ANGOLA: 2021 State Budget Law approved
A number of tax amendments were introduced by Law 42/20 of 31 December 2020, approving the State Budget Law for 2021, including:
- introducing a value-added tax (“VAT”) threshold of AOA10-million. Entities or individuals with turnover or imports below this amount will not be liable to pay VAT;
- establishing a simplified regime to replace the transitory regime. The new regime is to apply to taxpayers (excluding taxpayers in the manufacturing industry) with turnover or import transactions not exceeding AOA350-million in the previous 12 months. Taxpayers under the regime are subject to VAT at a rate of 7% on a monthly basis on turnover from operations that are not VAT exempt (including advance payments and services rendered by non-resident entities);
- charging VAT on the importation of certain agricultural inputs and basic food baskets at a reduced rate of 5%;
- subjecting payments made to non-residents for services provided to oil operators to withholding tax at a rate of 6.5%. All other services provided by non-resident entities to Angolan resident entities that are not oil operators are subject to withholding tax at a rate of 15%;
- introducing withholding tax at a rate of 2.5% on receipts at automatic payment terminals for the transfer of goods and services by VAT taxpayers;
- subjecting the transfer of movable property between spouses or to relatives in the ascending or descending line to property tax at a rate of 0.5% for amounts below AOA5-million and 1% for amounts exceeding AOA5-million. With respect to other transfers, the rate is 1% for amounts up to AOA5-million and 2% for amount exceeding AOA5-million; and
- introducing new rules on the special captive regime in terms of which the Tax Administration may, in any circumstances, include or exclude taxpayers under this regime, as long as it is justified by reasons of protecting public revenues.
BOTSWANA: Guidance Note on VAT Transitional Rules issued
The Botswana Unified Revenue Service, on 10 March 2021, published a Guidance Note on the VAT Transitional Rules advising the public and VAT-registered persons on the effects of the change in the VAT rate from 12% to 14% on existing agreements that were entered into on the basis of the 12% rate.
It highlights that the note is providing information only, and has no force in law. It does not bind the Commissioner General, nor restrict the taxpayers’ rights of objection and appeal as provided for by the VAT Act.
BURKINA FASO: Rental properties census introduced
The Regional Tax Director (Directeur régional des impôts), on 23 March 2021, launched an extensive census campaign affecting all landlords, tenants and sub-tenants in the city of Ouagadougou and its surroundings to broaden the real estate income tax base. The campaign is focused on:
- compiling an exhaustive list of landlords, tenants and sub-tenants;
- establishing regular lease contracts; and
- renew expired lease contracts.
BURKINA FASO: Motor vehicle Tax E-payment launched
General Tax Director (Directeur général des impôts) in letter No. 2021-0559/MINEFID/SG/DGI/DI of 23 March 2021 announced the implementation of an electronic payment system for motor vehicle tax via mobile phones making use of specific codes.
BURKINA FASO: Implementation of tax on financial activities postponed
In response to a request from the Professional Association of Banks and other Financial Establishments of Burkina Faso, the Minister of Finance by letter No. 2021-000215 of 8 February 2021, postponed the implementation of the financial activities tax (Tax sur les activités financière, FAT) introduced by the Finance Law 2021 from 1 January 2021 to 1 July 2021.
CENTRAL AFRICAN REPUBLIC: Finance Law 2021 introduces various tax changes
Law No. 20-25 of 30 November 2020 (the Finance Law 2021) introduces a number of tax amendments, including:
- increasing the rate of withholding tax on goods imported for sale by taxpayers under the synthetic tax regime from 3% to 5%;
- introducing a VAT withholding on the gross margin of beverage and cigarette wholesalers;
- increasing customs duties on the import or downloading of software (with a value from CFA100 000) from 5% to 10%. Software imported or downloaded fraudulently is taxed at 30%;
- increasing customs duties on imports of wheat flour from 5% to 30%;
- introducing a penalty for delayed customs duties payment of 1.5% of the tax amount per month delayed up to 50% of the amount due; and
- reducing the notice period preceding a spot audit from five to two days.
COMOROS ISLANDS: Finance Law 2021 introduces tax amendments
Law No. 20-022/AU of 16 December 2020 (The Finance Law 2021) introduces a number of tax amendments, including:
- reducing the limit on deductible head office expenses from 10% to 5% of annual turnover realised in the Comoros Islands. The limit is reduced from 5% to 2% for public works companies and from 15% to 7% for consulting engineers;
- increasing the surtax on the business licence duty rate from 10% to 30%;
- increasing the tax on the production of dry vanilla from 1% to 5% and ylang-ylang oil from 1% to 7.5% of the export selling price;
- increasing the international cooperation fee on imports (redevance de coopération internationale, RCI) from 1.5% to 2.5% with an exception for the importation of computers where the previous rate applies;
- making it compulsory for all importers, including diplomatic entities, international organisations, associations and occasional importers, to register with their fiscal identification number (Numéro d’identification fiscal, NIF);
- increasing penalties following tax audits from 1.5% to 10% of the tax due per month delayed from the due date; and
- requiring taxpayers to provide a guarantee when appealing against a tax notice.
DEMOCRATIC REPUBLIC OF CONGO: Finance Law 2021 amends several tax provisions
Law No. 20/020 of 28 December 2020 (the Finance Law 2021) introduces amendments to various tax provisions, including:
- extending the deductibility of the provision for doubtful debts to microfinance institutions and confirming the deductibility of donations made to the COVID-19 Fund;
- implementing a self-assessment procedure for VAT on imports. This procedure is to be detailed by ministerial decree;
- introducing a tax on petroleum pipe construction and royalties on their usage in the hydrocarbons sector. A ministerial order will specify the implementation;
- extending the deadline for responding to an information request from 10 to 20 days from receipt of the request;
- extending the deadline for appealing to a tax assessment notice from seven to 20 days from the reception of the tax assessment;
- reducing the time limit for a decision of the tax administration following an appeal from six to three months. If this deadline is exceeded, the appeal is deemed to be rejected;
- introducing a fine for delayed tax payment of 2% of the amount due for each month delayed from the tax due date;
- introducing a three-month deadline to appeal before the Administrative Court against a tax administration’s decision; and
- introducing penalties for taxpayers exempt from non-fiscal levies who failed to file their exemption certificate within 15 days of their granting.
ESWATINI / LESOTHO: Tax Treaty enters into force
The Eswatini – Lesotho Income Tax Treaty (2019), signed on 6 September 2019, entered into force on 2 October 2020 and generally applies from 1 April 2020 for other taxes and from 1 November 2020 for withholding taxes.
GHANA: COVID-19 measures announced
The 2021 National Budget, presented to parliament on 12 March 2021, included various tax amendments aimed at alleviating the economic impact of the COVID-19 Pandemic. The proposals, which will become effective upon approval by the parliament, include:
- a 30% rebate of income tax instalments due from hotels, restaurants, education, arts and entertainment companies and travel and tour agencies for the rest of 2021;
- subject to specified conditions, waiving interest and penalties due on accumulated tax arrears up to December 2021 for taxpayers who arrange to settle the arrears by September 2021;
- suspending quarterly income tax instalment payments for the second and fourth quarter of 2021 for small businesses using the income tax stamp system;
- suspending quarterly payments for vehicle income tax for the second to fourth quarters of 2021 for public transportation enterprises;
- indefinitely extending the tax exemption on capital gains on securities listed in Ghana’s capital market;
- increasing the National Health Insurance Levy from 2.5% to 3.5%;
- increasing the VAT flat rate scheme from 3% to 4%;
- introducing a Financial Sector Clean-Up Levy of 5% on the profit-before-tax of banks, which will be reviewed in 2024;
- replacing individuals’ tax identification and social security numbers with their Ghana national identification card numbers; and
- increasing tax audits and investigations focused on the extractive industries.
GUINEA: Scope of the income tax advance payment expanded
Law No. L/2020/0029/AN of 30 December 2020 (Finance Law 2021) introduced an increased scope of the income tax advance payment. With effect from 1 January 2021, withholding tax is due on all local purchases by:
- shipping companies, foreign non-governmental organisations and cooperation and development agencies;
- subcontractors registered for VAT;
- distributors of SIM cards and phone credit top-ups (in physical or dematerialized form) who are registered for VAT; and
- intermediaries registered for VAT involved in operations in respect of transfer of money or payments by phone (mobile money).
Further amendments introduced by the Finance Law 2021 include:
- a VAT exemption for the import of raw materials and packaging used for the production of wheat flour;
- an obligation for notaries to file with the tax administration a statement on real estate transfer deeds drafted by 15 July and 15 January every year;
- introducing tax payment in instalments for taxpayers experiencing exceptional cash flow issues. The Finance Minister can also defer tax payment in case of natural disaster;
- introducing electronic filing of tax returns and making of tax payments; and
- requiring companies granted a tax exemption for an investment project extension to maintain separate accounting for such project.
KENYA: Instalment tax and minimum tax due by 20 April
The first payment of instalment tax for taxpayers with an accounting period ending on 31 December 2021 is due by 20 April 2021.
Pursuant to the Finance Act, 2020, where the instalment tax payable by a taxpayer is lower as the minimum tax, calculated as 1% of the gross turnover of a taxable person, the taxpayer will, instead, be subject to the minimum tax. The minimum tax for taxpayers with an accounting period ending on 31 December 2021 is also due and payable by 20 April 2021.
Although there is currently a petition against the introduction of the minimum tax, the matter is still before the High the Court of Kenya, which is yet to make a ruling on the same. The provision is therefore still in force and the tax remains payable by 20 April 2021.
KENYA: President assents to Business Laws Amendment Act 2021
The president signed the Business Laws (Amendment) (No.2) Act of 2021 into law on 30 March 2021. The Act amends several statutes to facilitate the ease of doing business in Kenya, including the Law of Contract Act, Cap. 23; Stamp Duty Act, Cap. 480; the National Hospital Insurance Fund Act (No. 9 of 1998); the National Social Security Fund Act (No. 45 of 2013); the Companies Act. No. 17 of 2015, and the Insolvency Act, No. 18 of 2015.
KENYA: Legal notice on tax exemption for Japanese companies published
Income Tax (Exemption of Japanese Companies), 2021, Legal Notice No. 15 of 2021 was published in the Kenya Gazette Supplement No. 17, Legislative Supplement No. 10 of 26 February 2021.
The Legal Notice provides for the exemption from income tax, to the extent specified in relevant financing agreements, income which accrued in or was derived from Kenya by Japanese companies, Japanese consultants and Japanese employees involved in projects under the financing agreements that were signed on the corresponding dates specified in the Schedule to the Legal Notice.
LESOTHO: VAT rate on electricity increased from 9% to 10%
The Minister of Finance in this 2022 Budget Speech on 17 February 2021 announced a number of measures aimed at increasing government revenue, including:
- increasing the VAT rate on electricity from 9% to 10%;
- limiting VAT refunds for mining companies;
- introducing export sales tax on diamonds at a rate of 15% of the mine rate; and
- introducing an alcohol and tobacco levy at 15% and 30% respectively.
LIBERIA: Practice Note on tax payable on other services issued
The government issued Practice Note No. PN-LRC-III-1021/1022-0902020-09 on the application of service tax to other taxable services in the sectors of air travel, vehicle rental, communications, automotive repair services, professional services (excluding medical services) and port-related services on 15 September 2020, which came into effect on 1 November 2020.
The Practice Note:
- provides that a registered service provider or person providing a service must withhold and remit services tax at a rate of 10% of payments made and file a service tax return on or before the 21st day of the month following that in which the payment was made;
- lists the taxable services in the sectors of air travel, vehicle rentals, communications automotive repairs, professional services and port-related services.
- provides that all registered service providers or persons providing taxable services failing to adhere to the provisions of the Practice Note will be penalised in accordance with the Liberia Tax Code.
The first payment of the service tax became due on 21 December 2020.
MAURITIUS: COVID-19 Pandemic: due date of submission of returns and payment of taxes extended
In light of the second countrywide lockdown which commenced on 10 March 2021, the Mauritius Revenue Authority (“MRA”), in a notice published on its website on 31 March 2021, extended the due date of filing returns and making tax payments which were due during March 2021 to 30 April 2021.
Small and medium enterprises whose turnover does not exceed MUR50-million also have until 15 July 2021 to submit their VAT returns and pay the VAT due for the taxable period of February 2021.
MAURITIUS: COVID-19 Levy guide published
The MRA published a COVID-19 Levy Guide on 12 March 2021, providing that every employer who has benefited from an allowance under the Wage Assistance Scheme shall be liable to the COVID-19 levy, calculated based on “chargeable income” as defined, payable in respect of the year of assessment (“YOA”) commencing on 1 July 2020 (YOA 2020/2021), on 1 July 2021 (YOA 2021/2022) or on 1 July 2022 (YOA 2022/2023).
The Guide provides a number of detailed scenarios and examples of calculations to assist employers in calculating and remitting the correct amount of the levy to the MRA.
NAMIBIA: Mutual Assistance Convention in Force for Namibia
On 1 April 2021, the OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, entered into force for Namibia. The Convention generally applies in Namibia from 1 January 2022, although it may apply for earlier periods between signatories if agreed to and applies in relation to any period regarding criminal matters.
NAMIBIA: Tax policy and administration reforms announced
The Minister of Finance, in his 2022 Budget speech of 17 March 2021, announced several tax policy and tax administration reforms aimed at strengthening the fairness and equity principles of the tax system and achieving greater compliance through effective tax administration. Significant measures announced include:
- launching the Namibia Revenue Agency on 7 April 2021;
- a potential reduction of the corporate income tax rate for non-mining companies (currently 32%);
- revising the withholding tax rate on interest from unit trusts relating to Namibian companies;
- introducing a 10% withholding tax on dividends paid to individual Namibians;
- increasing the aggregate tax deduction of contributions towards pension funds, provident funds, retirement funds, educational policies and long-term insurance policies from an annual amount of NAD40 000 to a maximum annual amount of NAD150 000;
- charging VAT on sanitary pads at a zero rate instead of 15%;
- introducing VAT at a standard rate of 15% on management fees earned by listed asset managers in line with management fees earned by unlisted asset managers; and
- improving VAT claim procedures to ensure that taxpayers can expect to receive their claims within 90 days if there are no audit queries.
NIGERIA: Companies in free zones to submit income tax returns
In a Public Notice issued on its website on 1 April 2021 the Federal Inland Revenue Service (FIRS) announced that all approved enterprises operating in free trade zones, export processing zones and oil and gas free zones are required to file tax returns with effect from the 2021 year of assessment following the Finance Act 2020 amendments to the Nigerian Export Processing Zones Authority Act and the Oil and Gas Free Zone Authority Act.
Enterprises are required to file their returns with the FIRS’ offices situated in the geo-political regions of Nigeria where they are located, ie, Port-Harcourt for enterprises located in the South, Engu for enterprises operating in the South East, Ibadan for enterprises operating in the South West, Kan for enterprises operating in the North East and North West and Abuja for enterprises operating in the North Central region.
Penalties for failure to comply with the filing requirements will be imposed in accordance with the provisions of the CITA and the FIRS (Establishment) Act 2007.
NIGERIA: Public Notice on due dates for capital gains tax returns and payments issued
In a Public Notice issued on its website on 1 April 2021, the FIRS announced that all persons (including companies, partnerships, executors, trustees, communities, families and individuals) that have disposed of chargeable assets are required to file capital gains tax (“CGT”) returns in line with the Finance Act 2020 amendments to the Capital Gains Tax Act.
All persons that have disposed of chargeable assets are required to calculate the amount of CGT due, file self-assessment returns and pay the tax computed on a bi-annual basis. The due date in respect of chargeable assets disposed of between 1 January and 30 June is 30 June while the due date for chargeable assets disposed of between 1 July and 31 December is 31 December.
For all chargeable assets disposed of prior to 1 January 2021 (the effective date of the Finance Act 2020) returns must be filed by no later than 30 June 2021. Any tax due and unpaid by the due date will attract interest and penalties as per current legislation.
NIGERIA: Automated tax administration solution to be introduced
In another Public Notice issued on its website on 1 April 2021 the FIRS announced that it intends to connect its automated tax administration system to systems of relevant taxpayers in order to have access, for tax purposes, to relevant records, data or information stored in computers or other electronic devices (including cloud computing facilities) maintained, operated, controlled or owned by those taxpayers or their agents.
This is expected to also include all relevant points of sale or invoicing platforms of all taxable persons (individuals, enterprises, companies and entities). Additionally, relevant persons are required to grant the FIRS access to all computers, electronic devices or cloud computing facilities where records, data or information are stored.
Failure to grant the FIRS necessary access will attract penalties, upon conviction, of 100% of the amount of the tax liability in accordance with extant tax laws.
NIGERIA: Joint committee set up to review administration of pioneer status incentive
The Nigerian Investment Promotion Commission and the FIRS have set up a joint committee to review the administration of the pioneer status incentive (“PSI”). The joint committee will review the current administrative guidelines of the PSI, validate the cost of the incentive to Nigeria and recommend changes to the qualification and administration.
Under the PSI regime, qualifying companies making investments in industries designated as “pioneer” sectors qualify for a corporate income tax holiday for a period not exceeding five years under the Industrial Development (Income Tax Relief) Act and the Application Guidelines for PSI issued by the Federal Ministry of Industry, Trade and Investment in August 2017.
NIGERIA: Guidance on instalment tax payments issued
Through a Public Notice issued on its website on 30 March 2021 the FIRS has requested companies wishing to make instalment tax payments to apply in writing before the due date of filing and attach evidence of full payment of tertiary education tax in accordance with the Tertiary Education Trust Fund Act, 2011 and evidence of payment of the first instalment of the companies income tax due.
Following a 2019 amendment to the Companies Income Tax Act (“CITA”), every company is required to make payment of tax due on or before the due date of filing in one lump sum or in instalments, provided that, where the taxpayer pays in instalments, the taxpayer must first write, with evidence of payment of the first instalment, to obtain approval of the FIRS to pay in the number of instalments as may be approved by the FIRS; and the final instalment must be paid on or before the due date of filing.
In line with the amendment to the CITA, companies wishing to make instalment payments will now have to pay 2% tertiary education tax and the first instalment of their CIT before their application is approved by the FIRS. Any balance of taxes unpaid as at the due date will attract interest and penalties as provided under the CITA or any relevant law for failure to pay on the due date in accordance.
NIGERIA: TAT rules on VAT on imported services and foreign third-party charges
The Tax Appeal Tribunal (“TAT”), on 17 February 2021, ruled in Tourist Company of Nigeria Plc vs FIRS (Appeal No. TAT/LZ/VAT/033/2018) on the VAT treatment of imported services and foreign third-party recharges.
In the case at hand, Tourist Company of Nigeria Plc (“TCN”) engages in the gaming and hospitality business including the operation of a casino, in Nigeria. Sun International Management Limited (“SIML”), a related party resident in South Africa, was contracted to provide offshore management services to TCN. SIML did not include VAT on its invoices to TCN.
For certain services, SIML also sub-contracts with third-party vendors in South Africa and recharges relevant costs without mark-up to TCN and other related entities. SIML also did not include VAT on these recharges. Ikeja Hotels Limited, a Nigerian company, provides support services to TCN and also did not include VAT on its invoices.
TCN argued that VAT is not applicable on the management fees as, under the VAT Act in force at the time, only non-resident companies “carrying on business” in Nigeria are required to register for and charge VAT. SIML did not have any form of presence in Nigeria and therefore no VAT was to be charged. (The 2019 Finance Act introduced reverse-VAT rules and subsequent court rulings upheld the self-charge requirement.)
TCN also argued that VAT is not applicable to the recharge of third-party costs paid by SIML, as there was no value added by SIML and no consideration for any service performed. In addition, as the costs were incurred offshore between two non-resident companies, they should not be subject to Nigerian VAT.
The TAT held that:
- management fees paid to SIML were subject to VAT, irrespective of whether SIML was registered for, or charged VAT on its invoices on the basis that management services were not specifically excluded from VAT in the Act, and as such, TCN should self-charge and remit the tax. The FIRS also relied on judicial precedents that a non-resident company is carrying on business with Nigeria if it has a contract with a Nigerian party;
- SIML was only an agent who contracted with third parties on TCN’s behalf. Therefore, payments by TCN were not reimbursements, but the settlement of TCN’s obligations. The TAT referred to court rulings which stated that, where a principal is disclosed, the principal is in fact liable for relevant obligations under the contracts; and
- for services provided by local vendors, the vendor is an agent to collect VAT from its customers, but that where such vendor fails to do so, this does not mean that the FIRS cannot recover the VAT from the relevant customers.
NIGERIA: TAT rules on deemed profits assessments
In terms of the deemed profits assessment (“DPA”) provisions of section 30(1)(b) of the CITA, the FIRS may assess foreign companies to tax on a fair and reasonable percentage of their turnover where it appears to FIRS that the company either has no assessable profits or assessable profits that are less than expected or the profits of such companies cannot be ascertained.
In practice, the FIRS previously deemed 20% of a company’s turnover to be taxable profits subject to corporate income tax at the standard rate of 30%, resulting in an effective tax rate of 6% of turnover. However, in 2015 this practice was reviewed and the FIRS directed that all foreign companies with Nigerian operations are to file tax returns based on their actual profits as provided for by section 55 of CITA.
In accordance with FIRS’ 2015 directive, BJ Pumping Service SA Panama (“BJP”), a foreign company with Nigerian operations filed its 2015 to 2017 income tax returns based on its actual results, which amounted to no assessable profits. The FIRS disregarded the submitted returns, issued a DPA and imposed a 6% tax on BJP’s turnover.
BJP objected and subsequently appealed to the TAT, arguing that, although the FIRS has a discretion under section 30 to impose tax based on the company’s turnover, such discretion should only be exercised in circumstances where tax evasion or avoidance has been established. It indicated that the FIRS did not carry out any detailed analysis of the returns prepared by BJP, in response to which the FIRS argued that it was not mandated by the CITA to carry out audits before issuing assessments.
The TAT ruled on 12 February 2021 in Appeal No. TAT/LZ/CIT/029/2018 that, before the FIRS can exercise its powers under section 30 of the CITA, the following conditions precedent must be fulfilled or must have occurred:
- for any year of assessment, the trade or business must produce either no assessable profit; or
- profit which in the opinion of the Board is less than expected to arise from the trade or business; or
- the true amount of the assessable profit of the company cannot be ascertained.
It agreed that the discretion granted to the FIRS is very wide and such discretion must be exercised judiciously and in good faith. According to the FIRS, having perused and carried out a desk audit review of the tax returns and financial documents of BJP, it could not be accused of failure in complying with the above conditions precedent.
The TAT itself conducted an extensive investigation into the tax returns and financial documents of BJP and found that:
- the cost of sales for 2015 was originally stated as USD2.1-million, but then restated as USD5.3-million in 2016, representing an 153% escalation in cost of sales despite a decrease in sales revenue;
- BJP had no bad debt expense in the 2013 financial year, but reported a figure of USD5.44-million in 2014, which was restated and increased to USD7.5-million in 2015. USD6.21-million was reported for the 2015 year of assessment;
- An amount of USD2.7-million was reported as inventory and asset impairment in 2016; and
- BJP had significant related party transactions during the period which did not appear to be supported by relevant written agreements.
The TAT viewed these highlighted gaps as “a thick cloud which would make a rational tax regulator / administration pitch its tent with a DPA regime” and upheld the FIRS’ decision to apply section 30 of the CITA. It unfortunately did not pronounce on the actual extent of the FIRS’ discretionary power under the section.
NIGERIA: Corporate Governance Guidelines for insurance and reinsurance companies issued
The National Insurance Commission (“NAICOM”), on 17 March 2021, issued the Corporate Governance Guidelines for Insurance and Reinsurance Companies in Nigeria 2021 to assist in the implementation of the Nigerian Code of Corporate Governance (“NCCG”) 2018. The Guidelines will take effect from 1 June 2021 in line with the National Insurance Commission Act, 2004 (the “NAICOM Act”).
In terms of the Guidelines:
- a person is prohibited from occupying the position of chairman and managing director/chief executive officer in related insurance companies at the same time, and two members of the same family (nuclear and extended) are prohibited from occupying the position of chairman and managing director/ chief executive officer of any insurance company;
- directors and employees of insurance/reinsurance companies are to disclose to the board of directors or shareholders their interests in any reinsurance company, insurance company, takaful insurance company, micro insurance company, insurance broking firm, loss adjusting firm, actuarial firm, accounting/taxation firm, audit firm or legal and secretarial firm; and
- any payments, including commission and/or fees, made to an entity in which any director or an employee has an interest must be fully documented, and such interest must be disclosed to the board/shareholders.
Non-compliance with the Guidelines and the NCCG is a violation of the extant provisions of the NAICOM Act and is subject to, following conviction, a fine of not less than NGN250 000 and not more than NGN500 000, or imprisonment for a term not exceeding three years, or to both such fine and imprisonment.
RWANDA: COVID-19 Pandemic: new economic recovery measures introduced
The prime minister, in his address to parliament, on 25 March 2021 has announced the introduction of special incentives to stimulate private sector investment in manufacturing and construction under the initiative dubbed the “Manufacture and Build to Recover Program” (“MBRP”).
Qualifying registered investors can submit their application for the incentives, aimed at assisting the economy to recover from the effects of the COVID-19 pandemic, to the Rwanda Development Board one-stop centre for consideration and/or the incentives committee.
Under the MBRP, registered investors involved in general construction projects with a value of at least USD10-million and factory construction projects with a value of at least USD1-million can benefit from exemptions from VAT and import duties on construction materials not available in the East African Community and an exemption from VAT on locally sourced materials.
Registered investors in the manufacturing sector can benefit from an exemption from VAT on locally sourced machinery and raw materials.
RWANDA: Application of new land tax rates suspended
The Ministry of Finance and Economic Planning released a communiqué on 17 March 2021 announcing that:
- the application of the new land tax rates that were enacted in 2019 under law n°75/2018 of 07/09/2018 was suspended and that the rates levied under repealed law n° 59/2011 of 31/12/2011 are to be reinstituted. The applicable land tax rates (land lease fees) were between RWF0 and RWF80 per square meter, whereas the rates under the new law vary between RWF0 and RWF300 per square metre;
- the deadline for payment of land tax is to be extended from 31 March 2021 to 30 April 2021; and
- those who have already paid tax based on the new rates are allowed to carry forward the excess amounts paid to the next land tax period.
RWANDA: Deadline for filing certified financial statements extended
The Rwanda Revenue Authority (“RRA”), in an announcement on 11 March 2021, has extended the deadline for filing certified financial statements from 31 March 2021 to 30 April 2021 to address challenges faced by taxpayers and audit firms to certify financial statements owing to recent COVID-19 lockdown measures in the Kigali.
The extension only relates to the filing of certified financial statements and taxpayers must ensure that their income tax returns are filed and tax payments are made by 31 March 2021.
RWANDA: Guidelines on deductibility of expenses issued
Following the announcement by the RRA on 24 December 2020 that expenses not supported by electronic billing machine (“EBM”) invoices will not be accepted as deductible expenses, the RRA has issued the following guidelines on 3 March 2021:
- EBM invoices will not be required in respect of:
- imported services or payments made to suppliers of construction materials or services who are not registered for income tax purposes. The declaration of withholding tax on such payments shall be accepted as a valid supporting document of the expense incurred; and
- trading licenses, various government fees and purchase and sales on which tax is withheld at 15%, bank charges and interest payments.
RWANDA: Partnership Law enacted
Rwanda has gazetted a Partnership Law, Law no 008/2021 of 16 February 2021, on 17 February 2021.
The law provides for various categories of partnerships (i.e. general partnerships, limited partnerships and limited liability partnerships) and allows the conversion of companies into limited liability partnerships.
According to the newly set up Kigali International Financial Centre, the law is expected to benefit international investors in private equity funds, fund management and professional firms such as law and audit firms.
It is expected that the income tax law is to be amended to subject partnerships to a pass-through tax regime, under which income derived by a partnership is taxed in the hands of the partners.
SEYCHELLES: Corporate Social Responsibility Tax repealed
The Minister of Finance, Economic Planning and Trade in his Budget Speech of 16 February 2021 announced the repealing of the corporate social responsibility (“CSR”) tax with effect from 1 April 2021 in order to provide relief to businesses. Currently, CSR tax is applicable to taxpayers with an annual turnover of at least SCR1-million at a rate of 0.5% on the monthly turnover.
The government also proposed to reduce business tax rates to apply uniformly to all sectors and businesses as follows:
- 15% on profits of up to SCR1-million; and
- 25% on profits above SCR1-million.
UGANDA: Various tax bills tabled in parliament
Uganda’s Minister of Finance tabled several bills for the 2021-22 Budget for the first reading in parliament on 1 April 2021, including bills containing amendments to the Income Tax Act, the VAT Act and the Tax Procedure Code Act.
Significant proposed amendments include:
- introducing a new definition of “beneficial owner”;
- introducing a new definition of “consideration”, which includes the total amount in money or of payment in kind, paid or payable for the supply of goods, services, or sale of land by any person, directly or indirectly, including any duties, levies, fees, and charges other than tax paid or payable on, or by reason of, the supply, reduced by any discounts or rebates allowed and accounted for at the time of the supply or sale;
- requiring taxpayers earning rental income from more than one rental building to account for income, expenses, and tax separately for each building;
- repealing the tax exemption for income derived from agro-processing;
- introducing a tax exemption for income derived from the manufacture of chemicals for agricultural use, industrial use, textiles, glassware, leather products, industrial machinery, electrical equipment, sanitary pads, and diapers;
- introducing a tax exemption for manufacturers making a capital investment of at least USD50-million, with the conditions that at least 70% of raw materials are locally sourced, subject to availability, and that at least 70% of employees are Ugandan citizens earnings at least 70% of the total wages;
- reducing the number of asset classes for depreciable assets from four classes to the following three;
- allowing for capital gains tax purposes for an inflation adjustment of the cost base of assets sold after 12 months from the date of purchase according to a prescribed formula based on the consumer price index;
- introducing a six-month time limit from the invoice date for claiming an input tax credit for VAT purposes;
- introducing a quarterly VAT return filing requirement with returns due 15 days after the quarter (three-month) period for taxable persons supplying certain services to non-taxable persons in Uganda, including services in connection to immovable property in Uganda, radio or television broadcasting services received at an address in Uganda, electronic services delivered to a person in Uganda, the transfer, assignment, or grant of a right to use a copyright, patent, trademark, or similar right in Uganda; and telecommunication services other than those by a supplier of telecommunication services or services to a person who is roaming while temporarily in Uganda;
- expanding VAT exemptions to include imported services if the service would be exempt if supplied in Uganda, supplies of liquified gas and the supply of services in the nature of feasibility study or design and construction to manufacturers qualifying for the tax exemption for investments of at least USD50-million;
- removing VAT exemptions in respect of certain supplies provided to hotel or tourism facility developers with investment capital of at least USD10-million and to conference and exhibition facility developers with investment capital of at least USD300 000;
- expanding VAT zero-rating to include supplies of leased aircraft, aircraft engines, spare parts for aircraft, aircraft maintenance equipment, and repair services are zero-rated; and
- repealing the over-the-top tax for social media, along with the introduction of a 12% excise levy on internet data fees.
Subject to approval, the changes will generally apply from 1 July 2021.
UGANDA: Public Notice on digital tax stamps on sugar and cement issued
The Uganda Revenue Authority (“URA”) on 13 March 2021 issued a Public Notice regarding digital tax stamps on sugar and cement.
The Public Notice provides that:
- in addition to beer, soda, spirits, wines, mineral water and tobacco products, effective 1 April 2021, all cement and sugar, whether locally manufactured or imported into Uganda, shall be affixed with digital tax stamps;
- the transitional period of 1 April 2021 to 30 June 2021 has been granted during which every manufacturer, importer, distributor, agent or trader of sugar or cement shall be required to deplete all the unstamped goods; and
- a taxpayer who fails to affix a tax stamp on goods is liable to pay a penal tax equivalent to double the tax due on goods or UGX50-million, whichever is higher.
UGANDA: Public Notice on 2022 withholding tax exemption applications issued
The URA on 4 March issued a Public Notice on withholding tax exemption applications for 2021/2022.
The Public Notice provides that the application process for withholding tax exemption for financial year 2021/2022 commences on 9 March 2021 and applications shall be received for a period of 30 working days, ending on 21 April 2021.
Once granted, the withholding tax exemption shall be valid for a period of 12 months beginning on 1 July 2021 and ending on 30 June 2022.
ZAMBIA: Country-by-Country reporting introduced
Zambia amended its Income Tax (Transfer Pricing) Regulations 2000 through the Income Tax (Transfer Pricing) (Amendment) Regulations 2020 to introduce Country-by-Country (“CbC”) reporting with effect from 1 January 2021.
The ultimate parent entity (“UPE”) of a multi-national enterprise group that is tax resident in Zambia with an annual consolidated group revenue exceeding EUR750-million (or its equivalent in Zambian kwacha) in the year immediately preceding the accounting year is required to file a CbC report with the Commissioner-General of the Zambia Revenue Authority (“ZRA”) by no later than 12 months after the last day of the reporting accounting year of the MNE group.
A Zambian entity which is neither the UPE nor surrogate parent entity (SPE) of the MNE group is still required to file a CbC report to the ZRA where:
- the UPE is not required to file in its jurisdiction;
- the jurisdiction of the UPE does not have automatic exchange of information with Zambia; or
- there is a systemic failure in the automatic exchange of information.
ZIMBABWE: rate of interest on unpaid tax amended
Income Tax (Rate of Interest) Notice, 2021, Statutory Instrument No. 79 of 2021 published in the Supplement to the Zimbabwean Government Gazette on 19 March 2021 repeals the Income Tax (Rate of Interest) Notice, 2021, Statutory Instrument No. 55 of 2021.
The Statutory Instrument provides for the rate of interest on unpaid or overpaid income tax in foreign currency to be 10% for any month or part thereof during which tax remains unpaid with effect from 1 January 2020.
ZIMBABWE: Public Notice on submission of income tax returns issued
The Zimbabwe Revenue Authority issued a Public Notice providing that all persons who received taxable income or gains, or to whom taxable income or gains accrued from a source within or deemed to be within Zimbabwe, are required to submit income tax returns or capital gains tax Returns for the tax year ended 31 December 2020 as follows:
- income from employment [non-final deduction system cases]: subject to the specified conditions, persons in receipt of income from employment are required to submit Income Tax Returns [ITF 1] by 30 April 2021;
- income from trade and investments: all taxpayers who were specified by the Commissioner General to be on self-assessment in terms of section 37A of the Income Tax Act [Chapter 23:06] are required to submit ITF 12C Returns, accompanied by the relevant financial statements, by 30 April 2021; and
- income from disposal of specified assets and marketable securities: individuals and persons who disposed of specified assets and marketable securities in 2020, and did not submit capital gains tax returns are required to submit returns on Form CGT1 by 30 April 2021.