ANGOLA: Extensive Tax Reforms introduced
On 15 December 2014, Legislative Presidential Decrees (LPDs) Nos. 324/14 and 325/14 were enacted. The LPDs provide for the internal regulation of the new unified tax administration (Administração Geral Tributária, AGT), which results from the merger of the National Tax Direction (Direcção Nacional dos Impostos) with the National Customs Service (Serviço Nacional das Alfândegas) and the Executive Project for Tax Reform (Projecto Executivo para a Reforma Tributária, PERT). The AGT aims at better management of non-oil tax revenue.
As part of a process of extensive tax reforms in Angola, the following updated legislation has been published: Investment Income Tax Code (Código de Imposto sobre a aplicação de capitais), Employment Income Tax Code (Código sobre os Rendimentos de Trabalho), Industrial Income Tax Code (Código do Imposto Industrial), Tax Enforcement Code (Código de Execuções Fiscais), General Tax Code (Código Geral Tributário) and Stamp Duty Code (Código do Imposto de Selo). We provide a brief overview of each of these below.
Investment Income Tax Code
An overview of Presidential Legislative Decree no 2/14 of 20 October 2014 revising the Investment Income Tax Code was published in our November 2014 newsletter.
Employment Income Tax Code
Law no 18/14 of 22 October 2014 introduces a new Angolan Employment Income Tax Code (EIT) and provides for three groups of taxpayers for employment income tax purposes, namely employees (Group A), independent professionals (Group B) and individuals deriving income from industrial or commercial activities (Group C).
Group A taxpayers are subject to EIT at the published progressive rates, Group B at a rate of 15% and Group C at a rate of 30% in general.
Exemptions from EIT include a family allowance of 5% of the basic salary amount, termination benefits not exceeding the limit established by the labour law, meals and transport subsidies not exceeding AOA30 000 per month and a Christmas and holiday bonus of up to 100% of basic salary.
Industrial Income Tax Code
Law no 19/14, enacted on 22 October 2014, introduces a new Industrial Tax Code with a new withholding tax regime, effective from 1 January 2015.
Under the new regime, taxpayers subject to the Industrial Tax with a head office, place of effective management or permanent establishment in Angola that render any services will be subject to withholding tax at a rate of 6.5%. In addition, such services rendered by non-resident entities without a permanent establishment will also be subject to such tax, irrespective of where the service is rendered.
The following services are expressly excluded from the withholding tax: telecommunication services, hotel and similar services, financial intermediation and insurance services, educational services, medical care services, transportation of passengers, rental of machinery which give rise to the payment of royalties under the Investment Income Tax Code and any services not exceeding AOA20 000.
Currently, withholding tax is imposed only on construction projects and subcontract activities at a rate of 3.5% and on technical, management and similar services at a rate of 5.25%.
Tax Enforcement Code
The new Tax Enforcement Code (Law no 20/14) was approved and published by the Angolan Government on 22 October 2014 and will become effective on 1 January 2015. The Code provides for the execution process over tax debts and replaces the Simplified Tax Enforcements Regime, approved by Presidential Decree Law no 2/11 of 9 June 2011.
The Law specifically provides for an exceptional tax debt amnesty program in respect of periods ending on 31 December 2012, in terms of which full waiver can be granted in respect of taxes (industrial tax, personal income tax, stamp duty, investment income tax and urban property tax) and related penalties and interest due.
The amnesty does not apply to customs debts, social security contributions or companies subject to the special oil and mining tax regimes.
General Tax Code
Law 21/14 of 22 October 2014 approved the General Tax Code and revokes the previous Code. The new Code establishes the general principles applying to tax benefits (their creation, classification, access, publication and expiration), deals with prescription periods and tax procedures, including review of assessments, tax inspections and offences.
Stamp Duty Code
The revision and republication of the Stamp Duty Code was approved by Presidential Decree no 3/14 on 21 October 2014. In terms of the revised Code (effective from the date of its publication), the following transactions are exempt: marketable securities transacted on the capital market, real estate transactions resulting from a merger, demerger or incorporation under the Commercial Companies Code, Labour agreements, exports and the free transfer of property between parents and children.
Angolan entities entering into contracts with non-resident entities are subject to a self-assessment mechanism whenever the transaction is subject to stamp duty. The stamp duty rates as per the General Table of the Stamp Duty Code have also been amended by the Decree.
BENIN: Detail of treaty with United Arab Emirates available
Details of the United Arab Emirates-Benin double tax agreement, signed on 4 March 2013, have become available. The treaty was concluded in the Arabic, English and French languages, all texts being equally authentic. In the case of divergence, the English text prevails. The treaty generally follows the OECD Model (2010).
BURUNDI: 2015 Budget announced
On 17 December 2014, a local Taxation Reform Bill was presented to the Council of Ministers by the President. The Bill aims at improving the local tax system in order to increase the municipalities' tax receipts. The Council of Ministers adopted the Bill which will be presented to the National Assembly shortly.
On 22 December 2014, the Budget Bill 2015 ("the Bill") was presented to the National Assembly. Significant proposed amendments include:
- The provisions of Law No. 1/23 of 24 September 2009, as inserted in the Investment Code, which grant tax credits against corporate income tax, are repealed for 2015.
- The provisions of the Investment Code and Free Zone Area Regulations granting exemptions from VAT on the import of goods are repealed for 2015.
- The tax on incoming international telephone calls which was introduced by the Amending Budget Law 2014 is maintained but applies at the rate of BIF 42 per minute.
- Taxpayers are obliged to pay 30% of the amount of tax dispute prior to initiating legal proceedings against the tax administration.
- the rendering of services in general is subject to a 1% withholding tax on the transaction value. The Minister of Finance will issue further regulations listing the services subject to such tax and its modalities.
COMOROS ISLANDS: 2015 Finance Bill presented to the National Assembly
In terms of the 2015 Finance Bill, presented on 1 November 2014, taxpayers deriving income from business activities not registered at the National Register of Tax Identification Numbers are subject to a minimum income tax at the rate of 5%, capital gains are to be subject to 20% tax and a reduced rate of consumption tax is introduced.
GHANA: eTax Portal launched
The Ghana Revenue Authority (GRA) taxpayer portal was officially launched on 4 November 2014 by the Ministry of Finance and Ghana Community Network Services Limited and provides for online services in respect of registration, tax management, tax return filing, tax payments and exemption applications.
GHANA: Internal Revenue (Amendment) Bill, 2015 presented to Parliament
On 9 December 2014, the Minister of Finance presented the Internal Revenue (Amendment) Bill, 2015 to the parliament to give legislative effect to the changes announced in the Budget Speech of 19 November 2014, including:
- Introduction of a Special Petroleum Tax of 17.5%;
- Extension of the National Fiscal Stabilisation Levy of 5% and special import levy of 1 – 2% to 2017;
- Imposition of value added tax (VAT) on fee-based financial services;
- Imposition of a 5% flat rate VAT on real estate transactions;
- Increasing the withholding tax rate on directors' remuneration from 10% to 20%; and
- Increasing the tax rate applicable to free zone enterprises from 8% to 15% after the expiration of the 10 year tax holiday.
GHANA / KENYA: Treaty negotiations underway
Following a meeting held in Nairobi on 13 December 2014, negotiations for a tax treaty between Ghana and Kenya are underway. The treaty is expected to be signed in the near future.
GUINEA: Details of treaty with the United Arab Emirates available
Details of the United Arab Emirates-Guinea tax treaty (2011), signed on 13 November 2011, have become available. The treaty was concluded in the Arabic, English and French languages, all texts being equally authentic. In the case of divergence, the English text prevails. The treaty generally follows the OECD Model (2010).
KENYA: Capital gains tax guidelines published
Following the reintroduction of the Kenyan capital gains tax (CGT) regime with effect from 1 January 2015, the Kenya Revenue Authority on 12 December 2014 published guidelines on its website regarding the application of the legislation, effectively summarising the provisions of the Eighth Schedule to the Income Tax Act ("the Act") which deals with CGT.
KENYA: Belgium treaty update
As per the Belgian government's tax treaty negotiation priorities for the year 2015 published on 8 January 2015, a second round of negotiations for a tax treaty between Belgium and Kenya is scheduled to take place in mid-2015, following the first round of negotiations held from 20 to 24 October 2014.
KENYA: Details of treaty with the United Arab Emirates available
Details of the Kenya / United Arab Emirates double tax agreement, signed on 21 November 2011, have become available. The treaty was concluded in the Arabic and English languages, both texts being equally authentic. In case of divergence in the interpretation, the English text prevails. The treaty generally follows the OECD Model (2010).
KENYA: Guidelines on importation of industrial spare parts issued
On 31 December 2014, the Kenya Revenue Authority issued Guidelines on the Importation of Industrial Spare Parts by Registered Manufacturers (the Guidelines) pursuant to Item 3I of Part B to the 5th Schedule of the EAC Customs Management Act, 2004 ("the Act").
MAURITIUS: Treaty with Swaziland signed
On 11 November 2014, Mauritius and Swaziland signed a double tax agreement in Port Louis. Once in force and effective, the new treaty will replace the Mauritius - Swaziland Income Tax Treaty (1994).
NIGERIA: 2015 Budget proposal presented to National Assembly
On 17 December 2014, the 2015 Budget proposal was presented to the National Assembly by the Minister for Finance and Coordinating Minister for the Economy. Proposed tax amendments include:
- a review of the existing tax waivers and exemptions, including considering whether upstream oil companies and other entities are entitled to pioneer status;
- potentially increasing the VAT rate in order to align it with the VAT rates in other West African countries;
- 5% import surcharge on luxury cars;
- 10% import surcharge on new private jets;
- 39% import surcharge on luxury yachts;
- 3% luxury surcharge on champagne, wine and spirits;
- surcharge on business and first-class airline tickets; and
- tax at 1% on residential properties located within the Federal Capital Territory (FCT) with a value of NGN 300 million and above.
RWANDA: Treaty with Barbados signed
On 22 December 2014 Barbados and Rwanda signed a double tax agreement in London.
SENEGAL: Treaty with Iraq authorised
The Iraqi Council of Ministers authorized the Minister of Finance on 13 January 2015 to negotiate and sign a double tax agreement with Senegal.
ZAMBIA: Taxation Bills, 2014 approved by Parliament
On 17 December 2014, the parliament approved the following five taxation bills that had been presented by the Minister of Finance on 28 November 2014:
- Income Tax (Amendment) Bill, 2014;
- Customs and Excise (Amendment) Bill, 2014;
- Value Added Tax (Amendment) Bill, 2014;
- Property Transfer Tax (Amendment) Bill, 2014; and
- Mines and Minerals Development (Amendment) Bill, 2014.
The amendments include significant amendments to the mining tax regime. With effect from 1 January 2015, open cast and underground mining operations are exempt from corporate income tax, but will be subject to a final 8% mining royalty in respect of underground mining operations and a 20% mining royalty in respect of open cast mining operations. Zambia has already doubled mineral royalties to the 2014 rate of 6% in 2011.
The new tax system aims to collect mining revenue at different stages in the production process with 30% corporate income tax to be levied on income earned from the processing of purchased mineral ores, concentrates and any other semi-precious minerals, as well as income earned from tolling (an agreement between the owner of raw materials and another party for processing such materials).
These changes will not apply to the mining of industrial minerals such as lime, sand and gravel.
ZIMBABWE: 2015 Budget presented to Parliament
The 2015 Budget Statement and Bill for the Finance Act (No.3 ) Act, 2014 was presented to Parliament on 27 November 2014. Proposed amendments include:
- A reduced corporate income tax rate applicable to export companies. Depending on the export threshold, the applicable rate is 15%, 17.5% or 20%.
- With effect from 1 January 2015,special mining leases and mining operations are subject to the 3% AIDS levy.
- Foreign agents' fees for the pre-selling and marketing of exports are to be exempt from withholding tax, provided that such fees do not exceed 5% of the value of exports.
- Companies that have not carried on any trade or business during a year of assessment commencing on or after 1 January 2015 will not be penalised for failing to furnish a return, provided they have supplied the Commissioner with a sworn written declaration to such effect within 30 days of the notice by the Commissioner regarding the submission of returns for each year of assessment.
- The prescribed period for deferment of VAT on capital goods is to be extended to a maximum of 180 days with effect from 1 January 2015.
In terms of the Finance (No. 2) Act, 2014 and the Finance Act (Tax Amnesty Regulations, 2014), Zimbabwe's tax amnesty program provides for:
- Amnesty in respect of interest and penalties on unpaid income tax, capital gains tax, customs and excise duties, value added tax and stamp duties for the period 1 February 2009 to 30 September 2014.
- A single amnesty application is to be submitted per applicant to ZIMRA before 31 March 2015 with full disclosure of the unpaid tax with relevant supporting documents.
- The deadline for payment is to be extended from 31 March 2015 to 31 December 2015.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.