Worldwide: Africa Tax In Brief - March 2016

Last Updated: 28 March 2016
Article by Celia Becker

Most Read Contributor in South Africa, September 2018

ANGOLA: Budget Law 2016 published

Law No. 28/15 ("Budget Law 2016"), which had been adopted on 31 December 2015, was published on 30 January 2016 and applies with effect from 1 January 2016. The Budget Law 2016 provides for:

  • the introduction of a Special Contribution on Banking Operations, to be levied at the rate of 0.1% on all financial operations by banking and non-banking financial institutions governed by the Financial Institutions Framework Law (Law 12/15 of 27 June 2015). The payment of salaries and other personal payments do not qualify as banking operations;
  • the maintaining in force of the Special Contribution on Current Invisible Operations, established by Presidential Decree no. 2/15 of 29 June 2015. The contribution continues to apply at a rate of 10% levied on transfers performed under management services and foreign technical assistance contracts.

BOTSWANA: 2016/17 Budget and Income Tax (Amendment) Act 2015

Botswana's Minister of Finance, Mr O.K. Matambo presented the 2016/17 Budget Proposals to the National Assembly on 1 February 2016.

The Income Tax (Amendment) Act, 2015 which was gazetted on 30 October 2015, became effective on 1 February 2016. Amendments introduced by the Amendment Act include:

  • empowering the Commissioner General to (a) refund tax overpaid (without having to wait for vote allocation from the Ministry and (b) set-off any refund due against any tax, duty, levy, interest or penalty payable under any of the relevant laws that he is responsible for;
  • the amendment of the term "farming operations" and an exemption for income from specified farming operations accruing to a resident individual, provided certain conditions are met;
  • abolishing the carry-back of farming losses and the indefinite carry-forward of farming losses. With effect from 1 February 2016, farming assessed losses can only be carried forward for 5 years;
  • repealing the provisions allowing set-off by individuals of farming losses against up to 50% of chargeable income from other sources;
  • introduction of a 4% withholding tax in respect of the purchase of livestock for slaughter or for feeding for slaughter.

BOTSWANA: Treaty with Ireland enters into force

The Botswana/Ireland Income Tax Treaty (2014) entered into force on 3 February 2016 and generally applies for Botswana from 4 March 2016 for withholding taxes and 1 July 2017 for other taxes, and for Ireland from 1 January 2017.

CHAD: Budget Law 2016 – details

Budget Law 2016 (Law No. 001/PR/2016), which introduces tax amendments to the General Tax Code, was enacted on 1 January 2016. Significant tax amendments include inter alia:

  • withholding tax: the introduction of an advanced payment of withholding tax on incoming foreign calls and telephone interconnections at a rate of 25% on payments to non-resident companies made by telecommunications companies;
  • value added tax: the levying of VAT on all transactions carried on by telephone companies related to the sale and delivery of goods;
  • transfer duty: the introduction of the following new rates for the transfer of immovable property: (1) 8% on undeveloped land; and (2) 10% on developed land. The Law also amends the land registry's values with effect from 1 January 2016, depending on the municipality where the property is located, ranging from F.CFA 500 per square metre to F.CFA 5,500 per square metre;
  • real estate tax: extension of the scope of application of real estate tax on developed land to include houses made of hard materials that are used as main owner residence. The taxable base is 8% of 30% of the market value, taxed at a rate of 2.5%;
  • individual income tax: amendment of the rates of advanced payment of individual income tax on income derived from immovable property; and
  • excise duty: the excise duty regime has been harmonised to be in line with the provisions of title 2 of CEMAC (Economic and Monetary Community of Central Africa, Communauté économique et monétaire de l'Afrique Centrale) Directive No. 01/99/CEMAC-28-CM-03 of 17 December 1999, as amended by CEMAC Directive No. 07/11/UEAC-028-CM-22 of 19 December 2011.

REPUBLIC OF THE CONGO: Finance Law 2016

On 31 December 2015, Law No. 33/2015 ("Finance Law 2016") was adopted by the parliament. The following amendments to the General Tax Code ("GTC") and to regulations not codified apply from 1 January 2016:

  • corporate income tax: no exemptions from any kind of national or local tax, whether direct or indirect tax, may be granted under public contracts;
  • individual income tax: taxpayers whose annual turnover (from non-employment income) does not exceed F.CFA25-million are subject to tax under the regime provided for microenterprises, which are exempt from lump-sum tax, but subject to the business licence duty. Taxpayers whose annual turnover from non-employment income does not exceed F.CFA100-million are subject to individual income tax based on the regime provided for small enterprises. The simplified regime of taxation (régime réel simplifié d'imposition) applies if annual turnover does not exceed F.CFA2-billion during a fiscal year;
  • value added tax: VAT on imports applies at a rate of 5% on goods that benefit from the reduced rate on domestic transactions; and
  • lump-sum tax: the applicable rates for lump-sum tax are amended to 7% of annual net turnover (previously 7.5%), and 10% of the overall annual net margin.

DEMOCRATIC REPUBLIC OF THE CONGO: Finance Law 2016 published

The Finance Law 2016 has been enacted, with the following amendments applying with effect from 1 January 2016:

  • senior tax officers are allowed to propose an amicable arrangement with respect to tax penalties. In this respect, penalties ranging from CDF500-million to CDF2.5-billion are under the tax administration's jurisdiction. For penalties exceeding CDF2.5-billion, only the Minister of Finance has the power to propose an arrangement with the taxpayer. Once an arrangement is reached, the taxpayer must commit to abandon his right to file an appeal or to withdraw any claim which has already been lodged before the arrangement is concluded;
  • tax losses may be carried forward indefinitely, but the deduction limit is reduced from 70% to 60% of the tax profits prior to the allocation of losses;
  • the maximum annual turnover threshold in order to be eligible for the small enterprise tax regime is increased from CDF80-million to CDF200-million;
  • pension income paid to employees through retirement funds is subject to income tax at the rate of 10%; and
  • individuals deriving income from liberal professions are now subject to VAT only if their turnover reaches the minimum threshold of CDF80-million.

GHANA: Tax Amendment Act 2016 approved by Parliament

On 10 February 2016, Parliament approved the Income Tax Amendment Act 2016. The Act abolishes the 1% withholding tax on interest paid to individuals which was introduced with effect from 1 January 2016 and reduces the withholding tax on service fees from 15% to 7.5%. The Act is pending presidential assent.

GUINEA: Finance Law 2016

The National Assembly adopted Law No. 2016/001/AN ("Finance Law 2016"), which introduces tax amendments to the General Tax Code, on 18 January 2016. The following amendments apply, inter alia, with effect from 19 January 2016:

  • value added tax: an increase in the standard rate from 18% to 20%, but zero rating of export and international transport sales. Taxpayers providing services or goods to public companies, mining, oil and telephone companies are required to pay VAT in advance by way of withholding tax in respect of 50% of the invoices; and
  • tax on telephone use and tax on access to network communication facilities: the tax on telephone use is extended to include telephone text message (levied at GNF10.00 per message) and the tax on network communication facilities is to be levied at a rate of 5% on each authorisation of access to the Internet.

KENYA: Tax Procedures Bill enacted

The Tax Procedures Bill, which was assented to by the President on 15 December 2015, was enacted as the Tax Procedures Act ("TPA") and became effective from 19 January 2016. The TPA covers procedures for income tax (corporate tax, personal taxes and withholding tax), value added tax and excise duty and aims to provide uniform procedures for consistency and efficiency in tax administration. The TPA provides for, inter alia:

  • interest on the late payment of tax of 1% per month (previously 2% per month);
  • introduction of public and private rulings in respect of all taxes;
  • a requirement for the Kenya Revenue Authority ("KRA") to respond within 60 days to an objection to a tax assessment;
  • harmonisation of the time required to maintain records for tax purposes to 5 years (previously 7 years for income tax and excise duty);
  • harmonisation and enhancement of penalties for non-compliance;
  • no tax in dispute being payable on appeal to the Tax Appeal Tribunal or from the Tax Appeal Tribunal to the High Court; and
  • no waiver of interest on assessed tax or late payments.

KENYA: Signs Multilateral Anti-Tax Evasion Agreement

Kenya became the 94th jurisdiction and the 12th African nation to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters ("the Convention") on February 8, 2016.

The Convention, jointly developed by the Organisation for Economic Co-operation and Development ("OECD") and the Council of Europe in 1988 and amended in 2010, provides for all forms of administrative assistance in tax matters: exchange of information on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations, and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers' rights.

MAURITIUS: Introduction of SME Development Scheme

The Mauritian Government has agreed to introduce an SME Development Scheme, providing eligible SMEs with, inter alia:

  • a subsidised interest rate on credit;
  • tax exemptions for the first eight years of their operations; and
  • VAT and import duty exemptions on purchases of productive equipment.

It is expected that the SME Development Scheme will be extended to a broad range of sectors that create jobs.

NAMIBIA: 2016/17 Budget

The Budget for 2016/17 was presented to the National Assembly by the Minister of Finance on 25 February 2016. Tax proposals include:

  • the finalisation, approval and implementation of the environmental and export taxes;
  • an increase in the fuel levy;
  • assessing the feasibility of a presumptive tax on the informal sector;
  • developing the double tax agreement policy and increasing collaboration with international tax authorities to counter transfer pricing;
  • tabling of the Customs Bill;
  • finalising of public consultation in respect of the proposed introduction of a solidarity tax;
  • deploying the new Integrated Tax System;
  • strengthening the provisions for recovery of tax debts; and
  • implementing the transitional modalities for the establishment of a Semi-Autonomous Revenue Agency.

NIGERIA: Tax Appeal Tribunal rules that tax statutes supersede any contractual arrangements

On 18 December 2015, the Lagos Tax Appeal Tribunal ("TAT"), ruled that an upstream oil company can deduct capital allowances on capital expenditure incurred in line with the Petroleum Profits Tax Act ("PPTA"), irrespective of whether such costs have been approved by a counter-party under a contractual agreement.

In the case at hand, an International Oil Company ("IOC") entered into a joint venture ("JV") arrangement with the Nigerian National Petroleum Company ("NNPC") under which both parties jointly provided funding for oil exploration and production. The IOC and NNPC had 40% and 60% participating interests in the oil concession respectively. Each JV partner is to contribute to the costs and share in the benefits in accordance with their proportionate equity interest in the oil concession. However, due to incessant delay by the NNPC to meet its funding obligations, it was required to execute a Modified Carry Agreement ("MCA"), which requires the IOC to bear 100% of the JV's capital cost.

Under the MCA, the IOC is entitled to recover 85% of the capital cost through capital allowances ("Carry Tax Relief") and the balance of 15% through NNPC's share of crude oil production.

The IOC deducted the Carry Tax Relief in its tax returns for the period 2006 to 2011. The FIRS rejected the deductions and raised additional assessments on the IOC. The additional assessments, according to the FIRS, were raised because prior approval for deduction of the costs had not been sought by the IOC from NNPC. The IOC appealed to the TAT.

According to the TAT, the question of tax deductibility should be determined by the PPTA. As the PPTA does not stipulate any approval as a prerequisite to be fulfilled by taxpayers, the question of cost approval should not interfere with tax deduction.

NIGERIA: Communication Service Tax Bill, 2015 being considered

The Communication Service Tax Bill, 2015, which seeks to impose Communication Service Tax ("CST") at a rate of 9% on users of electronic communication services ("ECS"), is currently being considered by the National Assembly. "Users" for purposes of the CST include customers or subscribers of any electronic communication network or broadcasting service, as well as customers that are operators or providers of electronic communications networks or services.

RWANDA: Treaty with Singapore enters into force

The Rwanda/Singapore Income Tax Treaty (2014) entered into force on 15 February 2016 and generally applies from 1 January 2017.

ZAMBIA: Mining Royalties revised

Zambia's Cabinet has agreed on new proposals to redesign the taxation regime for mining companies, following the aborted attempt to hike royalties in 2015.

Under the tax arrangements that were subsequently revoked last year, the 6% royalty for all mines was to have been replaced by split levels of 8% and 20% on underground mining and on open cast mining operations, respectively. They were replaced by keeping the previous 6% royalty rate for underground mining and fixing a 9% rate for open cast operations.

The Government has now approved a system of variable royalty rates for copper. It has been reported that those rates will vary between 4% and 6%, depending on prevailing copper market prices. The new system is aimed at sustaining Zambia's significant copper mining operations, and the jobs they provide, in a period of low mineral prices.

In addition, a flat mineral royalty rate of 5% is to be set for other base metals and minerals; and of 6% for precious metals and gemstones.

The Cabinet have also approved a suspension of the 10% export duty on ores and concentrates for which there are no processing facilities in Zambia, but have maintained the current 30% corporate income tax on mining operations.

The review of the taxation regime for the mining sector, the Government said, "is deemed necessary to sustain continuous operation of existing mining companies, and avert the suspension of mining operations and job losses."

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.

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