Article by Celia Becker
ANGOLA: Special Contribution Regime for Foreign Technical Assistance and Management Services
A Special Contribution Regime for Foreign Technical Assistance and Management Services was introduced through Presidential Legislative Decree number 2/15 of 29 June and became effective on the same date.
In terms of the Regime, the following requirements apply to payments by both private and public companies for technical assistance and management services to foreign entities:
The Burkina Faso acting parliament passed a new Mining Code on 26 June 2015. The adoption of the new code, which replaces 12-year-old mining regulations, was among requirements set by the World Bank for the release of $100 million in budget support for the West African country. The funds were frozen in February pending passage of the new code and an anti-corruption law, which was adopted in March.
In terms of the new code, companies with industrial mining licenses are to pay 1{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of monthly turnover excluding taxes or 1{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of the value of extracted minerals into a fund designated for the development of local mining communities. The government undertook to pay 20{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of its mining revenues into the fund.
The code also provides for the removal of a 10{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} tax break on profits. Under the new regulations, companies with exploitation permits will pay the normal tax rate on profits of 27.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}.
The new mining code includes provisions for the creation of funds to rehabilitate artisanal mining sites, finance geological research and support education in earth sciences.
The VAT Act 2013 (Act 870), was amended as follows by Act 890, gazetted on 15 April 2015:
The amendments became effective on 15 April 2015.
In terms of the Budget 2015, implementation instructions issued by the Minister of Finance to all funding sources, including Government of Ghana (“GoG“) funds, Development Partner Funds and retained Internally Generated Funds (“IGFs“), all Ministries, Departments and Agencies (“MDAs“) are required to cease the granting of tax exemptions in their contracts, as the authority to grant tax exemptions is vested only in the Parliament.
The Kenya Revenue Authority (“KRA“) has indicated that it is in the process of developing an Alternative Dispute Resolution (“ADR“) mechanism which is set to lower costs, enhance expediency, confidentiality and the relationship with taxpayers involved in disputes.
It is intended for the ADR process to apply to disputes at all stages, including:
The ADR process may be initiated by either the taxpayer or the KRA and during the process, taxpayers will have access to their tax advisors or other representatives and may be entitled to appoint an external member to a Facilitation Panel. Such Panel will consist of experienced technical experts drawn from independent KRA staff or externally appointed experts.
The KRA is also in the process of reforming the tax audit process to create more transparency and fairness. It is intended for audits to specify, in advance:
Kenya presented its 2015/16 Budget on 11 June 2015. Significant proposed tax amendments include an increase in the carry forward period for tax losses from four to ten years and an exemption from the previous 20{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} withholding tax for foreign actors and film crews. Non-resident mining sub-contractors will now be subject to a final 5.625{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} withholding tax on gross service fees, whereas training fees paid by petroleum or mining companies to non-resident entities will be subject to a rate of 12.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}.
In order to address the administrative complexities around calculating capital gains on the sale of shares, it is proposed to levy capital gains tax through a withholding mechanism at a rate of 0.3{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} on the transaction proceeds of the sale of listed shares. Landlords earning less than KES10 million from the rental of residential property are to pay a final withholding tax of 12{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} on the gross rental value.
The Mauritius Revenue Authority (“MRA“) on 19 June 2015, released guidelines on the Expeditious Dispute Resolution of Tax Scheme (“EDRTS“) 2015. The Scheme allows taxpayers that were unable to appeal against any income tax or VAT assessment imposed by the MRA prior to 1 January 2015 to apply for an assessment review before 30 September 2015. The EDRTS also covers assessments imposed under the Gambling Regulatory Act.
In order to be eligible for the scheme, the taxpayer must waive its right to initiate any proceedings before any Mauritius Court in respect of any decision of the Director-General of the MRA based on a three-member panel’s decision.
The taxpayer will be informed as to whether its request for review has been accepted or not within 1 month of receipt of its application. The panel will reach a decision based on information submitted within 6 months from the date on which the application for review was referred to it. The panel’s decision will be final and conclusive.
The taxpayer will have to sign an agreement regarding the terms and conditions for the settlement of its tax liability. If no agreement is reached, the amount set by the panel will be due immediately.
Although the Federal Ministry of Finance already on 12 January 2015 issued a Circular approving the implementation of the Economic Cooperation of West African States (“ECOWAS“1) Common External Tariff (“CET“) 2015 – 2019 with effect from January 2015, the CET only became effective in Nigeria from April 2015 and was officially launched in Lagos on 23 June 2015. The CET seeks to ensure uniform tariff as well as a uniform valuation system in the region.
The Tax Appeal Tribunal (“TAT“) in Abuja, in the case of Gazprom Oil & Gas Nigeria Ltd v. Federal Inland Revenue Service (TAT/ABJ/APP/030/2014), on 10 June 2015 held that VAT is not applicable on services provided by a non-resident company (“NRC“) to a Nigerian company where the services are provided outside Nigeria, and to the extent that the NRC providing the services is not carrying on business in Nigeria, there is no legal obligation on the NRC to register for, or charge, VAT in Nigeria. Additionally, a Nigerian company that has not received a VAT invoice from such NRC is not required to charge and/or remit VAT.
Rwanda presented its 2015/16 Budget on 11 June 2015. The country is currently undergoing comprehensive tax reforms and, consequently, no significant amendments have been announced in this year’s Budget Speech. However, a 1.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} infrastructure development levy has been introduced on all goods imported from outside the East African Community in order to finance infrastructure projects.
Tanzania presented its 2015/16 Budget on 11 June 2015. Tax proposals aimed at improving revenue collection include elimination of discretionary tax exemptions (with the exception of strategic investors) and improving the business climate to attract informal businesses to formalise their operations in order for tax to be collected from them.
The marginal tax rate for individuals has been reduced by from 12{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 11{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} on the lowest tax band (monthly income from TZS170,000 to TZS360,000). Gaming prize winners are to be taxed at 18{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} on the prize received.
Income earned on bonds issued by the East African Development Bank in the Tanzania domestic market is to be exempt from tax, whereas Government projects financed through commercial loans will no longer be exempt from income tax with effect from 1 July 2015.
Special strategic investment status is to be granted to investors who invest at least USD300 million (in cash or assets), employ at least 1,500 Tanzanians and generate foreign exchange or reduce importation.
A Government Notice signed on 3 June 2015 announced the commencement date of the new Tanzania VAT Act (VAT Act 2014), which received Presidential assent on 11 December 2014 as 1 July 2015. The new VAT Act repeals the existing VAT Act 1997. Significant amendments include:
With effect from 1 July 2015, employers in mainland Tanzania are subject to the Workers Compensation Fund tariff at a monthly rate of 1{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of cash payments (wages, salaries, leave pay, sick pay, payment in lieu of leave, fees, commission, bonuses and any subsistence, traveling, entertainment or other allowances) to employees in the private sector and 0.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} in the public sector.
Payments are to be submitted at the end of the month following the month in which earnings was paid together with form WCP-1 and an annual return is due by no later than 31 March.
Uganda presented its 2015/16 Budget on 11 June 2015. The VAT threshold (UGX50 million since 1997) is to be revised to UGX150 million. The threshold for using a cash basis of accounting for VAT purposes is to be increased from UGX200 million to UGX500 million.
The thin capitalisation rules have been amended to allow firms to deduct interest on loans if the loans do not exceed their share capital by 150{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}. Thin capitalisation rules have also been extended to branches of non-resident companies.
The withholding tax on reinsurance premiums, which was introduced at 15{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} in July 2014, has been reduced to 5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}.
In an attempt to bring informal businesses into the tax net, taxpayers will not be allowed to claim a tax deduction in respect of amounts exceeding UGX5 million incurred on goods or services acquired from suppliers without a valid tax identification number (TIN).
Services rendered by a non-resident for a period exceeding 90 days in a 12 month period are to be specifically included in the definition of “branch” as per the Income Tax Act.
The Mines and Minerals Development Bill, 2015 (which is to repeal and replace the Mines and Minerals Development Act, 2008) was presented for first reading to the parliament on 25 June 2015. In terms of the Bill:
Sources include IBFD, IHS and other
1 The member states of the Economic Community of West African States (ECOWAS) are Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
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