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15 Apr 2024
BY Celia Becker

Africa Tax in Brief

CAMEROON: Tax burden on certain items reduced

In order to address the effects of the 15% increase in fuel prices which came into effect on 3 February 2024, the following ad hoc tax changes have been announced through a public notice issued by the Secretary-General on 23 February 2024:

  • A 10% reduction in the taxable base of imported brand new tyres;
  • A 50% reduction in global taxes (impôts liberatoire) paid annually by small taxpayers with an annual turnover of less than F.CFA10-million; and
  • A 25% reduction on business licenses (patente) paid by businesses with annual turnover above F.CFA10-million.

The changes are effective from 23 February 2024.

DEMOCRATIC REPUBLIC OF THE CONGO: Professional standard on the certification of annual financial statements published

The National Order of Chartered Accountants (Ordre National des Experts-Comptables, “ONEC”) has published ONEC/DRC Professional Standard no. 2024/001 on the certification of annual summary financial statements accompanying the corporate tax return.

The Standard is effective from 11 March 2024 and applies to financial statements for the 2023 financial year. It defines the principles and procedures for certification and auditing by ONEC-registered certified public accountants. It applies to all companies established in the DRC subject to the standard tax regime, including financial institutions, insurance and reinsurance companies, and social security organisations, whether or not they are subject to the obligation to appoint a statutory auditor in accordance with the provisions of the OHADA Uniform Act relating to Commercial Companies and Economic Interest Groups. Small companies under Ordinance-Law no. 13/006 of 23 February 2013 are excluded.

Certification of the financial statements accompanying the corporate tax return is mandatory, failing which they will be rejected by the tax administration and the taxpayer concerned will be subject to a penalty ranging from CDF100-million to CDF200-million. Certification must be done by a chartered accountant registered with the ONEC, subject to the conditions defined by Ministerial Order 014/CAB/MIN/FINANCES/2023 of 16 May 2023.

ETHIOPIA: New Transfer Pricing directive released

Ethiopia has released Transfer Pricing Directive No. 981/2024 which repeals the previous Transfer Pricing directive (No. 43/2015) and is effective from January 2024.

The new directive follows the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and is issued in accordance with the transfer pricing provision in section 79 of Federal Income Tax Proclamation No. 979/2016, which concerns international and domestic transactions between related persons whose annual turnover is over ETB500-000.

Amongst other provisions, the new directive provides for a penalty equal to 20% of a taxpayer's annual tax payable for taxpayers who fail to maintain contemporaneous transfer pricing documentation. In addition, non-maintenance of transfer pricing documentation for more than two years could result in the cancellation of a taxpayer's business license by the licensing authority once notified by the tax authority.

KENYA: Employers required to deduct affordable housing levy

The Kenya Revenue Authority has issued a public notice announcing that all employers are required to deduct the Affordable Housing Levy from the gross salary of employees and remit it together with the employer's contribution with effect from 19 March 2024.

Both employers and employees are obliged to contribute 1.5% of the employee's gross monthly salary. The due date for remittance of the levy is the 9th working day after the end of the month in which the gross salary was due or gross income was received or accrued.

Any person who fails to comply with the law shall be liable to payment of a penalty equivalent to 3% of the unpaid funds for every month if the same remains unpaid.

KENYA: Median rate in arm's length range declared optional

On 2 February 2022, the Kenyan Tax Appeals Tribunal (“TAT”), in an appeal case of Checkpoint Software Technologies Ltd v. Commissioner of Domestic Taxes (No.1181 of 2022), issued a judgment declaring that the median is not the default rate in the arm's length range in transfer pricing cases.

The TAT held that imposing the median measure as the arm's length range is contrary to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, which allow a taxpayer to adopt any rate within the arm's length range as the basis of related party transactions.

MALAWI: Netherlands withdraws ratification of tax treaty

According to a letter of 14 March 2024, sent by the Dutch Ministry of Finance to the lower house of parliament (Tweede Kamer der Staten-Generaal), the Netherlands has withdrawn its ratification of the Malawi-Netherlands Income Tax Treaty (2015).

To date, the treaty has not been ratified by Malawi and thus has not yet entered into force. The Netherlands regards the treaty as outdated, since it does not contain adequate anti-abuse clauses and, therefore, considers the entry into force of this treaty undesirable.

MALI & NIGER: French Tax Authorities react to Mali and Niger denouncing tax treaties with France

The French Ministry of the Economy and Finance published a Ministerial Reply in the Official Journal of the Senate on 14 March 2024, commenting on the tax consequences of the decision taken jointly by Mali and Niger on 5 December 2023 to unilaterally terminate their respective tax treaties with France.

According to the Ministerial Reply, "the French government deplores these non-concerted decisions that will complicate business relations between France and those two countries, whereas enterprises have no responsibility in the evolution of political relations". It also notes that the denunciations, which took effect on 5 March 2024, do not respect the termination rules contained in the treaties.

The French Constitution applies the reciprocity principle and provides that international treaties are binding in so far as they are applied by the other contracting state. Based on these provisions, France will cease to apply the provisions of the two treaties with effect from 5 March 2024. The government also intends to clarify the legal and tax consequences of the new situation for businesses and individuals resident in one state and having an activity in or deriving income from the other state.

MAURITANIA: Multilateral Competent Authority Agreement on Automatic Exchange of Country-By-Country Reports (CbC MCAA) signed

On 12 February 2024 Mauritania joined the Multilateral Competent Authority Agreement on Automatic Exchange of Country-by-Country Reports (2016) (CbC MCAA), which enables the automatic exchange of country-by-country reports between countries. To date, the CbC MCAA has now been signed by 101 jurisdictions. 

NIGERIA: Tax Code to be simplified to nine types of taxes

The President of Nigeria has directed the Presidential Committee on Fiscal Policy and Tax Reforms to begin work on the creation of a single–digit tax system that allows for a maximum of nine taxes.

This development aims to simplify the tax code and lower the tax burden, thereby making doing business in Nigeria easier and cheaper. It also aims to expand the national tax base, rather than introduce new taxes or increase existing ones.

NIGERIA: Implementation of expatriate employment levy suspended

Following a meeting of the Minister of Industry, Trade and Investment, the Minister of Interior, and other key stakeholders, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture ("NACCIMA") has announced the suspension of the expatriate employment levy ("EEL"), which was to be imposed on employers of expatriates in Nigeria.

It was agreed that implementation of the EEL will be suspended to allow for further consultations with stakeholders and the establishment of a joint committee of stakeholders to review the EEL policy.

NIGERIA: Self-registration module on TaxPro-Max introduced

The Federal Inland Revenue Service (“FIRS”) has issued a public notice on the introduction of a self-registration module on TaxPro-Max aimed at easing the process of doing business in Nigeria. The TaxPro-Max features will enable taxpayers to:

  • Complete all registration processes with the FIRS independently from the convenience of their offices or homes; and
  • For newly incorporated companies or business entities with assigned tax identification numbers, complete their registration with FIRS on TaxPro-Max via the TaxPro-Max portal following the prompt for self-registration.

NIGERIA: Compliance guidelines for enterprises operating in export processing zones published

The Nigeria Export Processing Zones Authority has published a circular on the following guidelines for tax compliance by approved enterprises operating in export processing zones (“EPZs”) that were endorsed by the FIRS:

  • Returns are required to be filed with the FIRS in line with the guidelines;
  • Granting of a moratorium for EPZ entities to file up-to-date returns until 31 March 2024 before Penalties and interest are imposed by the FIRS. This will be applied to the following returns: annual income tax returns; annual transfer pricing returns; monthly VAT returns; monthly withholding tax returns; and other returns expressly provided for in the guidelines;
  • Waiver of interests and penalty for non-compliance with tax return obligations will be granted by the FIRS under the Finance Act, 2020; and
  • Payment for operating licenses can be made annually or upfront; and the FIRS and Nigeria Export Processing Zones Authority will jointly organize a sensitization of the tax guidelines implementation on a future date to be communicated.

RWANDA: Requirements for “importation of services not available in Rwanda” for VAT purposes gazetted

Ministerial Order No. 003/24/03/TC of 8 March 2024, which came into effect on the same date, defines “service not available in Rwanda” and determines the requirements to apply for authorisation to acquire foreign services not available in Rwanda. A taxpayer who imports services is only allowed an input credit in respect of the VAT levied on such services after having obtained authorisation from the Minister, confirming that such services are unavailable in Rwanda.

In terms of the Order, a taxpayer who intends to apply for authorisation to acquire foreign services not available in Rwanda:

  • Must be registered for VAT;
  • Submit to the Minister of Finance and Economic Planning an application letter for authorisation, accompanied by supporting documents, at least two months before the services are imported; and
  • Prove that he/she made a call for tenders and that no successful bidder was found in Rwanda; or
  • Provide a recommendation letter issued by a competent regulatory organ certifying that there are no providers of the service in Rwanda or that those that exist do not meet the standards required by the taxpayer.

RWANDA: Incentives for voluntary disclosure of tax liabilities gazetted

Ministerial Order No. 001/24/03/TC of 8 March 2024, which came into effect on the same date, provides for the waiver of interest and penalties on voluntarily disclosed tax liabilities. The Order provides that:

  • It applies to:
    • a registered taxpayer that voluntarily discloses and pays the tax due that was unpaid before being notified of an imminent audit;
    • a registered taxpayer that voluntarily discloses and pays tax following the expiry of the time limit for a tax audit;
    • a non-registered taxpayer that voluntarily discloses and pays tax due; and
    • any other registered taxpayer that voluntarily discloses and pays tax within the period announced for voluntary disclosure;
  • The Voluntary Tax Disclosure applies to all tax types except customs duties and runs with effect from 22 March 2024 to 22 June 2024.
  • The application for voluntary disclosure must be made through an online tax system established by the Rwanda Revenue Authority (“RRA”), specifying the tax period concerned and tax due, accompanied by related supporting documents;
  • The Commissioner General of the RRA will make a decision on the application within 30 days from the day of receipt of the application;
  • A taxpayer is required to pay the principal tax disclosed within 30 days after being granted the voluntary disclosure incentive;
  • A taxpayer may be allowed to pay the principal tax disclosed in instalments within a six-month period if they present valid reasons to the RRA;
  • Incentives granted for voluntary disclosure may be revoked if the taxpayer:
  • fails to pay the tax disclosed voluntarily;
  • fails to respect the payment plan granted; or
  • submitted false or incomplete information that leads to payment of understated tax; and
  • A taxpayer has a right to appeal against the revocation of the incentives before the Commissioner within 30 days of such decision and the Commissioner also decides on the appeal within 30 days of receipt of the appeal.

RWANDA: Rewards for final consumers who request electronic billing machine VAT invoices introduced

Ministerial Order No. 002/24/03/TC of 8 March 2024, which will become effective 90 days after its publication in the Official Gazette, implements a reward to final consumers who request and are issued electronic billing machine (“EBM”) VAT invoices. In terms of the Order:

  • A final consumer is eligible for a reward if they are registered on the VAT reward system and have received an invoice indicating his or her mobile telephone number;
  • They are eligible for an additional reward if they declare the incident of the requested and denied invoice in the system in the manner prescribed by the RRA;
  • The reward is equivalent to 10% of the VAT amount charged on the issued invoice and an additional reward of 50% of the penalty charged to the supplier, when a consumer is denied an EBM invoice and reports that to the RRA;
  • The reward amount is to be deposited quarterly in the mobile money or bank account designated by the final consumer within 15 days following the declaration of the VAT;
  • The RRA may, before granting the reward to the final consumer, request additional information to prevent abuse; and
  • A single invoice of value equal to or exceeding RWF1-million is subject to verification before granting a reward.

SENEGAL: 2024 Budget announces tax amendments

Following the approval of the 2024 Budget, which was presented on 15 December 2023, the government has implemented tax measures aimed at enhancing tax compliance and increasing tax revenue.

Significant amendments include:

Direct taxes

  • Clarifying that all transfers of mining or hydrocarbon titles in Senegal, regardless of the method of transfer, will be subject to capital gains tax;
  • Expanding the scope of the real estate capital gains tax to indirect transfers of buildings located in Senegal, with the tax amount to be withheld by the buyer on the price paid to the seller.
  • The possibility for the excess payment of tax on movable capital to be carried forward to the following financial years or reimbursed if the taxpayer ceases its activities or leaves Senegal, or if there is a corporate income tax loss during two consecutive years;
  • Increasing the income tax rate for disguised remuneration (fraudulent payments) from 40% to 43%;

Indirect taxes

  • Reducing registration fees on transfers of claims held by the government to a fixed fee of CFA10-000 instead of a proportional fee of 1%;

Administration

  • Changing the criteria for the application of the country-by-country reporting ("CbCR") rules to companies with a consolidated turnover of F.CFA492-billion (previously F.CFA491-billion). In addition, CbCR will be required if:
    • the tax authorities have been informed of a systemic failure in the automatic exchange of the CbCR in the country of residence of the parent company, even though there is an agreement providing the automatic exchange between Senegal and the residence country of the parent company; or
    • a substitution filing has been made by a company of the group in another country, but the Senegalese tax authorities have not been informed;
  • Introducing new filing requirements for certain entities, including public service delegated companies in the water and electricity sectors, and digital platform operators. These taxpayers must provide information to the tax authorities regarding their clients, concession-holder companies, and users of digital platforms, among other parties. The deadline is 30 April for digital platform operators and 31 January for other taxpayers; and
  • Exempting foreign digital service providers from the obligation to appoint a tax representative in Senegal.

UGANDA: 2024 Tax Amendment Bills presented to parliament

On 28 March 2024, the Minister of Finance, Planning and Economic Development tabled before the parliament the Tax Amendment Bills, 2024. Significant amendments include:

Direct taxes

  • Introducing a separate capital gains tax of 5% on the disposal of non-business assets;
  • Exempting income derived from private equity or venture capital funds regulated under the Capital Markets Authority Act; and disposal of government securities on the secondary market;
  • Clarifying the definition and taxation of a “permanent establishment”;
  • Introducing a 2% withholding tax on interest paid by a resident person to a non-resident person in respect of debentures;
  • Levying commission paid to payment service providers such as banking agents or any other agents offering financial services;

Indirect taxes

  • Leving VAT on goods or services supplied by a taxable employer to an employee at no consideration; and
  • exempting the transfer of shares or other securities, to or by an investor in a private equity or venture capital fund regulated under the capital from stamp duty.

ZAMBIA: Electronic invoicing system introduced

Following the enactment of the VAT Electronic Invoicing System Regulations, SI No 58 of 2023, the Zambia Revenue Authority (“ZRA”) in a publication dated 29 January 2024 indicated that effective from 1 July 2024, all VAT-registered taxpayers will be required to issue electronic invoices using the Smart Invoice system.

The Smart Invoice system will apply to the following tax types: VAT; insurance premium levy; tourism levy; rental income tax; excise duty (coal and electricity); corporate income tax (VAT-exempt suppliers); and turnover tax.

The initial roll-out and onboarding for VAT and turnover tax commenced on 15 December, while the roll-out for all other tax types was to start on 1 February 2024.

The following transitional measures have been introduced regarding the migration from current Electronic Fiscal Devices (“EFDs”) to the Smart Invoice system:

  • While new EFD applications will be accepted, they will not be registered on the Tax Invoice Management System ("TIMS");
  • Vendors are advised to defer all interface developments until the Smart Invoice pilot phase has been completed;
  • Taxpayers actively using EFDs will be deregistered from the TIMS as the primary test target group for the Smart Invoice roll-out; and
  • Following the initial roll-out, a specified date will be announced from which Smart Invoice will be required for all eligible taxpayers.

 

Celia Becker

Executive | Africa Regulatory and Business Intelligence

cbecker@ENSafrica.com