July 2022 / Focus Africa

August 1 2022

Africa in Review by the Numbers (July 2022)

$60 million  Financial package has been signed by the African Development Bank (AfDB) comprising $50 million subordinated debt to support CRDB Bank’s regional expansion efforts and a senior loan of $10 million to accelerate access to finance for small businesses managed and owned by women in Tanzania. (Africa Business Communities)

1 million Barrels of oil are reportedly being produced in Libya daily, boosting the North African country's production after output had halved since April. The boosted production levels result from reopened fields and export terminals that were largely shut since the spring. (Oil and Gas 360) 43% Increase in revenues from Uganda's coffee exports for the 12 months which ended in June 2022. The exports amounted to 6.3 million 60-kilo bags worth $862.28 million compared to 6.1 million 60-kilo bags valued at $ 559.16 million the previous year. (Food Business Africa)

$750 million  Loan from Afreximbank approved by Ghanaian lawmakers as part of a $1 billion credit target to finance the national budget. The country expects to get the remaining $250 million from other international lenders. (Business Insider Africa)

300,000 Solar kits to be distributed in Mozambique as part of a project to achieve universal access to electricity by 2030. The Netherlands Development Organisation (SNV) signed an agreement with electricity provider Ignite Power to provide solar home systems to areas not served by the national grid. (Afrik 21) 70% Jump in the cost of Nigeria's petrol subsidy should it remain in place next year, for a total state expenditure of up to $16.2 billion. Africa's largest oil producer imports refined products because of a lack of domestic refining capacity. (Reuters)

$459.8 million Sale announced by Diageo for its Cameroonian Guinness unit to Castel Group. The London-based brewer said the sale would enable expanded brewing and distribution capacity, having outgrown its existing operations in the country. (Business Insider Africa)

25% Stake sold by Airtel Africa in its local mobile money business, Airtel Money, in a deal that values the mobile money provider at $2.1 billion. The sale is part of a continent-wide deal that has seen Airtel raise $550 million from four institutional investors. (CEO Business Africa) 100 MWp Solar PV plant to be built in Chimuara, Mozambique by Solarcentury Africa, its second in the country. The project will be implemented in several phases, the first of which will have a capacity of 30 MWp. (Africa Energy Portal)

$1.3 billion Funding rolled out by European Union to help Nigeria to diversify its economy away from oil. The funding will be provided until 2027 under the EU's Green Deal initiative and will, among other things, focus on enhancing access to renewable energy and boosting the development of the agricultural sector. (CNBC Africa)

150,000 People in Democratic Republic of Congo to benefit from the new mini-grid model launched by Bboxx in partnership with telecommunications operator Orange. The mini-grid project will help accelerate the provision of clean energy access for households across the country. (ESI Africa) 400,000 Hectares of land has been set aside in Tanzania for wheat cultivation aimed at ending the shortage in the country. The Ministry of Agriculture has also committed to spending $66.5 million on research and development to enhance crop production, including supplying improved seed to smallholders. (Food Business Africa)

$2 billion Debt guaranteed by the UK government to help the AfDB to free up finance for climate-related projects. The additional lending capacity will be used to fund projects for climate resilience and renewable energy within the region. (Bloomberg)

10 million tonnes Volume of wheat to be imported by Egypt within the next six months to boost local consumption and remaining reserves. In addition, the World Bank approved a loan worth $500 million to boost food security in the country. (The Africa Report) 12% Rise in palm kernel oil production expected in Nigeria in 2022/23, bringing output to 440,000 metric tons (MT), up from the previous period's 393,000 MT. The oil extraction rate is also expected to improve, due to private sector investors improving operation efficiency by upgrading to more modern crushing and extraction equipment and machinery. (Food Business Africa)

Review by Kili Partners . Powered by Asoko Insight

July 2 2022

Nigeria Terminates Reduced 7.5% Withholding Tax Rate on Investment Income with Treaty Partners

Nigeria has terminated the flat 7.5% withholding tax rate previously applicable on dividends, interest and royalties earned by taxable persons resident in countries with a tax treaty with Nigeria with effect from 1 July 2022.

Going forward, the withholding tax rates under domestic law (i.e. 5% for individuals and 10% for companies on dividends, interests and royalties) will apply also to payments to residents of treaty countries. This applies unless the rates in the tax laws exceed the maximum rate under the tax treaty, in which case, the maximum rate specified in the tax treaty will apply.

The Federal Inland Revenue Service (FIRS) announced these changes through an information circular on the Claim of Tax Treaties Benefits and Commonwealth Relief in Nigeria ("the Circular"). In a follow up to the Circular, the FIRS issued a public notice on the application of withholding tax on dividends, interests and royalties paid by Nigerian residents to non-resident recipients of such payments in countries with which Nigeria has already entered and executed tax treaties.

The circular/notice also provides that the withholding treaty rate cap applies only to payments made to non-resident entities having no permanent establishment in Nigeria and payments received by them from Nigeria are not connected to such permanent establishment.

However, where the payment is connected to a permanent establishment or a fixed base in Nigeria, the domestic withholding tax rate applies on the dividend, interest and royalties, regardless of the withholding tax rate specified in the relevant tax treaties.

The Circular was issued on 11 May 2022 in line with FIRS' powers under the Federal Inland Revenue Services (Establishment Act) 2007 and it replaces an earlier Circular issued in 2021 on the subject. Hence, any previous ruling, direction, or approval issued by the FIRS on the applicable withholding tax rate under tax treaties is automatically revoked by 1 July 2022.

August 2 2022

Republic of the Congo joins international fight against tax evasion as 165th Global Forum member

The Republic of the Congo (hereafter “Congo”) joins the international fight against tax evasion by becoming the 165th member – and 34th African member – of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The country’s decision to join the Global Forum was made public on the last day of the 11th meeting of the Africa Initiative, which was held in Nairobi, Kenya, from 14 to 16 June 2022.

Members of the Global Forum include all G20 countries, all OECD members, all international financial centres and a large number of developing countries.

"We are delighted to welcome Congo as the latest Global Forum member," said Maria José Garde, Chair of the Global Forum. "The regular enlargement of the Forum’s membership highlights the importance given to tax transparency by the international community, and the resolve of governments to come together to fight and prevent tax evasion and avoidance."

Like all other members, Congo will participate on an equal footing and is committed to combatting offshore tax evasion through the implementation of the internationally agreed standards of exchange of information on request (EOIR) and automatic exchange of information (AEOI).

Congo will also participate in the Africa Initiative, a programme of work launched in 2014 to support domestic revenue mobilisation and the fight against illicit financial flows in Africa through enhanced tax transparency and exchange of information. The recently published Tax Transparency in Africa 2022 progress report underlined the Initiative’s achievements to date and presented its various work streams.

The Global Forum is the leading multilateral body mandated to ensure that jurisdictions around the world adhere to and effectively implement both the exchange of information on request standard and the standard of automatic exchange of information. These objectives are achieved through a robust monitoring and peer review process. The Global Forum also runs an extensive capacity-building programme to support its members in implementing the standards and help tax authorities make the best use of cross-border information sharing channels.

July 8 2022

Tax Authority Reminds Non-Resident Suppliers of Digital Services to Register for VAT and File Returns

The Uganda Revenue Authority has reminded non-resident suppliers of digital services to non-taxable persons in Uganda to charge VAT on their supplies, file quarterly returns and make payments within 15 days from the end of each quarter. This is a follow up to previous communications by the URA.

All non-resident suppliers of electronic services are expected to:

  • have registered for VAT online by 1 July 2022; and
  • file a quarterly tax return online and pay VAT charged for the first quarter of the financial year by 15 October 2022.

The simplified system for registration, online filing of VAT returns and payment of VAT is accessible through the URA web portal.

This news was announced by the URA through a public notice dated 7 July 2022.