Welcome to our inaugural Baker McKenzie Africa Tax Newsletter. With insights from Africa-focused tax advisers from Baker McKenzie and our network of African hub firms, we aim to provide you with regional updates and practical guidance on the tax implications of doing business across the large and diverse African continent. Below are the most recent tax-related developments across the region, with a spotlight on Southern Africa.
The Ministry of Finance and Economic Development introduced the Finance (Miscellaneous
Provisions) Bill 2019 to the National Assembly for parliamentary debates in July 2019. Among the major amendments to the Income Tax Act were the introduction of Controlled Foreign Company (CFC) Rules for Mauritius-resident companies and the change in the means of determining the tax residency of companies. Also, significant amendments to the Financial Services Act now require Global Business License companies (GBC) to meet economic substance requirements in or from Mauritius.
The National Treasury (NT) and the South African Revenue Service (SARS) published the 2019 Draft Taxation Laws Amendment Bill (Draft TLAB) and the 2019 Draft Tax Administration Laws Amendment Bill (Draft TALAB) in July 2019, providing the necessary legislative amendments required to implement more complex tax announcements made in the 2019 Budget Review.
The amendments relate to the treatment of income tax (for individuals, businesses and financial institutions and products) and related incentives, and the interaction between the employment tax incentive and the Special Economic Zone (SEZ) provisions, amongst others.
With the enactment of the Income Tax (Amendment) Act No. 17 of 2018 in January 2019, the Government of the Republic of Zambia introduced a 30% limitation on the deductibility of interest paid or accrued by a business in a charge year. This limitation applies to interest on all forms of debt; payments linked to the financing of an entity to be determined by the Commissioner-General of the Zambia Revenue Authority (ZRA); and expenses incurred in connection with the raising of finance.
The Zambian Government also widened their tax net with the extension of the Property Transfer Tax (PTT) on offshore share transfer transactions as well as intellectual property, raising complexities on the impact and operational details of this extension.
Contact Emmanuel Manda of Musa Dudhia & Company for any queries.
The Zimbabwe dollar was effectively reintroduced through Statutory Instrument 142 of 2019, Reserve Bank of Zimbabwe (Legal Tender) Regulations, 2019 which ended the multicurrency system and determined the Zimbabwe dollar as the sole legal tender in Zimbabwe. This has been the most significant legislative development in Zimbabwe, which has since seen a High Court judgment in foreign currency, introduction of new income tax bands, and the registration requirement for foreign liabilities and legacy debt.
Other Africa Tax News
Algeria – The Draft Finance Law 2020 of Algeria introduces new measures including the increase of the standard VAT rate from 19% to 20%, taxation of electronic deliveries, increase of the income tax regime, taxation of company dividends, and reorganization of property tax, amongst others. A number of decisions have also been presented at the Council of Ministers.
Nigeria – The Federal Inland Revenue Service (FIRS) issued a public notice on 19 August 2019 to all resident and foreign companies who maintain accounts with Nigerian banks, enforcing payment of tax liabilities against all directors, managers, secretaries and management personnel, if the companies do not take steps to regularize their tax status with the FIRS.
Tanzania – A recent decision by the Court of Appeal of Tanzania ousted the jurisdiction of the Tax Revenue Appeals Board and the Tax Revenue Appeals Tribunal in relation to the waiver of a tax deposit.