Africa tax in brief

TAXATION10DEMOCRATIC REPUBLIC OF THE CONGO (DRC): Refund of input VAT credit suspended

In terms of the DRC value added tax (“VAT”) legislation, export businesses, companies ceasing their activities, oil and mining companies (during the exploration phase) and companies making significant investments are entitled to request input VAT credit refunds.

However, on 18 April 2016, the government announced the suspension of the refund of input VAT credits for all taxpayers in an attempt to bolster its decreasing tax revenues resulting from the decrease in commodity prices.

DJIBOUTI: Finance Law 2016 implemented

Order No. 2016-214/PR/MB (“the Order”), implementing Finance Law 2016, was gazetted on 24 March 2016. Material tax amendments, applicable with effect from 1 January 2016, include:

Employees’ tax

  • The inclusion of benefits in kind on a monthly basis in employees’ taxable base, which is subject to individual income tax at progressive rates.
  • An exemption from individual income tax for taxpayers whose salary or assimilated income is less than DJF50 000 per month.
  • Taxpayers whose salary or assimilated income exceeds DJF50 000 under a contract lasting less than 1 month are subject to individual income tax at a fixed rate of 15%.

Capital gains tax

  • The taxable base is extended to include income derived from the sale of securities, real estate acquired or built, and the sale of securities representing real estate. However, gains derived from the sale of securities registered as assets of a company are exempt from individual income tax but subject to corporate income tax.

Business licence duty

  • The business licence duty generally applies at a fixed rate. However, with effect from 1 January 2016, private call centres and importers of goods are, in addition, also subject to progressive amounts varying from DJF700 to DJF5 000.

Real estate tax

  • The tax on developed real estate applies to rental income derived by taxpayers during the fiscal year, net of a deduction of 20% deemed to be management costs.

Stamp duties

  • The list of documents concerning the capital and existence of companies (capital increases, mergers and transfers of assets) that are subject to stamp duties is extended, subject to rates varying from DJF50 000 to DJF500 000.

NIGERIA: Tax Appeal Tribunal confirms that tax assessments are to comply with the enabling act

On 15 April 2016, the Lagos Tax Appeal Tribunal (“TAT”), ruled in favour of Star Deep Water Petroleum Limited (“Star Deep”) in its case with the Lagos State Internal Revenue Service (“SIRS”), on the basis that an assessment issued by the revenue authority is only final and conclusive where it complies with the provisions of the enabling act.

The principal issue in dispute was whether Star Deep was required to deduct and remit Pay-as-you-earn (“PAYE”) tax on the salaries paid to the employees provided to it by Chevron Nigeria Limited (“CNL”) between the 2005 and 2009 financial years. The salaries of these employees were borne by CNL.

The SIRS relied on the “manager concept” under the PAYE Regulations 2002, arguing that Star Deep had the responsibility to deduct and remit PAYE taxes on the salaries of these employees, whether or not they were its employees. On this basis, the SIRS raised a PAYE tax assessment on Star Deep.

In terms of the “manager concept” contained in Regulation 2(3) of the PAYE Regulations, where an employee works under the supervision or management of a person who is not his employer, that person (referred to in the Regulations as the “manager”) is required to furnish the particulars of the employee’s emoluments to the relevant SIRS, deduct the tax due from the employee’s emolument, and remit the tax deducted to the SIRS.

Star Deep argued that, in terms of sections 81 and 82 of the Personal Income Tax Act, only employers are required to deduct and remit PAYE and the PAYE Regulations therefore did not apply to it during the years in question because it did not have any employees of its own at that time.

The TAT upheld the position of Star Deep that the provisions of the PAYE Regulations did not apply to it during the years under consideration and discharged Star Deep of the PAYE tax assessment.

ZAMBIA: Mining Tax Regime changes pursued

The Zambian Government has confirmed its proposals to redesign the royalty regime for mining companies by introducing the Mines and Minerals Development (Amendment) Bill into the National Assembly.

The new regime follows an aborted attempt to hike royalties last year, when the Government had to retract its attempt to impose split royalty rates of eight percent and 20% on underground mining and on open-cast mining operations, respectively. They have been replaced, in the interim, by keeping the previous six percent royalty rate for underground mining and fixing a nine percent rate for open-cast operations.

Under the new proposed legislation, which would be implemented retroactive to 1 April 2016, the Government has proposed a system of variable royalty rates for copper production. The rate would be four percent when prevailing copper market prices are less than USD4 500 per metric tonne, six percent when prices are USD6 000 per metric tonne or greater, and five percent for all prices in between.

In addition, a flat mineral royalty rate of five percent is to be set for other base metals and minerals, except for a rate of six percent for precious metals and gemstones. The new system is aimed at sustaining Zambia’s significant copper mining operations, and the jobs they provide, in a period of low mineral prices.

ZIMBABWE: Electronic filing of tax returns introduced

The Zimbabwe Revenue Authority (“ZIMRA”) issued a public notice that from 1 April 2016, tax returns in respect of the following taxes must be submitted electronically: income tax, value added tax, PAYE, capital gains tax and presumptive tax. The issuance of tax clearance certificates and the registration of business partnerships will also be processed electronically.

Taxpayers are required to register with the ZIMRA’s electronic services platform.

ZIMBABWE: Treaty with South Africa ratified

On 14 April 2016, Zimbabwe announced that the country had ratified the 2015 South Africa-Zimbabwe double taxation agreement (“DTA”), by way of Statutory Instrument 40 of 2016, as published in the Official Gazette of 8 April 2016.
The DTA awaits ratification by South Africa, before it can enter into force. Once in force and effective, the new treaty will replace the South Africa – Zimbabwe Income Tax Treaty (1965).

Sources include IBFD, IHS, taxnews.com, and other

 

Celia Becker

Africa regulatory and business intelligence | executive
cbecker@ENSafrica.com
+27 82 886 8744

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