Worldwide: Africa Tax In Brief - January 2018

Last Updated: 2 February 2018
Article by Celia Becker

Most Read Contributor in South Africa, March 2019

ANGOLA: Draft law on tax and foreign exchange compliance approved

Parliament approved a draft law on the Extraordinary Regime on Tax and Foreign Exchange Compliance, regulating the repatriation of assets held abroad that have not been declared in Angola in December 2017.

All Angolan national individuals resident in the country and companies that are resident in, or have a head office, effective management or permanent establishment in Angola, will be subject to this regime in terms of which all foreign held assets, as defined, that were not declared to the tax authorities by 31 December 2017, have to be declared and the corresponding amounts repatriated within 180 days from the publication of the law.

For this purpose, "foreign held assets" are defined to include bank deposits, certificates of incorporation, securities, and other financial instruments, such as life insurance policies linked to investment funds and capitalisation operations of "life insurance" exceeding USD100 000.

Those complying with these procedures will be exempt from the payment of any tax and from tax obligations for tax periods ending on 31 December 2017. 

ETHIOPIA: Treaty with Singapore enters into force

The Ethiopia - Singapore Income Tax Treaty, 2016 entered into force on 8 December 2017 and generally applies from 1 January 2018 for Singapore and from 8 July 2018 for Ethiopia. 

GHANA: African Union Import Levy Bill, 2017 and Tax Amendment Bills presented to parliament 

The Minister of Finance presented the African Union Import Levy Bill, 2017 (in terms of which the African Union levy of 0.2% on eligible imports into Ghana is to be imposed) to parliament on 7 November 2017.

In order to give effect to the amendments proposed by the 2018 Budget, which was presented to parliament on 15 November 2017, various tax amendment bills were also presented on 29 and 30 November 2017. In terms of these amendment bills:

  • the special import levy and national fiscal stabilisation levy are to be extended until the 2019 year of assessment;
  • lotteries (ie, stakes in the National Lotto organised by the National Lottery Authority) are exempted from value-added tax ("VAT");
  • the place of supply rules for telecommunications services and electronic commerce are revised and place of supply rules are prescribed for the supply of recharge cards; and
  • the appointment and duties of VAT withholding agents, required to withhold VAT at the rate of 7% on payments to registered persons (VAT registered entities making zero-rated supplies and selected government and other VAT-registered entities), are prescribed.

The 2018 Budget also proposed:

  • reviewing and updating current tax laws and the Revenue Administration Act, 2016 and preparing regulations for the Revenue Administration Act;
  • updating the Transfer Pricing Regulations to reflect current and international practice;
  • presenting the Automatic Exchange of Financial Information Bill to parliament for the implementation of the common reporting standard for the exchange of information; and
  • deploying fiscal electronic devices for the real time monitoring of VAT-registered businesses.

GHANA: Tax Amnesty Bill, 2017 passed by parliament 

The Tax Amnesty Bill, 2017, proposing the granting of waivers for interest and penalties due on unpaid taxes to encourage voluntary tax compliance, was passed on 22 December 2017.

GHANA: Excise tax stamp scheme implemented 

The Ghana Revenue Authority announced the commencement of the Excise Tax Stamp Scheme provided for by the Excise Tax Stamp Act, 2013 on 14 December 2017. 

In terms of the Excise Tax Stamp Scheme, an excise tax stamp must be affixed to products such as cigarettes and other tobacco products, alcoholic and non-alcoholic beverages, including bottled water and any other product prescribed by the Minister of Finance.

Enforcement at ports of entry will commence on 1 January 2018, whereas enforcement at point of sales will commence on 1 March 2018. 

KENYA: Iran and United Arab Emirates tax treaties enter into force

The Iran - Kenya Income and Capital Tax Treaty, 2012 entered into force on 13 July 2017 and generally applies from 1 January 2018 for Kenya and from 21 March 2018 for Iran. 

The Kenya - United Arab Emirates Income Tax Treaty, 2011 entered into force on 22 February 2017 and generally applies from 1 January 2018.

KENYA: M-Payment system introduced

The Kenya Revenue Authority implemented the M-Payment system in December 2017. In terms of the system, tax payments can now also be made via M-Pesa on the KRA's iTax payment system, with the confirmation SMS messages from M-Pesa serving as proof of payment.

MOZAMBIQUE: Tax amendments signed into law

Amendments to the Personal Income Tax Act, Excise Duty Law, Customs Tariff Schedule and the specific tax regimes for the mining and petroleum industries were signed into law by the president in December 2017. 

The bills amending the specific tax regimes for the mining and petroleum industries are yet to be published in the official gazette. They include the following significant amendments:

  • any tax paid on the transfer of shares or participating interests in the petroleum or mining industries is a non-deductible cost;
  • capital gains tax is assessed autonomously at a rate of 32%;
  • petroleum rights holders are granted tax stability for a period of 10 years from commercial production, provided there is an investment of at least USD100-million, whereas mining rights holders are granted tax stability (excluding surface taxes) for a period of 10 years from commercial production, provided that there is an investment of at least USD5-million; 
  • petroleum and mining companies may, subject to approval from the Ministry of Finance, adopt USD as reporting currency, provided that they have realised an investment of at least USD500-million and more than 90% of their transactions are in USD.

MOZAMBIQUE: Transfer Pricing Regulations enter into force

The Council of Ministers approved the first Transfer Pricing Regulations through Decree 70/2017, dated 6 December 2017, which entered into force on 1 January 2018.

The regulations apply to: 

  • resident taxpayers subject to corporate or individual income tax in Mozambique that undertake transactions with related parties (whether resident or not);
  • permanent establishments that undertake related-party transactions with non-resident entities or other permanent establishments of the same entity outside of Mozambique; and
  • resident or non-resident entities that undertake related-party transactions with entities subject to a more favourable tax regime.

An entity is deemed to be related to another if the entity:

  • directly or indirectly (i) controls, is controlled or is under common control of the same entity, (ii) has an interest in the company that grants a significant influence, or (iii) has joint control over the entity;
  • is an associate or has a joint venture of the other entity;
  • is a member of the management of the other entity or of its main office; or
  • manages a post-employment benefit for the other entity's employees.

The regulations recognise the comparable uncontrolled price, the resale price method, the cost-plus method, the profit-split method, the transactional net margin method and any other method deemed appropriate based on the circumstances of the transaction.

Specific rules are imposed for cost-sharing and group service agreements. Taxpayers have to indicate related party transactions in their Annual Return (M/20) and prepare (in Portuguese) a file with all documentation and relevant information pertaining to the transfer pricing policy adopted by the company and the agreements signed with related parties. Taxpayers with annual turnover below MZN2.5-million are exempt from the these compliance obligations. 

MOZAMBIQUE: Social Security Regulations enter into force

The new regulations on mandatory social security, approved by Decree No. 51/2017 of 9 October 2017, entered into force on 8 January 2018. 

In terms of the regulations, the basis of assessment of contributions has been expanded, monthly payments of contributions to the NSSI can be made from the 20th of the respective month up to the 10th of the following month and embassies' employees, as well as artists and sportsmen linked to a sports club or company, are required to make contributions.

ZAMBIA/BOTSWANA: Tax treaty enters into force

According to a notice by the Zambian government dated 14 June 2017, the Botswana - Zambia Income Tax Treaty, 2013 entered into force on 14 August 2015 and generally applies from:

  • 1 October 2015 for withholding taxes;
  • 1 April 2016 for other taxes in respect of Zambia; and
  • 1 July 2016 for other taxes in respect of Botswana.

ZAMBIA: Inclusive framework for implementing measures against Base Erosion and Profit Shifting joined

Zambia has joined the Inclusive Framework for the global implementation of the Base Erosion and Profit Shifting Project in December 2017. 

ZIMBABWE: 2018 Budget presented to parliament

The Minister of Finance and Economic Development presented the 2018 National Budget to parliament on 7 December 2017. The proposed measures are to become effective from 1 January 2018, unless otherwise stated.

Sources include IBFD's Tax Research Platform;;

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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