Africa Tax In Brief (May 2023) - Withholding Tax

AFRICA: Model legislation to implement 15% domestic minimum top-up taxes under Pillar Two published by the African Tax Administration Forum

The African Tax Administration Forum published "The Approach to Drafting Domestic Minimum Top-Up Tax Legislation" on its website in April 2023. The model legislation aims to enable its members to implement 15% domestic minimum top-up taxes in line with the OECD's Pillar Two model and collect the additional tax from large multinational companies at source, rather than having it collected offshore under an Income Inclusion Rule or Under Taxed Payments Rule regime.

ANGOLA: New legal framework for electronic communication of tax procedures approved

Angola has approved a new legal framework for the electronic communication, processing, and execution of tax procedures through Decree No. 95/23 of 6 April, which revokes the old Presidential Decree No. 232/19 of 22 July, as well as No. 4 of article 9 of Presidential Decree No. 245/21 of 4 October. The new rules entered into force on the date of their publication in the Official Gazette and include the following:

large taxpayers with a turnover or imports exceeding AOA50-million, tax representatives of non-tax residents, and individuals or corporate entities owning real estate, cars, aircraft, boats, and other goods subject to property tax or to tax on motor vehicles will receive tax notifications electronically;
the period for consideration of a notified taxpayer is extended from one to five days after the tax assessment is made available on the taxpayer's portal; and
taxpayers qualifying for electronic communications are required to update their registration with the tax authorities.

ANGOLA: Global Forum on Transparency and Exchange of Information joined

In March 2023, Angola has become the 166th member of the Global Forum on Transparency and Exchange of Information for Tax Purposes.

BENIN: Value Added Tax on digital services implemented

Services rendered through electronic platforms are taxable in Benin when the beneficiary is a resident or has a permanent establishment in the country. On 21 April 2023, the Director General of Tax published Note No. 0426/DC/SGM/DGI/DLC/DCFR of 22 March 2023 on the implementation of value-added tax ("VAT") for digital services in accordance with article 224 of the General Tax Code. The Note provides as follows:

non-resident digital platform operators can submit a simplified registration using a form available on the Benin tax administration website. A Tax Identification Number and membership number for the e-services portal will be automatically assigned to them;
a VAT return must be submitted quarterly through the tax administration e-services portal. Transactions carried out in respect of each calendar quarter are declared by the last day of the month following the quarter during which these transactions were carried out; and
the reverse charge mechanism applies when the resident beneficiary is registered for VAT. The payment of the collected VAT by non-resident suppliers (from individuals and non-VAT registered taxpayers) must be made via bank transfer in CFA franc (XOF), Euro (EUR), American dollar (USD) or Chinese Yuan (CNY).

BENIN: Call centre for taxpayers launched

As part of its digitalisation process started in 2016, the General Directorate of Taxes, on 24 March 2023, launched a call centre for taxpayers to be used for accessing information, assistance, or filing complaints and suggestions.

BOTSWANA: Amendments to list of VAT exempt and zero-rated supplies

On 28 March 2023, the Minister of Finance presented the VAT (Amendment) Bill to the National Assembly. Significant proposed amendments include:

zero-rating of taxable supplies such as vegetables, cooking oil, liquid petroleum gas, salt, infant formula, baby diapers, sanitary pads, tampons, agricultural implements, and condoms; and
exempting private medical supplies from VAT.

BURKINA FASO: F.CFA200 tax stamp modernised

The General Director of Taxes has launched a new version of the F.CFA200 tax stamp through Statement No. 2023-0380/MEFP/SG/DGI of 16 May 2023. The new tax stamp includes tracking systems, QR codes and authentication printing. The current F.CFA 200 tax stamp will no longer be valid as of 1 June 2023.

BURKINA FASO: Lease contracts registration process clarified

In Memo No.2023-0302/MEFP/SG/DGI/DLC/sl of 19 April 2023 the General Director of Taxes (Directeur Général des Impots, DGI) has clarified that it is mandatory for all tax offices to complete the registration formality for all types of lease contracts within 48 hours, subject to subsequent verification. Previously, tax officers performed the physical verification of the location of the building or premises subject to lease before completing the registration formality, which delayed the process.

BURKINA FASO: Certificate of residence issuance procedure amended to include taxpayers under "Undetermined" tax regime

Following the introduction of the new tax regime, the General Tax Director (Directeur général des impôts, DGI) adjusted the procedure for issuance of certificates of residence to include the new tax regime, by replacing the term "employees" with "taxpayers under undetermined tax regime".

These measures were outlined in Service Note 2023-218/MEFP/SG/DGI/DLC/sfri, issued on 22 March 2023, which repealed and replaced Note 2021-643/MINEFID/SG/DGI/DLC/sfri, issued on 8 July 2021.

BURKINA FASO: Mutual Assistance Convention in force

The OECD-Council of Europe Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, entered into force for Burkina Faso on 1 April 2023. The Convention generally applies in Burkina Faso from 1 January 2024, although it may apply for earlier periods between signatories if agreed to and applies in relation to any period regarding criminal matters.

CABO VERDE: Clarifications on electronic invoicing system issued

On 14 March 2023, the National Directorate of State Revenue (Direção Nacional de Receitas do Estado ("DNRE")) issued clarifications on the electronic invoicing system which was introduced on 12 November 2020. The clarifications made include the following:

it is mandatory to issue and share invoices and other tax-relevant documents electronically in all commercial transactions in specified sectors (including industrial, agriculture, fishing, services and real estate);
an electronic invoice is the official document that must be issued in commercial transactions and acquisitions of goods and services; and
a public issuer has been made available by the DNRE to help taxpayers that have difficulties or do not intend to acquire their own software for issuing and sharing electronic tax documents on the electronic invoice platform.

CAMEROON: Employee monthly minimum wage increased

On 6 March 2023, the President of Cameroon, through Presidential Decree No. 2023/158 of 6 March 2023, increased the basic salaries of civilian and military personnel by an average of 5.2%. The increase is effective retrospectively from 1 February 2023.

Through Decree No. 2023/00338/PM of 21 March 2023, the monthly minimum wage in the private sector was also increased from FCFA36 270 to the following amounts in the various employment sectors:

FCFA41 875 for civil servants governed by the Labour Code;
FCFA45 000 for the agriculture and related sectors; and
FCFA60000 for other sectors.

C?TE D'IVOIRE: Decree to ratify Multilateral Convention approved by Council of Ministers

On 19 April 2023, the Council of Ministers adopted a decree ratifying the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS ("MLI"). C?te d'Ivoire submitted its provisional MLI position at the time of signature, listing its reservations and notifications and including 11 tax treaties that it wishes to be covered by the MLI.

DEMOCRATIC REPUBLIC OF THE CONGO: Fixed assets revaluation coefficients for fiscal year 2022 issued

The Minister of Finance has issued the revaluation coefficients applicable to fixed assets for the fiscal year 2022 in the appendix of Ministerial Decree No/CAB/MIN/FINANCES/2023/004 of 13 February 2023.

DEMOCRATIC REPUBLIC OF THE CONGO: VAT exemptions on essential goods and construction materials extended

On 15 April 2023, the Prime Minister, through ministerial decree Nos.°23/15 and 23/16 of 15 April 2023, extended the previous VAT exemptions on essential goods and certain construction materials until 31 December 2023.

DEMOCRATIC REPUBLIC OF THE CONGO: Instructions for execution of Finance Law 2023 published

On 9 March 2023, the Ministry of Budget of the Democratic Republic of the Congo published instructions for the execution of the Finance Law for 2023 through Circular no. 001/ME/Min.Budget/2023. The Finance Law was enacted on 28 December 2022 and entered into force on 1 January 2023. Significant provisions of Finance Law 2023 include:

a new rule providing that interest paid to partners or shareholders of a company is only deductible when the sums made available to the company do not exceed, for all of the partners or shareholders, the amount of paid-up share capital;
extending the scope of non-deductible expenses to include:
- provisions made to cover losses, charges, or depreciation of assets, except for:
  - provisions for the replenishment of mining deposits;
  - mandatory provisions for receivables (doubtful debts) set up by credit and microfinance institutions in accordance with specific regulations in force;
  - mandatory provisions constituted, within the framework of regulated commitments, by insurance and reinsurance companies in accordance with insurance regulations and certified by the statutory auditor;
- the following costs:
  - 50% of communication costs, although internet costs are 100% deductible provided that the internet is used for exclusively professional needs;
  - 60% of entertainment expenses;
- donations, gifts, and subsidies, although payments to the Social Fund of the DRC, to research organisations, public utility works or organisations of a philanthropic and social nature, and sports associations in the DRC are allowed to be deducted when they are justified and within the limit of 0.5% of turnover for the financial year.
replacing the tax rate section of the VAT Law, providing for a standard VAT rate of 16%, a reduced rate of 8% for beef, pork, poultry, different fish, cane and beet sugar, milk, cream, and milk-based preparations, bottled water, iodized salt, bar soap, and matches, as well as domestic plane tickets, and a 0% rate for exports and similar operations;
new requirements for the use of electronic tax devices for issuing invoices by persons subject to VAT, along with related registration requirements and penalties;
an explicit provision that no tax exemption or relief can be granted except by virtue of the law, and any derogatory exemption, whatever its nature, in favour of a natural or legal person, is strictly prohibited; and
amending tax audit procedures to provide that on-site verification cannot extend beyond three months for small enterprises, six months for medium enterprises, and nine months for large enterprises, while "spot checks" may not exceed one month, although these limits may be extended when a taxpayer does not produce all required information or when waiting on a response from a foreign authority.

GHANA: Revised tax bills enter into force

Following presidential assent and gazette notification, the following three tax bills passed in April are now effective.

Income Tax (Amendment) Act 2023 (Act 1094);
Growth and Sustainability Levy Act 2023 (Act 1095); and
Excise Duty (Amendment) Act 2023 (Act 1093).

The President also assented to the Ghana Revenue (Amendment) Act 2023 (Act 1096) which legislates the administration of the Ghana Revenue Authority.

Significant amendments to the Income Tax Act 2015 (Act 896) include:

unification of the existing tax loss carry-forward provision to five years across all sectors;
revision of the treatment of foreign exchange losses, including prohibition against the deduction of unrealised exchange losses and realized exchange losses arising from a transaction between resident entities;
increase in the concessionary tax rate from 1% to 5%;
introduction of a minimum chargeable income of 5% of turnover in certain circumstances;
introduction of a withholding tax of 3% for residents and 10% for non-residents on the realisation of assets and liabilities;
revision of existing individual income tax brackets and introduction of an additional tax bracket of 35% on income in excess of GHS600 000 per annum; and
an increase in the upper limits for taxable vehicle benefits for individuals, such as an increase from GHS600 to GHS1 500 for vehicle benefits.

The Growth and Sustainability Levy Act 2023 follows the government's 2023 budget proposal to convert the National Fiscal Stabilization Levy to a Growth and Sustainability Levy at a rate of 5%, 1%, and 2.5% on the profit before tax of companies and on institutions in categories A, B and C respectively. Category A institutions include banks, insurance companies, breweries and oil marketing companies among others, whereas category B institutions comprise mining companies and upstream oil and gas companies. Category C includes all other entities not falling within categories A and B.

KENYA: Finance Bill 2023 table before the National Assembly

The National Treasury tabled the Finance Bill 2023 before the National Assembly on 4 May 2023. Significant proposed amendments, effective from 1 July 2023 unless otherwise indicated, include:

reducing the corporate income tax rate applicable to branches from 37.5% to 30%, but introducing additional tax on profits repatriated by a permanent establishment with effect from 1 January 2024;
introducing a 15% withholding tax on income by digital content creators;
introducing a 5% withholding tax on sales, promotion and advertisement paid to residents in excess of KES24 000 per month;
increasing the turnover tax rate from 1% to 3%;
excluding borrowings from resident lenders from the interest deduction limitation rules with effect from 1 January 2024;
extending the capital gains tax regime to include property owned by partnerships and capitals gains derived from the sale of shares if at any time during the 365 days preceding the alienation, the shares directly or indirectly derived more than 20% of their value from immovable property situated in Kenya;
limiting the exemption from capital gains tax on internal reorganisations to groups which have existed for at least 24 months;
introducing a digital asset tax to be paid on income derived from the transfer or exchange of digital assets. It is proposed that the owner of a digital platform will be required to deduct tax at the rate of 3% of the transfer or exchange value of the digital asset with effect from 1 September 2023;
increasing the pay-as-you-earn tax rate for income above KES500 000 to 35%;
introducing a 3% contribution by employees and employers respectively to finance affordable housing projects;
introducing an export and investment promotion levy on specified imports;
increasing the VAT rate on petroleum products from 8% to the standard rate of 16%;
exempting exported services from VAT;
reclassifying the transfer of a business as a going concern from a VAT standard-rated supply to an exempt supply;
enhancing Electronic Tax Invoice Management Systems ("eTIMS") compliance by disallowing expenses that are not supported by eTIMS compliant invoices;
requiring notification of the Kenya Revenue Authority ("KRA") where there is a direct or indirect change of at least 20% in the ownership of a company;
amending the due date of withholding tax payments from the 20^th of the month following the payment date to 24 hours after payment;
clarifying that persons supplying imported digital services over the internet, an electronic network or through a digital marketplace are required to register for VAT, irrespective of whether the usual VAT registration threshold of KES5-million has been met; and
amending the definitions of "related persons" and "ultimate parent entity" for purposes of country-by-country reporting.

KENYA: Market and deemed interest rates for fringe benefit tax and non-resident loans set

The KRA has issued a notice on the market interest rate for fringe benefit tax purposes and the deemed interest rate of certain non-resident loans. The market interest rate and deemed interest applicable for the three months April to May 2023 is 10%.

KENYA: New Regulations for VAT on digital supplies issued

Kenya has issued the VAT (Electronic, Internet and Digital Marketplace Supply) Regulations 2023, dated 15 March 2023, which replace the VAT (Digital Marketplace Supply) Regulations 2020. Significant amendments include:

no distinction being made between B2B and B2C supplies, following the amendments introduced by the Finance Act 2022 which provide that the reverse charge did not apply for imported digital supplies with effect from 1 July 2022. Non-residents supplying taxable electronic, internet, or digital marketplace supplies in Kenya are required to register and pay VAT regardless of the nature of the recipient;
expanding the scope of taxable supplies to include:
- downloadable digital content including downloadable mobile applications, eBooks, and films;
- subscription-based media including news magazines and journals;
- over-the-top services including streaming television shows, films, music, podcasts, and any form of digital content;
- software programs including software, drivers, website filters, and firewalls;
- electronic data management including website hosting, online data warehousing, file sharing, and cloud storage services;
- music and games;
- search engines and automated helpdesk services including customizable search engine services;
- ticketing services for events, theatres, restaurants, and similar services;
- online education programs including distance teaching programs through pre-recorded media, eLearning, education webcasts, webinars, online courses, and training but excluding education services exempted under the First Schedule to the VAT Act;
- digital content for listening, viewing, or playing on any audio, visual, or digital media;
- services that link the supplier to the recipient including transport hailing platforms;
- electronic services specified under section 8(3) of the VAT Act, which includes (a) websites, web-hosting, or remote maintenance of programs and equipment; (b) software and the updating of software; (c) images, text, and information; (d) access to databases; (e) self-education packages; (f) music, films, and games, including games of chance; or (g) political, cultural, artistic, sporting, scientific and other broadcasts and events including broadcast television;
- sales, licensing, or any other form of monetizing data generated from users' activities;
- facilitation of online payment for, exchange or transfer of digital assets excluding services exempted under the Act; and
- any other service provided through an electronic, internet, and digital marketplace that is not exempt under the VAT Act.
confirming that all persons supplying imported digital services over the internet or an electronic network or through a digital marketplace, must register for VAT regardless of turnover; and
indicating that non-resident suppliers are not required to issue electronic invoices but must issue an invoice or receipt showing the value of the supply and the tax deducted as well as the personal identification number of the customer.

KENYA: Multilateral Instrument approved

On 21 March 2023, the Cabinet of Kenya approved the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). Kenya submitted its provisional MLI position at the time of signature, listing its reservations and notifications and including 14 tax treaties that it wishes to be covered by the MLI.

MAURITIUS: English synthesized text of treaties with Seychelles and Thailand published

On 14 April 2023, the Mauritius Revenue Authority ("MRA") published the English synthesized text of the Mauritius - Seychelles Income Tax Treaty (2005), as amended by the 2011 protocol, and the Mauritius - Thailand Income Tax Treaty (1997), displaying the modifications made to the treaty by the MLI.

The MLI entered into force for Mauritius on 1 February 2020. Unless stated otherwise in the synthesized text, the provisions of the MLI will have effect in Mauritius:

with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 July 2022; and
with respect to all other taxes levied by Mauritius, for taxes levied with respect to taxable periods beginning on or after 1 October 2022.

The MLS entered into force for Seychelles on 1 April 2022. The MLI will have effect in Seychelles:

with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2023; and
with respect to all other taxes levied by Seychelles, for taxes levied with respect to taxable periods beginning on or after 1 October 2022.

The MLI entered into force for Thailand on 1 July 2022. Unless stated otherwise in the synthesized text, the provisions of the MLI will have effect with respect to the Mauritius - Thailand Income Tax Treaty (1997) in Thailand:

with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2023; and
with respect to all other taxes levied by Thailand, for taxes levied with respect to taxable periods beginning on or after 1 January 2023.

MAURITIUS: Assessment Review Committee rules that taxpayers can decide when to claim capital allowances

On 9 March 2023, the Assessment Review Committee ("ARC") issued its ruling in the case of in Mauritius Freeport Development Co. Ltd ("MFD") v. The Director General, Mauritius Revenue Authority ("MRA") ARC/IT/677-15; ARC/IT/441-16.

In the case at hand, MFD, in maximizing its capital allowance claim for trading losses, and in seeking to secure higher tax write-offs, claimed capital allowances on assets acquired between 31 December 1995 and 31 December 2005 in the 2012 year of assessment.

The MRA disallowed the capital allowances inter alia on the basis that it is compulsory to claim capital allowances on an annual basis without interruption, and that capital allowances must be claimed in the year in which the assets are used.

MFD argued that annual allowances were claimed in accordance with section 24 of the Income Tax Act, which gives a taxpayer the option to claim or not to claim such allowances, and also allows a taxpayer to arrange its tax affairs in the most tax efficient way.

The ARC ruled that the legislator had not imposed a minimum threshold on claiming the annual allowance to such an extent that the applicant had the right to claim or not to claim and if the respondent was of the opinion that the applicant made use of the annual allowance in a way designed to avoid income tax liability, the law provides for the necessary avenues to deal with tax avoidance.

MOZAMBIQUE: VAT treatment of invoices and equivalent documents clarified

Following the recent reduction of the VAT rate from 17% to 16%, the following clarifications on the treatment of invoices and equivalent documents were made through Circular No. 01/AT/DGI-GDG/001.1/2023, issued by the General Directorate of Taxes on 27 March 2023:

taxpayers using printed invoice books or equivalent documents reflecting a 17% VAT rate, will continue using them by applying a 16% VAT rate, up to 30 April 2023; and
taxpayers using printed invoice books or equivalent documents are required to:
- request the authorised printers to supply new invoice books or equivalent documents with the new VAT 16% rate, with effect from 2 May 2023; and
- inform the tax department about the last series of invoices using the previous 17% VAT rate.

MOZAMBIQUE: Changes to regulation of specific regime of taxation and tax benefits for mining activities introduced

Through Decree No. 76/2022, which was gazetted on 30 December 2022 and became effective on 1 January 2023, the government has introduced changes to the Regulation of the Specific Regime of Taxation and Tax Benefits for Mining Activities. Significant amendments include:

repealing the tax incentive of the 50% reduced rate of Mining Production Tax ("MPT") for mineral products used for the development of local industry;
introducing a requirement to provide the specifications of ore extracted along with a monthly production report when submitting a MPT return;
requiring all sales or large disposals of mining products to be made through auctions or via the free market to be communicated to the Tax Administration within 30 days before the expected date of sale;
providing that the administration:
- may monitor sales and disposals of mining products for supervisory purposes, regardless of the place where they occur;
- must have access to all information regarding the auctioning of the mining product and issue a report on it, which must also be signed by the holder and sector regulatory entities present;
requiring that entities carrying out mining activities under a concession contract must have their financial statements certified by an independent authorised auditor;
allowing an operator of a mining title to have its accounting records in USD upon approval of the Minister of Finance;
requiring the reference exchange rate published by the Mozambique Central Bank to be used for the conversion of accounting records from local currency to USD; and
requiring taxpayers who hold more than one mining title to create separate legal entities and have separate tax numbers and accounting records for each prospecting and research license, mining concession and mining certificate.

MOZAMBIQUE: 2023 National Reconstruction Tax rates revised

In Mozambique, the National Reconstruction Tax ("NRT") is imposed on individuals between the ages of 18 and 60 earning taxable income as defined in the Individual Income Tax Code (Código do Imposto sobre o Rendimento das Pessoas Singulares, IITC) 33/2007, who are residents in provinces of Mozambique that are not formal municipalities. The rates are subject to annual review.

On 24 January 2023, the Ministry of Economy and Finance published the revised NRT rates for these provinces, implementing a general increase of between five and 10%.

NAMIBIA: 2023/2024 Budget presented before the National Assembly

On 22 February 2023, the Namibian Minister of Finance presented the 2023/2024 national Budget before the National Assembly. Significant proposed tax amendments include:

reducing the general corporate income tax rate from 32% to 31% with effect from 1 April 2024 and to 30% with effect from 1 April 2025;
increasing the tax-free threshold for individuals from NAD50 000 to NAD100 000 effective for the tax year ending 2024/2025;
extending the tax relief programme from 31 May 2023 to 30 October 2024. Under the relief programme, 100% of penalties and interest would be written off, provided that the taxpayer:
- is registered as an e-filer on the ITAS portal;
- is registered to partake in the tax relief programme on the ITAS portal;
- has filed all tax returns which are due; and
- has fully paid the outstanding principal amount on all registered tax accounts by 30 October 2024.

NIGERIA: Due date for filing VAT returns extended

In a notice dated 20 May 2023, the Federal Inland Revenue Service ("FIRS") has officially extended the due date for filing VAT returns from 21 May 2023 to 31 May 2023. Interest and penalties shall only become due where the relevant VAT returns were not filed by 31 May 2023.

NIGERIA: Implementation of 2023 fiscal policy measures approved

In Circular HMFBNP/MDAs/Circular/2023 FP/04 of 20 April 2023, which approves the implementation of the 2023 fiscal policy measures, the Minister of Finance, Budget, and National Planning has announced that the previously proposed 5% excise duty on telecommunication services has been reinstated and will apply to post-paid and prepaid mobile telephone, fixed telephone, and internet services.

The duty, which was introduced by the Finance Act 2020, is collected and enforced by the Nigerian customs service and is payable by all sectors of the economy on all local and foreign goods and services. However, following the widespread criticism of the tax by major stakeholders in the telecommunication sector, Nigeria suspended the duty for the telecom sector/digital economy in September 2022 and in March 2023 exempted the telecommunications sector from the excise duty.

The circular also announces a new "Green Tax" to be introduced with effect from 1 June 2023 as part of Nigeria's commitment to climate change adaptation and mitigation which includes a 10% excise duty on single use plastics containers, films and bags and an import adjustment levy at the rate of 2% or 4% on motor vehicles, depending on their engine capacity.

NIGERIA: Participation in Pillar Two Solution discussions to be continued

Following a technical workshop between the OECD and Nigeria, the FIRS on 13 April 2023 disclosed plans to continue participating in the OECD/Inclusive Framework discussions to ensure that Nigeria and other developing countries maximise the benefits of the two-pillar solution. The FIRS also announced that Nigeria should engage stakeholders to draw up a national strategy to streamline its tax incentives to avoid ceding its tax base to other jurisdictions owing to the implementation of the Pillar Two rules.

The FIRS statement marks a departure from Nigeria's previous stance of withholding consent on global tax reform.

NIGERIA: Guidelines on generating electronic tax clearance certificates issued by Lagos State

The Lagos Internal Revenue Service ("LIRS") issued a notice providing guidelines to taxpayers resident in Lagos State on the process of generating the new electronic tax clearance certificate ("eTCC") through its end-to-end tax administration (eTax) platform.

A tax clearance certificate ("TCC") is an official document, which is issued by the relevant tax authority to a taxpayer, confirming that the taxpayer has fulfilled his/her civic obligation for the period specified in the certificate. Under the Personal Income Tax Act, government ministries, departments and agencies and commercial banks are mandated to request a copy of valid TCC from individuals, partnerships (in respect of their partners) and enterprises in order to process their applications for licences, permits and certificates from the government.

The embedded security features on the new TCC, including a unique certificate number and QR code, should reduce the incidence of fraud relating to the processing of TCC applications and improve the ease of tax administration in the State. The LIRS encourages all government organisations and commercial banks to request and validate the eTCC using the security features before conducting businesses with individuals resident in the State.

To process, generate and download an eTCC, a taxpayer must have:

an updated profile on the platform with a recent passport photograph and address information;
filed annual income tax returns (also the employer must have submitted the annual tax returns) for the last three years; and
received tax assessment from the LIRS for the above returns and made full payments of all taxes due on returns.

NIGERIA: Tax Pro-Max Module on VAT filing and payment updated by FIRS

The FIRS updated the features for VAT filing and payment on the TaxPro-Max online platform. Significant changes include:

introducing an input VAT credit mechanism, which requires suppliers to remit VAT collected from customers to the FIRS using a new sales schedule format for the customers to claim the allowable input VAT on such purchases; and
modifying the sales adjustment process, which allows a taxpayer to modify the sales figures reported in the prior month's returns in the current month when there are changes to the information filed earlier.

NIGERIA: Guidelines on the withholding of and self-accounting for VAT issued by FIRS

The FIRS issued Information Circular No. 2023/01 providing guidelines on the administrative and compliance obligations of companies charged with the responsibility to withhold VAT at source and/or self-account for VAT on taxable supplies.

Under the VAT Act, all ministries, statutory bodies or other agencies of government and companies operating in the oil and gas sector are required to withhold, collect and remit VAT due on all payments made to contractors. According to the Circular, such entities are also required to:

prepare a separate schedule showing the name, tax identification number ("TIN"), address of the vendor, contractor or supplier, gross amount of the invoice, VAT charged on the supply and the month of return;
deduct or withhold the VAT stated on the supplier's invoice;
remit the amount withheld directly to the FIRS in the currency of transaction, separately from VAT collected on sales made by the taxpayer; and file the return of VAT withheld using the relevant module provided on the FIRS' TaxPro-Max platform.

A person to whom taxable supplies are made are required to self-account for VAT where no tax is charged on such invoice. The Circular clarifies that such a person is required to:

compute and self-charge the applicable VAT on the transaction;
prepare a separate schedule showing the name, TIN and address of the vendor, contractor or supplier, gross amount of the invoice, amount of VAT self-charged and the relevant month of the return; and
file the VAT return and remit the self-charged VAT to the FIRS, in the currency of transaction, using the relevant module on the FIRS' TaxPro-Max platform.

RWANDA: Tax Amendment Bills tabled before Parliament

The Minister of Finance, Planning and Economic Development has tabled the tax amendment bills before parliament on 20 April 2023. The bills will take effect on 1 July 2023, subject to approval and assent by parliament and the President. Significant proposed amendments include:

reducing the standard corporate income tax rate from 30% to 28%;
reducing the income tax rate on employment income of between RWF60 000 and RWF100 000 per month from 20% to 10%;
removing VAT on cereals, such as maize and rice (both locally processed and imported), special purpose vehicles and capital market brokers;
changes to local government fees and taxes, including:
- introducing tax at the following rates on the sale of immovable property: 2% of the property value less the first RWF5-million of the sale for registered taxpayers; and 2.5% of the property value less the first RWF5-million of the sale for non-registered taxpayers;
- reducing the property tax rate on commercial buildings from 0.5% to 0.3%, with a cap of RWF30-billion;
- exempting farmland less than two hectares from land tax; and
- amending residential land tax brackets as well as the taxing of residential and condominium houses.

RWANDA: Ruling issued to clarify the tax treatment of complimentary services in the hotel industry

The Rwanda Revenue Authority ("RRA") on 20 March 2023 issued a public ruling to clarify the tax treatment of meals offered by hotels to their staff and complimentary services or goods offered to a hotel customer for marketing purposes. The ruling came into effect on the same day. As per the ruling:

meals offered to staff and complimentary services in the hotel industry are deductible expenses at the rate of 1.5% of the total food revenue for staff meal expenses and at 1.5% of specified operating expenses on complimentary services;
meals offered to staff are not to be treated as benefits in kind in the hands of employees;
no input tax credit shall be allowed on staff meal expenses and complimentary services;
as a prerequisite for allowing staff meal expenses and complimentary services as deductions, taxpayers are required to maintain:
- proper records and accounts related to staff meal expenses;
- records of the beneficiaries of complimentary services and proof of the relationship between the taxpayer and the hotel; and
- proof that the beneficiary brought clients or contributed to improving the hotel business.

RWANDA: New Tax Procedures Law enacted

On 31 March 2023, Rwanda adopted a new Tax Procedures Law. Significant amendments include:

extending the period for maintaining books of accounts and records from five to 10 years;
providing for the accessing and sharing of books of accounts and records electronically;
obliging taxpayers registered for corporate income tax to file transfer pricing documentation prepared in accordance with the applicable legislation along with their tax declarations;
requiring withholding tax agents making payments to residents of countries with tax treaties with Rwanda to keep tax residence certificates of the payees issued by the competent authority of the other contracting state;
prohibiting taxpayers from amending declarations, books of accounts for the period/(s) to be covered by an audit following a receipt of an audit notice unless authorised by the tax administration;
empowering the tax administration to issue an assessment without notice if the taxpayer does not cooperate with tax audit officers or fails to provide the explanations requested;
reducing the interest rate on late payments from 1.5% to 0.5% where the delay does not exceed six months and to 1% where the delay is between six months and 12 months;
reducing administrative fines for taxpayers that delay paying taxes due from 10% to 5% for payments delayed for a period not exceeding 30 days; and from 20% to 10% for delays not exceeding 60 days; and
empowering the RRA to access information held by any person that may facilitate the implementation of the Tax Procedure Law, other tax laws in force, and all tax treaties ratified by Rwanda.

RWANDA: Beneficial ownership thresholds clarified

On 31 March 2023, Rwanda published in the Official Gazette new instructions for determining the threshold for identifying the beneficial owners of companies or partnerships, aiming to clarify the beneficial ownership thresholds and record keeping obligations introduced in 2021. As per the new instructions, a natural person is a beneficial owner if:

they hold, either directly or indirectly, at least 25% of either the shares in a company or the capital contribution in a partnership; or
they exercise, either directly or indirectly, at least 25% of the voting rights in a company or partnership.

RWANDA: Automatic exchange of information for tax purposes introduced

Following Rwanda's signing of the Multilateral Competent Authority Agreement on Automatic Exchange of Information on Financial Accounts (CRS-MCAA) on 28 March 2023, it gazetted a new law on the automatic exchange of information for tax purposes (No. 021/2023 of 31 March 2023) on 31 March 2023.

Under the new law:

all reporting financial institutions are obliged to identify reportable accounts and submit to the Commissioner General of the RRA an information return in respect of reportable accounts they maintain in a calendar year by no later than 30 April of the following year;
the RRA is permitted to engage in cooperation arrangements with tax administrations of other countries or jurisdictions with regard to the automatic exchange of information; and
an administrative fine of between RWF1-million and RWF2-million will be payable by reporting financial institutions that fail to provide the information required or provide false or incomplete information.

RWANDA: Deductible expenses capped

In an interview by The New Times newspaper with an RRA spokesperson on 17 March 2023, the RRA has reminded taxpayers that a cap of 73% has been placed on the deductibility of expenses not supported by an invoice generated by an Electronic Billing Machine (EBM), customs exit notes or invoices not subjected to withholding tax for corporate income tax purposes.

RWANDA: Manufacture and Build to Recover Program extended

The government on 27 February 2023 announced the extension of the Manufacture and Build to Recover Program, which was introduced in December 2020 to drive economic recovery from the effects of COVID-19, by an additional two years. The program is targeted at:

general construction projects with a minimum value of USD10-million;
the construction of manufacturing plants with a minimum value of USD1-million; and
the construction of agro-processing plants with a minimum value of USD100 000.

SÃO TOMÉ AND PRÍNCIPE: New stamp duty rates implemented

The Tax Directorate Communication Service on 14 April 2023 announced new stamp duty rates to be aligned with the entry into force of the new VAT regime. The new stamp duty rates, which were introduced by the Stamp Duty Amendment Code 2022 and will come into effect on 1 June 2023, include rates of:

5% on life and work accident insurance;
5% on other insurance;
1% on the transfer of real estate;
5% on interest, premiums, commissions or consideration for financial services;
10% on leasing and sub-leasing; and
1% on real estate leasing.

SÃO TOMÉ AND PRÍNCIPE: Normal and special VAT regime implemented

The VAT Amendment Code 2022 introduced a special VAT regime for taxpayers with turnover below STD1-million and a normal VAT regime for other taxpayers with effect from 1 June 2023. Under the VAT regimes:

taxable persons under the normal VAT regime are obliged to charge VAT at the standard rate of 15% and pay such VAT over to the state;
some basic products such as rice, corn flour, pasta, bread, milk and beans benefit from a reduced rate of 7.5%; and
taxable persons under the special VAT regime are not required to charge VAT, but are subject to a monthly rate of 7% of turnover if it exceeds STD100 000 or are required to pay a monthly fee of STD167 if the turnover is less than STD100 000.

SENEGAL: Tax electronic platform updated

Following a workshop evaluating its effectiveness, the Tax Administration has updated the electronic tax filing platform (sen-etafi) with the new version of the application going online on 20 April 2023.

On 27 April 2023, as a consequence of the update, the Director General announced the postponement of the deadline for filing financial statements via the platform from 30 April 2023 to 31 May 2023 to allow members of the National Order of Chartered Accountants and solution providers to make any necessary adjustments to the new version of the application.

SENEGAL: Mandatory beneficial ownership identification extended to all legal entities

On 24 March 2023, the Chief of the Division of Management and Ligation issued Letter No. 0110/MFB/DGID/DGC/BG of 23 March 2023 to extend the mandatory identification of beneficial ownership to all taxable and non-taxable legal entities.

Entities must keep a register at their headquarters in Senegal, listing beneficial owners and disclosing their identity, precise address, as well as the nature, method and extent of control over the entity. A beneficial owner is defined as a natural person who:

holds directly or indirectly 25% of the capital share or voting power of the declaring entity (2% for the mining sector);
has a controlling power over management or executive bodies, as well as over the general meeting of shareholders; or
is the legal representative of the declaring entity.

Through Decree No. 013335/MFB/DGID of 21 April 2023 the Minister of Finance has updated the definition of beneficial owners to exclude individuals who hold up to 25% of capital shares or voting rights. As a result, only individuals who ultimately hold directly or indirectly more than 25% of the capital shares or voting rights will be considered a beneficial owner.

SENEGAL: French synthesized text of Luxembourg-Senegal treaty published

On 24 March 2023, the government of Luxembourg published the French synthesized text of the Luxembourg - Senegal Income and Capital Tax Treaty (2016), displaying the modifications made to the treaty by the MLI.

The MLI therefore entered into force for Luxembourg on 1 August 2019 and for Senegal on 1 September 2022. Unless stated otherwise in the synthesized text, the provisions of the MLI will have effect with respect to the Luxembourg - Senegal Income and Capital Tax Treaty (2016):

In Luxembourg:
- with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2023; and
- with respect to all other taxes, for taxes levied with respect to taxable periods beginning on or after 1 March 2023.
In Senegal:
- with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2023; and
- with respect to all other taxes, for taxes levied with respect to taxable periods beginning on or after 1 January 2024.

SIERRA LEONE: Tax and Duty Exemptions Act 2023 enacted

On 24 April 2023, the Sierra Leone parliament enacted the Tax and Duty Exemptions Act 2023. The Act, applies to all categories of exemptions, will become effective following presidential assent. Under the Act:

new laws and contracts must comply with the provision of the Act to be enforceable; and
the Minister of Finance will be responsible for negotiating all exemptions, presenting them to the Cabinet and parliament, and seeking executive approval for exemptions during emergencies.

In the case of any conflict or inconsistency with other laws related to tax and duty exemptions, the Act will prevail.

SIERRA LEONE: Finance Act 2023 enacted

On 24 April 2023, Finance Act, 2023 received presidential assent and entered into effect from 1 April 2023. Significant amendments include:

introducing a minimum alternate tax ("MAT") of 3% of turnover for companies. With effect from the 2023 tax year, all companies subject to corporate income tax will be required to pay the higher of the corporate income tax, calculated at a rate of 25% on profits, and the MAT. A MAT credit can carried forward for up to 10 years and be used to offset the corporate income tax in years when it exceeds the MAT. An exemption is available for:
- start-up companies during their first three years of existence;
- companies under liquidation;
- foreign companies' resident in a country with a double taxation agreement with Sierra Leone and no permanent establishment in Sierra Leone; and
- foreign companies not required to register in Sierra Leone;
expanding the scope of digital supplies subject to general sales tax to include satellite television and online or digital gambling and betting activities;
removing specified items, including fee-based financial services, insurance services (excluding life insurance) and plant and machinery for agriculture, manufacturing and mining, from the list of supplies exempt from general sales tax;
amending the Stamp Duty Act, CAP 274 to increase of the stamp duty rate from 1% to 2% of the value of the property for conveyances and other assignments of property, real and personal, mortgages debentures and transfers thereof, and liquidations; and
charging a 2% tax on the total commission derived on mobile money transactions.

SIERRA LEONE: Global Forum on Transparency and Exchange of Information joined

Sierra Leone has become the 168th member of the Global Forum on Transparency and Exchange of Information for Tax Purposes and has committed to implement the international standards on transparency and exchange of financial account information with other members of the organisation, upon request and on automatic basis.

UGANDA: Alternative Dispute Resolution Procedure Regulations 2023 issued

The Minister of Finance, Planning and Economic Development, through the Statutory Instrument No. 28 of 2023, issued the Tax Procedures Code (Alternative Dispute Resolution ("ADR") Procedure) Regulations 2023.

The Regulations, which came into force on 6 March 2023, provides for an alternative mechanism to settle tax disputes between taxpayers and the tax authority. They provide that:

the application of ADR is voluntary;
dissatisfied taxpayers are required to apply to the Commissioner for the ADR within seven days after the tax decision;
taxpayers are required to select either conciliation or negotiation methods of ADR to be applied during a tax dispute;
both parties have a right to withdraw at any stage from the ADR proceedings before arriving at the settlement by notice in writing;
a taxpayer may appear for ADR proceedings in person, through a tax agent, through an employee or an advocate;
a commissioner may appear for the ADR proceedings by themself through a tax officer, or may be represented by an advocate; and
issues agreed upon during the ADR proceedings are put in a settlement agreement signed by the commissioner and the taxpayer or persons authorised to sign on their behalf.

UGANDA: Tax Amendment Bills 2023 tabled before parliament

On 30 March 2023, the Minister of Finance, Planning and Economic Development tabled before the parliament the Tax Amendment Bills 2023. The Bills will take effect on 1 July 2023, subject to approval and assent by parliament and the President. Significant amendments include:

direct taxes

widening the rules of income sourced in Uganda to include amounts arising from the disposal of industrial property or intellectual property used in Uganda;
allowing taxpayers to carry forward 100% of assessed losses for a period of five years, after which only 50% of assessed losses may be carried forward into the following year;
excluding capital gains or losses arising from the disposal of business assets from a person's chargeable income in a financial year;
scrapping initial allowances as an allowable deduction in deriving a person's chargeable income;
excluding from employment income gains derived by employees on the disposal of their rights or options to acquire shares under an employee share acquisition scheme;
introducing a final 5% withholding tax on the gross payments for purchases of all assets situated in Uganda;
charging a digital service tax at 5% on non-residents providing digital services, including online advertising, data services, services delivered through an online marketplace or intermediation platform, digital content services, including accessing and downloading of digital content, online gaming services, cloud computing services, data warehousing and other services delivered through a social media platform or an internet search engine;
amending tax rates applicable to gaming and lotteries;
implementing the provisions of the Convention on Mutual Administrative Assistance in Tax Matters and the Competent Authority Agreement on Automatic Exchange of Financial Account Information into domestic tax laws; and
waiving all interests and penalties owed by a taxpayer who voluntarily pays the principal tax outstanding as of 30 June 2023, by 31 December 2023.

indirect taxes

disallowing input VAT credits to:
- taxable persons who pay for entertainment through a form of membership in a club, association or society of a sporting, social or recreational nature; and
- non-residents supplying taxable services to non-taxable persons in Uganda.
extending the VAT place of supply rules for services outside of Uganda to include non-residents who supply digital and electronic services to non-taxable persons in Uganda;
expanding the scope of electronic services subject to VAT to include advertising platforms, streaming platforms and subscription-based services, cab-hailing services, cloud storage and data warehousing;
granting the Commissioner of the URA the authority to elect to:
- refund tax to a taxable person whose input credit exceeds his or her liability for the taxable period by UGX5-million or more;
- offset that amount against the future liability of the taxable person; or
- apply the excess in reduction of any other tax not in dispute due from the taxpayer; and
allowing non-resident suppliers of taxable services to pay taxes in USD.

ZAMBIA: Tax amnesty programme on penalties and interest extended

On 31 March 2023, the Minister of Finance and National Planning announced the extension of the tax amnesty programme waiving all penalties and interest on accumulated tax due, for a period of three months, effective from 1 April 2023.

The Zambian government introduced the tax amnesty programme on all penalties and interest accumulated up to 30 September 2022 as part of the 2023 Budget measures. The amnesty covers all tax types and initially ran for a period of six months, from 1 October 2022 to 31 March 2023.

ZIMBABWE: Global Forum on Transparency and Exchange of Information joined

Zimbabwe has become the 167th member of the Global Forum on Transparency and Exchange of Information for Tax Purposes. Zimbabwe has committed to implement international standards on transparency and the exchange of financial account information with other members of the organization, upon request and on an automatic basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Worldwide: Africa Tax In Brief (May 2023)

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