Africa tax in brief – Lexology

AFRICA: African Continental Free Trade Area Agreement developments

On 5 February 2022, Cabo Verde deposited its instrument of ratification for the African Continental Free Trade Area Agreement (AfCFTA), becoming the 41st country to do so.

BENIN: Finance Law 2022 entered into force

Benin’s tax authority has published the Finance Law for 2022 (Law No. 2021-16 of 23 December 2021). Significant provisions, which entered into force on 1 January 2022 include:

  • the renewal of the following measures:
    • an exemption from all customs duties and taxes and VAT during the period 1 January to 31 December 2022 for listed vehicles and other items;
    • “statistical tax” on petroleum products under the re-export regime to be levied at the rate of 1% of the customs value of the products from 1 January to 31 December 2022;
    • from 1 January to 31 December 2022, exempting from penalties, fines and tax increases, taxpayers that, for the first time, voluntarily file declarations for previous years and pay the full amount of taxes, provided that there is no tax audit or ongoing investigation;
  • continued measures for COVID-19 from 1 January to 31 December 2022, including:
    • an exemption from all customs duties and taxes and VAT on health equipment, materials, and other health inputs used in the fight against the COVID-19 pandemic; and
    • an exemption from taxes, duties, and fees, with the exception of income tax, on contracts for the supply of services and works, import and delivery of equipment, materials, and consumables related to the response to the COVID-19 pandemic;
  • subject to request, allowing an exemption from customs duties and taxes and VAT on new materials and equipment imported into Benin by small and medium-sized enterprises not benefiting from a derogatory tax regime, intended for the installation of artisanal and industrial units;
  • exempting, from 1 January 2022, electric and hybrid motorcycles manufactured or sold in Benin from customs duties and VAT;
  • the rate of “statistical tax” on machinery and equipment, for agriculture, livestock, aquaculture, and fisheries, and their part, is 1% of the customs value of the products from 1 January to 31 December 2022;
  • from 1 January 2022, a charge called the Urban Development Charge (“RAU”) and a fee called the Corridor Security Charge (“RSC”) are introduced on imports. RAU is levied at the rate of 0.5% ad valorem on all imported goods subject to a consumer regime, with the exception of basic necessities such as sugar, milk, pharmaceutical products, and agricultural inputs and RSC is levied at the rate of 0.5% ad valorem rate on all imported goods subject to a transit procedure, with the exception of hydrocarbons destined for hinterland countries and uranium from Niger; and
  • exempting new equipment and materials imported into Benin, as well as local materials, intended for the construction of service stations, sidewalk stations, and oil and diesel tanks from customs duties and taxes and VAT during the period 1 January to 31 December 2022.

Benin’s Ministry of Finance has also announced the adoption of a new General Tax Code that consolidates prior laws and regulations and introduces new provisions in order to simplify and correct inconsistencies in taxation rules, update obsolete, redundant or irrelevant provisions and introduce incentives for SMEs.

BOTSWANA: Amnesty period for waiver of interest and penalties extended

The government of Botswana published a communication in the Gazette Extraordinary, Vol. LIX, No. 122 of 29 December 2021, announcing that the amnesty period for the waiver of interest and penalties, which was due to come to an end on 31 December 2021, was extended until 30 June 2022. The waiver applies where a taxpayer makes full payment of the principal amount of income tax and value added tax (“VAT”) due.

BURKINA FASO: Finance Law 2022 adopted by parliament

The Finance Law 2022 (Law No 042-2021/AN) was adopted by parliament on 16 December 2021 and published in the official Gazette on 31 December 2021. Significant provisions, applicable with effect from 1 January 2022, include:

  • the introduction of a “fiscal flagrance procedure” which allows the tax administration to carry out protective seizures by ex officio assessment in the event of undeclared activities, false invoices, inconclusive or fraudulent accounting records and imports under false identity;
  • requiring all companies to keep a register of their beneficial owners (natural persons in accordance with the regulation against money laundering and the financing of terrorism in Burkina Faso), with a declaration to be filed annually by 30 April;
  • requiring companies operating in Burkina Faso and having an annual turnover excluding VAT or gross assets of at least CFA1-billion (previously F.CFA3-billion) to prepare transfer pricing documentation;
  • allowing the tax administration, during a tax assessment, to copy all required documents without the taxpayer being able to object;
  • in the event of the liquidation of a company, requiring all supporting documents for tax returns to be kept by the liquidator trustee for a period of 10 years;
  • requiring a tax clearance certificate for business import operations; and
  • calculating property tax based on the cadastral value of lands and buildings on 1 January, instead of the declared value.

CAMEROON: Finance Law 2022 enacted

Parliament has adopted the Finance Law for 2022 (Loi de Finance pour 2022, FL 2022). Significant measures, which apply from 1 January 2022 unless otherwise indicated, include:

Corporate taxation

  • introducing a tax on non-profit entities that are not in competition with for-profit businesses, whether public, private or denominational (including foundations) a rate of 15% on annual income from their commercial activities plus a 10% surcharge of council tax. A monthly advance payment of 1% plus a 10% surcharge of council tax applies;
  • allowing an automatic deduction of bad debts up to F.CFA500 000 which have been provisioned over at least five years, without it being necessary to exhaust all the recovery procedures;
  • allowing a full deduction of donations and gifts made within the framework of the reconstruction and development plan for economic disaster zones for the 2021 fiscal year;
  • extending withholding tax on purchases to purchases from manufacturers, importers and businesses of the forestry sector at rates of between 2% and 14% depending on the tax regime of the purchaser;
  • providing that non-registered taxpayers are no longer subject to advance payment on import;
  • exempting from payroll taxes, allowances paid by companies that offer pre-employment internships of up to two years to young graduates within the framework of socio-professional integration assistance programs, especially those implemented under the National Employment Fund;
  • exempting from the special tax on income (“TSR”) remuneration, at cost price, paid to foreign service providers without a permanent establishment in Cameroon for petroleum operations by holders of petroleum contracts and their sub-contractors during the petroleum research phase and development phase;
  • increasing the rate of TSR on payments made to shipping companies from 2% to 3% and reducing the rate applicable on public procurement as well as payment for audio visual contents from 5% to 3%;
  • introducing a 0.2% tax on money transfers or withdrawals through any electronic means and withdrawals following money transfers through financial institutions or telephone companies;

Individual taxation

  • increasing the rental income tax rate from 5% to 10%, with a surcharge of 10% council tax;

VAT

  • extending the scope of VAT to commercial activities of non-profit organisations and ancillary services and supplies related to educational, vocational training and health sectors;
  • subjecting VAT credits generated by non-profit entities to pre-refund audits by competent tax offices;
  • in case of a merger, allowing absorbed companies to transfer their VAT credits already validated by competent tax offices, and pending refunds, to absorbing companies;

Other

  • introducing various incentives to banana sector companies, both those included in Economic Disaster Zones and elsewhere;
  • reducing registration tax on the transfer of business assets (goodwill) (Mutation de fond de commerce) from 15% to 5%; and
  • reducing the tax on inheritance transfers from rates of between 2% and 10% to rates of between 2% and 5%.

CHAD: Finance Law 2022 adopted

The Chadian Parliament has adopted Finance Law 2022 (Law N˚0010/PCMT/2021) and it was promulgated by the president on 31 December 2021. The main provisions, which apply from 1 January 2022 unless otherwise indicated, include:

Corporate taxation

  • introducing an export tax on gold of Chadian origin intended for processing and a tax on the resale of processed gold of Chadian origin based on the capital gains generated at a rate of 0.5% of the reference value, which would be determined by order of the Minister of Finance and Budget. In addition, a statistical fee of 2% based on the export value would apply;
  • introducing a tax on money transfer transactions by electronic means, except for bank transfers, transfers for the payment of taxes and cash withdrawals following a money transfer from financial institutions or telephone companies at the rate of 0.2% of the amount transferred or withdrawn. With effect from 1 April 2022, the rate is to be increased to 5% for withdrawals via mobile money transfer;
  • removing the minimum tax thresholds of CFA2-million and F.CFA1-million respectively for companies under the normal tax regime and simplified tax regime;

Individual taxation

  • exempting interest on bonds or debt securities issued by the State, local authorities and public establishments from personal income tax;
  • reducing synthetic tax from the range of CFA50 000 to F.CFA5-million per year to the range of F.CFA25 000 to F.CFA1-million per year;

VAT

  • subjecting refuelling operations of aircraft for international flights to VAT at the rate of 0% and textiles and reinforcing bars at the rate of 9%;
  • exempting interest on bonds subscribed to by non-professionals of the financial sector from VAT;

Other

  • adjusting tax incentives for investment within the country’s interior provinces;
  • granting exemption from fines, penalties and late payment interest in the case of voluntary disclosure with effect from 1 January 2022; and
  • requiring large companies to file their annual tax return by electronic means in addition to the hard copy.

DEMOCRATIC REPUBLIC OF THE CONGO: Annual mining taxes rates and fines amounts adjusted

The Mining Cadastre (Cadastre minier) along with the Central Bank, adjusted the rates of mining annual surface rights, the tax rates on mining concessions and the amounts of fines in Decision No. CAMI/DG/006/2021 of 8 December 2021 with effect from 1 January 2022.

DEMOCRATIC REPUBLIC OF THE CONGO: Mandatory electronic submission of tax returns introduced

The Congolese Tax Administration (“Direction Générale des impots“), in an official statement No 01/047/DGI/DG/DESCOM/CE/BBYCK/2021 of 23 December 2021, introduced the mandatory submission of tax returns by electronic means, starting with large businesses. A training program will be organised for this purpose.

DEMOCRATIC REPUBLIC OF THE CONGO: VAT exemption for airline companies introduced

Decree 21/01 of 24 July 2021 and service note n°01/167/DGI/DG/CR/GM/2021 of 19 October 2021 introduced a two-year exemption (commencing on 24 July 2021) for airline companies from custom duty and VAT on the importation of goods to be specified in a ministerial order. In addition, a reduced VAT rate of 8% will apply to airline tickets for the same period.

GHANA: Proposal for introduction of new levy on electronic transactions to be resubmitted

On 19 January 2022, Ghana’s Minister for Finance announced that the government will resubmit a proposal for the introduction of a new levy on electronic transactions at a rate of 1.75% on mobile money payments, bank transfers, merchant payments, and inward remittances. The proposal was included as part of the 2022 Budget but was rejected in parliament. The new E-Levy was originally proposed to come into effect on 1 February 2022 and apply to all transactions that add up to more than GHS100 per day. The effective date of the proposal as resubmitted is uncertain.

KENYA: High Court rules that distribution and sale of copyrighted material is not subject to withholding tax

In a judgment delivered on 10 December 2021, the Kenya High Court ruled that the distribution and sale of copyrighted material is not subject to withholding tax.

The High Court found that a distinction should be made between the sale of copyrighted material and the use or exploitation of a copyright. Arrangements between a software copyright holder and a distribution intermediary grants to the distribution intermediary the right to transactions, and the rights acquired in relation to the copyright are limited to those necessary for the commercial intermediary to distribute copies of the software program. In such transactions, distributors are paying only for the acquisition of the software copies and not to exploit any right in the software copyrights.

Accordingly, in a transaction where a distributor makes payments to acquire and distribute software copies (without the right to reproduce the software), the rights in relation to these acts of distribution should be disregarded in analysing the character of the transaction for tax purposes. Payments in these types of transactions would be considered as business profits and not royalties subject to withholding tax, irrespective of whether the copies being distributed are delivered on tangible media or are distributed electronically (without the distributor having the right to reproduce the software), or whether the software is subject to minor customisation for the purposes of its installation.

LESOTHO: Multilateral Convention (MLI) signed

On 9 February 2022, Lesotho signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (“MLI”) bringing the total number of signatories to 97. The government of Lesotho released its provisional list of expected Reservations and Notifications, which will be confirmed upon deposit of the instrument of ratification.

MAURITIUS: France publishes French synthesised text of the France-Mauritius treaty

The French Government recently published the French synthesised text of the France – Mauritius Income and Capital Tax Treaty (1980), as amended by the 2011 protocol, displaying the modifications made to the treaty by the MLI.

France and Mauritius deposited their instrument of ratification of the MLI on, respectively, 26 September 2018 and 18 October 2019. The MLI entered into force for France on 1 January 2019 and for Mauritius on 1 February 2020. France expanded the application of the Multilateral BEPS Convention on its existing treaties on 22 September 2020.

NIGER: 2022 Finance Law published

Niger’s Ministry of Finance recently announced the publication of the Finance Law for the 2022 Budget Year (Law No. 2021-50 of 20 December 2021). Significant measures include:

  • amending the rules regarding the scope of income subject to income tax on securities (“IRVM”) in relation to deemed distributions of income (dividends) with the additional provision that amounts placed in free reserves that exceed one-fifth of a company’s share capital are considered a deemed distribution subject to IRVM, calculated on 50% of the amounts so placed in reserve;
  • abolishing the obligation to fictitiously calculate the VAT on transactions with non-taxable persons;
  • amending the tax audit rules to provide that any item or document not presented or rejected during the on-site inspection operations shall give rise to the establishment of a report and such item or document may not be invoked by the taxpayer at later stages of the litigation procedure;
  • amending advance payment in the context of litigation with the removal of the requirement to pay 15% or 10% of the disputed amount prior to an appeal with the Director General of Taxes and the Minister of Finance, respectively, as well as a reduction in the advance amount payable before referral to the courts from 50% to 25%; and
  • amending the Petroleum Code to reinstate the VAT exemption on supplies of goods and services that relate directly to the execution of petroleum operations.

NIGER: Tax treaty with the United Arab Emirates enters into force

On 18 August 2021, the Niger – United Arab Emirates Income Tax Treaty (2018) entered into force and generally applies from 1 January 2022.

NIGERIA: New Tax Appeal Rules adopted

The Chief Judge of the Federal High Court (“FHC”) recently approved the FHC Tax Appeal (Procedure) Rules, 2022 (“the Rules”), which follows the FHC (FIRS) Practice Directions, 2021 issued in May 2021.

The Rules repeals the FHC (Tax Appeal) Rules, 1992 effective 10 January 2022, and provides guidance on the preparation of notices of appeal against decisions of the Tax Appeal Tribunal (“TAT”). Significant amendments include:

  • a requirement for tax debtors to deposit any judgment debt from the TAT’s ruling in an interest yielding account of the FHC as a security deposit for prosecuting an appeal. An appeal may be struck out or dismissed where a taxpayer fails to make such security deposit;
  • provision for accelerated hearing of tax appeals and limitation of oral arguments to clarification of points in parties’ briefs of argument;
  • introduction of electronic means for service of court processes and hearing notices such as SMS, emails, WhatsApp or other platform as advised by the Court;
  • reduction of timelines for the service of appellants’ and respondents’ written briefs from 30 days each to 15 days each; and
  • specification of timelines for transmission of records of appeal to the FHC.

NIGERIA: Circulation on the taxation of Government Securities and Corporate Bonds issued

Following the expiration of the Exemption Order on bonds and short term securities effective from 2 January 2022, The Federal Inland Revenue Service (“FIRS”) has issued an information circular with regards to the tax treatment of interest and other gains arising from investment in government securities and corporate bonds. Essentially withholding tax will be deducted at source while the income will be included in the determination of corporate income tax as the case may be.

NIGERIA: Finance Act 2021 enacted

The Government of Nigeria has enacted several changes to domestic laws, including the Capital Gains Tax (CGT) Act, Cap. C1 LFN, 2004, the Companies Income Tax Act, Cap. C21 LFN, 2004 and the Personal Income Tax Act Cap. P8 LFN 2004, through the Finance Act 2021. Significant amendments, which apply from 1 January 2022 unless otherwise indicated, include:

Corporate taxation

  • imposing a 10% capital gains tax (“CGT”) on the disposal of shares in any Nigerian company where the gross proceeds from such sale exceeds NGN100-million in any 12 consecutive months. Where the proceeds are reinvested in shares of the same or another Nigerian company within the same year of assessment or where the shares are transferred between an approved borrower and lender in a regulated securities lending transaction, the sale is exempted from CGT;
  • granting powers to the FIRS to assess a non-resident company for income tax by determining whether a company has a significant economic presence in Nigeria based on a fair and reasonable percentage of the turnover attributable to that presence;
  • extending the period for the reduced minimum tax rate of 0.25% (normally 0.5%) to 31 December 2021 as part of the government’s COVID-19 support measures to businesses. This reduced rate will apply to three accounting periods ending on any date between 1 January 2019 and 31 December 2021. However, companies will only be allowed to apply such a reduced rate for two out of the three reporting periods available;
  • restricting the capital allowance claimable by a company in relation to a qualifying asset that is only partially utilised in generating the taxable income (where the tax-exempt income is greater than 20% of taxable income of the company in any year of assessment). The capital allowance computed on the qualifying asset will be pro-rated and only the portion with the taxable income will be allowed as the capital allowance deduction against the assessable profits of the company. This is not applicable to companies that have enjoyed a pioneer status tax incentive;
  • clarifying that the tax incentive available to downstream gas utilisation projects (an initial tax-free period of three years which may be subject to renewal for an additional period of two years) is not available to a company more than once. A company which has been reorganised or restructured out of a company that has previously enjoyed the incentive is ineligible. The incentive is also not applicable to any company that has claimed an incentive for trade or business of gas utilisation under any law in Nigeria;

Indirect taxation

  • increasing the tertiary education tax (“TET”) rate from 2% to 2.5% for Nigerian companies. The timeline for payment of TET is also reduced from 60 days to 30 days after the FIRS has served a notice of the assessment on a company;
  • empowering the FIRS to appoint non-resident suppliers as agents for VAT collection. An agent so appointed shall on or before the 21st day of the following month remit the tax withheld or collected to the FIRS in the currency of the transaction;
  • clarifying that companies liable to the national agency for the science and engineering infrastructure levy of 0.25% of profit before tax include companies operating in the banking, mobile telecommunication, ICT, oil and gas, and aviation sectors, and maritime companies with turnover of at least NGN100-million;

Administration

  • empowering the FIRS to assess, collect, account, and enforce the payment of the Nigerian police trust fund levy of 0.005% of the net profit of companies operating a business in Nigeria; and
  • empowering the FIRS to deploy proprietary or third-party technology to automate the tax administration process which includes tax assessment and information gathering provided it gives 30 days’ notice to the taxpayer.

NIGERIA: Payments to Nigeria Police Trust Fund declared unconstitutional

The Federal High Court has ruled as unconstitutional section 4(1)(b) of the Nigeria Police Trust Fund (Establishment) Act, 2019 (“the Act”) which provides for an amount constituting 0.5% of the total revenue accruing to the Federation Account, and a levy of 0.005% of the net profit of companies operating in Nigeria respectively to be remitted to the Nigeria Police Trust Fund.

The court ruled that the Constitution mandates that all revenue collected by the government of the federation, except for the revenue specifically exempted by the section, must be paid into the Federation Account and that the only entities who are entitled to partake in the sharing of the funds in the federation account are the federal government, state government, and local councils in each state of the federation. Accordingly, section 4(1)(a) of the Act which permits the Federal Government to deduct a first line charge of 0.5% of the total revenue accruing to the Federation Account and section 4(1)(b) which permits the Federal Government to pay into the Fund revenues received by way of levies on companies operating in Nigeria, are both inconsistent with the Constitution, and thus null and void.

The court ordered a refund of River State Government’s share of all sums illegally deducted from the Federation Account but declined to make the same order for the other States of the Federation who were not parties in the case.

NIGERIA: Filing of Country-by-Country (“CbC”) reports reinstated

In January 2022, the FIRS issued a public notice reinstating the local filing of CbC reports by Nigerian subsidiaries and permanent establishments whose headquarters are not in Nigeria, which was suspended in May 2021.

NIGERIA: Tax Appeal Tribunal (“TAT”) rules that withholding tax applies on commission deducted upfront by betting agents

The TAT ruled in December 2021 that a principal is responsible for accounting for withholding tax in respect of commissions earned by its agent, notwithstanding that the agent deducts the commission upfront. The ruling suggests that agents should deduct their commissions net of the applicable withholding tax.

NIGERIA: TAT rules that withholding tax is due on management fees paid to a non-resident company

On 6 December 2021, the Lagos TAT issued a judgment on the applicability of withholding tax on management fees paid to a non-resident company.

The TAT held that management fees paid from Nigeria was “sourced” from Nigeria and, therefore taxable in Nigeria. The judgments in a number of earlier cases have confirmed that an item described as a reimbursement in a contract is not subject to withholding tax to the extent that it is payable on behalf of another party. However, this judgment suggests that the FIRS can disregard the wording of a contract or any arrangement, if the FIRS of the view that the arrangement is artificial.

RWANDA: Deadline for filing and payment of decentralised taxes extended

The Rwanda Revenue Authority, through a public notice issued on 31 January 2022, has extended the deadline for filing and payment of rental income tax and property tax for the year 2021 and trading licences for the year 2022, from 31 January 2022 to 15 February 2022.

RWANDA: Tax treaty with Morocco enters into force

The Morocco – Rwanda Income Tax Treaty (2016) entered into force on 5 March 2020 and generally applies from 1 January 2021.

SEYCHELLES: Pay-As-You-Earn system introduced for small business

The Government of Seychelles has introduced a Pay-As-You-Earn (“PAYE”) scheme for small businesses under a presumptive tax regime (i.e. businesses earning less than SCR1-million) with effect from 1 January 2022 as a pilot project for the year 2022.

Under the new PAYE scheme, taxpayers will be required to remit 1.5% of their revenue received in any month to the Seychelles Revenue Commission (“SRC”). The tax paid will be credited to the taxpayer’s account with SRC once an annual presumptive tax return has been submitted. Any excess credit will be carried forward to the following year. No penalties are incurred for failure to pay the tax in any month of the year.

The new payment scheme excludes:

  • businesses currently operating a monthly pay as go under the normal business tax regime; and
  • “specified businesses” that use a deduction at source booklet including building contractors, maintenance contractors and others.

SEYCHELLES: Budget 2022 proposals presented

The Ministry of Finance, Economic Planning and Trade presented the Budget 2022 proposals on 12 November 2021. Significant proposals include:

  • reducing the business tax rate from 25% to 15% for annual income less than SCR1-million and from 30% to 25% for annual income more than SCR1-million. The new rates will also apply to sectors that previously had a preferential rate such as tourism, fisheries, casinos, international corporate service providers, businesses listed on the Seychelles Securities Exchange, and businesses linked to medical services. Tax on businesses in the telecommunication services, banking, insurance, alcohol and cigarette production will remain at 33% on profits above SCR1-million;
  • a three-year grace period on tax payments from 2021 onwards for the agricultural sector;
  • reducing the accelerated depreciation rate on capital investment, excluding buildings, from 145% to 100% over a period of five years. The reduced rate will be granted to businesses linked to tourism, agriculture and fisheries;
  • reducing tax deductions on salaries of employees who graduated from professional centres from 200% to 125%;
  • reducing tax deductions on salaries paid to students from professional centres who are on part-time employment from 150% to 125%;
  • with effect from 1 January 2022, removing the temporary excise tax on passenger vehicles, which was introduced in January 2021 to discourage the importation of passenger motor vehicles to build up foreign exchange reserves and stabilise the exchange rate; and
  • requiring the retail sector to have a cash register and a point-of-sale machine allowing electronic payments. The government plans to connect such cash registers directly to the system at the SRC in the future.

SEYCHELLES: Multilateral Instrument (MLI) – Instrument of ratification deposited

On 14 December 2021, Seychelles became the 68th country 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 Seychelles on 1 April 2022.

Seychelles submitted its MLI position on 7 June 2017, listing its provisional reservations and notifications and including 28 tax treaties that it wished to be covered by the MLI.

SIERRA LEONE: Finance Act 2022 assented to

On 11 January 2022, the President of Sierra Leone assented to the Finance Act 2022. Significant amendments, which came into effect on 1 January 2022, include:

  • reducing the income tax rate for mineral and petroleum operations from 30% to 25% in order to match the standard corporate tax rate;
  • introducing the following new definition for gross income: gross income is defined to mean that in relation to any year of assessment for any person’s gross income is the total amount in cash or otherwise, received by or accrued to or in favour of such person from all sources during the year or period of assessment excluding receipts and accruals of a capital nature;
  • reducing the thresholds for large, medium and small taxpayers as follows:
    • large taxpayers: annual turnover exceeding SSL5-billion (previously SSL6-billion);
    • medium taxpayers: annual turnover of between SSL100-million and SSL5-billion (previously between SSL350-million and SSL6-billion); and
    • small taxpayers: annual turnover of between SSL10-million and SSL100-million (previously SSL10-million to SSL350-million);
  • increasing the threshold for withholding tax for contractors’ deductions from SLL500 000 to SLL1-million;
  • reducing the Goods and Services Tax (“GST”) registration threshold from SLL350-million to SLL100-million;
  • adding the supply of solar power to the list of GST zero-rated supplies;
  • adding the following items to the list of GST exempt supplies: plants, equipment and machinery used exclusively for agriculture, veterinary care, fishing, horticulture, manufacturing, and mining; materials for conducting national elections; arms, ammunition, and security equipment; and medals and medallions imported by the government for awards;
  • increasing the late fees for extensions of filing income tax returns for a maximum period of 60 days to SLL20-million, and SLL10-million and SLL1-million for large, medium and small taxpayers respectively; and
  • increasing the fee for filing a late objection to an assessment raised by the NRA from SLL1-million to SLL5-million.

TANZANIA: Electronic VAT return filing system upgraded

The Tanzania Revenue Authority (“TRA”) in a public notice issued on 3 February 2022 informed taxpayers of the introduction of an upgraded VAT e-filing system to be rolled out effective from 1 March 2022.

The new system offers the use of a single e-filing account, simplified filing of returns, automatic apportionment of input tax and enabling users to effect adjustments arising from adjusting events as provided for in the law.

UGANDA: List of products to be affixed with digital tax stamps expanded

The Ugandan Government has gazetted the following additional products to be affixed with digital tax stamps with effect from 1 May 2022:

  • any other alcoholic beverages (other than those previously gazetted);
  • fruit and vegetable juice;
  • any other non-alcoholic beverages (other than those previously gazetted);
  • any other fermented beverages (other than those previously gazetted); and
  • cooking oil.

Digital tax stamps are affixed on all gazetted products whether locally manufactured or imported. The Uganda Revenue Authority (“URA”) advises all manufacturers, traders, importers, distributors and agents to dispose of any stock that does not have digital tax stamps between 1 February 2022 and 30 April 2022. Any stock not disposed of by 30 April 2022 shall be returned to the manufacturer or importer for stamping. A manufacturer who fails to affix a tax stamp on the gazetted product is liable to a penal tax equivalent to double the tax due on the goods or UGX50-million, whichever is higher.

The digital tax stamps were introduced by the URA in partnership with the Uganda National Bureau of Standard in November 2019 and took effect on 1 February 2020.

UGANDA: National Social Security Fund (“NSSF”) (Amendment) Act 2021 enacted

Parliament has passed the NSSF (Amendment) Bill 2021 on 17 February 2021 which was assented to by the president on 2 January 2022. Significant provisions include:

  • it being mandatory for every eligible employee to register as a member and make contributions to the NSSF. Every employer, irrespective of the number of employees, is required to register with the NSSF as a contributing employer. (Previously, employers were only eligible for compulsory registration and contribution if they had at least five employees);
  • allowing mid-term access to benefits by members who have made contributions to the NSSF upon fulfilment of the following conditions:
    • a member must have made voluntary contributions to the NSSF;
    • a member must be 45 years or older and have made contributions for at least 10 years to the NSSF to be able to access up to 20% of their accrued benefits; or
    • member must be a person with disability, aged 40 years or older and have made contributions to the NSSF for 10 years to be able to access up to 50% of their accrued benefits.

ZAMBIA: 2022 Tax Bills presented to parliament

On 10 December 2021, the Minister of Finance and National Planning presented the tax bills and related legislation to parliament in support of the 2022 Budget measures that were announced on 29 October 2021.

ZIMBABWE: 2022 Budget presented

The Minister of Finance and Economic Development presented the 2022 National Budget on 25 November 2021. Significant proposals include:

Corporate taxation

  • increasing the tax-free annual bonus threshold from ZWL25 000 to ZWL100 000, and from USD320 to USD700 when denominated in foreign currency, with effect from 1 November 2021;
  • basing royalty rates for platinum, gold and diamonds on international prices and authorised invoice values instead of gross fair market values. In addition, financial institutions will be authorised to collect mining royalties;
  • reducing deductions allowable for donations made to the State or funds approved by the Minister of Health from USD8-million to USD100 000 (convertible to ZWL at prevailing rate) with effect from 1 January 2022;
  • capping ownership of Real Estate Investment Trusts so that 50% of their shares are held by five or fewer individuals in a taxable year, with the exception of pension funds;
  • granting a new tax credit for the employment of physically handicapped persons with a medically ascertainable physical condition to the amount of USD50 per month with a maximum aggregate amount of USD2 250 in any year of assessment. This does not apply where the employee is a trainee, intern, apprentice or a managerial employee;
  • introducing a special initial allowance deduction of 25% for buildings, improvements, machinery and equipment used for commercial, industrial and farming purposes, given retrospective effect from 1 January 2014.

Individual taxation

  • tax relief for individuals with effect from 1 January 2022, including increasing the non-taxable employment income threshold in local currency from ZWL10 000 to ZWL25 000 per month, and from USD70 to USD100 per month when denominated in foreign currency. In addition, the employment income subject to the highest marginal tax rate is increased from ZWL250 000 per month ZWL500 000 per month;
  • amending the definition of “advantage or benefit in kind” to include 30% of the costs that have been incurred by the employer for the provision of mobile or landline telephone airtime or data for broadband or internet access with effect from 1 January 2022;
  • removing non-Executive Directors’ fees, which have been subject to withholding tax, from the definition of remuneration in terms of end of year bonuses;
  • granting exemptions on annual income derived by individuals above 55 years on instruments traded by financial institutions up to ZWL240 000 or USD3 000;

VAT

  • amending the definitions of “invoice” or “fiscal tax invoice” to denote invoices printed by a fiscal electronic register or fiscal memory device by a registered operator. The term “fiscal tax invoice” consequently replaces “tax invoice”;
  • setting the deadline to 31 March 2022 to claim input tax for tax invoices issued on or before 31 December 2021;

Administration

  • suspending reward payment to informants who provide information leading to the collection of unpaid taxes indefinitely with effect from 1 January 2022;
  • introducing new requirements for manufacturing, mining, tourism, agriculture, transport, energy and health sectors prior to the application of the tax rebate and the VAT deferment;
  • strengthening the provisions governing the rebate of duty on capital equipment imported for use in specified industries which include mining, manufacturing, agriculture and energy;
  • amending Tax Clearance Certificate issuance conditions to grant certificates only to registered operators that have a fiscal device with the Zimbabwe Revenue Authority (“ZIMRA”) interface with effect from 1 January 2022; and
  • amending the ZIMRA means of communication to include delivery of notices and serving documents to the registered address of the taxpayer through electronic mail or other electronic means.

ZIMBABWE: COVID-19 Measures extended

In response to the negative effects of the COVID-19 pandemic, the government has proposed to increase the non-taxable portion of the retrenchment package from the greater of ZWL50 000 and one-third of the retrenchment package up to a maximum of ZWL240 000 to the greater of ZWL400 000 and one-third of the retrenchment package up to a maximum of ZWL2-million effective 1 November 2021.

Sources include IBFD’s Tax Research Platform; www.allafrica.com; http://tax-news.com, orbitax.com

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