We are pleased to present the November issue of SKP Global Updates – our newsletter that covers employment, payroll, Goods and Services Tax (GST)/Value Added Tax (VAT) and corporate tax-related developments globally.
The key highlights of this issue are - South Africa Postpones e- Services VAT Changes, New-employer tax credit for paid family and medical leave available for 2018 and 2019 in the United States, New Tax Revenue Portal in Australia and Norway National Budget 2019.
Kenya Publishes Finance Act 2018
Key highlights of the Finance Act 2018 include:
- The definition of dividends has been widened to include a crucial aspect that any amount paid by a company on behalf of its shareholder or a person related to the shareholder will be deemed a dividend.
- The compensating tax rate will be reduced from 42.8% to 30% to align with the corporate tax rate that will be effective from 1 January 2019;
- A new presumptive tax of 15% will be applicable with effect from 1 January 2019, on the business permit or trading license fees on issuance and renewal for small businesses (turnover below KES 5million). This will replace the turnover tax;
- Withholding tax @20% will be applicable on demurrage charges paid to the non-resident persons in relation to the Port of Mombasa;
- The introduction of a contribution of 1.5% of monthly earnings, towards the National Housing Development Fund, by both the employers and the employees with a maximum cap of KES 5000 per month;
- Amendments to the VAT rates for certain types of services;
- Introduction of VAT exemptions for certain types of goods and services;
- The tax amnesty scheme has been extended from 30 June 2018 to 30 June 2019, and will also cover the tax year 2017;
- Minimum time limit to apply for a tax return extension. The taxpayer should apply at least 15 days prior to a monthly return deadline and 30 days prior to an annual return deadline, and the tax authority must respond at least five days prior to the return deadline;
- An increase in late payment interest from 1% to 2% per month and the introduction of a 5% late payment penalty on the amount due.
Change in the Commercial Rate for Fringe Benefit Tax
The Malawi Revenue Authority (MRA) announced to all employers that the applicable commercial rate for calculating Fringe Benefit Tax (FBT) on concessional loans provided by the employer to an employee is 30% for the quarter ending 30 September 2018.
Employers who fail to comply with the Fringe Benefits Tax Regulations attract penalties.
Public Notice on New Transfer Pricing Regulations
The FIRS issued a public notice post to the introduction of Transfer Pricing (TP) regulations, which states that the new TP Regulations are effective from 12 March 2018. Non-compliance will attract the penalties contained in the relevant provisions of the regulations.
Furthermore, through the notice, the FIRS has granted taxpayers up to 31 December 2018 to discharge all their outstanding obligations relating to filing the TP declarations/returns, making disclosures of controlled transactions, submitting of TP documentation, etc.
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