the Botswana - Lesotho Income and Capital Tax Treaty (2010) entered into force on 30 January 2020.

The treaty generally applies in Botswana from 29 February 2020 for withholding taxes and from 1 April 2020 for other taxes. In Lesotho, the treaty applies from 29 February 2020 for withholding taxes and from 1 July 2020 for other taxes.

BOTSWANA: Public Notice on the filing of 2020 Annual Other Withholding Tax Returns issued

The Botswana Unified Revenue Service (“BURS”) recently issued a public notice informing taxpayers that the submission of the annual other withholding tax return (ITW10O) is not available online following implementation of the new Lekgetho Live Tax System.

Taxpayers are advised to wait for BURS to announce when the service will be ready for online uploading of the June 2020 tax year-end ITW10O return. It also provides that the printing of online tax certificates (ITW9) for periods before implementation of the Lekgetho Live will be ready by 10 August 2020. 

BOTSWANA: Public Notice on the filing of withholding tax returns by employees issued

The BURS issued a public notice informing taxpayers that the withholding tax annual returns (ITW10) are to be filed under two categories as follows:

  • category 1 (applicable to employers who have been filing Pay-As-You-Earn (“PAYE”) monthly returns online):
    • employers are advised not to file the annual returns until such time that BURS notifies them to do so; and
    • withheld tax should be paid online accordingly;
  • category 2 (applicable to employers who have been filing PAYE monthly returns manually):
    • employers should continue to file their WHT annual returns (ITW10) manually for the tax year ended June 2020;
    • the completed manual returns should be emailed to lekgetholivereturn@burs.org.bw, in adherence to the COVID-19 regulations of social distancing; and
    • payment of the withheld PAYE tax should be made online through the taxpayer’s bank’s e-service platforms.

BURKINA FASO: Amending Finance Law 2020 adopted

The Burkina Faso Government adopted the amending Finance Law No. 031-2020/AN on 9 July 2020 and promulgated by Decree No. 2020-0649/PRES of 20 July 2020 to adjust the budget and implement the tax measures announced to counter the impact of the COVID-19 pandemic on the economy. Significant measures include:

  • a reduced VAT rate of 10% (instead of 18%) applicable to hotels, restaurants and assimilated businesses with effect from 1 April 2020;
  • exemption from synthetic tax for individuals involved in independent professional activities with an annual turnover below CFA15-million; and
  • reduction by 25% of business licence duty for public passenger transport, hotels, restaurants and tourism businesses.

CABO VERDE: Incentives and credits announced to encourage job creation

Cabo Verde adopted Law No. 100/IX/2020 of 11 August with effect from 12 August 2020 which introduces a number of amendments, including:

Income tax

  • the granting of a corporate income tax or personal income tax credit of CVE20 000 to taxpayers in respect of each employee hired for a minimum of 12 months. A state allowance of up to 50% of the salary received by at least two employees (capped at CVE25 000) is also to be granted to the abovementioned taxpayers that create five jobs or more;
  • taxpayers subject to corporate income tax (“CIT”) whose advance payments are due by September and December 2020 will be governed by the following provisions:
    • the respective amount can correspond to 10% of the CIT assessed in the previous tax year; and
    • the payments can be waived in case of proof of an effective and significant loss of activity prior to the respective payment date (ie, if between April 2020 and the payment dates the turnover decreased by at least 40% or more compared with the same period in the previous year).
  • taxpayers subject to personal income tax (“PIT”) whose advance payments are due by September and December 2020 will be governed by the following provisions:
    • the respective amount can correspond to 2.5% of the taxable profit assessed in the previous tax year, and can be made in September and December 2020; and
    • the payments can be waived in case of proof of an effective and significant loss of activity prior to the respective payment date (ie, if between April 2020 and the payment dates the turnover decreased by at least 40% or more compared with the same period in the previous year).
  • incentives are granted to corporate entities and businesses operated by individuals which are affected by the COVID-19 pandemic, including CIT taxpayers and PIT taxpayers with organised accounting will be entitled to an additional deduction of 30% of specified eligible expenses incurred as from 25 April 2020, including expenses incurred in respect of the acquisition of personal protective equipment, cleaning equipment, cleaning services, fees charged by certified auditors and accountants for the certification of payments, etc.

VAT and customs duties

  • a reduced VAT rate of 10% (as compared to the standard rate of 15%) for specified taxpayers including:
    • the tourism industry, on the rendering of services related to accommodation in hotels and similarly in the catering industry;
    • tour operators who are resident micro, small and medium-sized companies, on all combined services rendered in Cabo Verde; and
    • entities with tourist utility status that promote cultural events on the rendering of the respective services.
  • allowing a credit in respect of the amount of VAT incurred by qualified farmers on the acquisition of water for use exclusively in agricultural activities.
  • an exemption from VAT on the sale of laptops, desktops and tablets by educational and professional training institutions located in Cabo Verde.
  • an exemption from VAT and customs duties on the importation of:
    • machinery and materials aimed at preparing premises to cope with the existing rules on matters of sanitisation required under the medical protocols applicable during the COVID-19 pandemic;
    • photo-voltaic panels, inverters and batteries to store solar power, to be used in the production of water for agricultural purposes;
    • laptops, desktops and tablets by educational and professional training institutions located in Cabo Verde, as well as by students of such institutions;
    • fibre optic submarine cables as well as other materials to be used in project EllaLink and in any other projects to connect international submarine cables; and
    • materials and equipment to be used in the maintenance, construction or refurbishment by the Central Sports Institute, of spaces for sports practice, sports associations and sports clubs.

Stamp tax

  • an exemption from stamp tax in respect of the principle loan, interest and commissions on credits granted to Cabo Verde's educational and professional training institutions and respective students, for the acquisition of laptops, desktops and tablets; and

Tax administration

  • the payments of tax debts, including in respect of VAT and withholding taxes, originating prior to April 2020, can be made in 60 interest-free instalments with effect from April 2020. This measure excludes tax debts already covered by the special regime of regularisation of tax debts, that allowed the payment in instalments until 31 December 2020, as foreseen in Decree- Law NO.37/2020, of 31 March 2020.

DEMOCRATIC REPUBLIC OF THE CONGO: On-site tax audits and enforced recovery of tax arrears resumed

The General Director of the Congolese Tax Office (Direction Générale des Impôts DGI) in an official statement n°01/0032/DGI/DESCOM/MT/2020 issued on 17 August 2020 announced the resumption of on-site tax audits and enforced recovery of tax arrears which had been suspended to alleviate the economic impact of the COVID-19 pandemic.

DEMOCRATIC REPUBLIC OF THE CONGO: VAT exemption on importation by mining companies suspended

The Government Council’s decision of 24 July 2020 to suspend the VAT exemption on imports by mining companies was implemented by Note No. RDC/GC/ECOFIN/PR/089/2020 issued on 31 July 2020.

DEMOCRATIC REPUBLIC OF THE CONGO: Tax exemption audits announced by General Finance Inspectorate

In response to instructions of the President, the Director of the General Finance Inspectorate has informed taxpayers that an exhaustive audit on tax exemptions will be performed. In cases of fraud, illegality or abuse, tax exemptions will be cancelled and judicial procedures could be triggered. Tax exemptions unduly granted will give rise to the recovering of taxes due and the claiming of the corresponding penalties.

GHANA: Treaty with Czech Republic enters into force

On 11 August 2020, the Czech Republic - Ghana Income Tax Treaty (2017) entered into force and generally applies from 1 January 2021.

GHANA: COVID-19 pandemic: Second window for the submission of reports under the Common Reporting Standard announced

The Ghana Revenue Authority, in a public notice on its website on 28 July 2020, announced a second reporting window for the submission of 2019 reports by reporting financial institutions under the Common Reporting Standard from 1 July to 30 September 2020. The initial deadline was 30 June 2020 but this has been revised due to the adverse effects of the COVID-19 pandemic.

KENYA: Digital Service Tax announced

Finance Act 2020 introduced the digital service tax (“DST”) on the income of a resident or non-resident person derived or accrued in Kenya from the provision of services through a digital marketplace at 1.5% of the gross transaction value of the service. Further to the introduction of the DST, the Cabinet Secretary for National Treasury and Planning issued the Income Tax (Digital Service Tax) Regulations 2020, which will take effect on 1 January 2021.

The DST is to apply to:

  • streaming and downloadable services of digital content, including but not limited to movies, videos, music, applications, online games and e-books;
  • transmission of data collected about users which has been generated from such users' activities on a digital marketplace, however monetised;
  • provision of a digital marketplace, website or other online applications that link buyers and sellers;
  • subscription-based media, including news, magazines and journals;
  • electronic data management, including website hosting, online data warehousing, file-sharing and cloud storage services;
  • supply of search-engine and automated helpdesk services, including supply of customised search engine services;
  • tickets bought for live events, theatres, restaurants, etc. purchased through the Internet;
  • online distance teaching via pre-recorded medium or eLearning, including online courses; and
  • any other service provided or delivered through an online digital or electronic platform, excluding any service whose payment is subject to withholding tax.

The services of a licensed financial service provider carrying out online services which facilitate payments, lending, or trading of financial instruments, commodities or foreign exchange will not be subject to DST.

The gross transaction value will exclude VAT and will be, in the case of a digital service provider, the payment received as consideration for the services; and in the case of a digital marketplace provider, the commission or fee paid for the use of the platform.

The Regulations also include definitions of critical terms, such as a digital service provider, digital marketplace provider, payment service provider and platform and provide for the determination of user location, accounting and payment, and keeping records. They also provide that, in addition to the penalties stipulated in the general tax procedures, a person that fails to comply with the Regulations will be restricted from accessing the digital marketplace in Kenya until the obligation is fulfilled.

The Kenya Revenue Authority (“KRA”) is inviting public comment on the Regulations until 24 August 2020, to be emailed to stakeholder.engagement@kra.go.ke.

KENYA: Public Notice on the processing of tax waiver applications issued

The KRA issued a public notice on 30 July 2020 stating that:

  • it has finalised the roll out of the system enhancements for processing of waiver of penalty or interest applications and has embarked on clearing the backlog of the applications;
  • it will be contacting each applicant through email or SMS contact information provided on their iTax profile in order to expedite the processing of the pending applications;
  • applicants will be required to submit supporting evidence for each application within a period of 30 days from the date specified in the aforementioned communication; and
  • all waiver applications presented by the specified deadline without supporting evidence shall be rejected and the penalty and interest thereof demanded for payment.

KENYA: Public Notice on inflation adjustment on specific rates of excise duty issued

The KRA, on 24 August 2020, issued a public notice informing manufacturers and importers of excisable goods that the Commissioner General will adjust the rates of excise duty using the average inflation rate for the financial year 2019/2020, as determined by the Kenya National Bureau of Statistics with effect from 1 October 2020.

The KRA invites interested members of the public and stakeholders to submit their views on the excise inflation adjustment on or before 4 September 2020.

MAURITIUS: Minimum and maximum basic wage for the calculation of NPF and NSF contributions reviewed

The Mauritius Revenue Authority, on 29 July 2020, issued a communiqué informing employers that the minimum and maximum basic wage on which contributions to the National Pensions Fund (“NPF”) and National Savings Fund (“NSF”) are payable, have been reviewed as detailed in the Notice with effect from 1 July 2020

MOZAMBIQUE: Customs clearing process to be expedited and VAT credits to be allowed to offset other tax debts

The Government of Mozambique, in its continued dedication to fight the COVID-19 pandemic, announced certain measures in Ministerial Diploma No. 41/2020 of 6 August 2020, following the generic measures adopted by the government to help alleviate the impact of the COVID-19 by Decree No. 23/2020 of 27 April 2020.

The clearing process of imported products used in the prevention and treatment of the pandemic and specified in the Ministerial Diploma No. 41/2020 of 6 August 2020 is to be expedited until 31 December 2020, subject to the submission of the following documents:

  • an application addressed to the General Director of Customs stating the tax number and domicile of the applicant and destination of the imported goods;
  • the responsibility term (letter required by law, where the importer assumes all responsibility for the imported goods and payment of related taxes and import duties);
  • a special licence issued by the Ministry of Health (for importation of medicines, vaccines, health products and hospital supplies);
  • the customs documents of the goods;
  • an approved list of goods to be imported;
  • a clearance certificate issued by the Customs Court; and
  • a tax clearance certificate.

Importers with outstanding liabilities will, however, not benefit from the expedited customs clearance, regardless of the fact that they import the listed goods.

Taxpayers will also be allowed to offset VAT credits against debts related to other taxes of a different nature until 31 December 2020. In order to benefit from this, taxpayers must provide a written request supported by specified documentation to the Tax Department Director who should issue a credit note.

For ongoing VAT refund requests, where a credit note has been issued, the taxpayer may use that credit note for the purpose of offset, provided that the application is supported by specified documentation.

MOZAMBIQUE: e-Taxation Project launched

In a bid to modernise its services, the Mozambique Revenue Authority recently introduced the e-Taxation Project in terms of which taxpayers are able to submit their tax returns and make tax payments electronically.

Tax payments are made via local commercial banks which are linked to the system and proof of payment which is issued electronically by the bank is accepted as proof of payment of taxes due.

Taxpayers can join the e-Taxation System by downloading an application form from https://edeclaracao.at.gov.mz.

MOZAMBIQUE: Obligations under the Special Taxation and Fiscal Benefits Regime for Mining and Petroleum Activities clarified

The Minister of Economy and Finance by Ministerial Diploma nº 37/2020 of 30 April 2020 with effect from 30 July 2020 approved the following tax forms to comply with the tax obligations arising from the Special Taxation and Fiscal Benefits Regime for the Mining Activities, approved by Decree nº28/2015, of 28 December:

  • Mining Production Tax Declaration - Form 1PM;
  • Declaration of the Surface Tax - Form ISS; and
  • Mining Resource Income Tax Declaration - Form IRRM.

The Ministry also by Ministerial Diploma nº 36/2020 of 30 April 2020 with effect from 30 July 2020 approved the following tax forms to comply with the tax obligations arising from the Special Taxation and Fiscal Benefits Regime for the Petroleum Operations, approved by Law nº14/2017 of 28 December:

  • Declaration of the Petroleum Production Tax- Form IPP; and
  • Cost Recovery Declaration - Form RC.

RWANDA: Waiver of penalties, interest and fines on late payment announced

The Rwanda Revenue Authority (“RRA”), on 21 August 2020, announced a waiver of penalties, interest and fines on late payments in terms of which:

  • taxpayers who requested a waiver of penalties, fines and interest on late payment of Pay-As-You-Earn, value-added tax and withholding tax in the months of March, April and May 2020, as well as corporate income tax due for 2019 as a result of hardships caused by the COVID-19 pandemic may proceed with the payment of the principal tax due not later than 30 September 2020;
  • taxpayers who have not yet filed their tax due for the period mentioned above, are requested to file and pay their principal tax due not later than 30 September 2020;
  • taxpayers who have not paid their principal tax due by 30 September 2020 will be subject to all penalties, fines and interests accrued; and
  • taxpayers who have already paid their tax dues are not beneficiaries of this waiver, even in the event that they find themselves on the list which is published on the RRA website.

TANZANIA: Transfer Pricing Guidelines 2020 issued

Following the issuing of the Tax Administration (Transfer Pricing) Regulations 2018 (“Regulations”) which replaced the 2014 Regulations and came into force in April 2018, the Tanzania Revenue Authority (“TRA”) has provided practical guidance on the application of the Regulations in the form of the Transfer Pricing Guidelines 2020 (“Guidelines”), which were issued on 1 July 2020.

The Guidelines cover, inter alia, the different methods for determining the arm’s length price, the comparability analysis, transfer pricing documentation, the application of the OECD and UN models and advance pricing arrangements.

UGANDA: Withholding agents required to conduct compliance checks and settle outstanding liabilities

The Ugandan Revenue Authority (“URA”), in a public notice dated 17 August 2020, reminded designated withholding tax agents to withhold tax at a rate of 6% on the gross amount of payments for goods and services made to any person that, in aggregate or as a single payment, exceed UGX1-million. The tax must be remitted to the URA within 15 days after the end of the month in which the transaction took place. If the agent fails to deduct and remit the tax, it will be liable for the tax not withheld.

Taxpayers are required to confirm whether they are designated withholding agents as provided for in section 119 of the Income Tax Act, Cap. 340 and if so, to amend the registration details on their tax identification number to include withholding tax.

All agents are advised to carry out a compliance check from 15 August to 15 September 2020 to review both past and current transactions and identify those that are subject to withholding tax, file or amend relevant tax returns, charge withholding tax and pay any outstanding withholding tax which was not remitted to the URA

UGANDA: Penalties and interest on voluntarily disclosed outstanding tax liabilities to be waived

The URA on 16 July 2020 issued a public notice on voluntary tax disclosure. The notice provides guidance on the application of the Tax Procedures Code Act provisions that a taxpayer who voluntarily discloses any tax that should have been declared to the Commissioner, may enter into an agreement with the Commissioner to pay the outstanding unpaid tax and that person shall not be required to pay any interest or fine due. Read more here.

ZAMBIA: Treaty with Mauritius terminated

The Mauritius National Assembly published an update of 30 June 2020 confirming that the Mauritius - Zambia Income Tax Treaty (2011) has been terminated by Zambia. The treaty will continue to apply in Zambia up to 31 December 2020 and in Mauritius up to 30 June 2021.

SOUTH AFRICA: Highlights of the 2020 Tax Indaba

The first virtual Tax Indaba is being held from 7 September to 9 September 2020.  Below are some key takeaways from the first two days of the conference:

  • Tax collection has slowed, but it is believed that raising taxes would be detrimental in the current environment.
  • Using AI, the South African Revenue Service (“SARS”) has made strides in simplifying tax compliance.
  • SARS will focus on tax evaders rather than those unable to comply.
  • COVID-19 has accelerated digitizationacross Africa, creating cross border trade opportunities, but also risks. This also highlights the need to the OECD framework to be finalised faster.
  • Promising steps have been taken in providing for infrastructure and PPPs, however it is important for government to balance tax policy and investment opportunities.

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

Celia Becker

Africa Regulatory and Business Intelligence | Executive

cbecker@ENSafrica.com

+27 82 886 8744