AFRICA: Africa Tax Administration Forum endorses adoption of draft terms of reference for UN Framework Convention on International Tax Cooperation
The African Tax Administration Forum ("ATAF"), through a communication of 18 August 2024, has endorsed the adoption of the draft terms of reference for a United Nations ("UN") Framework Convention on International Tax Cooperation, which were published on 15 August 2024 by the Chair of the UN Ad hoc Committee.
DEMOCRATIC REPUBLIC OF THE CONGO: Taxes and duties on selected basic necessities eliminated
During the 8th ordinary meeting of the Council of Ministers held on 9 August 2024, the Deputy Prime Minister and Minister of National Economy presented a series of urgent quantitative measures to reduce the cost of living for DRC citizens, including:
- eliminating all duties, taxes, and fees on maize and maize flour; and
- for other products, such as meat, poultry, fish, powdered milk, rice, vegetable oil and sugar, a total of 24 taxes and duties are either completely abolished or reduced by 5%, 25%, and 50%.
It was proposed that the fiscal and parafiscal measures should be enacted through a Decree amending and supplementing Decree No. 23/124 of December 30, 2023, which provides for the suspension of value added tax ("VAT") collection on basic necessities. These measures are expected to result in a decrease in importer sale prices by an average of 20% to 25%.
KENYA: Period for tax amnesty on penalties, interest on unpaid taxes to be extended
The government has proposed to extend the period for tax amnesty on penalties and interest on unpaid taxes for the period ended 31 December 2022 from 30 June 2024 to 30 June 2025.
Taxpayers wanting to benefit from the amnesty should apply for the amnesty and pay all outstanding principal taxes by no later than 30 June 2025, endeavour not to incur a further tax debt, and sign a commitment letter for the settlement of all outstanding taxes owed.
Other amendments introduced through the Tax Procedures (Amendment) Bill 2024, which was published in the Gazette on 23 August 2024, include:
- relieving taxpayers of unpaid taxes where the Commissioner
General of Kenya Revenue Authority
("KRA") determines that:
- it may be difficult or impossible to recover an unpaid tax;
- there is undue difficulty or expense in the recovery of an unpaid tax;
- there is hardship or inequity in relation to the recovery of an unpaid tax; or
- there is any other reason occasioning inability to recover the unpaid tax;
- authorising the Cabinet Secretary to consider and approve taxpayers for a relief of part or whole of the unpaid tax because of doubt or difficulty in recovery and other conditions as determined by the Commissioner; and
- excluding weekends and public holidays while computing the period for lodgment of objections to the Commissioner.
KENYA: Plans to re-introduce "progressive" provisions in withdrawn Finance Bill 2024
Finance Minister John Mbadi, in a televised interview on 18 August 2024, announced that the government plans to reintroduce 49 "progressive" provisions in Finance Bill 2024 through the Tax Laws Amendment Bill. However, the government will not re-introduce the contentious provisions of Finance Bill 2024 that were rejected and not assented into law following weeks of widespread protests.
KENYA: Supreme Court suspends Court of Appeal Decision declaring Finance Act 2023 unconstitutional
The Supreme Court of Kenya, in a petition of the Cabinet Secretary for the National Treasury & Planning & 4 Others v. Okiya Omtatah Okoi & 52 Others (No. E031 of 2024), has issued a ruling suspending the Court of Appeal's decision issued on 31 July 2024, which declared the Finance Act 2023 unconstitutional.
The Supreme Court issued a conservatory order suspending and staying the declarations in orders issued in the Court of Appeal's judgment dated 31 July 2024 in consolidated Civil Appeals Nos. E003, E016, E021, E049, E064 and E080 of 2024 pending the hearing and determination of the consolidated appeal.
In issuing the orders of stay, the Supreme Court considered the uncertainty regarding the revenue-raising measures and difficulty that may arise in the operations of the national and county levels of government as posited by the applicants, coupled with the far-reaching implications of declaring the entire Act unconstitutional. The consolidated appeals are set for hearing on 10 and 11 September 2024.
The ruling by the Supreme Court means that the government can continue implementing the tax measures introduced through the Act until the appeal is heard and determined.
KENYA: KES1-billion win for Kenya Revenue Authority in "missing trader" VAT fraud case
The KRA recently announced a KES1-billion win in a "missing trader" VAT fraud case, following an appeal filed by China Communications Construction Company Ltd ("the Company") at the Tax Appeals Tribunal ("TAT") seeking to have a tax assessment of KES1 047 557 661 set aside.
The KRA conducted an audit on the tax affairs of the Company and issued it with an assessment for VAT and income tax on 3 February 2023. The company objected to the KRA's assessment and appealed to the TAT, claiming that the audit was erroneous in fact and in law.
From the audit that led to KRA's rejection of the taxpayer's VAT input claims, the KRA established that the Company was involved in a complex tax evasion scheme that entailed claiming inflated input VAT for purchases that had not been incurred or were not related to genuine business activities using fictitious invoices obtained from both fraudulently registered and non-existent companies to avoid or reduce tax liabilities. Apart from demonstrating that fictitious invoices generated in the whole scheme were used to legitimise the transfers and to reduce tax liability on the significant income received, the financial transactions trail showed that the shell companies would be paid for the supply of construction materials but the subsequent recipients of the monies would immediately transfer the funds to their USD accounts, from where they were wired overseas, including to China.
After hearing the KRA submissions of the case filed on 25 May 2023, the TAT held that KRA's testimony showed that the totality of the firm's transactions did not support a reasonable commercial transaction but was instead an elaborate scheme to avoid payment of tax in Kenya. The TAT upheld the KRA assessment and dismissed the appeal on 9 August 2024.
MALI AND NIGER: French Tax Authorities comment on termination of tax treaty
On 4 September 2024, the French tax authorities published updated guidelines on the France – Mali and France – Niger tax treaties, following the denunciation of the treaties by Mali and Niger with effect from 5 March and 5 June 2024 respectively.
The French tax authorities confirm that:
- in respect of Niger, all treaty provisions are suspended as from 5 June 2024, pursuant to the reciprocity principle applicable to international treaties; and
- in respect of Mali, the treaty will be terminated with effect from 1 January 2025. The French tax authorities confirm that all treaty provisions are suspended for the period between 5 March 2024 until 31 December 2024, pursuant to the reciprocity principle applicable to international treaties.
NIGERIA: Plans to increase VAT standard rate
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee has announced plans for the Committee to propose to the National Assembly an increase in the VAT standard rate from 7.5% to 10%. In addition, the Committee communicated its plans to consolidate multiple taxes in Nigeria to reduce the tax burden. A bill to that effect would soon be submitted to the National Assembly.
NIGERIA: Government approves regulations to implement zero-duty rate and VAT exemption on specified basic food items
As part of the President's Accelerated Stabilization and Advancement Plan to ensure economic stability, mitigate the high cost of food items and ensure the accessibility of basic foodstuffs, the government of Nigeria has approved regulations to implement a zero-duty rate and VAT exemption on specified basic food items.
Basic food items eligible for the zero-duty rate and VAT exemption include husked brown rice, grain sorghum, millet, wheat, maize and beans.
In order for a company to be allowed to import prescribed basic food items, it must:
- be incorporated in Nigeria;
- have been in operation for at least five years;
- have filed annual tax returns and financial statements and paid taxes and statutory payroll obligations for the past five years;
The temporary suspension of duty and VAT on basic foods items runs from 15 July 2024 and will remain in force until 31 December 2024.
SIERRA LEONE | Tax treaty with Türkiye enters into force
The Sierra Leone – Türkiye Income Tax Treaty (2020) entered into force on 25 March 2024. The treaty generally applies from 1 January 2025 for withholding and other taxes.
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