Africa tax in brief

Author: Celia Becker. ANGOLA: Securities Code Regulations enacted The Securities Code Regulation (Regulation No. 6/16) (the “Regulation“) was approved by the Council of Administration of the Capital Market Commission and gazetted on 7 June 2016. The Regulation contains the organisation rules and administrative requirements for open companies and other issuers of securities admitted to trading in regulated markets. CAMEROON: Tax amnesty on property tax announced On 21 June 2016, Cameroon’s National Treasury published a notice on its website introducing tax amnesty on property tax. According to the notice, provided that payments of property tax are made before 31 December 2016, no penalties will be levied.

OECD Request for Input on the development of a multilateral instrument to implement tax treaty BEPS measures

Author: Elsabe Strydom (ENSafrica). The Organisation for Economic Co-operation and Development (“OECD”)/G20 Base Erosion and Profit Shifting (“BEPS”) Project identified 15 actions based on the following three key themes, being: the introduction of coherence in the domestic rules that affect cross-border activities; the reinforcement of substance requirements in the existing international standards; and the improvement of transparency and certainty. In particular, the final BEPS package, released on 5 October 2015, represents a substantial overhaul of the international tax rules and once the measures become applicable, it is expected that profits will need to be reported where the economic activities that generate them are carried out and where value is created.

Africa tax in brief

Author: Celia Becker (ENSafrica). BOTSWANA: Exchange of information agreement with Isle of Man enters into force The Botswana/Isle of Man Exchange of Information Agreement (2013) entered into force on 5 March 2016 and generally applies from 5 March 2016. KENYA: Stamp duty on nominal share capital Following publication of Legal Notice No. 60 of 2016 dated 12 April 2016, the initial nominal share capital of a limited liability company is now exempt from stamp duty. MALAWI: 2016/17 Budget presented to parliament On 27 May 2016, the Minister of Finance, Economic Planning and Development presented the Budget for 2016/17 to parliament.

Tax relief to revive flagging SA shipping industry

Author: David Warneke, Tax Partner, BDO South Africa. From 1 April 2014[1], South African (SA) resident companies engaged in international shipping have enjoyed a far better income tax dispensation than before. If you are involved in this industry, make sure your company is enjoying the benefits described below. Prior to this date, international shipping income derived by such companies was generally subject to SA tax at the rate of 28%, the rate applicable to other types of companies. The only particular incentive for such companies was related to tax depreciation on the cost of their ships. SA had a wholly uncompetitive tax dispensation for such companies, whereas in order to attract such companies, many other jurisdictions have either introduced a ‘tonnage tax’ – tax based on the tonnage of the ship rather than profits of the shipping company – or exempted such income from tax altogether.

Cross Border Interest Paid by a South African Resident: Tax Issues that Arise

Author: Siyasanga Madikazi (Tax Trainee), BDO South Africa. Cross border transactions, as well as growth in international trade between companies within the same group, has increased significantly in recent years. This often results in debts between resident and non-resident companies and numerous complexities from a South African tax perspective. Interest payments by residents to non-residents are generally subject to interest withholding tax (WHT) at 15%. Whether WHT applies depends on whether a Double Tax Agreement (DTA) between South Africa and the country of residence of the recipient exists to give South Africa the rights to tax. It also depends on whether the interest is subject to South African income tax (as opposed to interest WHT) in the hands of the non-resident recipient.

Reportable Arrangements – Foreign Services

Author: Khutjisho Ramosebudi (Tax Trainee), BDO South Africa. SARS Public Notice 140 (3 February 2016) contains a new list of Reportable Arrangements (RAs) in terms of the Tax Administration Act (TAA). The RA regime acts as an early warning for SARS in respect of various types of arrangements that could pose a risk to the fiscus. RAs do not necessarily allow SARS to act, for example, by disregarding or re-characterising steps in or parts to the arrangement in terms of the general anti-avoidance provisions in the Income Tax Act.

Brief window of opportunity for South Africans named in the Panama Papers

A number of South African individuals, trusts and companies feature in the recent data leak involving clients of Panamanian law firm Mossack Fonseca. Although the publication of the data by the International Consortium of Investigative Journalists does not allege any violation of tax laws or exchange control regulations by those identified in it, the South African Revenue Service (“SARS”) and the South African Reserve Bank (“SARB”) have indicated that they will be investigating the tax and exchange control affairs of these South Africans. As a result, those named in the leak should consider urgent steps to address any potential tax or exchange control transgressions.

Update on the taxation of South African dividends to the Netherlands

Author: Stephan Spamer and Howmera Parak (ENSafrica). In 2014 and 2015, ENSafrica published two articles on the “most favoured nation clause” contained in article 10(10) of the protocol (“2008 Netherlands Protocol”) issued under the Netherlands/South Africa (“SA”) double tax agreement (“Netherlands/SA DTA”). In the 2014 article, ENSafrica highlighted the view that has been expressed in the market that article 10(10) of the 2008 Netherlands Protocol gives rise to a complete exemption from dividends tax in SA

Can a controlled foreign company have more than one foreign business establishment?

In terms of the South African controlled foreign company (“CFC“) legislation contained in section 9D of the Income Tax Act, 58 of 1962 (the “Act“), where South African residents directly or indirectly hold more than 50% of the total participation rights (essentially, the right to participate in the benefits of the rights attaching to a share) in a foreign company, a proportional amount of the “net income” of that foreign company (as a CFC) will be included in the income of those residents. In determining the “net income” of the CFC, section 9D(9)(b) of the Act exempts, inter alia, any amount which is attributable to any foreign business establishment (“FBE”) of that CFC.

Pension funds and BEPS

Author: Magda Snyckers (Tax Director at ENSafrica). Is the current international tax focus on base erosion and profit shifting (“BEPS”) relevant for tax-exempt pension funds? In particular, should the trustees and/or administrators of pension funds take note of the finalisation by the Organisation for Economic Co-operation and Development (“OECD”) of the 15 point action plan to address BEPS?