Africa Tax In Brief

AFRICA: the Democratic Republic of the Congo joins the African Tax Administration Forum

In June 2024 the Democratic Republic of the Congo (DRC) has joined the African Tax Administration Forum (ATAF), becoming the 44^th member of the organisation.

BURKINA FASO, MALI & NIGER: Tax treaties with France terminated

On 21 June 2024, France published  notices in Official Journal No. 0145 regarding the denunciation by Burkina Faso, Mali and Niger of the tax treaties with France.

According to the notice:

• The Burkina Faso treaty is suspended from 8 November 2023 to 31 December 2024, and terminated with effect from 1 January 2025 pursuant to  article 44 of the treaty;
• The Mali treaty is suspended from 5 March 2024 to 31 December 2024, and terminated with effect from 1 January 2025 pursuant to  article 44 of the treaty; and
• France has suspended the application of the Niger treaty as of 5 June 2024.

ETHIOPIA: Blanket VAT exemptions rescinded

On 20 June 2024, the Ministry of Finance issued a directive with immediate effect rescinding all VAT exemptions previously granted since the enactment of VAT Proclamation No. 285/2002 (as amended). Exceptions to the blanket VAT rescissions include those exemptions granted under article 8(2) of the VAT Proclamation and those in articles 19 to 33 of VAT Regulation No. 79/1995.

Under the new directive (Value Added Directive No. 1006/2024) the following categories of locally produced and imported goods are exempted from VAT:

• selected cereals and pulses;
• agricultural inputs;
• cooked or prepared foods and drinks; and
• select capital goods and medical items.

KENYA: Finance Bill 2024 withdrawn due to sustained public pressure

The 2024-25 Budget Statement was presented to the National Assembly on 13 June 2024 and various tax measures were proposed through the Finance Bill 2024. Following initial protests in the Nairobi streets on 18 June 2024 by Kenyans dissatisfied with the proposed changes in the Finance Bill 2024, the government conceded to drop certain proposals from the Bill 2024. Subsequently, sustained public pressure has forced the Kenyan President to announce the withdrawal of the Finance Bill 2024, in its entirety on 26 June 2024.

MADAGASCAR: Amending Finance Law 2024 adopted

On 10 June 2024, the National Assembly of Madagascar adopted Bill No. 012/2024, a draft law amending the Finance Law, which primarily aims to strengthen revenue mobilisation and security through the reinforcement of certain tax measures. The Bill will now pass through the Senate before a possible referral for a second reading to the National Assembly. Significant proposed amendments include:

Direct taxation

• Extending the arm's length principle to all domestic transactions;
• Non-deductibility of losses arising from the revaluation of investment property or biological asset;
• Increasing the minimum income tax amount from MGA320 000 to MGA1-million for majority shareholder managers of private limited companies;

Indirect taxes

• Banning export for taxpayers not up to date with IREx arrears payments;
• Exempting from VAT on donations, sales of goods and services to foundations recognised as being of public utility;

Tax administration

• Implementing an online invoicing solution through the "e-facturation" module which is a structured, harmonised and centralised invoicing system to monitor transactions;
• Launching an "e-VAT" platform to strengthen VAT administration by ensuring optimal management and effective control of tax, curbing tax fraud and increasing tax revenues; and
• Allowing companies subject to corporate income tax to have their first financial year shorter or longer than 12 months but not exceeding 18 months.

NIGERIA: Tariffs, excise duties and VAT on imported pharmaceutical inputs removed

In an attempt to revitalise the health sector of the country and increase the local production of healthcare products, the President has signed an Executive Order removing tariffs, excise duties and VAT on specified machinery, equipment and raw materials for use in the health sector.

According to the Order, the specified items include:

• active pharmaceutical ingredients;
• excipients; and
• essential raw materials required for manufacturing drugs, syringes and needles, insecticides, nets and rapid diagnostic kits.

The Federal Inland Revenue Service, Nigeria Customs Service and other ministries and agencies are charged with the responsibility of implementing the Order swiftly, with special waivers and exemptions effective for two years.

MAURITIUS: 2024-2025 Budget Speech delivered

On 7 June 2024, the Minister of Finance delivered the Budget 2024-2025 Speech to the National Assembly. Significant proposed tax amendments include:

Direct taxation

• Introducing a 2% corporate climate responsibility levy on profits of companies with turnover of at least MUR50 million in an accounting year in order to bolster its climate agenda;
• Introducing a 15% tax on the intellectual property assets of manufacturing companies in the medical, biotechnology or pharmaceutical sectors;
• Extending tax incentives in the form of investment tax credits on capital expenditure to companies involved in recycling activities;
• Granting an eight-year tax holiday to captive insurance companies effective from the date of starting operations. Freeport operators holding a global business licence are not entitled to the tax holiday;
• Providing tax incentives for private investors who develop the creative industry, including concert venues and theatres;
• Introducing a partial exemption of 80% of income claimed when substance requirements are satisfied by a company holding a robotic and artificial intelligence enabled advisory services licence or a payment intermediary service licence. The exemption also applies to a licensee deriving income from the sale of money market instruments or debt instruments;
• Introducing a 300% deduction on donations made to NGOs involved in combating drug abuse, gender-based violence, poverty alleviation and protection of animals;
• Introducing a 200% deduction on expenses incurred in supporting registered artists;
• Increasing the tax exemption from the first MUR2.5-million to MUR3-million for an individual deriving a lump-sum payment from a pension scheme, or a retiring allowance or severance allowance, from an employer;

Indirect taxes

• Exempting from VAT:
  • goods and services required for a project funded by a donor organization to the extent of a 50% grant or concessionary loan;
  • motor vehicles used in construction when purchased by approved contractors engaged in the construction of social housing units;
  • motor vehicles purchased by taxi operators in respect of the first MUR120 000 of VAT payable;
  • the construction of pre-primary or technical and vocational education and training buildings;
  • entrance fees to digital art galleries; and
  • services purchased by diplomatic missions and agents;

Administration

• Renewing the tax arrears payment scheme for one year with payment of tax in full by 31 March 2025. Under the scheme, a full waiver of penalties and interest for tax arrears outstanding under the Income Tax Act, VAT Act and Gambling Regulatory Authority Act will be applicable to individuals who register by 31 December 2024;
• Introducing of a contribution arrears settlement scheme to fully waive penalties on national pension contributions;
• Postponing hearings by the assessment review committee to be made available only on specified grounds, such cases to be determined within a prescribed period of time;
• Requiring banks to provide details of deposits made by their clients into their credit cards or prepaid card accounts;
• Considering a notice from the Mauritius Revenue Authority to an individual's e-tax account as officially delivered on that date once an email or short message service (SMS) is sent to the taxpayer; and
• Extending the time limit for requesting information and records for VAT returns submitted late to a period of four years from the taxable period for which the VAT return is submitted. The same rationale applies for issuing an assessment where the VAT return is submitted late, the four-year period applies to four years before the taxable period in which a VAT return is submitted instead of the taxable period in which the liability arose.

RWANDA: directive on payment of tax arrears in instalments issued

The Commissioner General of the Rwanda Revenue Authority has issued Directive No. 001/2024 of 31 May 2024, effective from 3 June 2024, determining the modalities and conditions for payment of tax arrears in instalments. Under the Directive:

• A taxpayer with outstanding tax arrears unable to pay the amount in full immediately may opt for payment in instalments based on their financial capacity. Interest is imposed on the unpaid principal amount throughout the instalment period;
• A taxpayer wishing to pay tax arrears in instalments is required to submit an application to the Commissioner specifying the type of tax; the instalment plan requested; the tax period; and the reasons for not being able to pay the full tax due at once;
• Following receipt of the application of the taxpayer, the Commissioner may allow the taxpayer to pay the tax due in 12 instalments within a period of one year and may extend the period of payment in instalments by another period not exceeding 24 months based on evidence of circumstantial financial hardship;
• A taxpayer that is allowed to pay tax arrears in instalments is required to sign an instalment contract with the Commissioner indicating the number of instalments to which it has committed and the amount to be paid;
• Enforcement measures are suspended once a taxpayer complies with the obligations under the signed instalment contract with the Commissioner; and
• A taxpayer that fails to adhere to the terms of an existing instalment contract may be subject to the enforcement tax recovery measures.

RWANDA: Law on Taxation of Minerals adopted

On 24 May 2024, Parliament adopted the Law establishing taxes on minerals. Once promulgated by the President and gazetted, the Law will repeal Law No. 55/2013 of 02/08/2013 on minerals tax, which has been in force since 2013. Details of the changes to be introduced by the Law will be reported once it is published in the official gazette.

SENEGAL: Changes to VAT on cross-border provision of digital services

The Senegalese Ministry of Finance published an order replacing the decree that implemented VAT on the cross-border provision of digital services from 1 April 2024. Under the new decree, the rules are now effective from 1 July 2024, as opposed to 1 April 2024. It also includes:

• Guidance on the applicable foreign exchange rate for VAT compliance;
• Clarification that non-resident digital services providers and marketplaces are required to issue VAT invoices and provides specific invoice requirements for both business-to-business (B2B) and business-to-consumer (B2C) transactions; and
• Measures introducing relief for taxpayers from certain record-keeping requirements.

TANZANIA: Budget 2024 presented to National Assembly

The Minister for Finance presented the Budget Statement for the financial year 2024-25 to the National Assembly on 13 June 2024. Significant proposed tax amendments include:

Direct taxes

• Exempting tea-processing companies that persistently make losses from paying alternative minimum tax for three years;
• Introducing the following withholding taxes:
  • 3% on income derived from the transfer of digital assets;
  • 2% on payments received on sale of industrial minerals with the exception of salt and metallic minerals or other precious minerals;
  • 5% on income derived from the business of digital content creation done by resident business entities;
  • 2% on payments made by resident entities for purchase of agricultural produce, fishing, animal and poultry keeping, as well as forestry produce;

Indirect taxes

• Imposing a VAT zero rate on gold supplied to the Central Bank of Tanzania;
• Exempting from VAT:
  • the supply of aircraft, aircraft engines, aircraft parts and aircraft maintenance to a local aircraft manufacturer, assembler or producer;
  • the supply and importation of motor vehicles, equipment, machinery and other goods for official use by Tanzania People's Defence Force; and

Administration

• Introducing a requirement for VAT refunds to be paid within 30 days from the date of submission of the refund applications.

UGANDA: Budget 2024 presented to the public

Minister of Finance, Planning and Economic Development presented the Budget for the financial year 2024-25 to the public on 13 June 2024. Proposed significant tax amendments include:

• Exempting income derived from:
  • the production of electric vehicles, electric batteries or electric vehicle charging equipment, or fabrication of frames and bodies of electric vehicles by an investor operating in or outside an industrial park or free zone;
  • the operation of a specialized hospital facility by an investor in or outside an industrial park or free zone;
• Imposition 10% withholding tax on commission paid to payment service providers, such as banking agents or any other agents offering financial services;
• Imposing VAT on taxable goods and services supplied by a taxable employer to an employee for no consideration;
• Expanding the list of VAT-exempt supplies to include the supply of an electric vehicle or its body and frame manufactured or fabricated locally, and electric vehicle charging equipment or charging services; and
• Extending a waiver of penalties and interest on areas outstanding as at 30 June 2023.

ZAMBIA: E-invoicing required for VAT-registered taxpayers

Following the enactment of the VAT (Amendment) Act, 2023 and the gazetting of the VAT (Electronic Invoicing System) Regulations 2023, the Zambia Revenue Authority has announced that, from 1 July 2024, it will be mandatory for all VAT-registered taxpayers to issue electronic invoices using the "smart invoice" system.

The smart invoice electronic invoicing system replaces the physical electronic fiscal devices (“EFDs”) that are currently used to record all commercial transactions and send invoice and receipt information in real-time to the tax authority. While the implementation of EFDs only covered VAT and insurance premium levy, the smart invoice system will cover more types of taxes or levies such as VAT, turnover tax, rental income tax, insurance premium levy, tourism levy, and excise duty on electricity.

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.