Ghana: 2014 Budget

Finance and Economic Planning Minister Seth Terkper presented the government's 2014 Budget and Financial Statement to Parliament on 19 November 2013.  Terkper pledged to narrow the budget gap by curbing wages and boosting revenue to reassure investors.

Fiscal policy will focus on, inter alia, improving revenue mobilization through tax effectiveness and efficiency - an effort being led by the Ghana Revenue Authority (GRA) under its on-going Revenue Modernization Program.  Proposals presented for parliamentary approval include:

  • expanding the scope of the capital gains tax to cover petroleum operations;
  • subjecting income derived from the supply of goods and services by free zone enterprises on the domestic market to the standard income tax rate (i.e. to restrict the concessional rate of 8% to exports only);
  • maintaining the current personal income tax threshold and brackets in 2014;
  • increasing the withholding tax rate on rental income from commercial buildings (i.e. other than residential) from 8% to 15%;
  • increase the withholding tax rate on management and technical service fees from 15% to 20%;
  • introducing a special Electronic Point of Sale Device Scheme (EPOS) to reduce VAT leakages;
  • removing the import VAT on raw materials imported for local printing of textbooks and exercise books;
  • introducing tax stamps on selected excisable products;
  • changing the basis of petroleum excise duty from specific to ad valorem;
  • increasing the road fund levy;
  • the National Fiscal Stabilization Levy (NFSL) which is scheduled to end on 31 December 2014, will instead be terminated at the end of June 2014;
  • the Special Import Levy (SIL) originally scheduled to end in June 2015, will now end at the close of 2014;
  • exempting agriculture and fishing inputs, medical supplies, educational materials and energy bulbs from the SIL with immediate effect;
  • harmonizing and simplifying tax laws under a single Tax Administration Act;
  • reviewing the various exemptions granted on duties and other taxes;
  • reintroducing the Windfall Tax Bill on mining activities in Parliament for consideration after due consultation with relevant stakeholders; and
  • introducing a Construction Industry Scheme (CIS) to regulate payments made by contractors to subcontractors in the building and construction industry.

GHANA:  Taxpayer Identification Numbers prerequisite for individuals

An official at the Small Tax Office of the Domestic Tax Revenue Division of the Ghana Revenue Authority announced at a seminar on 4 December that, with effect from the end of 2014, the possession of an 11-digit unique Taxpayer Identification Number would be a prerequisite for individuals earning taxable income to, inter alia, obtain travel visas.

KENYA:  Finance Bill 2013 enacted

Kenya’s Finance Bill 2013 was enacted into the Finance Act 2013 on 24 October 2013, following the assent by the President.  Key changes introduced by the Finance Act include inter alia:

  • the 10% withholding tax on the sale of property of shares in respect of oil, mining or mineral prospective companies introduced as a final tax with effect from 9 January 2013 is amended to a non-final tax for resident oil companies formed pursuant to assignment of rights;
  • directors and senior officers of corporate bodes may be held personally liable to tax offences committed by a corporate entity.  The court has the discretion to order such persons to make payment to the Commissioner of the whole or such part as remains unpaid of the tax assessed by the Commissioner;
  • with effect from 1 February 2013, excise duty on locally manufactured excisable goods other than spirits is payable at the time when the goods are delivered from the stock room of the licensee.  Previously such duty was payable by the 20th of the following month;
  • with effect from 1 July 2013, a Railway Development Levy at 1.5% of the customs value is applicable on all goods imported into the country for home use.  The duty is payable by the importer at the time of entering goods into the country and is aimed at funding the construction of a standard gauge railway network for the transportation of goods;  and
  • it has been clarified that, with effect from 18 June 2013, the 10% excise duty applicable to fees charged by financial institutions is applicable on any fee charged by a financial services institution, irrespective of the nature of the services rendered.  The duty is due by the 20th of the following month.  The amendment also clarifies that the duty is not applicable to interest, although “interest” has not been defined in the Customs and Excise Act.

KENYA:  Digital tax payments to become mandatory

In a statement signed by senior deputy commissioner for marketing and communication at the Kenya Revenue Authorities (KRA), it was announced that, with effect from 1 January 2014, it will be mandatory for large and medium taxpayers to file their tax returns electronically and pay taxes due through the KRA’s 20 appointed bank agents.

Affected taxpayers are required to update their information on the KRA’s iTax system to enable them to file their returns electronically and generate electronic tax payment slips to be presented to agent banks.

Large taxpayers include banks, insurers, oil explorers, tobacco and alcoholic drinks makers, ministries and state departments as well as all companies and parastatals with annual turnover of Sh750 million.  Medium taxpayers are those with annual turnover of between Sh300 million and Sh750 million.

MOZAMBIQUE:  Employees exempt from submitting income tax returns

With effect from January 2014, Mozambique tax residents earning employment income only will no longer be required to submit annual income tax returns.  The tax withheld from such income through the employees’ tax system will be considered to be the individuals’ final tax liability and no adjustments will be allowed through the submission of an annual tax return.

NIGERIA:  FIRS establishes a Transfer Pricing Division

Nigeria’s Federal Inland Revenue Service (FIRS) has established a dedicated Transfer Pricing Division in Lagos, which will be responsible for the implementation and administration of the Income Tax Transfer Pricing Regulations (“the Regulations”) published in August 2012 and applicable to accounting years commencing after 2 August 2012.

The FIRS has also published the transfer pricing Disclosure Form and an updated version of the transfer pricing Declaration Form referred to in the Regulations.