ANGOLA: IMF suggests the introduction of VAT

Angola’s National Assembly approved the long-awaited non-oil tax reform on July 4, 2014 and Law No.14/14, which allows the Government to adopt legislative acts performing additional review and republication of the Investment Income Tax Code (Código do Imposto sobre a Aplicação de Capitais), was enacted and published in the Official Journal on July 30 2014.

The reform included the adoption of three new laws (the General Tax Code, the Tax Procedure Code, and the Tax Collection Code) and a reduction in the corporate income tax rate from 35 to 30 percent.

The International Monetary Fund (IMF) welcomed the reform and further suggested that Angola should introduce a value-added tax (VAT) to provide more stable revenue for the budget and reduce the dependency on oil revenue.

ANGOLA:  General Tax Administration established

On September 18, 2014 the Economic Commission of the Council of Ministers approved the establishment of the General Tax Administration, which will be responsible for the merger between the National Customs Agency and the National Tax Administration. The General Tax Administration should ensure greater efficiency in the collection of taxes by streamlining available resources.

BURUNDI: Amended 2014 Budget Law issued

An amended Budget Law 2014 was issued by the Burundi Government on August 2, 2014. The Law provides for the introduction of:

  • a minimum lump-sum tax of 1% of annual turnover applicable to both residents and non-residents;
  • an advance payment income tax system at the rate of 3% on the customs value of imported goods to be sold in Burundi;
  • a tax of USD0.32 per minute on incoming international telephone calls;  and
  • a security tax of 1.15% on the imported value of imported goods.

The Law also repeals the tax credits and VAT exemptions on importation granted by the Investment Code of 2008 and the Special Free Zone Regulations.

MALAWI:  2014/15 Budget

The 2014/15 Malawi Budget was presented to Parliament by the Minister of Finance on September 2, 2014. A significant proposal was the reduction of the tax rate on mobile phone operators from 33% to 30%.

NIGERIA:  Tax deductibility of interest on inter-company loans confirmed

A judgment by the Lagos Division of the Nigeria Tax Appeal Tribunal (TAT) of September 18, 2014 confirmed that interest on related-party loans incurred by companies carrying out petroleum operations in Nigeria and assessed under the Petroleum Profits Tax Act (PPTA) are tax deductible provided that such loan bears a market-related interest rate.

This follows uncertainty regarding the interpretation of two contradictory sections in the PPTA, namely section 10(1)(g), which provides that all sums incurred by way of interest on any inter-company loans obtained under terms prevailing in the open market shall be deducted in computing the adjusted profit of the company and section 13(2) which provides that no deduction shall be allowed in respect of sums incurred by way of interest during a period, where the borrowed money was from a company where a direct or indirect relationship exists between the two companies.

NIGERIA:  Judgment on excess dividend tax regime

In terms of section 19 of the Nigerian Companies Income Tax Act (CITA), Nigerian companies are subject to tax, based on dividends paid out, where such dividend exceeds the company’s taxable profit in any year of assessment.

An August 2014 judgment by the Lagos Division of the Nigeria TAT causes uncertainty as to whether dividends paid out of retained earnings or reserves (which has been taxed previously) will still be regarded as profits on which no tax is payable and therefore be subject to the provisions of section 19 of the CITA.

RWANDA: Potential tax breaks announced

Clare Akamanzi, chief operating officer of the state-run Rwanda Development Board, on October 1, 2014 announced that Rwanda expects to have a new Investment Code at the beginning of 2015 that could offer incentives such as seven-year tax holidays for large-scale investments. It is expected that the new Code will be passed by the end of 2014 to be effective from the beginning of 2015.

It is also proposed to reduce the current corporate income tax rate of 30 percent with up to half for sectors of strategic importance to the economy such as infrastructure projects, energy, financial services, communications, technology and logistics.

Exporters apart from those of coffee, tea and minerals will also qualify for the new Code's tax benefits provided they export more than half the goods they produce.