Africa tax in brief

22 OCT 2019 ENSafrica – Celia Becker

ANGOLA: Treaty with Portugal enters into force

On 22 August 2019, the Angola-Portugal Income TaxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable...Tax TreatyA Double Taxation Agreement (DTA), also known as a Double Taxation Treaty (or a Tax Treaty), is an international tax treaty between two or more countries that aims to prevent individuals or businesses from being taxed twice on the same income. With globalisation and the increase in cross-border economic activities, DTAs have become essential tools for promoting trade, investment, and... (2018) entered into force and generally applies from 1 January 2020.

ANGOLA: New VAT Law enters into force

On 1 October 2019 the VAT Law came into effect, replacing the Consumption Tax LawTax laws form the backbone of any nation’s revenue system, setting the rules that govern how individuals and corporations contribute financially to support government functions. These laws define the types of taxes, the applicable rates, and the regulations regarding payment and compliance. They also outline the rights and obligations of taxpayers, ensuring a balanced and fair approach to funding public....

The effective VAT rate under the new Law is 14{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} on a cross section of goods and services with a few exemptions as well as zero-rated goods and services.

ANGOLA : Amendments to Personal Income TaxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable... Code

Law 28/2019 amended the Personal Income TaxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable... Code and determines that, with effect from 25 September 2019, holiday and Christmas bonuses are considered taxable incomeThe tax base is a fundamental concept in taxation, representing the total amount of economic activity or assets upon which a tax is levied. It is the foundation upon which governments calculate the amount of tax owed, based on factors like income, property value, sales, or corporate profits. Understanding the tax base is essential for tax professionals, businesses, and policymakers,....

MALAWI: 2020 Budget presented

On 9 September 2019, the Minister of Finance presented the Budget for 2019-2020 to parliament. Significant proposed amendments include:

• increasing the withholding tax rate on technical (professional) fees from 10{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 20{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} and the withholding tax on rental income from 15{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 20{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e};
• introducing a final 1{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} withholding tax on non-bank mobile money transactions based on the transaction amount;
• introducing a 50{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} deductible allowance, based on basic salary, for all employers of persons with disabilities;
• increasing the monthly pay as you earn (PAYE) tax free bracket from K35,000 to K45,000;
• introducing a carbon tax on local and foreign registered motor vehicles, to be calculated based on the engine capacity of the motor vehicle and the applicable rates, which will range from K4,000 to K11,500, to be published in the official gazette;
• increasing the export allowance on non-traditional processed exports from 25{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 30{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}; and
• removing VAT from solar panels, solar batteries, solar accumulators, solar inverters, solar chargers, solar lamps, solar bulbs and energy efficient bulbs, liquefied petroleum gas and gas cylinders, wood stoves and bars of laundry soap.

NIGERIA: 2020 Budget proposal presented

On 8 October 2019, the President presented the 2020 Budget proposal and Finance Bill to the National Assembly. Significant proposed amendments include:

• increasing the VAT rate from 5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 7.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e};
• expanding the VAT exemption list to include inter alia brown and white bread, cereals, fish, flour and starch meals, fruits, nuts, pulses and vegetables, roots, milk, meat and poultry products, salt and herbs and natural and table water; and
• set the annual VAT registration threshold at NGN25-million in turnover.

NIGERIA: Enterprise TaxCorporate Tax refers to the tax imposed by governments on the income or capital of corporations. Corporations, considered separate legal entities, are taxed on their profits, meaning the income generated from their operational activities, investments, and other financial undertakings. This tax is generally a key revenue source for governments, helping to fund public services, infrastructure, and other essential functions. The...Tax AdministrationTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... System (eTax) to be launched

On 25 September 2019, the Lagos State Internal Revenue ServiceTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... issued a public notice launching its Enterprise TaxCorporate Tax refers to the tax imposed by governments on the income or capital of corporations. Corporations, considered separate legal entities, are taxed on their profits, meaning the income generated from their operational activities, investments, and other financial undertakings. This tax is generally a key revenue source for governments, helping to fund public services, infrastructure, and other essential functions. The...Tax AdministrationTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... System (eTax), aimed at enabling payments of all forms of taxes due to the Lagos State via the web and mobile channels.

The eTax portal can be accessed from 1 October 2019.

NIGERIA: Federal Inland RevenueTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is...Revenue ServiceTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... to introduce electronic filing of transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... returns in 2020

The Federal Inland RevenueTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is...Revenue ServiceTax authorities are fundamental institutions within government frameworks, overseeing tax assessment, collection, and administration. Their operations ensure that tax laws are enforced and public funds are collected efficiently. This article delves into tax authorities' purpose, responsibilities, and structure, offering insights into their essential role in supporting government functions and economic stability. What is a Tax Authority? A tax authority is... (FIRS) held a demonstration of the electronic transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... (e-TP) filing portal (to become operational in 2020) on 27 September 2019. The e-TP filing portal is to enable taxpayers to complete and submit transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... declaration and disclosure forms and country-by-country notification forms and reports.

NIGERIA: Common Reporting Standard Guidelines published

The FIRS issued the Income TaxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable... (Common Reporting Standard) (CRS) Implementation and Compliance Guidelines (“the Guidelines”) to supplement the income taxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable... CRS regulations, 2019, effective from 1 July 2019. The guidelines are based on the OECDThe Organisation for Economic Co-operation and Development (OECD) is an international organisation comprising 38 member countries, established to foster economic growth, trade, and development on a global scale. Founded in 1961, the OECD provides a forum for governments to collaborate, share policy experiences, and develop solutions to common economic challenges. The OECD's core mission is to promote policies that improve... handbook Standard for Automatic Exchange of Financial Account Information in Tax Matters and consist of the following three parts:

• Part I: Preliminary information and the legal basis for issuance of the Guidelines;
• Part II: General information on the CRS with respect to reporting and due diligence for Financial Account Information, as contained in Part II.B of the Standard for Automatic Exchange of Financial Information (AEOI) in Tax Matters; and
• Part III: Specific commentaries on the CRS as contained in Part III.B of the OECD’s Standard for AEOI in Tax Matters.

NIGERIA: Police TrustA comprehensive look at trusts in international tax law, including definitions, practical examples, key cases, and synonyms. Fund Levy to be paid

On 24 June 2019, the President assented to the Nigeria Police TrustA comprehensive look at trusts in international tax law, including definitions, practical examples, key cases, and synonyms. Fund (NPTF) (Establishment) Act, to be used to train, retrain and improve the general welfare of the personnel of the Nigeria Police Force, and to provide state of the art security equipment and machinery.

Companies operating a business in Nigeria are obliged to contribute a levy of 0.005{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of their net profit to the NPTF.

Nigerian companies are also subject to other levies such as the tertiary education tax (2{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of assessable profit), the national information technology development tax (1{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of profit before tax) and other industry specific levies such as the telecommunication levy on all network providers in the telecommunication industry (2.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of net revenue), the Niger Delta development commission levy applicable to oil producing and gas processing companies operating onshore and offshore in the Niger Delta, and the cabotage levy applicable to vessels involved in coastal trade in Nigeria.

NIGERIA: High Court rules on appointment of banks as tax collection agents

The Federal High Court of Nigeria recently ruled in the case of Ama Etuwawe Esq. vs the FIRS and Guaranty TrustA comprehensive look at trusts in international tax law, including definitions, practical examples, key cases, and synonyms. Bank Plc that it is unlawful for the FIRS to appoint the Bank as its collecting agent to recover alleged companies income taxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable...tax liabilityTax liability represents the total amount of tax owed by an individual or business to a tax authority, whether local, national, or international. This obligation arises through various forms of income, profits, or transactions subject to taxation laws and regulations. Understanding tax liability is essential for compliance and efficient financial management for corporations and individuals. It influences how businesses structure... from Ama Etuwawe Esq.

NIGERIA: High Court upholds imposition of consumption tax in Lagos State

The Federal High Court on 3 October 2019 ruled in the case of The Registered Trustees of Hotel Owners and Managers Association of Lagos (RTHMAL) v the Attorney-General of Lagos State and FIRS that Lagos State has statutory authority to impose consumption tax on hotels and restaurants.

UGANDA: Services provided by server from outside Uganda to be taxable

On 21 August 2019, the Tax Appeals Tribunal (TAT) gave its decision in the case of Mix Telematics East Africa Limited v. Uganda Revenue Authority and held that:

• the VAT payable in the case of a supply of imported services, other than exempt services, is to be paid by the person receiving the supply; and
• subsequent to the introduction of the VAT Amendment Act 2012 input tax on imported services is disallowed.

ZAMBIA: 2020 Budget presented to National Assembly

The Budget for 2020 was presented to the National Assembly by the Minister of Finance on 27 September 2019. Proposed significant amendments include:

• exempting from withholding tax interest payable to banks and financial institutions;
• reducing withholding tax on interest payments on government securities to non-residents from 20{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 15{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e};
• excluding from the exemption from withholding tax transfers between group companies that have been members of a group for a period of three years or less;
• amending the transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... provisions to inter alia empower the Commissioner General to issue specific guidelines on the pricing of minerals, empower the Commissioner General to request a resident or non-resident person to provide, upon request, third-party sales agreements and third-party invoices relating to the sale of base and precious metals between related or associated parties and extend the use of reference pricing to adjust the pricing of purchases between related or associated persons;
• zero-rating for VAT purposes capital equipment and machinery for the mining sector, copper cathodes and liquefied petroleum gas (LPG);
• limiting input tax credit claims from mining and mineral processing companies on diesel and electricity from 90{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 70{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} and from 100{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} to 80{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} respectively;
• limiting input VAT claims on consumables, such as stationery, lubricants and spare parts, for all entities, except where these products are stock in trade;
• abolishing customs duties on liquefied petroleum gas;
• levying a 5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} surtax on the importation of containers; and
• increasing carbon tax on motor vehicles entering Zambia to 20{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}.

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