The African tax legislative perspective. Then, now and what could be around the corner

Transcription

1 The African tax legislative perspective Then, now and what could be around the corner

2 Panel Moderator Panel Natasha Meintjes Luis Marques Grace N Mulinge Ferdinand Nji Claudia Upham Africa Tax Coordination Services Leader Country Managing Partner EY Angola Senior Manager Tax EY Kenya Senior Manager Tax EY Cameroon Manager Africa Tax Coordination Services Peter Kinuthia Tax Manager Nestlé Equatorial Africa Region Page 2

3 Agenda Background to the Africa Tax Research Network (ATRN) Perceptions and challenges The African tax legislative perspective: Then: Legislative changes Now: Current challenges panel discussion Around the corner: Feedback based on ATRN conference and panel discussion Page 3

4 Background to the (ATRN) Page 4

5 The inaugural Africa Tax Research Network s conference The Africa Tax Research Network (ATRN), a scientific committee of the African Tax Administration Forum (ATAF), was established in May 2014: Purpose- Mobilizing domestic resources - the platform of choice for African tax research: Need for dialogue, research and collaboration Identify potential synergies and linkages, in areas of research, between academics, policymakers, researchers and tax officials from the ATAF member countries Theme of the inaugural congress held in Cape Town: contemporary tax challenges for African countries EY responded to the call for papers earlier in the year 46 of the approximately 80 papers submitted were presented at the conference, attended by more than 100 delegates Page 5

6 EY paper submitted: Tax compliance challenges of inbound multi-nationals in Sub-Saharan Africa Focus of the paper: Common tax compliance challenges faced by multinational companies (MNCs) in Sub-Saharan Africa We viewed these challenges through the following four lenses: Lens 1 Lens 2 Lens 3 Lens 4 Legislative perspective Filing and payment perspective Logistical perspective Peculiarities and other items Considering potential areas for collaboration and improvement through lessons learned EY office No EY office, but support available Page 6

7 Addressing perceptions and challenges Page 7

8 Addressing perceptions and challenges Taxpayer Tax authority Perception or reality? Targeted MNCs not paying fair share of tax Challenges Uncertain tax positions Attract foreign direct investment (FDI) Undocumented practices Meet revenue collection targets Keeping up to date Limited resources Page 8

9 Then: Legislative changes Page 9

10 The African tax legislative perspective: Legislative changes Using a heat map, we have highlighted legislative changes seen across Sub Saharan Africa ( ), including: The introduction of new acts Repeal and replacement of existing acts Significant changes in an existing act Number of changes enacted during last five years >3 tax types 1 3 tax types <1 or no change Not included in research Page 10

11 Considerations Does the increased number of legislative changes help achieve: Greater tax certainty for the taxpayer? More revenue for the tax authority? Page 11

12 The African tax legislative perspective: legislative changes Easing the compliance burden In the news: DRC announces (effective 1 September 2015) a single consolidated return for IPR (PAYE), INSS (Social Security), INPP (training tax) and ONEM (Office National de l Emploi) Kenya announces the annual corporate tax return to be filed on the itax platform, effective 1 August 2015 Chad extends the deadline to submit the annual corporate tax return from 31 March to 30 April Botswana introduced e-services, taxpayers can file value-added tax (VAT) returns online and view their tax information Mauritius introduced an electronic procedure for filing objections against tax assessments (E-objection) through a dedicated platform, effective 01 July 2015 Page 12

13 The African tax legislative perspective: Legislative changes A snapshot of new acts and taxes introduced: New taxes and levies Namibia withholding tax (WHT) nonresidents South Africadividend Withholding Tax (WHT) Ghana National Fiscal Stabilisation Levy (NFSL) Kenya money transfer tax (MTT) Kenya capital gains tax (CGT)* Namibia vocational education and training levy Angola special contribution on current invisible transactions** Congo-regional tax Zimbabwe MTT New acts and reforms of existing acts VAT introduced in: Democratic Republic of Congo (DRC) Seychelles Swaziland VAT Act reforms: Ghana Kenya Reforms of social taxes: Kenya national social security ** Nigeria pension Reforms of existing acts: Angola-corporate income tax (CIT) and personal income tax (PIT) Tanzania-VAT * Reintroduction **Subsequently stayed Page 13

14 The African tax legislative perspective: Legislative changes Snapshot of changes in rates direct and indirect taxes Senegal: CIT (2013) Rate increase from 25% to 30% Ghana: VAT (2013) Rate increase from 12.5% to 15% Gabon: CIT (2013) Rate decrease from 35% to 30% Namibia: CIT (2013) Decrease Increase Rate decrease from 34% to 33% for nonmanufacturing entities; Further 1% decrease announced. Chad: CIT (2015) DRC: CIT (2013) Rate decrease from 40% to 35% Rate decrease from 40% to 35% Congo: CIT (2013 & 2014) Rate decrease from 34% to 33% (2013), further 3% to 30% (2014) Madagascar: CIT (2013) Rate decrease from 21% to 20% Page 14

15 Consideration Should multinationals be encouraged to obtain a statement of account from the revenue authorities? Page 15

16 The African tax legislative perspective: legislative changes Easing the compliance burden: Voluntary disclosure and amnesty programs Country Year Detail South Africa (Voluntary Disclosure Program 2) 2012 Administered under the Tax Administration Act, with effect from 1 October 2012 for all taxes administered by South African Revenue Service (SARS) Administrative penalties can be levied by SARS in terms of the published reducing scale. Zimbabwe 2014 Amnesty on interest and penalties on unpaid covered taxes from 1 February 2009 to 30 September 2014 Application lodgement period was extend to 30 June 2015 Angola 2015 Exceptional amnesty program introduced for periods up to December 2012 under the new Tax Enforcements Code This came into force on the first day following the approval of the new code (23 October 2014) Seychelles 2015 Announced in March 2015, taxpayers have 3 options to settle all outstanding taxes Interest will be waived for the three options. The penalty waiver varies dependent on settlement dates Page 16

17 The African tax legislative perspective: Legislative changes Creating certainty: The move to electronic filing: Country Year Detail South Africa 2011 Effective from 1 October 2012 Regulates administrative procedures of all tax acts administered by the commissioner Tax administration acts Angola 2015 Tax Law Procedure Code (TPC) and Tax Enforcements Code (TEC) introduced effective 1 January 2015 Tanzania 2015 Introduced effective 01 August 2015 Consolidates the provisions relating to tax administration, simplifying the administration of tax and enforcement of tax laws by the Tanzania Revenue Authority Electronic filing available Electronic filing -pilot Manual filing Not included in research Page 17

18 The African tax legislative perspective: panel discussion Page 18

19 Consideration Is it perception or reality that the multinational is targeted and not paying its fair share of tax? Page 19

20 The African tax legislative perspective-now Addressing current challenges Uncertainty Manual interventions Engagement Taxpayer Tax authority Expected changes announced but not yet effective Page 20

21 The African tax legislative perspective: around the corner Page 21

22 The African tax legislative perspective: around the corner Africa is too rich to be poor: Fighting over a diminishing cake guard against harmful tax competition-stop the transfer of taxing rights to developed countries Key themes discussed Illicit financial flows are countries really getting the investments or are they paid back out? Caution against internal base erosion address corruption Need to build trust with MNCs Broadening the tax base: Reliance on single source of income-too much focus on extractive industry and the taxes on commodities Offering incentives and giving exemptions is not the answer to attract foreign investment Tax administrators: Investing in tax systems Improve capacity and technical competence Transfer pricing: Does the Organization for Economic Cooperation and Development (OECD) or United Nations (UN) model work in Africa? Current challenges experienced by revenue authorities The application of the arms length principle in the absence of comparable data Key priorities ATAF is drafting a model treaty to be implemented by African countries Data collection and exchange of information Return on investment identification of taxpayers for audit and collection of taxes Internal reviews needed reorganization of tax function large tax payer offices; self-assessments; trust to be built Domestic revenue mobilization: Resource mobilization Availability of information Technology advancement Tax reforms critical for advancement Engagement with taxpayers Page 22

23 The African tax legislative perspective: Around the corner ATAF encouraged research based on priorities: Guide against wrongful competition in tax laws in Africa Review of incentives and exemptions caution against taxing rights transferred to developed world Lopsided domestic legislation focus on extractive industry legislation Investigate root cause of problems return on investment is necessary Create framework for growth and formal employment creation Partnerships are needed for harmonization Africa must support own development and growth Caution against corruption must be eliminated Owning the responsibility for growth and the future Page 23

24 In closing Page 24

25 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EYGM Limited. All Rights Reserved. EYG no. DL1425 This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com