BOTSWANA: Value Added Tax ("VAT") rate reduced from 14% to 12% for six months
On 27 July 2022, the government of Botswana announced that it will reduce the VAT rate from 14% to 12%, effective 1 August 2022, for a period of six months, as part of its measures to mitigate the impact of rising global inflation. In addition, cooking oil and liquid petroleum gas are to be zero-rated for VAT purposes.
CAMEROON: Finance Law 2022 aims to broaden tax base
The 2022 Finance Law introduced various fiscal measures to broaden the tax base and promote local businesses.
As a result of the enforcement of the ban on the export of logs in the Central African Economic and Monetary Community zone ("CEMAC") in January 2023, an exemption from duties and taxes on the import of equipment intended for the advanced processing of wood is granted. The rate of export duties on logs is also increased from 35% to 50%.
Exemption from customs duties and taxes are granted on the importation of certain capital goods and seeds intended for agriculture, with the aim of encouraging and enabling the increase of agricultural production. Exported pepper and honey are now exempt from export duties (previously taxed at 2% (honey) and 5% (pepper)). Certain goods and equipment intended for breeding, including improved animal seeds, medicines and vaccines for veterinary use, are exempt from customs duties and taxes on the importation.
The human health sector is exempt from customs duties and taxes on the import of certain goods and products such as medical devices, equipment and consumables, vaccines, software for medical use, etc.
DEMOCRATIC REPUBLIC OF CONGO: Tax relief to be provided to the import-export sector
During a press conference on 18 July 2022, the minister of foreign trade, announced the suppression of 14 taxes and reduction of 20 tax rates for the import-export sector to improve the business climate and address rising inflation.
GHANA: New revenue enhancement measures announced in mid-year 2022 Budget
On 25 July 2022, the minister of finance presented the 2022 mid-year budget speech to Parliament. Significant proposed tax and administrative revenue enhancement measures which will become effective once relevant bills have been passed by Parliament and assented to by the President, include:
- extending the capital gains exemption on the realisation of securities listed on the Ghana Stock Exchange by 5 years, from 31 December 2021;
- extending the suspension of quarterly income tax instalment payments for small businesses under the income tax stamp system and for tro-tro and taxi drivers under the vehicle income tax system for six months effective 30 June 2022;
- providing for an electronic invoicing system for VAT collection (e-VAT);
- broadening the scope of taxation of electronic commerce;
- zero-rating the supply of locally assembled motor vehicles for a period of 18 months; and
- introducing an upfront payment of VAT at 12.5% Cost, Insurance and Freight (CIF) value of imports for importers not registered for VAT;
- extending the waiver of penalties and interest on accumulated tax arrears up to December 2020, from 1 July 2022 to 31 December 2022; and
- rolling out the implementation of a unified common platform for digitalising property rate collection processes by 1 October 2022.
GHANA: Government strengthens tax exemptions regime
The government has taken measures to strengthen the administration of the tax exemptions regime through the enactment of a Tax Exemption Bill, 2022, which was passed by Parliament on 22 July 2022 and is awaiting assent by the President.
The Bill aims to limit or vary the scope of current tax exemptions, provide clear eligibility criteria and provide a mechanism for monitoring tax exemptions.
KENYA: Additional tax measures to be implemented if High Court prohibits implementation of minimum tax
The High Court had halted the implementation of a minimum tax and an appeal subsequently filed by the tax authorities against this judgement is yet to be determined. According to the IMF Country Report (No. 22/232) of 19 July 2022, if the resolution of the legal challenges concerning minimum tax are not favourable, the tax authorities are committed to introducing additional tax measures as a contingency plan in FY 2022/23.
LESOTHO: Multilateral Convention ("MLI") instrument of ratification deposited
On 28 July 2022, Lesotho became the 77th jurisdiction to deposit its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). The convention will enter into force in respect of Lesotho on 1 November 2022. Lesotho submitted its MLI position on 9?February 2022, listing its provisional reservations and notifications and including seven tax treaties that it wishes to be covered by the MLI.
MAURITANIA: Mutual Assistance Convention enters into force
On 1 August 2022, the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 protocol entered into force for Mauritania. The Convention generally applies in Mauritania from 1 January 2023, although it may apply for earlier periods between signatories if agreed to and applies in relation to any period regarding criminal matters.
MOZAMBIQUE: Campaign launched to verify compliance with VAT invoicing rules
On 22 July 2022, the tax authorities announced a nationwide campaign to verify compliance with VAT invoicing rules. The campaign will be conducted through a door-to-door inspection of VAT taxable persons, and aims to verify compliance with the obligation to issue invoices or equivalent documents for each transfer of goods or provision of services.
NIGERIA: Tax Authority's appeal on VAT collection from state hotel owners upheld by Court of Appeal
The Court of Appeal delivered its judgement in the case of Registered Trustees of Hotel Owners and Managers Association (HOMA) of Nigeria v. Attorney General of Lagos state & the FIRS (Suit No: FHC/L/CS/360/2018) on 1 July 2022, confirming that the Federal Inland Revenue Service ("FIRS") has the power to collect VAT on the supply of goods and services consumed in hotels, restaurants and event centres in Lagos State under the VAT Act.
In 2009, the Lagos State government had enacted the consumption law which imposed a consumption tax at 5% on the value of goods and services consumed in hotels, restaurants and event centres in Lagos State. With this tax, consumers of goods and services in hotels, restaurants and event centres were subject to both the consumption tax and VAT on the same tax base, which amounted to double taxation.
Following this development, the Registered Trustees of Hotel Owners and Managers Association ("HOMA") instituted an action in the Federal High Court, seeking a declaration that the consumption tax law of Lagos State is inoperable and ineffective because the VAT Act fully covered the field of consumption tax. The High Court, however, ruled in favour of the Lagos State government, upholding the powers of the State government to charge and collect consumption tax.
The Court of Appeal observed that it is within the legislative competence of the Lagos State House of Assembly to enact the consumption law of Lagos State. However, taxable goods and services under the consumption law are also provided for under the VAT Act. Therefore, the VAT Act having covered other consumption taxes, its provisions prevail over similar state law. Thus, the Court of Appeal held that the FIRS has the power to collect VAT from state hotel owners on goods and services supplied to customers. Consequently, the Court of Appeal set aside the Federal High Court's judgment.
NIGERIA: Senate-Passed Bill to grant tax reliefs and incentives to labelled start-up companies
The Senate has passed the Nigeria Start-up Bill 2021 on 21 July 2022. Once the House of Representatives agrees with the contents of the Bill, it will be sent to the president for his assent. The Bill grants various tax reliefs and incentives to labelled start-up companies in Nigeria, including:
- exemption from companies' income tax or any other taxes on income for a four-year period;
- income tax relief of 5% of taxable profits for a maximum five-year period granted to labelled start-up companies having a minimum of 10 employees, 60% of which have no work experience or have graduated within the past three years;
- investment tax credit equivalent to 30% of the investment in a labelled start-up granted to investors;
- personal income tax exemption of 35% granted to employees on their income for a two-year period;
- exemption from capital gains tax granted to investors from the disposal of assets with respect to labelled start-up companies; and
- 5% final withholding tax on non-resident service providers for technical, consulting, professional or management services.
TANZANIA: Amendments to tax laws enacted by Finance Act 2022
Amendments to various tax laws through the Finance Act 2022, which took effect on 1 July 2022 unless otherwise indicated, include:
- widening the concept of company residence in Tanzania. A company is resident in Tanzania if its management and control is excised in Tanzania whether physically or through any electronic means;
- requiring non-resident suppliers of digital services to pay tax at a rate of 2% on payments received from individuals. The definition of business income has also been expanded to include a transaction or activity carried out through the Internet or an electronic means, including an electronic service or transaction conducted in the digital marketplace, regardless of the manner in which such transaction is carried out;
- introducing withholding tax obligations for individuals who make payments for dividends, interest, natural resource payments, rent or royalty;
- introducing withholding tax at the rate of 10% on royalties paid in respect of use of, or right to use of, cinematography film, videotapes, sound recordings or any other like medium;
- exempting interest paid to a holder of corporate or municipal bonds issued and listed at the Dar es Salaam Stock Exchange from withholding tax;
- amending the income tax rates for businesses subject to the presumptive tax regime;
- granting powers to the Minister of Finance to exempt income for a special investment approved by the National Investment Steering Committee under the Tanzania Investment Act, subject to cabinet approval;
- introducing a specific regime for the transportation industry/services. The First Schedule to the Income Tax Act lists fixed tax rates payable based on the category of transport vehicle;
- introducing notional interest on the cost-plus margin payable on alternative financing arrangements approved by the Bank of Tanzania;
- allowing businesses conducted in both Zanzibar and Tanzania mainland to claim a tax credit for any income tax paid in relation to income from business or investment carried out in Tanzania mainland or Zanzibar.
- requiring non-resident suppliers to register for VAT where it is not practical to appoint a tax representative;
- expanding the list of capital goods that qualify for VAT deferment to include trailers and semi-trailers for the transportation of goods;
- granting a mandate to the minister of finance to approve exemptions on importation by or supply of goods or services to a non-governmental organization having an agreement (with a VAT exemption clause) with the Government of the United Republic solely for projects implemented by the respective non-governmental organisation;
- empowering the minister to make regulations prescribing the manner and procedure of dealing in loans, including alternative financing products approved by the Bank of Tanzania;
- expanding the list of VAT exempt supplies, but repealing the VAT exemption on the supply or importation of smart phones tablets and modems respectively;
- introducing an export levy of 30% or USD150 per tonne on export of copper waste or scrap metal;
- requiring tax returns to be filed electronically as prescribed by the Minister of Finance. Manual filing can be done under special circumstances as permitted by the Commissioner via written notice;
- the Commissioner General of the Tanzania Revenue Authority ("TRA") is required to issue a tax identification number ("TIN") to every Tanzanian citizen who has been registered and issued with a national identification number ("NIN") under the Registration and Identification of Persons Act and connect the TIN with the NIN;
- extending the due date for maintaining a primary data server in Tanzania to 1 January 2023;
- empowering the Commissioner to licence individuals to act as tax consultants on behalf of any person upon fulfilment of conditions prescribed in the regulation or licence issued by the Commissioner; and
- requiring all storage facilities which store goods for business purposes to be registered with the Commissioner.
TANZANIA: Regulations on registration of non-resident suppliers of electronic services for VAT issued
The government has issued VAT (Registration of Non-Resident Electronic Service Suppliers) Regulations 2022 which came come into operation on 1 July 2022. The main features of the Regulations are as follows:
- a non-resident person who supplies electronic services to an unregistered person in mainland Tanzania and does not appoint a tax representative is required to register online for VAT purposes regardless of the threshold;
- a registered person shall pay tax due and file a return on or before the seventh day of the month following the month to which the return relates;
- non-resident persons supplying electronic services are required to register within six months from 1?July 2022;
- a registered person who ceases permanently to supply electronic services shall inform the Commissioner General of the TRA in a prescribed form;
- a person who ceases to carry on a business shall be required to file a return online in a prescribed form and make payments in respect of electronic services rendered in the tax period;
- a registered person is not allowed a claim on input tax;
- a registered person is not required to acquire and use an electronic fiscal device; and
- a person who makes a false or misleading statement or omits to include material facts in a statement made to a tax officer shall be liable to a penalty prescribed under the Tax Administration Act.
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