BOTSWANA: New tax management system introduced
With effect from 1 April 2020, the Botswana Unified Revenue Service is introducing a new tax management system called Lekgetho Live. Under the new system, companies’ Companies and Intellectual Property Authority (“CIPA”) numbers will be used as their tax identification number (“TIN”), whereas citizens’ TINs will consist of the letter I and their Omang number. Non-citizens, NGOs, parastatals, trusts and other taxpayers will be issued with system-generated TINs.
Burkina Faso: Finance Law 2020 adopted
On 5 December 2019, Law 051-20019 relating to the Finance Law for Execution of Budget 2020, was adopted. Significant amendments, which are applicable from 1 January 2020, include:
- the deduction for valid fees paid to related companies for operating licences, patents, trade marks, processes or manufacturing formulas and other similar rights are limited to 3.5% of turnover excluding value-added tax (“VAT”) from goods or services for which the fees have been paid; and
- additional requirements have to be complied with for payments to low-tax jurisdictions to be tax deductible. A country is considered a low-tax jurisdiction if its income tax rate is less than 50% of the income tax rate applicable to such income in Burkina Faso.
- an increase in the exemption threshold for the following allowances:
- service station managers and exclusive prepaid telephone card vendors are now only required to pay the minimum rate of lump-sum tax depending on the applicable taxation regime (ie, XOF300 000 under the simplified tax regime and XOF1-million under the standard tax regime) irrespective of their turnover.
- an exemption is available for national transport operations (with an option for taxation).
- the tax on telecommunications enterprises has been increased from 5% to 7%.
- electronic filing is mandatory for taxpayers registered with the large taxpayers' office and the medium-sized taxpayers' office; and
- payment by electronic means to the tax authorities is mandatory for taxpayers registered with the large taxpayers' office.
CHAD: Finance Law 2020 adopted
On 31 December 2019, Finance Law 2020 was adopted. Significant amendments, effective from 1 January 2020, include:
- the introduction of a definition of “permanent establishment” based on the OECD Model Tax Convention on Income and on Capital;
- disallowing the deduction of expenses of at least FCFA500 000 paid in cash;
- removing the deduction limitation applicable to the cost of restaurants, receptions and hotels for airline companies;
- granting a tax deduction in respect of the installation of materials or tools intended for the production of renewable energy;
- granting a 50% tax allowance on registration duties and the corporate income tax base for new companies operating in the field of agriculture, breeding, renewable energy and information technologies during their first five fiscal years. They are also exempted from payroll tax, minimum lump sum tax, business licence duty and apprenticeship tax;
- a 25% withholding tax on medical costs paid to health institutions domiciled abroad and a 20% withholding tax on medical costs paid to a resident;
- a 25% withholding tax on interconnection charges for mobile phone companies paid to non-resident companies subject to operating charges in Chad;
- a 7.5% non-final withholding tax on remuneration for services and fees paid to beneficiary companies located in the Economic Community of Central African States (“CEMAC”) zone;
- a reduction in the withholding tax rate on interest paid to CEMAC residents from 25% to 5%;
- a reduction in the withholding tax rate on dividends paid to CEMAC resident companies from 20% to 5% (for companies owning at least 25% of the payor) and 10% for other CEMAC residents; and
- a 15% withholding tax on the importation of contraband goods.
- the definition of a “resident” is amended to include a person effectively present in Chad for more than 183 days over a 12-month period (instead of a calendar year as previously provided).
- a new reduced VAT rate of 9% applies to cement, sugar, oil and soap as well as products of the local food industry, but excluding alcohol;
- exemptions are granted to aircraft refuelling for national flights, the provision of drinking water and electricity to the public by independent producers and services related to renewable energy materials and equipment and interest on loans to finance renewable energy; and
- a requirement that companies listed by the tax administration must withhold VAT from their payments to suppliers and liberal professions.
- an increase of business licence duty from 0.1% to 0.5% and the maximum turnover threshold, to be abolished;
- an exemption for the turnover from the provision of fixed and wired communications from the tax on mobile phone companies;
- the reintroduction of environmental tax on alcoholic beverages, minerals extracted, industrial or hazardous waste and hospital waste; and
- a reduction in the tax on incoming foreign calls from FCFA50 to 20 per call.
- mandatory electronic tax return filing for taxpayers with a turnover of at least FCFA500-million;
- mandatory bank transfers for the payment of tax by taxpayers under the standard tax regime;
- allowing the carry-forward of VAT credits, exceeding FCFA5-million, for traders, subject to prior approval of the tax administration;
- requiring banks to report to the tax authorities all outgoing transactions above FCFA50-million per year per taxpayer. Failure to report will result in a penalty of FCFA10-million for each transaction not reported;
- introducing a penalty for a delay in the filing of transfer pricing documents of FCFA10-million to FCFA25-million for the first three months and then FCFA5-million for each following month delayed; and
- abolishing the maximum threshold for penalties for an incorrect tax return.
ETHIOPIA: New excise tax proclamation becomes effective
On 13 February 2020, parliament approved new Excise Tax Proclamation No. 1186/2020 (the new proclamation) repealing Excise Tax Proclamation No. 307/2002 and its amendments with effect from 14 February 2020. Excise tax is imposed on 378 categories of goods imported into or manufactured in Ethiopia by a licensed manufacturer, at rates varying per the type of item.
GABON: General Tax Code amended
Law 014/2019 of 22 January 2020, amending the General Tax Code, was recently promulgated. The law includes amendments relating to audits, the taxation of capital gains and establishment of new taxes, such as a concession royalty for national aviation operations, a royalty for the registration of vessels with the International Vessel Registry and a duty on vehicles resale.
NAMIBIA: Bill repealing tax incentives tabled in parliament
On 19 February 2020, the Minister of Finance tabled the Income Tax Amendment Bill in parliament. The Bill repeals various tax incentives granted to registered manufacturers, as well as tax exemptions granted to taxpayers with export processing zone (“EPZ”) status and carrying on activities within EPZs.
If the Bill becomes effective, registered manufacturers will no longer qualify for the reduced income tax rate of 18%, currently available for 10 years or the additional deductions granted to them.
In addition, taxpayers with EPZ status and carrying on activities within EPZs will be subject to customs and excise duties, stamp duties, transfer duties and income tax. The movement of goods between Namibia and an EPZ will also no longer be seen as an import or export. However, taxpayers with EPZ status and carrying on activities within EPZs will continue to enjoy exemption from VAT and import VAT because these provisions are contained in the VAT Act and they have not been repealed.
NIGERIA: FIRS directs dormant companies to regularise tax returns
On 13 February 2020, the Federal Inland Revenue Service (“FIRS”) issued a public notice directing all dormant companies to regularise their tax returns with the FIRS on or before 30 June 2020. A dormant company is defined as one that has formally informed the FIRS that it will be temporarily out of business for at least a period of one financial year due to certain situations, eg, adverse economic circumstances.
Dormant companies are required to file a "statement of affairs" in lieu of audited financial statements when filing statutory returns. According to the notice, failure of any dormant company to regularise its tax returns may result in delisting of the company from the list of incorporated companies and placing lien on the company's bank account(s).
NIGERIA: Remittance of stamp duties notice issued
On 17 February 2020, the FIRS issued a public notice requesting all stamp duty collection agents, ie, the Office of the Accountant General of the Federation, the Central Bank of Nigeria, Deposit Money Banks, Central Securities Clearing Systems and other relevant institutions to remit all stamp duties they duly collected within seven days of the public notice having been issued. The FIRS also noted that, going forward, all relevant stamp duties must be promptly remitted into the FIRS stamp duties account.
NIGERIA: Public notice issued re date for payment of tax
On 21 February 2020, the FIRS issued a public notice following the amendment of section 77 of the Companies Income Tax Act, highlighting that:
- tax must be paid on or before the due date for return filing. Payment can be made in one lump sum or in instalments;
- the final instalment must be paid on or before the due date for return filing;
- a company that pays all its tax liabilities 90 days before the due date for return filing will be granted a bonus. The bonus will be 2% of the tax payable for a medium-sized company and 1% for any other company;
- a company granted an early-payment bonus may set off the bonus against its future taxes; and
- any tax due and unpaid by the due date for return filing will attract interest and penalties as provided in the extant laws.
NIGERIA: Public notice on mandatory use of taxpayer identification numbers issued
Following relevant amendments by the Finance Act 2019 to the Companies Income Tax Act and the Personal Income Tax Act, the FIRS, on 21 February 2020, issued a public notice directing all companies to register for tax purposes, obtain a taxpayer identification number (“TIN”) and display it on all documents supporting their business transactions.
All banks and other financial institutions are also required to request a TIN as a precondition for opening new accounts for companies and any other businesses. In addition, every company or business is required to provide its TIN to the relevant provider of financial services not later than 12 April 2020 for the purpose of updating existing records of accounts opened prior to the entry into effect of the Finance Act 2019.
NIGERIA: TAT rules on transfer pricing method and penalties
On 19 February 2020, the Lagos Tax Appeals Tribunal (“TAT”) delivered judgment in the case of Prime Plastichem Nigeria Limited (PPNL) vs the Federal Inland Revenue Service (FIRS) (TAT/LZ/CIT/015/2017). The court ruled in favour of the FIRS on a number of issues relating to transfer pricing compliance, including the appropriate transfer pricing method to be used, and the fact that the FIRS has powers to make transfer pricing adjustments and impose penalties and interest on the additional tax assessments resulting from such exercise.
Sources include IBFD’s Tax Research Platform; www.allafrica.com; http://tax-news.com