Africa Tax in Brief
KENYA: Comments on Petroleum Tax Amendment Bill invited
Parliament has invited comments from the public and stakeholders on the Petroleum Products' (Taxes and Levies) Amendment Bill, 2021, to be submitted to the National Assembly by no later than 23 November 2021.
The Bill proposes:
- amending the Value Added Tax (“VAT”) Act by reducing VAT on petroleum products from 8% to 4% and on liquefied petroleum gas from 16% to 8%;
- amending the Petroleum Development Fund Act to provide for a reduction in the petroleum development levy from KES5.40 to KES2.90;
- amending the Excise Duty Act to provide for a biennial excise duty inflation adjustment; and
- amending the Statutory Instruments Act to require that all statutory instruments that have the effect of imposing or varying taxes and levies be approved or rejected by the National Assembly and not just the parliament's Departmental Committee of Finance and National Planning.
MAURITANIA: 2022 Draft Finance Law published
The Mauritanian Ministry of Economy and Finance published the draft Finance Law for 2022 (Projet de Loi de Finance, PLF) on 15 October 2021. Significant amendments include:
- introducing simplified tax regimes for coastal and deep-sea sectors, the maritime bunkering sector, and fishing companies;
- reducing the VAT rate on telecommunication services from 18% to 16%;
- exempting public passenger or goods transportation activities from VAT;
- limiting the progressive tax scale on the employment remuneration of Mauritanian crew of local and foreign airlines operating in Mauritania to a maximum of 20%; and
- introducing a property tax on undeveloped land.
MAURITANIA: Inclusive Framework for implementing measures against BEPS joined
Mauritania has joined the Inclusive Framework (IF) for the global implementation of the Base Erosion and Profit Shifting (“BEPS”) Project in November 2021.
Through its membership, Mauritania has also committed to addressing the tax challenges arising from the digitalisation of the economy by joining the two-pillar plan to reform the international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate, bringing to 137 the total number of jurisdictions participating in the agreement.
MAURITIUS: Protocol to German tax treaty to be signed
On 29 October 2021, Germany and Mauritius signed the already initialed amending protocol to update the Germany - Mauritius Income Tax Treaty (2011) to implement the measures of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, according to their respective positions.
NAMIBIA: 2021/2022 Mid-year Budget presented
The Namibian Minister of Finance has announced several tax policies aimed at reviving sustainable economic growth in the 2021-22 mid-year Budget speech to the National Assembly on 3 November 2021, including:
- exploring options to reduce the non-mining company tax;
- requiring taxpayers to provide proof of actual tax withheld on services;
- introducing a 10% withholding tax on dividends paid to individual Namibians;
- increasing the aggregate maximum annual tax deduction of contributions towards pension funds, provident funds, retirement funds, educational policies and long-term insurance policies from NAD40 000 to NAD150 000;
- charging VAT on sanitary pads at zero rates;
- introducing VAT at the standard rate of 15% on management fees earned by listed asset managers; and
- exploring the imposition of carbon tax on electrical geysers to encourage broad-based adoption of solar geysers to contribute to net zero-emission targets.
NIGERIA: Guidelines on the simplified compliance regime for VAT for non-resident suppliers issued
On 11 October 2021 the Federal Inland Revenue Service (“FIRS”) issued new guidelines on the simplified compliance regime for VAT for non-resident suppliers. The guidelines will come into effect from 1 January 2022 concerning the supply of services and intangibles and from 1 January 2024 for goods.
The guidelines apply to supplies made by natural persons, trusts, partnerships, corporations, companies, and any other persons, through digital means, of goods, services, intangibles, and other digital products made by persons not physically present, located, or represented in Nigeria to businesses (business to business, B2B) or consumers (business to consumers, B2C) in Nigeria.
The guidelines require non-resident suppliers and any intermediaries to register for VAT, issue VAT invoices, and collect and remit VAT due to the FIRS. Resident consumers to whom supplies of taxable goods or services are made in Nigeria are expected to communicate with the non-resident suppliers on the collection of VAT.
The non-resident supplier is required to register for VAT if, within 12 consecutive months immediately before the coming into effect of the guidelines or any 12 consecutive months thereafter, it has made or expects to make a single supply or series of supplies to Nigeria with an aggregate value of USD25 000 and:
- the supplies are made by the non-resident supplier, through digital means, to a person in Nigeria from a location outside Nigeria; and
- the supplies are delivered to, consumed, or otherwise utilised in Nigeria.
Upon registration, a non-resident supplier will be required to file monthly VAT returns by no later than 21 days after the end of the month in which the supplies were made.
The services specifically included under the guidelines include:
- streaming, downloading, or obtaining/providing access to digital content;
- online gaming and betting services;
- online ticketing, excluding international air travels and freight charges;
- online intermediation platform services, including online marketplaces, payment platforms, ride hailing platforms, travel and accommodation booking, rental services, or similar services;
- subscription-based social media platforms, including video conferencing applications, instant messaging, chats, dating, image/video sharing, or similar services;
- standardised online education services such as e-learning, webinars or similar services;
- cloud computing services, including cloud storage services;
- auction services;
- automated online professional and consultancy services;
- online stores; and
- e-library services.
NIGERIA: Tax Appeal Tribunal rules in favour of taxpayer’s statutory charge deposit
The Lagos Tax Appeal Tribunal (“TAT”) on 20 October 2021 ruled, in the case of Multichoice Nigeria Limited (“MNL”) vs the FIRS that the amount deposited by the MNL with the FIRS satisfies the provisions of FIRS (Establishment) Act, 2007, (“FIRSEA”) and is sufficient for the TAT to commence hearing of the substantive suit.
The FIRSEA provides that the TAT may adjourn the hearing of an appeal to any subsequent day and order the appellant to deposit with the FIRS, before the day of the adjourned hearing, an amount, on account of the tax charged by the assessment under appeal, equal to the tax charged upon the appellant for the preceding year of assessment or one half of the tax charged by the assessment under appeal, whichever is the lesser plus a sum equal to 10 percent of the said deposit”, if the FIRS proves to its satisfaction that:
- the appellant has for the year of assessment concerned, failed to prepare and deliver to the FIRS returns required to be furnished;
- the appeal is frivolous or vexatious or is an abuse of the appeal process, or
- it is expedient to require the appellant to pay an amount as security for prosecuting the appeal. If the appellant fails to comply with the order, the assessment against which he has appealed shall be confirmed and the appellant shall have no further right of appeal concerning that assessment.
In the case at hand, the FIRS had issued a tax audit assessment of ₦1.8 trillion to MNL following a forensic audit of the Company’s records for the last 10 years of assessment. MNL disputed the assessment and filed an appeal at the TAT. The FIRS subsequently submitted a preliminary oral application to the TAT on its jurisdiction to entertain the appeal on the ground that the suit, having failed to satisfy the condition precedent to its institution was incompetent.
The FIRS requested the Court to order MNL to make the statutory deposit as provided for by the FIRSEA before the appeal can be heard by the TAT. The TAT ruled in favour of the FIRS and requested that MNL abides by the provisions of the FIRSEA before it can commence a hearing of the substantive appeal. MNL subsequently deposited a total of ₦8 billion with the FIRS in two installments of ₦2.7 billion and ₦5.3 billion respectively. The FIRS argued that this was not sufficient and did not satisfy the requirements of the FIRSEA, as MNL should have deposited an amount equal to the tax charged for the 10 different preceding years of assessment covered by the forensic audit rather than for just the last preceding year of assessment.
MNL argued that the wording of the statute was clear and made reference to the preceding year in the singular and that the amount already deposited should be sufficient to proceed to the hearing of the substantive appeal.
The TAT rules that MNL’s interpretation of the provisions of the FIRSEA was correct and that it had, therefore, complied with the TAT’s Order in respect of the statutory deposit.
RWANDA: Income Tax Amendment Law adopted
The Rwandan parliament adopted the draft law amending the 2018 Income Tax Law on 10 November 2021. Significant amendments, which will enter into force upon the promulgation of the law by the president and publication in the Official Gazette, include:
- introducing the taxing of digital services and partnership income;
- extending the definition of “permanent establishment”;
- denying the deduction of unrealised foreign exchange losses and limiting the deduction of realised foreign exchange losses arising from related party loan transactions exceeding four times the borrower's paid-up equity; and
- raising the employment income taxable base threshold from a monthly income of RWF30 000 to RWF60 000.
RWANDA: Convention and Protocol on Mutual Administrative Assistance in Tax Matters approved
On 12 November 2021, the Cabinet of Rwanda approved the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol.
RWANDA: Regional initiatives for tax transparency joined
According to a press release of 25 October 2021 published by the OECD, Rwanda has joined the Yaoundé Declaration, affirming the African initiatives for tax transparency and exchange of information for tax purposes and for tackling illicit financial flows through international tax cooperation.
The Yaoundé Declaration was originally signed on 15 November 2017 in Yaoundé (Cameroon), by Benin, Cameroon, Liberia, and Uganda. Rwanda is now the 31st African country with the African Union Commission, to adhere to the Declaration. The other countries are Benin, Burkina Faso, Cameroon, Cape Verde, Chad, Comoros, Congo, Djibouti, Egypt, eSwatini, Gabon, Ghana, Guinea-Bissau, Ivory Coast, Kenya, Lesotho, Liberia, Madagascar, Mali, Mauritius, Mauritania, Morocco, Niger, Nigeria, South Africa, Senegal, Seychelles, Togo, Tunisia, and Uganda.
ZAMBIA: 2022 Budget presented to Parliament
The Minister of Finance and National Planning proposed a series of amendments to tax laws, aimed at increasing investment and stimulating economic growth, to the parliament on 29 October 2021. Significant proposed amendments include:
- reducing the corporate income tax rate from 35% to 30%;
- extending by one year, the 15% corporate income tax rate on income earned by hotels and lodges on accommodation and food services, to mitigate the COVID-19 impact on the tourism sector;
- suspending the 35% corporate income tax rate for persons carrying on the business of manufacturing ceramic products for the charge years 2022 and 2023;
- introducing a 4% turnover tax on rental income where the turnover for the taxpayer is less than ZMW800,000 per year.
- an increase of 20% of presumptive tax rates for income from public service transportation based on the seating capacity of the vehicle;
- introducing a 20% withholding tax on reinsurance placed with reinsurers not licensed in Zambia;
- exempting from withholding tax interest on income earned by individuals on all interest earning accounts other than deposit and term deposit accounts that are already outside the withholding tax net;
- increasing from five to ten years the carry-forward of interest which is disallowed under the earnings before interest taxes depreciation and amortization (EBITDA) interest deduction limitation rules;
- increasing the tax rate from 10% to 30% on income from rentals above ZMW800 000 per year;
- introducing two new schedules providing for the submission of information required under international obligations for country-by-country (CbC) reporting and tax measures that are targeted towards investments in Special Economic Zones and the mining sector;
- introducing a 0% tax on dividends and profits realised on exports made by companies operating in Special Economic Zones for a period of 10 years from the first year of commencement of activities in these economic zones. For years 11 to 13, only 50% of profits would be taxed; and for years 14 and 15, 75% of profits would be subject to tax;
- increasing the tax-free amount on personal income from ZMW4 000 to ZMW4 500 per month to provide relief to employees and self-employed individuals, especially those in the lower income brackets;
- introducing a 10% property transfer tax on transfers of mineral processing and other mine-related licences;
- introducing VAT at a zero rate for listed agricultural equipment and accessories, solar charge control units and solar street lights; and
- introducing VAT on the supply of property and non-life insurance policies and applying VAT at the standard rate on the supply of booklets and newspapers.
Africa Regulatory and Business Intelligence | Executive
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