WEST AFRICA: New VAT Directive for Member States adopted by Economic Community of West African States (ECOWAS)

The Economic Community of West African States ("ECOWAS") announced on 7 July 2023 that it has adopted a new VAT directive (C/DIR.3/07/2023) for Member States, which came into force upon its publication. The Directive contains provisions regarding tax base and tax rate, taxable events and changeability.

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

WEST AFRICA: Supplementary Act on 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 on 26 July 2023 announced cooperation with ECOWAS and the West African Economic and Monetary Union (UEMOA) commissions under the European Union's Fiscal Transition Support Programme in West Africa (FTSP). The collaboration aims to develop the following three instruments to tackle base erosion and profit shifting (BEPS) and to increase tax transparency:

  • A directive on the harmonisation of transfer pricing rules to allow ECOWAS states to better control multinational enterprises;
  • A directive on beneficial ownership to help identify the beneficial owners of legal persons and arrangements; and
  • A supplementary act on mutual administrative assistance in tax matters enhancing the cooperation between ECOWAS and enhancing the exchange of information.

The Supplementary Act on Mutual Administrative Assistance in Tax Matters (A/SA.3/07/23), designed to strengthen cooperation between ECOWAS and to exchange information, was adopted by the Conference of Heads of State and Government on 9 July 2023 and shall enter into force upon publication. It shall be annexed to the revised ECOWAS Treaty, of which it shall form an integral part. The act deals with the form of exchange of information and assistance in the recovery of taxes, among others.

BURKINA FASO: Signatory powers for non-resident taxpayer accreditation certificates delegated by the General Director of Taxes

To improve taxpayer services, the General Director of Taxes has, through memo No 2023-0671/MEFP/SG/DGI/DLC which was adopted on 24 August 2023, authorised the delegation of his signature authority for non-resident taxpayers' accreditation certificates to directors of large and medium-sized enterprises and regional tax directors.

ETHIOPIA: Tax treaty with Luxembourg enters into force

On 11 August 2023, the Ethiopia - Luxembourg Income and Capital Tax Treaty (2021) entered into force and generally applies from 1 January 2024 for Luxembourg and from 8 July 2024 for Ethiopia for withholding and other taxes.

GABON: Tax treaty with the United Arab Emirates enters into force

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

KENYA: Consultation on the draft Income Tax (Transfer Pricing) Rules 2023 announced

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

The deadline for comments on the rules is 22 September 2023.

MAURITIUS: Reforms to personal income tax regime enacted

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

The reforms include:

  • Removing the solidarity levy, which was applicable to individuals;
  • Increasing the income exemption threshold under which no tax is paid; and
  • Introducing a new progressive system with tax charged incrementally.

MAURITIUS: Tax Arrears Settlement Scheme extended

In a communiqué dated 25 July 2023, the Mauritius Revenue Authority ("MRA") informed the public that it had renewed the Tax Arrears Settlement Scheme (TASS) that provides for a waiver of all penalties and interest on tax arrears due as of 2 June 2023.

Taxpayers may apply to the MRA for the waiver on or before 3 January 2024 and are subject to settling all tax arrears by a payment deadline of 1 April 2024.

NIGERIA: Shipping companies urged to regularise their tax position

On 21 August 2023, Nigeria's Federal Inland Revenue Service ("FIRS") issued a Public Notice via X (formerly Twitter), calling on international shipping companies operating in Nigerian territorial waters to regularise their tax position in accordance with Circular No. 2021/14 of 3 June 2021, Taxation of Companies Engaged in Shipping, Air Transport and Cable Undertakings. A grace period is provided until 31 December 2023, after which enforcement action will be taken.

NIGERIA: Tax Appeals Tribunal Nullifies Nigeria's Income Tax Country-by-Country Reporting Regulations 2018

According to a decision by the Tax Appeals Tribunal ("TAT") Lagos Zone on 17 August 2023 in the case of Check Point Software Technologies B. V. Nig Ltd v. FIRS ([TAT/LZ/CIT/121/2022]), the Income Tax Country-by-Country Reporting ("CbC") Regulations 2018 are null and void because they were issued by the FIRS in the period when the FIRS Board was inoperational.

The TAT held that the 2018 Regulations, having been enacted during a period when the FIRS Board was dissolved and not reconstituted, are deemed 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 applicable in Nigerian courts until the treaties are duly domesticated.

In addition, the 2018 Regulations (being subsidiary legislation) derive their validity and authority from the substantive law and have no capacity to extend such authority. Therefore, the provisions of the 2018 Regulations, which seek to impose penalties for non-compliance with the CbC requirements that are higher than the amounts stipulated by the FIRS Establishment Act, 2007 ("FIRSEA"), are null and void.

The TAT upheld the taxpayer's appeal and declared that the notices of administrative penalties issued by the FIRS, as stipulated in the 2018 Regulations, are unconstitutional and void. The FIRS was directed to reissue the penalties in accordance with the relevant provisions of the FIRSEA and applicable laws.

NIGERIA: Notice on effective dates for implementation of Finance Act 2023 published

The FIRS issued a notice on 25 August 2023 updating effective dates of compliance with the provisions of tax legislation, including the VAT Act and Tertiary Education Trust Fund ("TET") (Establishment) Act, from 1 May 2023 to 1 September 2023. The notices specifies that:

  • VAT withheld or collected during August 2023 must be remitted on or before 14 September 2023, while VAT for subsequent months must be remitted not later than the 14th day of the month following the month in which the VAT is withheld or collected;
  • Companies involved in the letting or trading, or rendering of services relating to radio or television masts, transmission lines, cell towers, vehicles, mobile homes, caravans and trailers must charge VAT at the prevailing rate effective from 1 September 2023;
  • Companies involved in the letting or trading, or rendering of services relating to radio or television masts, transmission lines, cell towers, vehicles, mobile homes, caravans and trailers must charge VAT at the prevailing rate effective from 1 September 2023;
  • The new TET rate of 3% will take effect for TET becoming due in respect of accounting periods ending on or after 1 September 2023 and;
  • Investment allowances, convertible currencies and tax exemptions are no longer available for tax returns becoming due in respect of accounting periods ending on or after 1 September 2023.

RWANDA: Tax treaty with United Arab Emirates enters into force

The Rwanda - United Arab Emirates Income Tax Treaty (2017) entered into force on 4 December 2019 and generally applies from 1 January 2019 for withholding and other taxes.

UGANDA: Tax amendments approved by parliament

The Income Tax (Amendment) Act, 2023 and Tax Procedures Code (Amendment) Act, 2023, the VAT (Amendment) (No.2), 2023 and the Excise Duty (Amendment)(No.2) Act, 2023 were approved by parliament and assented to by the President on 17 August 2023. The Amendment Acts became effective from 1 July 2023. 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;
  • Providing that companies reporting losses for more than seven years are only allowed a deduction of 50% of the assessed losses carried forward to subsequent years of income; and
  • Various provisions allowing for equal tax treatment between Islamic finance businesses and takaful businesses providing conventional financial services or insurance business.

ZAMBIA: Tax treaty with the United Arab Emirates enters into force

The United Arab Emirates - Zambia Income Tax Treaty (2020) entered into force on 13 January 2023 and generally applies from 1 January 2023 for withholding and other taxes.

ZIMBABWE: Tax Agent Licensing Regulations, 2023 issued

The government of Zimbabwe has issued the Tax Agent (Licensing) Regulations 2023 through Statutory Instrument No. 125 of 2023, which was published in the Government Gazette on 7 July 2023. The regulations, which intend to introduce new requirements for the licensing of persons wishing to operate as tax agents, came into force on 20 July 2023.

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