Africa Tax in Brief
ANGOLA: Introduction of VAT postponed
The introduction of value-added tax (“VAT”), scheduled for 1 July 2019, was postponed to October following discussions between the Angolan Government and the Business Technical Group (“GTE”), which advocated implementing VAT only in January 2020.
GTE also recommended reducing the VAT rate for taxpayers subject to the transitional regime to 7% and assessing if VAT should be implemented in the context of private sector education and teaching.
DEMOCRATIC REPUBLIC OF CONGO: Deadline for submission of financial statements for financial year 2018 announced
On 18 June 2019, the General Manager of the Congolese Accounting Authority (Conseil Permanent de la Comptabilité au Congo) confirmed the deadline for filing financial statements for the financial year 2018 with the Congolese Accounting Authority to be 30 June 2019. Failure to meet the deadline is liable to a penalty equivalent to USD100.
ETHIOPIA: Directive on taxation of undistributed profit issued
The Ministry of Finance recently issued Directive no. 7/2019 on the Taxation of Undistributed Profit as provided for by article 61 of the Federal Income Tax Proclamation 979/2016. In terms of the Directive:
ETHIOPIA: Proclamation amending VAT approved by parliament
On 4 July 2019, the House of People's Representatives approved Value Added Tax (Amendment) Proclamation No. 1157/2019 amending provisions of Value Added Tax (VAT) Proclamation No. 285/2002. Significant amendments, effective from the date of publication in theNegarit Gazette, include:
IVORY COAST: clarification on country-by-country reporting issued
On 7 May 2019, the Ivorian Tax Office (Direction Générale des Impôts) issued Ruling No.1606/SEPMBPE/DGI/DLCD-SDCFI/mn/09-2018, clarifying the filing of country-by-country (“CbC”) reports as provided for by article 36bis(4) of the General Tax Code. In summary:
KENYA: 2019/20 Finance Bill published
The 2019/20 Finance Bill 2019/20 was published on 14 June 2019 following the presentation of the budget to parliament by the Cabinet Secretary to the National Treasury on 13 June 2019. Significant proposed amendments include:
Corporate income tax
Personal income tax
MOZAMBIQUE: Decrees issued on customs and income tax benefits for areas affected by cyclones Idai and Kenneth
Mozambique recently issued Decree 27/2019 of 11 April and Decree 45/2019 of 22 May, granting certain customs and income tax benefits for the recovery and reconstruction of the areas affected by cyclones Idai and Kenneth, including:
MAURITIUS: Guidelines for tax objection and appeal published
On 28 June 2019, the Mauritius Revenue Authority (“MRA”) published theGuidelines for Tax Objection and Appeal.In summary:
MAURITIUS: 2019/20 Budget delivered
On 10 June 2019,the Prime Minister and Minister of Finance and Economic Development delivered the Budget speech for 2019-2020. Significant proposed amendments, generally effective from 1 July 2019 include:
Corporate income tax
will benefit from a reduced tax rate of 5% applicable to the chargeable income of banks in excess of their chargeable income in the base year; and
NIGERIA: Tax Appeal Tribunal rules that excess dividend is liable to tax at 30%
The Nigerian Tax Appeal Tribunal recently ruled that excess dividend tax should be levied, even when there is no incidence of tax avoidance.
In terms of section 19 of the Companies Income Tax Act, 30% tax (excess dividend tax) is imposed on a company where it declares and pays dividends in excess of its total profit, ie, the profit of the year from which the dividend was declared and not the profit of the year in which the dividend was paid.
In the case at hand, a company declared and paid dividends to its shareholders in financial year 2014 even though it had no taxable profits for the year. Based on the audited financial statements, the dividends paid were from retained earnings that had suffered tax in previous accounting years. The taxpayer argued that excess dividend is aimed at curbing tax avoidance and that the tax should not be due on these dividends as the retained earnings from which the dividends were paid had already been subject to tax in previous years, and the levying of excess dividend tax will result in double taxation.
However, the Federal Inland Revenue Service (“FIRS”) argued that section 19 should be interpreted literally and where the dividend exceeds the taxable profit or there is no taxable profit, the excess should be deemed as profit and subject to tax.
The Tax Appeal Tribunal ruled against the taxpayer, even though there was evidence that the taxpayer paid tax in previous years on the profits from which the dividend was paid. The implication is that companies that defer distribution of profit to a later period or pure holding companies who redistribute dividends to ultimate shareholders, would be subject to double taxation.
NIGERIA: Court of Appeal judgment of services rendered outside Nigeria
The Court of Appeal, on 24 June 2019, upheld the High Court’s decision inVodacom Business Nigeria Limited (“Vodacom”) vs Federal Inland Revenue Service (FIRS)regarding the applicability of VAT on satellite-network bandwidth capacities provided to Vodacom outside Nigeria by New Skies Satellites, a Netherlands-based non-resident company.
In terms of the Federal High Court’s judgment, the “destination principle” is to be used to determine whether imported services were liable to VAT in Nigeria, and VAT is applicable in the territory where goods and services are consumed instead of where they are produced.
As a result of the Court of Appeal judgment, Nigerian companies carrying on business with other companies outside Nigeria would be required to self-account for VAT on their transactions, notwithstanding that the services were rendered outside Nigeria, and regardless of whether the service providers charged VAT on their invoices.
REPUBLIC OF CONGO: deadline for payment of first instalment for advance tax for financial year 2019 announced
On 25 June 2019, the General Manager of the Congolese Tax Authority (Direction générale des impôts) in statement No.01/0026/DGI/DG/DESCOM/MT/2019 confirmed the deadline for payment of the first instalment of advance tax for the financial year 2019 for large taxpayers to be 31 July 2019. Failure to pay the instalment by the due date is subject to a penalty of 50% of the amount of the instalment due.
The first instalment due is calculated at 40% of the corporate income tax paid in the prior financial. A taxpayer may utilise a tax credit limited to 20% of the first instalment to be paid.
RWANDA: 2019/20 Budget
On 13 June 2019, the Minister of Finance and Economic Planning presented the 2019/20 Budget to both chambers of the parliament. Significant proposed amendments include:
TANZANIA: 2019/20 Budget presented
On 13 June 2019, the Minister of Finance presented the 2019/20 Budget. Significant proposed amendments, effective from 1 July 2019, include:
Corporate income tax
UGANDA: Bill to increase levy on coffee export sales tabled
On 24 June 2019, the National Coffee Bill was tabled to parliament, proposing:
UGANDA: 2019/20 Budget presented to parliament
The Budget 2019-20 was presented to parliament by the Minister of Finance, Planning and Economic Development on 13 June 2019. Significant proposed amendments include:
Corporate income tax
UGANDA: Insurance agents are not to be treated as employees of insurance companies
On 14 June 2019, the High Court of Uganda (Commercial Division), in its decision in the case ofInsurance companies in Uganda (several appellants) v. Uganda Revenue Authority,held that insurance agents are self-employed freelancers earning commission-based payments and, therefore, cannot be employees of insurance companies, regardless of the contracts signed between the insurance company and the insurance agents.
Based on the ruling, going forward, insurance companies will withhold 6% on commission paid to agents, unless the agent is exempt. A annual personal income tax return must be filed by the agents in which a credit for the withholding tax paid can be claimed against their annual personal income tax liability.
ZAMBIA: Zambia to introduce digital tax stamp on excisable products
On 28 June 2019, the Zambia Revenue Authority announced its intention to introduce a digital tax stamp on cigarettes and other excisable products in order to improve excise revenue collection and reduce the illegal importation and manufacturing of products liable to excise duties.
The digital tax stamp will be incorporated into the production facility of manufacturers of excisable products with the affixing of stamps to products to be automated and monitored in real time.
ZAMBIA: Sales tax implementation date postponed
On 28 June 2019, the Minister of Finance announced that the implementation date for sales tax has again been postponed to 1 September 2019. The of sales tax was initially scheduled to take effect on 1 April 2019 but was subsequently postponed until 1 July 2019.
ZIMBABWE: Regulations make Zimbabwe dollar sole currency for legal tender
On 24 June 2019, the Ministry of Finance and Economic Development of Zimbabwe issuedReserve Bank of Zimbabwe (Legal Tender) Regulations, 2019by statutory Instrument 142 of 2019, in terms of which the Zimbabwe dollar is to be the sole currency for legal tender purposes. Foreign currencies such as the British pound, United States dollar, South African rand, and Botswana pula are to be banned with effect from 24 June 2019.
Sources include IBFD’s Tax Research Platform;www.allafrica.com; http://tax-news.com
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