BOTSWANA: Tax Amnesty Update and Tax Changes
Botswana's Ministry of Finance and Economic Development issued a release on 30 June announcing the implementation of the tax amnesty that was implemented as part of the 2021/22 Budget. The amnesty provides for a 100% waiver of interest and penalties for taxpayers that pay the principal amount of outstanding taxes due during the amnesty period of 1 July to 31 December 2021.
The amnesty is generally available in respect of both individual and corporate income tax due for all tax years prior to the amnesty period, including the 2020/21 period, and VAT for all periods ending prior to the amnesty period.
The Botswana Unified Revenue Service has also published a notice confirming the increase in the individual income tax exemption threshold from BWP36,000 per year to BWP48,000 per year with effect from 1 July 2021, as well as a corresponding increase in the higher brackets as follows:
up to BWP48,000 - 0%
BWP36,001 - 84,000 - 5%
BWP84,001 - 120,000 - 12.5%
BWP120,001 - 156,000 - 18.75%
BWP156,001 and above - 25%
An increase in dividend withholding tax changes from 7.5% to 10% on dividends paid to both resident and non-resident shareholders is also introduced from 1 July 2021.
BURKINA FASO: Certificate of residence issuance procedure updated
The General Tax Director (Directeur général des impôts, DGI) issued note 2021-643/MINEFID/SG/DGI/DLC/sfri on 8 July 2021, repealing and replacing note 396/MINEFID/SG/DGI/DLC/sfri of 13 March 2020 to update the certificate of residence issuance procedure in accordance with the West African Economic and Monetary Union (“WAEMU”) Regulation 005/2010/COM/UEMOA used in the application of WAEMU's Regulation 06/CM/UEMOA of 28 September 2008 relating to double taxation avoidance in WAEMU State members.
The note specifies that business taxpayers must send a request to the DGI with a tax clearance certificate and a copy of the contract or the invoice relating to the payment, whereas employees must submit a copy of the identity document, a salary income tax clearance certificate, a copy of the last payslip and a copy of the contract or the invoice relating to the payment.
The processing time for the request is five days and the certificate is only issued for the fiscal year concerned and valid for 12 months.
KENYA: Release on the implications of Finance Act 2021 on Digital Service Tax published
The Kenya Revenue Authority (“KRA”) published a release on 12 August 2021 concerning the implications of the Finance Act 2021 on the Digital Service Tax (“DST”). The DST was introduced into the Income Tax Act for the first time in the Finance Act 2019 and amended subsequently by the Finance Act 2020 and Finance Act 2021.
KENYA: The Value Added Tax (Electronic Tax Invoices) Regulations, 2020
The KRA, through a Public Notice dated 9 July 2021, notified the general public that the roll out of the Electronic Tax Invoice pursuant to the provisions of the Value Added Tax (“VAT”) (Electronic Tax Invoice) Regulations, 2020 (the “Electronic Invoice Regulations”), is expected to commence from 1 August 2021.
The Electronic Tax Invoice Regulations, 2020, was gazetted through Legal Notice No. 189 dated 10 September 2020 and published on 25 September 2020, but their effective operation was postponed by 12 months from September 2020. The primary objective of the Regulations is to provide a framework for the use of electronic tax registers by VAT vendors.
Upon publication of the VAT Regulations in 2017, the Value Added Tax (Electronic Tax Registers) Regulations, 2004, were revoked, which brought into question the legality of use of electronic tax registers on the basis that the 2017 regulations had deleted the relevant provision. However, the new Regulations is clear about the requirement for registered taxpayers to issue electronic tax invoices. These Regulations are largely similar to the previous Regulations, with the main differentiator being a requirement for taxpayers to maintain a tax register that is able to transmit tax invoice data to the KRA system.
All VAT registered taxpayers are required to comply with the requirements of the Regulations on implementation of the Electronic Tax Invoice within a period of 12 months from the date of the roll out.
KENYA: Public Notice on automation of Voluntary Tax Disclosure Programme issued
The Finance Act, 2020 introduced a three-year Voluntary Tax Disclosure Programme (“VTDP”) effective from 1 January 2021 to 31 December 2023. It states that a person, upon disclosing previously undisclosed tax liabilities to the Commissioner, is granted relief from penalties and interest on the taxes disclosed.
The KRA on 26 July 2021 issued a Public Notice, informing the public that applications for the grant of relief of penalties and interest under the VTDP can now be made online through the iTax portal. Successful applicants will receive VTDP certificates via their registered email addresses. A step-by-step guide on the VTDP application process together with VTDP FAQs are available on the KRA website.
KENYA: Public Notice on Fringe Benefit Tax, Deemed Interest Rate and Low Interest Benefit published
The KRA on 5 July 2021 published a Public Notice providing for:
- a market interest rate of 7% for purposes of fringe benefit tax (section 12B of the Income Tax Act) for the three months of July, August and September 2021;
- a prescribed deemed interest rate of 7% for purposes of section 16(5) for the months of July, August and September 2021;
- a prescribed interest rate of 7% for purposes of the low interest benefit in section 5(2A), for the months of July, August, September, October, November and December 2021; and
- a withholding tax rate of 15% on the deemed interest to be deducted and paid to the KRA by the 20th of the month following the month of computation.
LESOTHO: Tax treaty with Mauritius enters into force
The Lesotho - Mauritius Income and Capital Tax Treaty (2021) entered into force on 7 June 2021 and generally applies from 1 July 2021 in respect of Mauritius and from 1 April 2022 in respect of Lesotho. The provisions of article 27 (exchange of information) and article 28 (assistance in the collection of taxes) have effect from 7 June 2021.
MADAGASCAR: Notice on transfer pricing documentation issued
The Ministry of Economy and Finance on 1 June 2021 issued a notice on the Master and Local Transfer Pricing Documentation requirements, which
- apply to all taxpayers undertaking cross-border transactions with related parties regardless of the transactions' amounts;
- are in line with the recommendations of the Organisation for Economic Co-operation and Development (OECD); and
- include the requirement to:
- file Master Files and Local Files in Madagascar; and
- submit the documentation in French or, a certified translation, together with the original documents by the specified deadlines.
NIGERIA: New Rivers State VAT law comes into effect
The Rivers State Value Added Tax Law 2021, which is to be administered by the Rivers State Internal Revenue Service (“RSIRS”), was signed into law on 19 August 2021. The law inter alia provides that:
- the rate of the tax is 7.5%;
- an importer of taxable goods is required to pay the tax on the goods to the state before clearing the goods;
- taxable persons are to register for the tax within six months of the commencement of the law or six months of commencement of business whichever is earlier. Accordingly, businesses which have been in business for at least six months are to register immediately while new businesses have up to 18 February 2022 to register. There is no registration exemption for small businesses unlike the N25-million exemption under the national VAT Act;
- non-residents are required to register for the tax if they carry on business in the state;
- monthly remittance and return is due by the 21st of the succeeding month in a manner specified by the RSIRS;
- the VAT revenue is to be shared 70% to the State and 30% to the Local Governments; and
- the list of exempt items is similar to the old national VAT law including basic food items, medical services and educational materials. It is expected that Rivers State will no longer be entitled to a share of the national VAT pool.
NIGERIA: Federal High Court's judgement on the administration of VAT in Nigeria
VAT was introduced in Nigeria by Decree No.102 of 1993, replacing sales tax which operated under Decree No.7 of 1986 and was administered by states and the Federal Capital Territory (“FCT”). By contrast, VAT is administered by the Federal Inland Revenue Service (“FIRS”) and the revenue is shared among all three levels of government.
The Federal High Court in Port Harcourt on 9 August 2021 ruled that the Rivers State Government (and not the FIRS) is entitled to collect VAT in the state, based on the premise that only the state is constitutionally entitled to impose taxes in its territory of the nature of consumption or sales tax.
If the judgement is enforced or upheld on appeal, it will apply to other states and not just Rivers State. This means each state would administer VAT within their territory. By implication, FIRS will administer VAT within the FCT and non-import foreign VAT, while the Nigeria Customs Service will continue to collect import VAT on international trade.
Given the significance of this judgement, it is expected that the FIRS will appeal the decision and, therefore the status quo is likely to continue in the meantime.
RWANDA: Convention on Mutual Administrative Assistance in Tax Matters and Protocol signed
On 11 August 2021, Rwanda signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, becoming the 144th country to do so.
SEYCHELLES: Tax amnesty notice issued
The Seychelles Revenue Commission (“SRC”) issued a notice on tax amnesty, which provides that:
- the amnesty will apply to outstanding debts, under-declared taxable income / assessable income and unfurnished business tax returns, presumptive tax returns and VAT returns;
- the percentage waiver of interest will depend on when taxes due are remitted to the SRC; and
- the payment of any outstanding primary taxes should be made in
full by the due dates to benefit from the proposed concessions:
- by 31 August 2021 – 75% waiver of interest, 100% waiver of penalties;
- by 31 October 2021 – 50% waiver of interest, 100% waiver of penalties; and
- by 31 December 2021 – 25% waiver of interest, 100% waiver of penalties.
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