Africa Tax In Brief (January 2016) - Sales Taxes: VAT, GST

ANGOLA: Budget Law 2016 adopted by National Assembly

The Angolan National Assembly adopted the final version of Budget Law 2016 on 11 December 2015, following its approval of the Program of Economic Diversification on 7 December 2015. The Program includes the introduction of the Special Contribution on Banking Transactions ("SCBT") and the Special Contribution levied on transfers for the payment of technical assistance or management fees.

The SCBT is to be levied at a rate of 0.1% on the value of each banking transaction (excluding the payment of salaries and other payments of a personal nature) performed by financial institutions, including banks, leasing companies, insurance and reinsurance companies, and investment companies.

The Special Contribution, which is levied at a rate of 10% on transfers conducted under agreements for the provision of foreign technical assistance and management services, is extended to the 2016 fiscal year.

Angola: Amendments to Industrial Income Tax regime

Amendments to the industrial income tax regime in respect of the treatment of doubtful debts and other provisions were introduced on 28 October 2015 by the publication of Presidential Decree No. 204/15 in the Official Gazette, which repeals the regime provided for under Ordinance No. 668/72 of 28 September 1972. In terms of these amendments:

provisions for bad debts are allowed as deduction subject to the condition that the risk of non-collection is considered "duly justified". The risk will typically be considered justified if such bad debts are in arrears for at least 6 months and there is proof that debt collecting proceedings are being conducted;
provisions in respect of debts granted to shareholders and subsidiaries (holding at least 10% of the shares in the company) are no longer allowed as deduction, except if the risk that it aims to cover is associated with judicial or enforcement procedures, bankruptcy, insolvency or the like;
taxpayers are required to provide the Tax Authorities with full details of each debtor in respect of which a provision for bad debt has been created; and
provisions created to cover losses relating to inventories are to be based on the relevant market value.

Presidential Decree No. 207/15, enacted on 5 November 2015, introduces amendments to provisions governing depreciation and amortization of assets for industrial income tax purposes and repeals Decree No. 755/72 of 26 October 1972, as amended by Decree No. 57/74 of 24 January 1974. In terms of these amendments:

in the case of intangible assets with an ascertainable expected useful life, the full amount of amortization may not exceed the amount provided for under the International Accounting Standards ("IAS");
specific provisions have been introduced to cover the amortisation of assets used in the telecommunication and information industries and financial activities; and
new depreciation rates have been introduced for equipment used in the production and distribution of wind and photovoltaic energy and electricity as well as for hoists and cranes used for construction.

The new provisions are to apply to assets that became operational or are being used for the first time in 2015 and subsequently.

BOTSWANA: Protocol to treaty between Botswana and South Africa enters into force

The amending protocol to the Botswana - South Africa Income Tax Treaty (2003), which was signed on 16 July 2012, entered into force on 19 August 2015. The protocol replaces article 25 governing the "Exchange of Information" and applies with effect from 1 January 2016.

BURUNDI: Budget Law 2016 adopted

Budget Law 2016 (Law No.1/22) was enacted by the President on 31 December 2015. The Law introduces minor tax changes in respect of inter alia:

income tax exemptions to non-governmental organisations;
income tax exemptions for interest on treasury bills and bonds;
tax on telephone calls and telephone companies fees; and
the surtax on imported goods.

In addition, on 18 December 2015, the National Assembly adopted a new local tax system which is to be based on the following five local taxes:

tax on livestock;
tax on rental income and on land;
tax on cycles and mopeds;
tax on professional and business activities; and
tax on the produce of certain industrial crops.

CAMEROON: Draft Finance Law 2016 adopted by National Assembly

The National Assembly adopted the draft Finance Law 2016, which was approved by the Council of Ministers on 29 October 2015, on 6 December 2015. The Finance Law introduces a tax on cash transactions, a tax on telecommunication services and a tax on domestic gas distribution.

CAPE VERDE: Transfer pricing guidelines enacted

Ordinance No. 75/2015 (Portaria de 31 de dezembro) (the "Ordinance"), which introduces Transfer Pricing Guidelines to be applied by related entities in determining the arm's length prices of goods and services, was enacted on 31 December 2015 and became effective on 1 January 2016.

The Guidelines apply to transactions between related entities, including transactions between two resident related entities and transactions by a permanent establishment located in Cape Verde with related persons.

The Guidelines provide for the arm's length principle and accepts the comparable uncontrolled price method, cost-plus method, resale price method, transactional net margin method, profit split method and any "other method that is appropriate under the circumstances" to determine arm's length prices.

Taxpayers are required to prepare a transfer pricing documentation file and it is mandatory for such file to the submitted to the Tax Authorities by "large taxpayers", entities benefiting from a privileged tax regime, permanent establishments of non-resident entities and any other entity designated by the Tax Administration.

CAPE VERDE: VAT standard rate increase ceased to apply

On 8 January 2016, the Ministry of Finance and Planning officially announced that the increase in the standard Value Added Tax ("VAT") rate of 0.5% (as enacted for 2015) ceased to apply from 31 December 2015. With effect from 1 January 2016, the VAT standard rate is 15%.

GHANA: New Income Tax Act 2015

On 1 January 2016, the new Income Tax Act 2015 (Act 896) took effect, replacing the Internal Revenue Act 2000 (Act 592). Significant amendments introduced by the new Act include inter alia:

introduction of a worldwide basis of taxation for residents which replaces the source-based tax system in terms of which residents were only subject to tax on income sourced in Ghana and foreign income brought into Ghana;
gains realised on the disposal of assets or liabilities are now to be included in business or investment income and taxed at the applicable income tax rate as capital gains tax is no longer a separate tax;
for thin capitalisation purposes, the debt-to-equity ratio has been increased to 3:1 from 2:1;
capital allowances are reduced from six to five classes with allowances for assets in classes 1, 2 or 3 to be computed based on the reducing balance method; and for assets in classes 4 and 5 in accordance with the straight-line method;
gains from the realisation of assets from mergers, amalgamations or reorganisations, where there is a continuity of at least 50% of the underlying ownership, are tax exempt;
introduction of a 1% withholding tax on interest paid to individuals and interest or dividends paid to individual members of an approved unit trust or mutual fund;
8% withholding tax is to be levied on interest or dividends paid to approved unit trust fund or mutual fund members, other than individuals;
exemption of pension income;
gift tax is no longer a separate tax and gifts received in respect of employment, business and investment are to be included in calculating the gains and profits from employment, business and investment;
the withholding tax rates on payments for the supply for services to a resident is increased from 5% to 15%, whereas the rate on payments for the supplier's goods to a resident is reduced from 5% to 3%. Under the new Act, the lottery is considered as an investment and, consequently, winnings from lottery are to attract a 5% withholding tax.
Increase in the threshold for withholding tax from GHC500 to GHC2,000 for the supply of goods, works and services.

The 2016 Budget, which was presented to Parliament on 13 November 2015, also introduced, inter alia, an increase in the value added tax registration threshold from GHS120,000 to GHS 200,000 and the roll-out of the Excise Tax Stamp Project and implementation of the Electronic Point of Sale Device Project for taxable supplies of goods and services.

In a press release dated 7 January 2016, the Ministry of Finance has confirmed that he has directed the Ghana Revenue to implement provisions in the Act granting an exemption from the 15% withholding tax on services for compliant taxpayers. Apparently, proposals have also been submitted to Parliament to review the withholding tax rate on services and to reverse the introduction of the 1% withholding tax on interest paid to individuals.

KENYA: Pre-arrival clearance notice issued

On 17 December 2015, the Kenya Revenue Authority ("KRA") published a notice on the pre-arrival clearance programme, in terms of which importers whose shipments are Pre-Export Verification of Conformity to Standards ("PVoC") inspected, are encouraged to enrol for pre-arrival clearance by lodging customs declarations accompanied with a scanned copy of the Certificate of Conformity ("CoC") issued by PVoC agents appointed by the Kenya Bureau of Standards ("KEBS") at least 7 days prior to vessel arrival.

The KRA also commits to ensuring clearance of CoC-compliant cargo within 24 hours of declaration lodgement (subject to the shipment fulfilling all other import formalities) and working with the Kenya Ports Authority to ensuring direct release of compliant cargo upon vessel arrival.

MAURITIUS: Protocol to treaty between Luxembourg and Mauritius enters into force

The amending protocol to the Luxembourg - Mauritius Income and Capital Tax Treaty (1995), which was signed on 28 January 2014 and ratified on 7 December 2015, entered into force on 11 December 2015 and is effective from 1 January 2016.

MAURITIUS: Implementation of Common Reporting Standard postponed

The Mauritius Revenue Authority ("MRA") on 22 December 2015 released a communiqué announcing that the implementation of the Common Reporting Standard ("CRS") (launched by the OECD in February 2014), initially planned for 1 January 2016, is to be postponed until further notice.

MAURITIUS: Treaty with Malta enters into force

The Malta - Mauritius Income Tax Treaty (2014) entered into force on 23 April 2015 and applies with effect from 1 January 2016.

NAMIBIA: Changes to Income Tax Act and VAT Act

Amendments to the Namibian Income Tax Act and VAT Act were published in the Government Gazette on 30 and 29 December 2015, respectively. Significant amendments include, inter alia:

reduction of the corporate income tax rate from 33% to 32% with effect from years of assessment commencing on or after 1 January 2015;
expanding of the definition of the disposal of mining rights/licenses subject to corporate income tax to include the transfer of any share or member's interest in a company that holds a mineral right/license, whether directly or indirectly;
taxing of any amount (whether in cash or in kind) received by or accrued as compensation for any restraint of trade and allowing a corresponding deduction in respect of any amount actually incurred in the carrying of trade as compensation for any restraint of trade;
taxing of the disposal of petroleum licenses or a right to mine petroleum in Namibia;
defining "Namibia" to include the territorial sea as well as the exclusive economic zone and the continental shelf over which Namibia exercises sovereign rights in accordance with its national and international laws;
the introduction of a 10% royalty withholding tax on payments to non-residents in respect of the right to use industrial, commercial or scientific equipment;
reduction of the withholding tax rate on management, consultancy, directors or entertainment fees paid to non-residents from 25% to 10%;
introduction of a liability of shareholders for tax debts in terms of which shareholders of companies or members of close corporations are liable to pay the entity's unpaid tax to the extent that the tax debt arose during the time the person so served as shareholder or member;
an increase in the VAT registration threshold from N$200,000 to N$500,000; and
providing for electronic filing of VAT returns and e-signatures.

Unless otherwise indicated, the corporate income tax amendments become effective on the publication date (30 December 2015) and the VAT amendments on 1 January 2016.

NIGERIA: 2016 Budget presented by President

Nigeria's 2016 Budget was presented by President Muhammadu Buhari to the joint session of the National Assembly on 22 December 2015. Proposals were made to reduce reliance on oil revenues (which are expected to amount to NGN 820 billion) in 2016.

However, Reuters reported that, according to sources at the Presidency and Senate, the President has written to Parliament on 17 January 2016 requesting the withdrawal of the 2016 Budget in order to make amendments, following the further dwindling price of oil.

NIGERIA: National Security Tax Bill

The Nigerian Parliament has been debating a proposed National Security Tax Fund Bill 2015 in December 2015. If passed into law, the Bill will require all registered companies operating in Nigeria to pay 5% of their profits as security tax.

SEYCHELLES: Treaty between Seychelles and Singapore enters into force

The Seychelles - Singapore Income Tax Treaty (2014) entered into force on 18 December 2015 and applies with effect from 1 January 2016.

SIERRA LEONE: 2016 Budget presented to Parliament

The Budget for the financial year 2016 was presented to Parliament by the Minister of Finance and Economic Development on 6 November 2015. Significant proposed measures include:

an increase in the withholding tax rate on management and technical fees from 10% to 15%;
the introduction of a national health insurance levy of 0.5% on the value of all contracts in support of the proposed National Health Insurance Scheme;
an increase in the top Pay-As-You-Earn ("PAYE") marginal tax rate (applicable to those with monthly earnings exceeding SLL 2 million) from 30% to 35%; and
an increase in the non-taxable threshold for personal allowances from SLL 220,000 to SLL 400,000.

ZAMBIA: Treaty between Ireland and Zambia enters into force

The new Ireland - Zambia Income Tax Treaty (2015) has entered into force and applies with from 1 January 2016.

ZIMBABWE: Budget 2016 presented to Parliament

The Budget for 2016 was presented to the Parliament by the Minister of Finance and Economic Development on 26 November 2015. Significant proposals, which, unless otherwise indicated will apply from 1 January 2016, include:

amendments to the current transfer pricing regulations in order to provide sufficient guidance on the tax treatment of transactions between related parties, and also help curb base erosion and profit shifting ("BEPS") and illicit financial flows ("IFFs");
reduction of the mineral royalty rate on gold from 5% to 3% on the incremental output based on the previous year's production;
exemption of interest on long-term deposits (of more than 12 months) from withholding tax.
introduction of a pension or annuity exemption of USD10,000 or one-third of the total value (up to a maximum of USD60,000);
amendments to the Income Tax Act, Capital Gains Tax Act, Customs and Excise Act and the Revenue Authority Act to provide for the set-off of any tax refunds due against tax liabilities assessed on other tax types; and
an intention to ratify the African Tax Administration Forum ("ATAF") agreement in order to enjoy the full benefits of membership.

Sources include IBFD, IHS and other

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.

South Africa: Africa Tax In Brief (January 2016)