Africa Tax in Brief
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AFRICA: African Continental Free Trade Area Agreement enters into force
The Parliament of Zimbabwe and the Ethiopian House of Representatives approved the African Continental Free Trade Area Agreement (“ACFTA”) on 14 March and 21 March 2019, respectively. The Moroccan Council of Government approved the ACFTA on 21 February 2019.
A number of African countries deposited their instruments of ratification for the ACFTA during April 2019: Egypt on the 8th, Ethiopia on the 10th, the Gambia on the 16thand Sierra Leone and the Sahrawi Arab Democratic Republic on the 29th. Following this, the requirement that the ACFTA will enter into force 30 days after the 22nd country has deposited its instrument of ratification, was met and the ACFTA will enter into force on 30 May 2019.
ANGOLA: Value Added Tax Code gazetted
The Value Added Tax (“VAT”) Code, approved by Law No. 7/19, was gazetted on 24 April and replaces the existing Consumption Tax Code. With effect from 1 July 2019, VAT at the rate of 14% will apply to the supply of goods and services and imports. Entities that have chosen not to be immediately subject to the general VAT regime and have a turnover or imports in excess of USD250 000 will be subject to a transitional regime until 2021, when VAT will apply to all taxpayers.
CONGO-BRAZZAVILLE: Finance Act 2019 assented to by the president
The president assented to Law No. 40-2018 of 28 December 2018 on the Finance Act 2019, which is yet to be published in the Official Gazette. Significant amendments, generally effective from 1 January 2019, include:
Corporate income tax
DEMOCRATIC REPUBLIC OF CONGO (“DRC”): Prescribed format for super profits tax return published
The General Manager of the National Tax Authority (Direction Générale des Impôts,DGI), via Official Statement No. 01/0041/DGI/DG/DLEG/MA/2019 of 14 March 2019, announced that the super profits tax return is now available to taxpayers concerned at the DGI's offices.
The super profits tax is levied at a rate of 50% on “super profits” earned by mining companies as a result of the unexpected increase in prices of commodities exploited by mining operators during a fiscal year.
DRC: New corporate income tax rate for 2018 fiscal year
The General Manager of the National Tax Authority (Direction Générale des Impôts) confirmed in Official Statement No. 01/015/DGI/DG/CR/GM/2019 of 4 April 2019, that the new corporate income tax rate of 30%, introduced by Finance Bill No. 18/025 of 13 December 2018, applies to the calculation of corporate income tax for the 2018 year of assessment (1 January to 31 December 2018).
Corporate income tax returns for the 2018 year of assessment were due by 30 April 2019.
DRC: New rates for parafiscal taxes in mining sector announced
The Minister of Mining and Minister of Finance adopted Ministerial Decrees No.0001/CAB/MIN/MINES/01/2019 and No.CAB/MIN/FINANCES/2019/009 of 22 February 2019, establishing new rates for parafiscal taxes in the mining sector.
Significant provisions include the introduction of a new tax on exceptional treatment of exported raw minerals at the rate of USD500/30 tonnes, and a new tax of USD5 000 on mining cooperative agreements. The mining royalty rate has also been increased from 0% to 6% depending on the type of mineral and 10% on the gross commercial value for strategic minerals, which are to be determined by the government.
DRC: VAT deductibility returns to be filed online
As per Official Statement No. 01/017/DGI/DG/DESCOM/MT/2019 of 9 April 2019 issued by the General Manager of the National Tax Authority (Direction Générale des Impôts), the monthly VAT deductibility return must be filed electronically in accordance with the provisions of the Procedural Tax Law (article 3 of Law No. 004/2003 of 13 March 2003 and Ministerial Decree No. CAB/MIN/FINANCES/2018/012 of 20 March 2018).
ETHIOPIA: Excise Tax Proclamation, 2002 to replaced
The Ministry of Finance, on 24 April 2019, held a consultation with the business community on the Draft Excise Tax Amendment (Bill), which is to repeal and replace the existing Excise Tax Proclamation 307/2002.
ETHIOPIA: Various directives published
During March and April 2019, Ethiopia’s Ministry of Finance issued a number of directives, including the following:
Directive on implementation of seizure and sale of taxpayer's property (No. 6/2011)
The directive became effective on 9 April 2019 and:
Directive on registration and de-registration of taxpayers (No. 3/2011)
The directive became effective on 11 April 2019 and:
Directive on implementation of licensing of tax agents (No. 4/2011)
The directive became effective on 9 April 2019 and provides:
Directive on implementation of exempt income (No. 1/2011)
The directive became effective on 9 April 2019 and provides for an exemption of:
Directive on deductible expenditure (No 5/2011)
The directive became effective on 9 April 2019 and provides for the following expenses to be deductible:
Directive on implementation of advance payment of tax (No. 2/2011)
The directive became effective on 9 April 2019 and applies to:
A directive onutilization and administration of tax receipt(No. 149/2011) was issued on 19 March 2019 and provides for the administrative requirements in respect of withholding tax receipts.
A directive on theextension of time for payment of taxwas issued on 29 March 2019 determining that the Ministry of Revenue may grant a taxpayer an extension of time for payment of tax due when application to this effect is made and the taxpayer pays at least 25% of the amount of the tax due.
A directive determining theapproval procedures for amending self-assessment tax returns(No. 144/2011) was issued on 29 March 2019, specifying the key requirements for taxpayers wishing to amend their self- assessed tax returns.
A directive to determinenotification of changes related to business activities(No. 143/2011) was issued on 29 March 2019, providing a list of changes that a registered taxpayer must communicate to the Ministry of Revenue, including changes in the memorandum and articles of association, shareholders, registered and paid-up capital, business address, business name and activities.
A directive providingprocedures for obtaining VAT refunds(No. 148/2011) was issued on 1 April 2019, consolidating the VAT refund procedures previously addressed by six directives and four circulars. The statutory period set to obtain the refund amount after the VAT-registered person files an application for a refund is also reduced from 60 to 45 days.
GHANA: ECOWAS protocol on free movement of persons implemented
The Ghana Revenue Authority (“GRA”) on 4 April 2019 announced that the implementation of article 5 of the ECOWAS protocol on "Movement of Vehicles for the Transportation of Persons" would take effect from 1 May 2019. Both private and commercial vehicles registered in the territory of an ECOWAS Member State will now be able to enter Ghana and remain there for a period not exceeding 90 and 15 days, respectively, if certain specified documents are presented.
GHANA: Individuals to file annual tax returns online
The Integrated Tax Application and Preparation system (“iTaPS”) by the GRA was launched on 4 April 2019, allowing individuals to prepare, apply for and receive GRA services online. The iTaPS will be launched in phases, with the first phase being accessible to individual taxpayers on 5 April 2019.
KENYA: High Court ruling on Mauritius treaty
On 15 March 2019, The High Court of Kenya gave its decision in the case ofTax Justice Network Africa (TJN-A) v. Cabinet Secretary for the National Treasury, The Kenya Revenue Authority and The Attorney General(Petition No 494 of 2014) regarding the constitutionality of the double tax agreement between Kenya and Mauritius.
Kenya and Mauritius concluded the treaty on 11 May 2012 and on 23 May 2014, the Cabinet Secretary to Treasury published Legal Notice No. 59 of 2014 on the enactment of the treaty.
TJN-A argued that the treaty was unconstitutional on the basis that:
The Kenya Revenue Authority and Attorney General argued that:
The court held that:
Although the court’s decision did not invalidate the treaty, it does not have current legal effect in Kenya. The Cabinet Secretary is to issue a new Legal Notice and ensure full compliance with the Statutory Instruments Act, including presenting it; with all the required information, on time to parliament.
KENYA: New Treaty with Mauritius signed
Following the outcome of above court case, Kenya and Mauritius signed anew tax treatyin Port Louis on 10 April 2019. Details of the new treaty are yet to be published.
KENYA: Court of Appeal issues ruling on interpretation of "paid" for withholding tax purposes
The Court of Appeal gave its decision in the case ofKenya Revenue Authority v. Republic (Ex Parte: Fintel Ltd(Civil Appeal No. 311 of 2013) on 5 February 2019, overruling the High Court decision that withholding tax was not due on accrued payments.
The court held that any amount recognised as an expense in the books of accounts is a credited amount in the payee’s account and is therefore “paid” as defined by the Income Tax Act and subject to withholding tax.
MOZAMBIQUE: Taxpayers to report on transfer pricing transactions
With the deadlines for the submission of annual corporate tax returns (31 May 2019) and Annual Tax and Accounting Information Return – M/20 (30 June 2019) fast approaching, taxpayers are reminded that, for the first time, they are required to report on transactions with related entities during 2018 as part of their M/20 return. Taxpayers are also required to prepare a transfer pricing file up to 30 June 2019.
MOZAMBIQUE: e-Taxation System data to be updated
The Maputo First Tax Office informed taxpayers by a notice dated 14 March 2019 that all taxpayers whose taxpayer identification numbers (“NUITSs”) have been issued prior to 2013 must update their tax data for purposes of the e-Taxation System within five days from the date of publication of the notice.
Documents to be provided include the Declaration of Registration or Attribution of NUIT of Corporate Entity or Equivalent (M/01C), Declaration of Commencement of Tax Activity (M/02) and Declaration of Registration or Amendment of NUIT of Individuals for each shareholder (M/01S).
Tax collection through the e-Taxation System will commence in April 2019.
MOZAMBIQUE: Notice on ring-fencing of mining activities issued
The National Institute of Mines (“INAMI”) published a notice (signed on 15 March 2019) on 10 April 2019, providing that:
NAMIBIA: Notification on online submission of employees tax returns published
According to a press release published by the Ministry of Finance – Inland Revenue Department on 23 April 2019, submission of monthly PAYE returns must be done online through the ITAS portal as from March 2019. The notification also grants a grace period until September 2019 to allow employers unable to immediately submit their returns electronically to submit them manually.
NAMIBIA: 2020 Budget presented to parliament
The Minister of Finance presented the 2020 Budget to parliament on 27 March 2019. Significant proposed amendments include:
NIGERIA: National Housing Fund Bill rejected by the president
President Buhari declined asset to the National Housing Fund (Establishment) Bill, 2018, which was passed by the National Assembly in November 2018 and meant to repeal the National Housing Fund Act, Cap. N45. The Bill now has to be overhauled to address the identified flaws.
NIGERIA: Tax administration issues guidelines on mutual agreement procedure
The Federal Inland Revenue Service, on 21 February 2019, publishedGuidelines on Mutual Agreement Procedure (“MAP”), providing that taxpayers may seek the assistance of the competent authority on matters relating to transfer pricing, dual residence status, withholding tax, permanent establishment and characterisation of income.
The guidelines also provide guidance on interaction between the MAP process and the domestic appeal process, termination and withdrawal from the MAP process, implementation of the MAP decision, tax collection during MAP, etc, and useful contacts for the MAP process.
NIGERIA: Freezing of taxpayer bank accounts resumed
Following the Federal Inland Revenue Service’s recent 30-day suspension of its directive to Nigerian banks to freeze the accounts of defaulting taxpayers, it has issued a notice that it will recommence the imposition of liens on the bank accounts of delinquent taxpayers with effect from 15 March 2019.
UGANDA: Tax Amendment Bills presented to parliament
The Tax Amendment Bills 2019 were tabled by the Minister of Finance, Planning and Economic Development for deliberation by parliament. Once the Bills are passed by parliament and signed by the president, the Bills will become effective on 1 July 2019.
Significant amendments include:
ZAMBIA: Sales Tax Bill published
Parliament published theSales Tax Bill 2019, intended to repeal and replace the VAT Act, 1995 on 1 April 2019. The Bill is currently pending parliamentary approval.
Significant provisions include:
ZAMBIA: Regulations on suspension of tax on payment of interest to non-residents issued
On 22 March 2019, the Income Tax Act (Suspension of tax on payment of interest to non-residents)(Treasury Bill and Bond) Regulations 2019 were gazetted. In terms of the regulations, for the period 1 January 2019 to 31 December 2019, withholding tax on interest or any other sum accruing to a non-resident on a treasury bill or bond will be imposed at a rate of 15%, thereafter a rate of 20% will apply.
ZAMBIA: Turnover tax threshold revised
On 1 April 2019, parliament enacted the Income Tax (Amendment) Act 2019 so as to revise the turnover tax threshold from ZMW 800 000 to ZMW 500 000 per annum.
Sources include IBFD’s Tax Research Platform;www.allafrica.com; http://tax-news.com
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