Africa Tax In Brief – Sales taxes: VAT, GST

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WEST AFRICA: New VAT directive for member states adopted by the Economic Community of West African States (ECOWAS)

The Economic Community of West African States (“Economic Community of West African States”)ECOWAS“) announced on July 7, 2023 that it had adopted a new VAT directive (C/DIR.3/07/2023) for the Member States, which entered into force upon its publication. The directive contains provisions concerning the base and the rate of taxation, taxable, events and variability.

Member states have three years from August 1, 2023 to implement the new directive.

WEST AFRICA: Additional Act relating to mutual administrative assistance in tax matters between Member States published by ECOWAS

The OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes announced on July 26, 2023, cooperation with the commissions of ECOWAS and the West African Economic and Monetary Union (UEMOA) in within the framework of the Budget Transition Support Program in West Africa (FTSP) of the European Union. The collaboration aims to develop the following three instruments to combat Base Erosion and Profit Shifting (BEPS) and increase tax transparency:

  • A directive on the harmonization of transfer pricing rules to enable ECOWAS States to better control multinational companies;

  • A beneficial ownership directive to help identify the beneficial owners of legal persons and arrangements; And

  • A complementary act providing mutual administrative assistance in tax matters strengthening cooperation between ECOWAS and strengthening the exchange of information.

The Additional Act relating to Mutual Administrative Assistance in Tax Matters (A/SA.3/07/23), intended to strengthen cooperation between ECOWAS and exchange information, was adopted by the Conference of Heads of State State and Government on July 9, 2023 and comes into force upon publication. It will be annexed to the Revised ECOWAS Treaty, of which it is an integral part. The law deals, among other things, with the form of information exchange and assistance in tax collection.

BURKINA FASO: Powers to sign accreditation certificates for non-resident taxpayers delegated by the Director General of Taxes

In order to improve service to taxpayers, the Director General of Taxes, by note No. 2023-0671/MEFP/SG/DGI/DLC adopted on August 24, 2023, authorized the delegation of his power to sign certificates of accreditation of non-resident taxpayers to directors of large and medium-sized companies and regional tax directors.

ETHIOPIA: the tax convention with Luxembourg enters into force

On August 11, 2023, the Ethiopia – Luxembourg Tax Convention relating to tax on income and capital (2021) has entered into force and generally applies from January 1, 2024 for Luxembourg and from July 8, 2024 for Ethiopia for withholding taxes and other taxes.

GABON: the tax convention with the United Arab Emirates comes into force

The UAE Ministry of Finance announced in August 2023 that the Tax Convention between Gabon and the United Arab Emirates (2019) entered into force on February 16, 2023. The convention generally applies retroactively from January 1, 2019 for withholding taxes and other taxes.

KENYA: Announcement of consultation on draft Income Tax (Transfer Pricing) Rules 2023

The Kenya Revenue Authority (KRA) has announcement a consultation on the Draft Income Tax (Transfer Pricing) Rules 2023which will replace the Income Tax (Transfer Pricing) Rules 2006.

The deadline to comment on the rules is September 22, 2023.

MAURITIUS: promulgation of reforms to the personal income tax system

The Finance (Miscellaneous Provisions) Act 2023, passed on July 20, 2023, introduced the proposed changes to the personal income tax regime by the Minister of Finance, Economic Planning and Development under the Mauritian National Law 2023/2024 with effect from July 1, 2023.

The reforms include:

  • Remove the solidarity levy, applicable to individuals;

  • Increase the income exemption threshold below which no tax is paid; And

  • Introduce a new progressive system with tax charged progressively.

MAURITIUS: extension of the system for settling tax arrears

In a press release dated July 25, 2023, the Mauritius Revenue Authority (“ARM“) informed the public that it had renewed the Tax Arrears Settlement Program (TASS) which provides for a waiver of all penalties and interest on tax arrears due from June 2, 2023.

Taxpayers can apply for the exemption from the MRA no later than January 3, 2024 and are subject to payment of all tax arrears by the payment deadline of April 1, 2024.

NIGERIA: shipping companies invited to regularize their tax situation

On August 21, 2023, the Federal Inland Revenue Service of Nigeria (“Federal Inland Revenue Service of Nigeria”)FIRST“) issued a Public notice via X (formerly Twitter), calling on international shipping companies operating in Nigerian territorial waters to regularize their tax situation in accordance with circular no. Taxation of companies carrying out maritime, air and cable transport activities. A grace period is provided until December 31, 2023, after which enforcement action will be taken.

NIGERIA: Tax Appeal Tribunal overturns Nigeria Income Tax Country-by-Country Reporting Regulations 2018

According to a decision of the Tax Appeal Tribunal (“TAT“) Lagos Zone on August 17, 2023 in the case of Check Point Software Technologies BV Nig Ltd v FIRS ((TAT/LZ/CIT/121/2022)), country-by-country income tax reporting (“CbC“) The 2018 Regulations are null and void as they were issued by the FIRS during the period when the FIRS Council was not operational.

The TAT held that the 2018 Regulations, having been promulgated during a period when the FIRS Board was dissolved and not reconstituted, are considered illegal, unconstitutional and void. The TAT further held that the Constitution of the Federal Republic of Nigeria requires the National Assembly to ratify the CbC Multilateral Competent Authority Agreement before it can become enforceable in Nigeria. Thus, the provisions of international treaties are not enforceable in Nigerian courts until the treaties are duly transposed into domestic law.

Furthermore, the 2018 Regulations (which constitute subsidiary legislation) derive their validity and authority from substantive law and do not have the capacity to extend that authority. Therefore, the provisions of the 2018 Regulations, which seek to impose penalties for non-compliance with CbC requirements in excess of the amounts stipulated by the FIRS Establishment Act, 2007 (“FIRSÉA“), are null and void.

The TAT upheld the taxpayer’s appeal and declared that the administrative penalty notices issued by the FIRS, as stipulated in the 2018 Regulations, are unconstitutional and void. The FIRS has been directed to re-issue the sanctions in accordance with the relevant provisions of the FIRSEA and applicable laws.

NIGERIA: Publication of a notice on the dates of entry into force of the 2023 finance law

The FIRS issued a notice on August 25, 2023 updating the effective dates for compliance with the provisions of the tax laws, including the VAT Act and the Higher Education Trust Fund (“Higher Education Trust Fund”).TFW“) Law (establishment), from May 1, 2023 to September 1, 2023. The notices specify that:

  • VAT withheld or collected during the month of August 2023 must be remitted no later than September 14, 2023, while VAT for subsequent months must be remitted no later than the 14th day of the month following that in which the VAT is retained or collected;

  • Businesses involved in the rental, trading or provision of services relating to radio or television masts, transmission lines, cell towers, vehicles, mobile homes, caravans and trailers must invoice VAT at the rate in force from September 1, 2023;

  • Businesses involved in the rental, trading or provision of services relating to radio or television masts, transmission lines, cell towers, vehicles, mobile homes, caravans and trailers must invoice VAT at the rate in force from September 1, 2023;

  • The new TET rate of 3% will come into force for TETs becoming payable for accounting years ending on or after September 1, 2023 and;

  • Investment allowances, convertible currencies and tax exemptions are no longer available for tax returns due for accounting years ending on or after September 1, 2023.

RWANDA: tax convention with the United Arab Emirates comes into force

THE Tax Convention between Rwanda and the United Arab Emirates (2017) came into force on December 4, 2019 and generally applies from January 1, 2019 for withholding taxes and other taxes.

UGANDA: tax amendments approved by parliament

The Income Tax (Amendment) Act, 2023 and the Revenue Procedures Code (Amendment) Act, 2023, the VAT (Amendment) (No. 2) Act, 2023 and the Rights Act, 2023 Excise Tax (Amendment) (No. 2) Act, 2023 was approved by Parliament and approved by the President on August 17, 2023. The amending laws came into force on July 1, 2023. The significant amendments include:

  • The implementation of a 5% digital services tax (DST) on non-residents providing digital services over the Internet or through an electronic network or online platform to customers in Uganda;

  • Provided that companies declaring losses for more than seven years can only benefit from a deduction of 50% of the assessed losses carried forward to subsequent income years; And

  • Various provisions allowing equal tax treatment between Islamic finance companies and takaful companies providing conventional financial services or insurance activities.

ZAMBIA: entry into force of the tax convention with the United Arab Emirates

THE United Arab Emirates – Income Tax Convention with Zambia (2020) entered into force on January 13, 2023 and generally applies from January 1, 2023 for withholding taxes and other taxes.

ZIMBABWE: Publication of Tax Agent Licensing Regulations, 2023

The Government of Zimbabwe has published the Revenue Agents (Licensing) Regulations, 2023 through Statutory Instrument No. 125 of 2023, which was gazetted on July 7, 2023. The regulations, which seek to introduce new requirements for licensing individuals wishing to practice as a tax agent, came into force on July 20, 2023.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your specific situation.

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