ANGOLA:  2013 Transfer pricing requirements

Angola published new transfer pricing documentation rules as part of Presidential Decree 147/13 on 1 October 2013, which became effective five days after publication.  All taxpayers reporting 2013 revenue in excess of 7 billion kwanzas (approximately USD70 million) are obliged to prepare and submit transfer pricing documentation by 30 June 2014.

All related party transactions involving goods, rights, services or financial operations, irrespective of their value, should be documented in Portuguese.  The OECD guidelines have not been adopted by Angola and the only acceptable pricing methods are the comparable uncontrolled price, resale price and cost plus methods.

According to Presidential Decree 66/11 of 18 April 2013, taxpayers not complying with the transfer pricing documentation requirements will be prohibited from performing capital transactions or trading operations that require intervention by the National Bank of Angola in terms of exchange control regulations.

The Tax Authorities are allowed to make transfer pricing adjustments in respect of the last five years and any adjustments made will be subject to a penalty of 50% of additional tax and interest at 2.5% per month.

BOTSWANA:  2014 Budget overview

The Botswana 2014 Budget was presented to the national assembly on 3 February 2014, announcing that amendments to the Income Tax Act and VAT Act will be presented to parliament during the 2014/15 fiscal year, including a proposed VAT zero rating for farming equipment and basic foodstuffs and increasing the VAT registration threshold from P500 000 to P1 million in order to provide relief to small taxpayers.

GHANA:  New VAT Act promulgated

The Value Added Tax Act, 1998 (Act 546) as amended, has been repealed and replaced by the Value Added Tax Act, 2013, (Act 870) (the new VAT Act) with effect from 31 December 2013.

One of the most significant amendments is the increase in the standard VAT rate from 12.5% to 15%.  The National Health Insurance Scheme Levy (NIHL) charged on goods and services supplied in or imported into Ghana and collected with VAT remains at 2.5%.  As a result, the standard aggregate VAT and NHIL rate on the taxable supply of goods and services is increased from 15% to 17.5%.  The VAT rate on VAT/NIHL invoices issued in respect of taxable supplies is to be manually adjusted from 12.5% to 15%.  Taxpayers who have been authorised by the Ghana Revenue Authority (GRA) to use their own computer-generated invoices or electronic cash registers are required to re-programme their equipment to ensure that VAT is charged at the rate of 15%. 

The allowable period for claiming input VAT in respect of expenses incurred has been reduced from three years to six months.  In practice, all taxpayers who are in possession of valid VAT/NIHL invoices for input claims which are more than six months old should claim such amounts in their December 2013 VAT returns, which were due for submission by no later than 31 January 2014.

The new VAT Act also extends the application of VAT to a number of business activities which hitherto fell outside the VAT net, including the sale of immovable property by an estate developer, the supply of financial services rendered for a fee, supply of domestic transportation of passengers by air and the supply of haulage as well as the rental or hiring of passenger and other vehicles, the business activities of auctioneers and promoters of public entertainment and the manufacture or supply of certain pharmaceuticals.

GHANA:  Mining Windfall Profit Tax on hold

The Ghanaian President announced on 22 January 2014 at the World Economic Forum in Davos that the introduction of the Windfall Profit Tax announced in the 2014 Budget in November 2014 is to be placed on hold.  The main reason for this decision is a concern by the President that mining companies will lay off workers to cover the additional tax cost.  The tax was initially introduced in 2012 as an additional 10% tax on mining companies.

GHANA:  New Foreign Exchange Control rules

Ghana introduced strict new foreign exchange control rules with effect from 5 February 2014.  The new provisions include a ban on dollar transactions for purchases and sales within Ghana, the requirement that exporters have to convert their export proceeds into local currency after 30 days and a limit on dollar cash withdrawals of USD10,000.

The cedi has weakened significantly following the introduction of the new rules.

KENYA:  New Social Security Funds launched

With effect from 31 May 2014, the National Social Security Fund (NSSF) Act establishes two new funds; the Pension Fund and Provident Fund, which replaces the existing Provident Fund.

The repealed NSSF Act required employees and employers to each contribute 5% of the employee’s monthly pensionable earnings to the Provident Fund, with the contribution being capped at KShs200 per month.  In terms of the new Act, the employer and employee each has to contribute 6% of the employee’s monthly pensionable earnings (with an upper annual limit of KShs18 000), with the contribution being capped at KShs2 160 per month.

MAURITIUS:  Exchange of Information Agreement signed with the USA

Mauritius and the United States of America signed a Tax Information Exchange Agreement (TIEA) and an Inter-Governmental Agreement (IGA) for the implementation of the Foreign Account Tax Compliance Act (FATCA) between the two countries on 6 January 2014.

The main objective of the FATCA, enacted in March 2010 by the USA, is to identify US persons behind foreign financial holdings and communicate their corresponding investment information to the US Internal Revenue Service.

MOZAMBIQUE:  Coal tax may be increased

The Mozambique Minister of Mines announced in February 2014 that Mozambique is in the final stages of preparing a new fiscal regime for its mining and petroleum sectors, which may include an increase in royalty taxes for coal by the end of the year.

Royalty taxes on coal is currently levied at 3%, lower than the 5% for base metals and 10% for diamonds.

NAMIBIA:  Vocational Education and Training Levy effective from 1 April 2014

The imposition of the vocational education and training levy (VET levy), which was due to come into effect on 1 September 2013, has now been gazetted with an effective date of 1 April 2014. 

The levy is due by employers exceeding the annual payroll threshold of N$1 million (originally N$350 000) at 1% of the total remuneration payable to employees during any financial year (originally 5%).

The levy is payable by the 20th of each month to the National Training Authority, with the first payment due by 20 May 2014.  Employers required to register for the VET levy must apply for registration by no later than 26 February 2014.

NIGERIA:  Housing Fund contributions to be resumed

In terms of the National Housing Fund Act every employer is required to deduct 2.5% of employees’ monthly basic salary and pay such amount over to the National Housing Fund administered by the Federal Mortgage Bank of Nigeria (FMBN) which was set up to provide affordable housing and effective financing of housing developments.

The Nigerian Labour Congress (NLC) and Nigeria Employers Consultative Association (NECA) directed that employers should suspend contributions to the Fund, following concerns raised by employees regarding the effectiveness of the scheme. 

On 28 October 2013 stakeholders, including representatives of the NLC, the Trade Union Congress, the NECA and the FMBN, signed a Memorandum of Understanding (MOU), agreeing to refocus efforts to ensure that the NHF scheme is able to deliver on its original promises.  As part of the MOU, it was agreed that all Nigerian workers are to resume contributions under the scheme and employers are required to remit such contributions to the FMBN with immediate effect.  No guidance has been provided in respect of the implications of non-compliance.

NIGERIA: 2014 Budget overview

The Nigerian government’s draft budget was presented on 19 December 2014, indicating that the government will continue to seek to expand non-oil revenue, promote growth in the power, agricultural, sold minerals, health and education sectors and intensify efforts to plug tax loopholes.

Expected policy actions include encouraging the local production and assembly of vehicles in Nigeria by levying an import tariff of 70% of the cost of new and used vehicles and providing for a five to ten year tax holiday for local manufacturers of tyres.

Nigeria’s Petroleum Industry Bill, which is Nigeria’s comprehensive oil and gas legislation, is expected to become law before 2015.

TANZANIA:  Electronic Communication Services excise duty increased

In July 2013 the Tanzanian government introduced a new simcard tax of TZS1,000 per month and increased the excise duty on electronic communication services from 12% to 12.5%.

The basis for application of the simcard tax has been disputed by members of the Mobile Operators Association of Tanzania (MOAT) in an appeal to the Tax Revenue Appeals Board (TRAB), but the claim has been rejected by the TRAB.  However, subsequently a deed of settlement has been entered into between the Tanzanian government and MOAT, in terms of which it was agreed that the excise duty on simcards will be scrapped and the excise duty rate on electronic communication service will be increased from 14.5% to 17% with effect from 1 January 2014.

ZIMBABWE: 2014 Budget overview

Zimbabwean Finance Minister Patrick Chinamasa presented the 2014 Budget to parliament on 19 December 2013. 

Proposals include a tax deduction in respect of contributions or donations by a taxpayer to a community share ownership trust or scheme in terms of the Indigenisation and Empowerment Act and interest payable by an indigenous person on any loan advanced to purchase shares in terms of an approved indigenisation implementation plan.  It is also proposed that amounts received by or accrued to a person form the sale or disposal of shares to an indigenous person or a community share ownership trust or scheme should be exempt from capital gains tax.

A revenue sharing formula of 10% on gross proceeds of diamond sales is proposed with effect from 1 January 2014.  The amount is to be withheld at source, after conclusion of each sale.  In addition, it is proposed to disallow mining royalties as a deduction for income tax purposes as of the same date.

Withholding tax on the payments for services rendered in Zimbabwe by non-resident artists or entertainers is to be increased from 10% to 15%.  The Intermediated Money Transfer Tax, levied at 5% per transaction, is to be extended to mobile banking service providers and it is proposed that an additional road levy of 2c/litre on petrol and 1c/l on diesel respectively be levied to service the loan funding by the Development Bank of South Africa for the reconstruction of the Plumtree / Mutare Road.

A VAT exemption for electricity imports is proposed, while the highest marginal personal income tax rate is to be increased to a flat tax of 50% on income exceeding USD20 000 with effect from 1 January 2014.