Africa Tax in Brief
ANGOLA: Instruction issued to clarify tax amendments
The General Tax Administration, on 15 April 2021, issued Instruction No. 0033/GACA/GJ/AGT/2021 to clarify and standardise the rules for the application of the amendments to the Industrial Tax Code and the Employment Income Tax Code.
BOTSWANA: Validity of expired tax clearance certificates announced
The Botswana Revenue Service, in a recent public notice, announced that the validity of all tax clearance certificates is extended for a three-month period until 30 June 2021. Customers are advised to continue using the expired tax clearance certificates for tender purposes or for any other purpose as required.
BURKINA FASO: Tax E-Return implemented
The General Tax Directorate, through Statement No 2021-119/MINEFID/SG/DGI/DCF of 22 April 2021, has implemented an electronic tax return via an operational platform named e-liasse.
The filing of tax returns in hard copy format is still allowed for the fiscal year 2020, but taxpayers falling under the large and medium-sized companies tax departments are required to file their tax returns via e-liasse before 1 July 2021, regardless of whether a hard copy has been filed.
DEMOCRATIC REPUBLIC OF CONGO: VAT exemption mechanism on import for mining companies adjusted
Ministerial Decree n°CAB/MIN/FINANCES/2021/002 of 15 March 2021, Instruction n°DGDA/DG/DV/DG/2021/001 of 22 March 2021 and Service Note n°01/039/DGI/DG/CR/GM/2021 of 25 March 2021 implement the new value-added tax (“VAT”) mechanism on imports by mining companies in the exploitation phase as announced by the Finance Law 2021.
In terms of the new mechanism, which is effective from 1 April 2021:
- the VAT exemption on imports previously granted to mining companies in the exploitation phase is scrapped;
- the new VAT mechanism only applies to imports by mining companies for exploitation purposes in the operation phase, except for foods, oil products, alcohol, tobacco, cosmetics and personal vehicles; and
- the VAT exemption for imports is subject to calculation by the customs authority and recording of the VAT normally due and filing of VAT return by mining companies within 15 days following the month of the import.
ESWATINI: Convention and Protocol on Mutual Administrative Assistance in Tax Matters enters into force
The multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, will enter into force in respect of Eswatini (formerly Swaziland) on 1 July 2021, following Eswatini depositing its instrument of ratification with the OECD on 16 March 2021. The convention and the amending protocol will generally apply from 1 July 2022 for Eswatini.
GHANA: New COVID-19 recovery levy and other amendments adopted by parliament
A new COVID-19 recovery levy of 1% on imports and supplies of goods and services that are subject to VAT has been introduced with effect from 1 May 2021. The levy applies to all taxpayers who charge VAT at either the standard or flat rate on the supply of goods and services. The levy is not available as an input credit to the person incurring the levy.
Other proposed tax amendments adopted by parliament and, unless otherwise stated, coming into effect on 1 May 2021, include:
- a waiver of interest and penalties due on accumulated tax arrears for previous periods paid on or before 31 December 2021 (excluding taxes payable or returns due from 1 January 2021) available upon written application to the Ghana Revenue Authority (“GRA”) and submission of the relevant returns;
- introduction of a financial sector recovery levy of 5% on the profits before tax of banks (excluding rural or community banks). The levy will be paid quarterly starting on or before June 2021 and will be reviewed in 2024;
- a reduction of income tax payable by 30% on estimated chargeable income payable in instalments in the second, third and fourth quarters of 2021 for taxpayers in the accommodation, food, travel and tours, education, arts and entertainment industry;
- suspension of the quarterly income tax instalment payment for certain self-employed persons including tailors, artisans, retail traders, hairdressers and auto technicians, provided that the taxpayer is registered, has paid their first quarter instalment and is compliant with other tax provisions; and
- the introduction of an energy sector recovery levy and a sanitation and pollution levy, which will increase the price per litre of petrol and diesel by GHS0.20 and GHS0.10, respectively. The energy sector recovery levy also increases the price per kilogramme of liquified petroleum gas by GHS0.18.
GHANA: National Identification Numbers and Tax Identification Numbers merged
In a press release issued on 31 March 2021, the GRA, Registrar General's Department and National Identification Authority announced that they have started the process of merging the Tax Identification Numbers (“TINs”) and National Identification Numbers (known locally as the "Ghana Card PINs") in implementing the government's databases unification policy and introducing a unique identifier for individual taxpayers.
A transitional period from 1 April 2021 to 31 December 2021 will allow individual taxpayers to use a GRA self-service portal, or GRA offices to link their Ghana Card PINs and TINs. After the transitional period, the TINs will cease to exist for individuals taxpayers and the Ghana Card PINs will be used for all transactions with the government and tax administration.
Companies and other tax-registered organisations will continue to use their TINs.
IVORY COAST: Cocoa and coffee export registration duty increased
Inter-Ministerial Decree N°01046/MINADER/MBPE/MEF of 13 November 2020 announced an increase in the cocoa and coffee export registration duty from 1.5% to 3% for the crop year 2020-2021. The registration initially had been reduced from 5% to 1.5% to support this sector during crop years 2016-2017 and 2019-2021.
IVORY COAST: Tax Electronic Procedure introduced
In a statement of 9 March 2021, the General Tax Director launched a tax electronic procedure via a platform named "e-impôt" that will be used for:
- the issuance of tax clearance certificates;
- appeals before the Tax Administration; and
- VAT credit refund requests.
KENYA: Budget and Finance Bill 2021 presented to parliament
The Cabinet Secretary for the National Treasury & Planning presented the 2021/22 and Medium Term Budget and the Finance Bill 2021 to parliament on 29 April 2021.
The Finance Bill 2021 seeks to amend the Income Tax Act, Value Added Tax Act, Excise Duty Act, Tax Procedures Act, Miscellaneous Fees and Levies Act, as well as the Capital Markets Act, Central Depositories Act, Kenya Revenue Authority Act, Insurance Act and Retirement Benefits Act.
Some proposed amendments include:
- VAT exemption for ventilators, decongestants and supplements to boost the health sector by lowering costs;
- support for youth employment through tax deductions for employers that engage technical and vocational education and training graduates as apprentices; and
- several amendments to enhance tax administration and dispute resolution operations.
KENYA: High Court suspends implementation of minimum tax
Following the petition from officials of the Kitengela Bar Owners Association, the High Court, on 19 April 2021, issued conservatory orders suspending the implementation of minimum tax pending the determination of the petition. The matter is scheduled to be heard in May 2021.
The Kenya Revenue Authority (“KRA”) issued a statement advising those who have already paid minimum tax to retain it as a credit in their online tax platform (iTax) ledger pending the outcome of the petition. A similar petition challenging the imposition of minimum tax was filed by the Kenya Association of Manufacturers, the Retail Trade Association of Kenya and the Kenya Flower Council and is also pending its hearing in court.
The KRA indicated that it will appeal to the Court of Appeal, the conservatory orders.
MAURITIUS: Online VAT registration introduced
The Mauritius Revenue Authority (“MRA”), in a notice published on its website on 30 April 2021, announced that it is offering the use of an online VAT Registration facility to anyone applying online for the incorporation of a company with the Corporate and Business Registration Department (“CBRD”).
An applicant can provide details that are required for their VAT registration at the time of applying for the incorporation of a company and, after incorporation of the company by the CBRD, the MRA will immediately register the company for VAT purposes and provide the VAT Registration Number. The effective date for the VAT registration is the later of the date of incorporation or the declared date the company will start business.
MAURITIUS: Trade under African Continental Free Trade Area Agreement commenced
Mauritius commenced trade under the African Continental Free Trade Area (“AfCFTA”) following the official launch of trade by the AfCFTA Secretariat on 1 January 2021.
In order to implement the AfCFTA, the government promulgated the following changes to the domestic legislation under Government Gazette No. 13 of 6 February 2021 which apply with effect from 1 January 2021.
- the First Schedule of the Customs Tariff Act to include the rate of customs duty applicable to goods imported under AfCFTA; and
- the Customs (Export to the AfCFTA) Regulations 2021.
The MRA has created customs procedure codes to facilitate the proper implementation of trading under AfCFTA. A list of States which have already implemented the provisions of AfCFTA has also been published.
MOZAMBIQUE: Waiver of fines and reduction of interest on the late payment of social security contributions approved
A Decree waiving fines and reducing interest on outstanding social security contributions due by taxpayers was approved on 4 May 2021 as a part of the measures mitigating the effects of the COVID-19 pandemic. The Decree is to enter into force on its publication in the Official Gazette.
The waiver of fines and reduction in interest applies to both employers and independent employees.
NIGERIA: FIRS issues public notices on payment of outstanding taxes by tax collection agents and prosecution of taxpayers for offences
The Federal Inland Revenue Service (“FIRS”) recently issued a public notice reminding persons appointed as agents of tax collection by the relevant provisions of the Companies Income Tax Act and the VAT Act of their obligation to collect, deduct or withhold taxes on supply of taxable goods and service and remit same to the FIRS within 30 days from the date of the Public Notice, ie, by Thursday, 3 June 2021.
The FIRS also indicated that it intends to exercise the “power of substitution” conferred on it by section 31 of the FIRS (Establishment) Act 2007 to recover any outstanding taxes, including applicable penalties and interest, from the assets of defaulting taxpayers after the deadline.
In another public notice, the FIRS informed the general public of its intention to prosecute taxpayers for non-compliance with tax laws, regulations and other related tax offences, including tax evasion, tax fraud, failure to deduct or remit tax, obstruction, false declaration, counterfeiting of documents, failure to file tax returns, etc.
The FIRS also indicated that it intends to invoke the provisions of section 49(2) of the FIRSEA and prosecute all relevant persons involved in the management of the affairs of the non-compliant company, firm or association. In light of this, the FIRS enjoins taxpayers, practitioners and company managements to comply with the provisions of section 24(f) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) by registering for tax, declaring all their incomes honestly, correctly, and accurately, and paying the appropriate taxes.
NIGERIA: Guidelines on the applicability of VAT on financial services issued
In April the FIRS issued Information Circular No.: 2021/04 to provide clarification on what will constitute a supply of taxable services by financial institutions, in line with the provisions of the VAT Act.
The circular provides:
- a definition of a “financial institution” and the various types of financial institutions including banks, insurance companies, pension fund administrators, discount houses, and brokerage firms;
- that only the income of FIs arising from charges, such as commissions and fees, for services provided to customers will be liable to VAT. Income from activities that constitutes a return on investments or consideration for risks, including dividends, gains on disposal of securities, interest on loans, advances, savings accounts, bank deposits, interbank placements, and premium on insurance policies, are exempt from VAT;
- that all financial institutions, except those exempted under the VAT Act, are obligated to register with the FIRS, obtain tax identification numbers for VAT purposes, and file monthly VAT returns;
- that allowable input VAT claimable by financial institutions will be limited to VAT on goods purchased or imported directly for resale, and goods which form stock-in-trade used for the direct production of any new product on which output tax is charged. Input VAT on fixed assets are to be capitalised with the cost of the assets, while input VAT on overheads, general administrative expenses and services are to be expensed in the statement of profit or loss account; and
- that the obligation to charge and remit the VAT on services falls on the person providing the service. However, this obligation may be transferred to the financial institutions in certain instances.
RWANDA: Applications for renewal of VAT exemptions opened
In an announcement made by the Ministry of Trade and Industry on 4 May 2021, eligible taxpayers have been requested to apply for an extension of their exemptions from VAT on machinery, capital goods and raw materials from 15 May to 30 May 2021.
An application must include a letter addressed to the Minister of Trade and Industry, certificate of incorporation or registration and a list of machinery, other capital goods and raw materials that the taxpayer wishes to import in the next two years.
Article 6 of the VAT Law exempts from VAT machinery and capital goods as well as raw materials used in industries included in the list compiled by the Minister in charge of industry and approved by the minister in charge of taxes.
RWANDA: Deadline for filing certified financial statements further extended
The Rwanda Revenue Authority, on 29 April 2021, announced a further extension of the deadline for filing certified financial statements from 30 April 2021 to 31 May 2021 in order to the address the ongoing challenges faced by audit firms and taxpayers in certifying financial statements while complying with measures put in place to contain the COVID-19 pandemic.
Sources include IBFD’s Tax Research Platform; www.allafrica.com; http://tax-news.com
Africa Regulatory and Business Intelligence | Executive
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