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Africa Tax in Brief 

by Celia Becker

Published: July, 2017

Submission: July, 2017


GHANA: Customs duty on spare parts abolished On 14 June 2017, pursuant to the measures proposed in the 2017 Budget, Parliament passed the Customs Amendment Bill, 2017, which amends the Customs Act, 2015 by abolishing customs duties on the importation of vehicular (including motorcycles and bicycles) spare parts. GHANA: VAT Flat Rate Scheme practice note issued The Ghana Revenue Authority published Practice Note No. IDT/2017/001 on 12 May 2017, providing guidance on the operation of the Value Added Tax Flat Rate Scheme (“VFRS”), introduced earlier this year, including the scope and coverage of the VFRS, mode of migrating taxpayers to the VFRS, record keeping requirements and returns to be submitted. GHANA: New import levy introduced On 10 June 2017, the President announced the imposition of a 0.2% import levy on all imports from outside the Member States of the African Union (“AU”). The import levy is aimed at financing the activities of the AU and is the result of a decision adopted by the heads of state and government during the 27th AU Summit held in Kigali, Rwanda in July 2016.

KENYA: Finance Act, 2017 assented into law Finance Act, 2017 was assented into law on 21 June 2017, introducing the following new tax changes:

· capital expenditure incurred on the construction of transportation and storage facilities for petroleum products by the Kenya Pipeline Company Limited is to qualify for an investment deduction at either 150% or 100%, with effect from 1 January 2018;

· a 150% investment deduction allowance for capital expenditure on buildings and machinery by special economic zone enterprises located outside of Nairobi and Mombasa is to be introduced with effect from 1 January 2018;

· local motor vehicle assemblers are to be subject to a reduced corporate income tax rate of 15% for the first five years of operations with effect from 1 January 2018. The reduced rate shall be extended for five years if the company achieves a local content equivalent to 50% of the ex-factory value of the motor vehicles;

· the period for repatriation of funds earned outside of Kenya subject to tax amnesty has been extended to 30 June 2018; and

· with effect from 1 January 2018, the registration of tax representatives shall be in the name of the non-resident person being represented.

Please click here for an overview of the key tax changes introduced by the Finance Bill. MALAWI: Revised excise duty rate On 19 May 2017, the Malawi Revenue Authority announced, effective from 19 May 2017, the reintroduction of a single excise rate of USD15 per 1 000 cigarettes or its equivalent in Malawian Kwacha, for both imported and locally produced cigarettes. The single excise rate replaces the two-tier structure that previously existed for locally produced and imported cigarettes. MALAWI: 2017/18 Budget presented to Parliament On 19 May 2017, the Minister of Finance, Economic Planning and Development presented the 2017/18 Budget to Parliament. The Budget proposes the following tax measures:

· revising the lower band of the personal income tax annual tax bracket from MWK240 000 to MWK360 000 and introducing a new income tax bracket of 35% for employment income in excess of MWK3-million per month;

· exempting fresh milk from value-added tax (“VAT”);

· broadening the scope of interest subject to withholding tax;

· imposing a 10% excise duty on television subscription fees; and

· revising the exemption granted for the import of buses and minibuses.

MOZAMBIQUE: VAT Code amendments A notice, dated 8 June 2017, rectified Law no 13/2016 of 30 December 2016 which amended and republished the Mozambican VAT Code, confirming:

· the elimination of the VAT exemption previously applicable to the provision of drilling, exploration and infrastructure construction services in the mining and oil and gas sectors during prospecting and exploration stages; and

· that any artistic, scientific, sporting, entertainment, educational services or ancillary services, as well as transport services provided within the national territory, would be deemed to be located in Mozambique.

NIGERIA: Voluntary Asset and Income Declaration Scheme launched On 29 June 2017, the acting President signed an executive order for the implementation of the Voluntary Asset and Income Declaration Scheme (“VAIDS”), offering a nine-month amnesty period commencing 1 July 2017 and ending 31 March 2018 to defaulting taxpayers. The VAIDS offers amnesty from interest and penalties on unpaid taxes as well as protection from criminal prosecution.

NIGERIA: 2017 Budget signed into law On 12 June 2017, the Acting President signed the 2017 Budget into law. Please click here for previously published details of the Budget. NIGERIA: Reduced import and export documentary requirements On 21 April 2017, the Federal Ministry of Finance issued a public notice announcing, with effect from 21 April 2017, the reduction of documents required for export and import as part of the government''s efforts to improve the ease of doing business in Nigeria. RWANDA: 2017/18 Budget presented to Parliament On 8 June 2017, the Minister of Finance and Economic Planning presented the 2017/18 Budget to Parliament. The tax measures include:

· the reduction of customs duties on the use of smart cards, ATM cards, point-of-sale cards and their operating machines from 25% to 0%, in order to promote a cashless economy; and

· increasing import duties on importation of second hand clothes from USD2.5/ per kg to USD4 per kg in further support of the “made in Rwanda” initiative.

SEYCHELLES: Protocol to exchange of information agreement with Guernsey enters into force On 14 June 2017, the amending protocol, signed on 12 August 2016 by Seychelles and on 1 September 2016 by Guernsey, to the Guernsey/Seychelles Exchange of Information Agreement, 2011 entered into force and generally applies from 14 June 2017.

SIERRA LEONE: 2017 Budget passed by Parliament The 2017 Budget, published by the Ministry of Finance and Economic Planning, was approved by Parliament on 13 December 2016. The Budget contains the following proposed tax measures:

· limiting the period of carrying forward tax losses to 10 years;

· introducing a royalty charge of 0.5% on the turnover of every company or taxable person providing telecommunication services; and

· increasing the payroll tax rate for ECOWAS citizens from SLL500 000 to SLL1.5-million, and for non-ECOWAS citizens from SLL3-million to SLL5-million.

TANZANIA: 2017/18 Budget presented On 8 June 2017, the Minister of Finance and Planning presented the 2017/18 Budget to Parliament. Proposed tax measures include:

· clarifying contradictory provisions in the Income Tax Act, it has been announced that corporations with unrelieved tax losses for three consecutive years will be liable for Alternative Minimum Tax at the rate of 0.3% of turnover in the third year;

· a 5% final withholding tax is to be introduced on the market value of minerals for small-scale miners, but no guidance is provided regarding the basis for determining market value or the practical collection of such tax;

· new assemblers of vehicles, tractors and fishing boats are to qualify for a reduced corporate income tax rate of 10% for the first five years of operation. Tax advisors have questioned the efficiency of the proposed measure as taxpayers in all likelihood would start showing taxable profits only after expiry of the five-year period;

· expenditure qualifying for wear and tear allowances on non-commercial vehicles has been increased from TZS15-million to TZS30-million;

· the tax bands, rates and thresholds applicable to individuals, which were last amended in 2008, are to remain unchanged. No further cuts have been introduced to the skills and development levy, which remains at 4.5%;

· VAT, at the rate of 0%, is to be reintroduced on ancillary transport services in relation to goods in transit through Tanzania. Since July 2015, VAT at 18% has been charged on such services, which was not available as an input to non-residents not registered for VAT in Tanzania, thus significantly increasing their cost of doing business. Fertilised eggs for incubation, local produced compounded animal feeds and machinery and plant used in the edible oil, textile and pharmaceutical industries are to be exempt from VAT.

These measures are effective from 1 July 2017, unless otherwise stated. UGANDA: 2017/18 Budget presented to Parliament On 8 June 2017, the Minister of Finance, Planning and Economic Development presented the 2017/18 Budget to Parliament. The details of the proposed tax measures as summarised as follows:

· clamping down on errant taxpayers, the Minister is to be granted powers to estimate rental income where taxpayers fail to submit rental income returns or provide misleading information;

· the scope of anti-avoidance provisions is also to be expanded, granting powers to the tax authority to recharacterise transactions between “associates” not entered into on an arm’s length basis. Previously, the arm’s length requirement only applied to “taxpayers”, which are more narrowly defined than associates;

· after being repealed in 2016, a 15% withholding tax is to be reintroduced on winnings from sports or pool betting, but the gaming tax levied on operators on total amounts staked less total pay-outs is to be reduced from 35% to 20%;

· the in duplum rule is to be introduced, limiting interest accruing on unpaid tax to the principal amount due. It is also proposed that interest due and payable as at 30 June 2017, which exceeds principal tax and penalties due, is to be waived. The initial allowance of 50% of the cost base of property more than 50km outside of Kampala brought into use for the first time, is also to be reintroduced.

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

Celia Becker

Africa regulatory and business intelligence executive [email protected] cell: +27 82 886 8744






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