- the standard rate has increased to 15%; and
- the transitional arrangements from 1 June 2017 are set out.
On 1 October 2018, HMRC updated its guidance on insurance premium tax. Significantly, HMRC informed that:
On 5 October 2016, the Office of Tax Simplification (OTS) published its report, Guidance for taxpayers: a vision for the future. The OTS makes a comprehensive assessment of the general approach to providing guidance for taxpayers.
From 1 April 2019, under Making Tax Digital, businesses registered for VAT with a taxable turnover above GBP 85,000 are required to keep their VAT records digitally and file their returns using software that is compatible with Making Tax Digital (MTD). On 16 October 2018, HMRC:
The Budget for 2018 was presented to Parliament by the Chancellor of the Exchequer on 29 October 2018. Detailed information is available on the government website. The Budget measures are summarized as follows:
Chancellor's StatementThe most important features of the Budget are as follows:
- from April 2020, "large" (i.e. with annual global revenues of at least GBP 500 million) social media platforms, search engines and online marketplaces will pay a 2% digital services tax on the revenues they earn which are linked to UK users; meanwhile, a consultation will be launched before the tax comes into effect;
- the tax rates for the oil and gas industries will remain unchanged;
- the annual investment allowance will be increased from GBP 200,000 to GBP 1 million from 1 January 2019 to 31 December 2020;
- there will be no change to the level of entrepreneurs' relief available although the ownership period will be doubled to 2 years;
- from April 2019, the personal allowance will be GBP 12,500 and the higher rate threshold will be GBP 50,000;
- a new tax will be levied on the manufacture and the import of plastic packaging containing less than 30% recyclable plastic; however, no tax will be levied on take-away coffee cups;
- all shared equity purchases by first-time buyers of up to GBP 500,000 are to be exempt from stamp duty;
- the business rates will be reduced by one third for all retailers in England with a rate table value of GBP 51,000 or less;
- there will be no increases in the short-haul rates of air passenger duty;
- the duties on beer, cider and spirits will be frozen for a year, while the duty on wine will increase in line with inflation;
- tobacco duty will continue to rise by inflation plus 2%; and
- fuel duties will be frozen for the ninth year in a row, as announced on 3 October 2018.
Finance BillFinance Bill 2018-19 will be published on 7 November 2018. On 29 October 2018, HMRC published the following documents:
- Policy paper – Budget 2018: overview of tax legislation and rates. This document enumerates the tax policy measures announced at Budget 2018 and explains when they will be legislated.
- Guidance - Notes on Finance Bill 2018-19 resolutions. This document contains the updated explanation of each of the Finance Bill resolutions.
- Supporting documents. This document lists the draft legislation and the measures that took immediate effect from 29 October 2018.
BrexitOn 29 October 2018, HMRC published a Policy paper - Amendments to tax legislation to reflect EU exit, which provides further information regarding the minor consequential amendments to the Taxes Acts which will be required if the United Kingdom leaves the EU without a deal. There is no current provision because this is obviously a new power. The legislation will have effect on and after the Royal Assent to Finance Bill 2018-19. The HMRC also published Guidance – Carbon Emissions Tax technical note and the accompanying Policy paper – Carbon Emissions Tax, which set out the arrangements for carbon pricing in the event of a "no-deal" Brexit.
Business taxationA 2% digital services tax will be introduced. The tax rates for the oil and gas industries will remain unchanged. On 29 October 2018, HMRC published the following documents:
- Guidance – Hybrid capital instruments technical note. This document explains the new tax rules for loan relationships that are hybrid capital instruments.
- Policy paper – Taxation of hybrid capital instruments. This documents concerns the changes to the tax treatment for hybrid capital instruments.
- Policy paper – Temporary increase in the Annual Investment Allowance. This document confirms that the annual investment allowance will be increased from GBP 200,000 to GBP 1 million from 1 January 2019 to 31 December 2020.
- Policy paper – Capital allowances: Ending enhanced allowances for energy and water efficient plant and machinery. This document provides further information on the termination of the enhanced capital allowance and details the impacts.
- Policy paper – Minimum qualifying period extension for Entrepreneurs' Relief. This document sets out the increase to the minimum qualifying period for entrepreneurs' relief.
- Policy paper – Diverted Profits Tax changes. This document highlights the measure that has effect on and after 29 October 2018, which clarifies that diverted profits will only be taxed under either Corporation Tax or Diverted Profits Tax, and to emphasize the minor modifications to the mechanics of the Diverted Profits Tax legislation.
- Policy paper – Corporation Tax: amendments to reform of loss relief rules. This document explains the amendments to group relief for carried-forward losses (other than shock losses of insurance companies) that were effective from 1 April 2017.
- Policy paper – Corporation Tax changes to the definition of permanent establishment. This document outlines changes to the definition of PE, which effectively implements into UK domestic law the BEPS Action Plan 7 recommendations.
- Policy paper – Corporation Tax changes for hybrid and other mismatches regime. This document details changes for certain mismatches involving PEs and the treatment of regulatory capital.
- Policy paper – Tax changes for UK property income of non-UK resident companies. This document reminds that from 6 April 2020, non-UK resident companies that carry on a UK property business, or have other UK property income, will be charged to Corporation Tax, rather than being charged to Income Tax as at present. This change will align with the end of tax year 2019 to 2020 on 5 April 2020.
- Policy paper – New statutory remedy for advance Corporation Tax. This document details the measure in response to Prudential Assurance Company Ltd v. Commissioners for Her Majesty's Revenue and Customs  UKSC 39.
- Policy paper – Changes to personal company tests for Entrepreneurs' Relief. This document details new tests to the definition of a personal company for entrepreneurs' relief.
Personal taxationOn 29 October 2018, HMRC published the following documents:
- Policy paper – Income Tax Personal Allowance and basic rate limit from 2019 to 2020. This document confirms that from April 2019, the personal allowance will be GBP 12,500 and the higher rate threshold will be GBP 50,000.
- Policy paper – Capital Gains Tax annual exempt amount for tax year 2019 to 2020. This document details the Consumer Price Index increase in the annual exempt amount for the tax year 2019 to 2020, which is increased to GBP 12,000 for individuals and personal representatives and GBP 6,000 for trustees of settlements.
- Policy paper – Changes to taxing gains made by non-residents on UK immovable property.
VATOn 29 October 2018, HMRC published the following documents:
- Policy paper – Changes to the VAT specified supplies anti-avoidance. This document explains how the amendments will affect providers of intermediary services to the insurance sector who export their services outside of the EU.
- Policy paper – VAT thresholds remain unchanged. This document confirms that the VAT registration and deregistration thresholds are maintained at GBP 85,000 and 83,000 respectively for a further 2 years from 1 April 2020.
- Policy paper – Changes to the VAT treatment of vouchers. This document explains the changes to the VAT treatment of vouchers issued on or after 1 January 2019.
- Policy paper – VAT reverse charge anti-avoidance changes. This document describes the regulations to be made to discourage attempts by fraudsters to escape a reverse charge.
Indirect taxationA new tax will be levied on the manufacture and the import of plastic packaging containing less than 30% recyclable plastic. On 29 October 2018, HMRC released the following documents in regard to measures for which appropriate legislation will be included in Finance Bill 2018-19:
- Policy paper – Changes to residence nil rate band.
- Policy paper – Extension of Stamp Duty Land Tax First Time Buyers' Relief.
- Policy paper – Stamp Duty Relief for Share Incentive Plans.
- Policy paper – Stamp Duty, Stamp Duty Reserve Tax transfers of listed securities and connected persons.
- Policy paper – Increase of the Landfill Tax rates.
- Policy paper – Air Passenger Duty rates from 1 April 2020 to 31 March 2021.
- Policy paper – Remote Gaming Duty increase. The new duty rate of 21% will apply for accounting periods that begin on or after 1 October 2019 and will be chargeable on profits from remote gaming from that date onward.
- Policy paper – Tobacco products duty rates for 2018.
- Policy paper – Increase in Alcohol Duty rates.
- Policy paper – Vehicle Excise Duty increases for cars, vans, motorcycles and motorcycle trade licences.
Tax managementOn 29 October 2018, HMRC published the following documents in regard to measures for which appropriate legislation will be included in Finance Bill 2018-19:
- Policy paper – Income Tax, Capital Gains Tax and Corporation Tax voluntary tax returns. This document deals with the introduction of legislation to provide for submission of voluntary tax returns to be treated the same as those submitted following to a statutory notice to file.
- Policy paper – Changes to interest provisions for late payment, repayment and penalties. This document clarifies interest provisions on late payments of Corporation Tax, Diverted Profit Tax, Stamp Duty, Stamp Duty Land Tax, Inheritance Tax and PAYE penalties.
The Budget for 2018 was presented to Parliament by the Chancellor of the Exchequer on 29 October 2018. The intention to reform the rules for the relief of corporate capital losses from 1 April 2020 was announced. On 29 October 2018, HMRC launched a consultation on all aspects of the corporate capital loss restriction. The consultation runs to 25 January 2019.
On 1 October 2018, the US Treasury Department and the US Internal Revenue Service (IRS) issued IRS Notice 2018-78 to provide guidance on the transition tax under section 965 of the US Internal Revenue Code (IRC). The transition tax is imposed on untaxed foreign earnings of foreign subsidiaries of US companies under IRC section 965, which treats those earnings as if they had been repatriated to the United States. Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5% rate. The remaining earnings are taxed at an 8% rate. Notice 2018-78 announces that the due date for the election to make certain basis adjustments with respect to each foreign subsidiary will be extended to 90 days after the publication of the final regulations. Further, elections made in the interim will be revocable. Notice 2018-78 also announces that the rules concerning the determination of the aggregate foreign cash position of a US shareholder that is a member of a consolidated group will be revised to be consistent with Notice 2018-07. Finally, Notice 2018-78 provides a postponement for taxpayers affected by Hurricane Florence to make elections and file transfer agreements related to IRC section 965, until 31 January 2019. Notice 2018-78 will appear in the IRS Internal Revenue Bulletin (IRB) as part of IRB 2018-42, dated 15 October 2018.
On 10 October 2018, the US Treasury Department and the US Internal Revenue Service (IRS) issued a document (2018-22022) to announce the availability of additional guidance regarding the transition tax under section 965 of the US Internal Revenue Code (IRC), issued as IRS Notice 2018-78. On 9 August 2018, the Treasury Department and the IRS published in the Federal Register proposed regulations (REG-104226-18) under IRC section 965. On 1 October 2018, the Treasury Department and the IRS issued Notice 2018-78, which contained additional guidance related to IRC section 965 and the proposed regulations. Notice 2018-78 was issued in advance of final regulations due to the imminent filing deadlines that could otherwise apply to the forms and elections described therein.
A tax treaty is a bilateral agreement made by two countries to resolve issues involving double taxation of passive and active income. Treaties Update – October 2018
Date Country A Country B Object Status 10.10.18 Kosovo Switzerland Income Tax Treaty Entered into force 04.10.18 Colombia United Kingdom Income Tax Treaty Approved by Colombian Congress 09.10.18 Jersey United Kingdom Income Tax Treaty Approved by Jersery 23.10.18 Austria United Kingdom Income Tax Treaty Signed
On 11 April 2019, the National Revenue Agency published, on its website, the 2019 version of the manual on personal income taxation. The manual provides a detailed overview of the applicable legislation and numerous examples with comments from the authorities. The manual can be found here.
On 19 April 2019, amendments to the Value Added Tax Act were published in the State Gazette. The amendments clarify that calendar years in which assets are not used must be excluded for the purpose of calculating the periods at the end of which no adjustments for input VAT deduction are required (20 years for immovable property and 5 years for other qualifying assets and services). An adjustment must be made when the asset is no longer used for business purposes. Effective 13 July 2019, the term for the adjustment of input VAT deducted will be interrupted and suspended for each calendar year during which the movable goods or the immovable property, respectively, are not used for business purposes.
On 3 October 2019, the director of the National Statistical Institute issued an order regarding the Intrastat thresholds and their statistical values for 2020. Thresholds for Intrastat reporting are:
- BGN 290,000 (currently BGN 280,000) for dispatches; and
- BGN 470,000 (currently BGN 460,000) for arrivals.
- BGN 15,800,000 (currently 14,400,000) for dispatches; and
- BGN 7,600,000 (currently BGN 7,400,000) for arrivals.
On 10 October 2018, the Council of Ministers approved amendments to tax legislation suggested by the Ministry of Finance. On 11 October 2018, the draft legislation was submitted to parliament where it will be voted on during two readings. For previous reporting, see http://www.diacrongroup.com/en/tax-news/proposed-amendments-to-tax-legislation-public-consultations-launched-summary/. Further developments will be reported as they occur.
On 11 October 2018, the National Revenue Agency (NRA) announced that amendments to the procedure for certification of documents issued by the tax administration and intended to be presented in other countries will be effective as from 15 October 2018. Before legalization at the Ministry of Foreign Affairs, such documents will be subject to certification by the competent regional structure of the NRA. Currently, such documents are certified at the NRA's headquarters.
On 12 October 2018, the National Statistical Institute announced the following Intrastat thresholds for 2019. Thresholds for Intrastat reporting:
- for dispatches - BGN 280,000 (currently, BGN 260,000); and
- for arrivals - BGN 460,000 (currently, BGN 430,000)
- for dispatches - BGN 14,400,000 (currently, 12,800,000); and
- for arrivals - BGN 7,400,000 (currently, BGN 6,300,000)
The National Revenue Agency announced that it has launched eight new e-services as of 15 October 2018. These services, amongst other things, include the submission of applications for issuing tax resident certificates, various notifications under Tax and Social Security Procedure Code and the Value Added Tax Act.
On 18 October 2018, the parliament approved at the first reading amendments to tax legislation suggested by the Ministry of Finance. For details on the initial proposals, see http://www.diacrongroup.com/en/tax-news/proposed-amendments-to-tax-legislation-public-consultations-launched-summary/. After the public consultation, the following main changes were introduced to the initial proposals:
- in relation to the implementation of the European Union Anti-Tax Avoidance Directive 2016/1164 (2016), known as the ATAD Directive, and more specifically regarding the new interest limitation rule, as part of the amendments to the Corporate Income Tax Act it was approved that taxpayers will be allowed to deduct exceeding borrowing costs up to EUR 3,000,000. In the initial proposal this threshold was BGN 500,000 (approximately EUR 256,000). For previous reporting, see Bulgaria-1151, News 3 September 2018;
- the proposal for abolishing the thin capitalization rules in the Corporate Income Tax Act was excluded from the amendments approved by the parliament. Now it is envisaged that these rules will remain the same but with a possibility to carry forward interest costs without limitation (currently this is possible only up to 5 years); and
- the initial proposal for amendments to the VAT Act envisaged repealing the requirement for issuing and reporting protocols for self-assessment of VAT in the case of intra-Community acquisitions and receiving cross-border services subject to reverse charge by the recipient in Bulgaria. However, in the version voted on at the first reading by parliament, this proposal was excluded.
On 22 October 2018, the Ministry of Finance published a proposal for the State Budget Act for 2019 and an updated mid-term budget forecast for the period 2019 - 2021. The Budget proposal includes the proposal to increase the minimum salary, released by the Ministry of Finance of 5 April 2018.
On 24 October 2018, a proposal to amend the Corporate Income Tax Act was submitted to the parliament. The main proposed change concerns the tax treatment of income/expenses of a lessee under operating lease agreements to which the rules of IFRS 16 Leases will be applicable from 1 January 2019. It is proposed that such income/expenses are not recognized for corporate income tax purposes and instead, the income/expenses determined as per the National Accounting Standard 17 Leases applied to these agreements should be recognized for corporate income tax purposes. In addition, a right to use assets in relation to operating lease agreements under IFRS 16 Leases will not be recognized as tax depreciable assets of the lessee. As a next step, the above proposal will be voted on by the parliament. Further developments will be reported when they occur.
On 24 October 2018, a proposal to amend the Value Added Tax Act was submitted to the parliament. The proposal concerns the new VAT rules applicable to vouchers from 1 January 2019. Details are summarized below. The proposal provides that no supplies are made for VAT purposes in the case of unused multi-purpose vouchers following their expiration, or where no goods or services are provided. Furthermore, if a taxable person sells vouchers on behalf of other persons for a fee, a service is deemed to be performed by such intermediary. In addition, the proposal recommends that the special VAT rules for vouchers not be applied to the following:
- instruments that entitle the owner to receive a discount when receiving goods or services;
- vouchers for travelling, cinema, museums, etc., as well as postal stamps; and
- food vouchers issued by a person having been authorized to do so by the Minister of Finance.
After approval by the Council of Ministers, the following draft acts were submitted to the parliament on 29 October 2018 where they will be voted on during two readings.
Draft State Budget Act for 2019The draft act proposes an increase of the minimum salary to BGN 560 (currently BGN 510) from 1 January 2019. For previous reporting, see http://www.diacrongroup.com/en/tax-news/state-budget-for-2019-increase-of-minimum-salary-proposed/.
Draft Act on the Budget of the State Social Security for 2019The draft act indicates that the social security rates will remain unchanged in 2019. It is proposed, however, to increase the maximum monthly social security base from BGN 2,600 to BGN 3,000 from 1 January 2019.
Draft Act on the Budget of the National Health Insurance FundThe document provides that the health insurance contribution rate will remain the same in 2019, i.e. 8%. Further developments will be reported when they occur.
The Ministry of Finance and the State Administration of Taxation recently released the Interim Measures for Special Additional Deductions from Individual Income Tax (Exposure Draft) to collect public opinions. Taxpayers who have expenditures related to six items - children's education, continuing education, treatment of serious diseases, housing loan interest and apartment rents as well as support to seniors - will enjoy additional deductions to their taxable incomes. According to the draft plan, expenditures on children's education could be deducted at a fixed standard of 12,000 yuan a year, or 1,000 yuan per month. If taxpayers are supporting parents aged 60 or above, they could get tax deductions alone or along with other siblings. Taxpayers can also be entitled to tax deductions on interest expenses for their mortgage loans or rent expenditures. Special Additional Deduction as followings
Maximum (CNY / year) Expenditures for education of children 12,000 / family Continuing education 4,800 / person (diploma education) 3,600 / person (vocational qualification) Medical treatment of serious diseases 60,000 / person Housing loan interest 12,000 / family Housing rents 9,600 – 12,200 / family Raise of parents 24,000 / family
Four Authorities Announce Circular on Tax Policies for Retail Exports in Comprehensive Cross-border E-Commerce Pilot ZonesThe Ministry of Finance, the State Administration of Taxation, Ministry of Commerce and General Administration of Customs recently issued the Circular on Tax Policies for Retail Exports in Comprehensive Cross-border E-Commerce Pilot Zones, providing an exemption to qualified exporters in pilot zones from value-added tax and consumption tax. The conditions include: (1) e-commerce exporters are incorporated in pilot zones and register export date, product name, unit of measurement, amount, unit price and sum of money with local online platform of comprehensive cross-border e-commerce services; (2) exports are subject to e-commerce export declaration procedures by local customs authorities; (3) exports are not among goods that do not enjoy export rebates according to the Ministry of Finance and the State Administration of Taxation under the instruction of the State Council. The circular has been implemented starting from October 1, 2018.
The Ministry of Finance, the State Administration of Taxation, the National Development and Reform Commission and the Ministry of Commerce recently issued the Circular about Expanding the Scope of Application on the Policy of Not Collecting Withholding Income Tax on Direct Investments with Distributed Profits by Overseas Investors. According to the circular, the favorable tax policy will be expanded to all non-restricted foreign investment projects and sectors from encouraged foreign investment projects. Moreover, if overseas investors have not enjoyed any policy benefits, they can apply to receive tax benefits within three years and get tax breaks from tax payments they have already made. The policy has been implemented since January 1, 2018.
The Ministry of Finance and the State Administration of Taxation recently issued the Circular about Adjusting Export Tax Rebate Rates for Some Products. According to the circular, exporters of bean pulps will not get tax rebates starting from November 1, 2018. Export tax rebate rates for certain products, such as photographic film, lubricant and some agricultural products, will be increased. Besides, export tax rebate rates for other products will be raised by one percentage point to 16%, 10% and 6%, respectively.
The Inland Revenue (Amendment) (No. 6) Ordinance 2018 (the Amendment Ordinance), enacted on 13 July 2018, was gazetted by the government on 26 October 2018. Among other things, the Amendment Ordinance provides the following new requirements relating to double taxation relief:
- the relief under section 8(1A)(c) of the Inland Revenue Ordinance (Cap. 112) (IRO) does not apply to income derived by a taxpayer from services rendered in a territory with which Hong Kong has concluded a tax treaty or arrangement (the treaty). For income derived from services rendered in such a territory, the taxpayer will be entitled to claim credit in respect of foreign tax payable on the income under section 50 of the IRO;
- the relief under section 8(1A)(c) or foreign tax credit granted under section 50 of the IRO must not exceed the relief that would be allowed had the taxpayer taken reasonable steps to minimize his foreign tax liability under the laws of the foreign territory or the treaty concerned; and
- if the relief under section 8(1A)(c) or tax credit under section 50 of the IRO is granted to a taxpayer and, subsequently, such relief or credit becomes excessive as a result of an adjustment to his foreign tax liability, the taxpayer is required to issue a written notice to the Commissioner within 3 months after the adjustment is made.
LAGOS, NigeriaOn any given weekday, commuters in Lagos, Nigeria’s commercial capital, are snarled in traffic for hours.Container trucks and tankers take up several lanes of traffic on the major thoroughfares close to the city’s ports. Often these trucks have been parked on the highways overnight.Cars and minivans snake along the remaining single lane, sharing it with pedestrians fighting off early-morning road rage as they slowly make their way from one end of the city to another. There is a palpable fear of accidents, or a spill. Much of Lagos is an environmental disaster waiting to happen.It is here in this vibrant metropolis of 21 million people that Africa’s richest person, Aliko Dangote, is undertaking his most audacious gamble yet. Dangote is building a $12 billion oil refinery on 6,180 acres of swampland that, if successful, could transform Nigeria’s corrupt and underperforming petroleum industry. It is an entrenched system that some say has contributed to millions languishing in poverty and bled the “giant of Africa” for decades.Planned as the world’s largest refinery, Dangote’s project is set in a free-trade zone between the Atlantic Ocean and the Lekki Lagoon, an hour outside the city center. The site employs thousands, and upon completion — Dangote says in 2020; some analysts suggest more likely in 2022 — should process 650,000 barrels of crude oil daily.That’s enough oil to supply gasoline and kerosene to all 190 million Nigerians and still have plenty to export. By the end of this year, the facility is expected to churn out 3 million tons of fertilizer. The production of diesel, aviation fuel and plastics will then follow.“The construction site is already a huge beehive of activities, with workers, local and foreign, hard at work. It is going to be the largest manufacturing plant of any sort in Lagos,” said Kayode Ogunbunmi, the publisher of City Voice, a Lagos daily newspaper and lifelong Lagos resident.Private ferryIndeed, some 7,000 employees are working around the clock on the site, many arriving by private ferry from the city centre. Another 900 Nigerian engineers and technicians are being trained abroad for jobs at the refinery.Dangote, whose net worth is estimated at $11.2 billion, has had to build a port, jetty and roads to accommodate this project, along with new energy plants to power it all.Nigeria’s government, despite being a longtime crude oil exporter, has four underperforming and frequently broken down refineries with a combined capacity of 445,000 barrels daily. Those refineries — two in the oil hub of Port Harcourt, one in Warri in the Niger Delta, and the other in the northern city of Kaduna — are all operating at less than 50 per cent of capacity.Which means that even though Nigeria is Africa’s largest oil producer, petroleum for everyday use must be imported. This has spawned fuel importers and diesel traders who have grown extremely wealthy.Nigeria’s government subsidises fuel imports to keep pump prices low, and this has contributed to Nigeria’s well-documented culture of petroleum industry corruption.“The failure to produce refined products over the last 25 years has created a huge architecture of graft and corruption around everything,” said Antony Goldman, the co-founder of the London-based Nigeria specialists ProMedia Consulting.Political riskGoldman does political risk analysis in West Africa and has worked in and out of Nigeria for two decades. Corruption, he explained, stems from illegal refineries and the local criminal network that helps transport illegal crude out of the country. Both elements, he said, have not been sufficiently challenged by the government or law enforcement agencies, which has further contributed to Nigeria’s entrenched oil industry corruption.“A refinery that actually works and can meet Nigeria’s refined product requirement? It’s a game-changer,” Goldman added. But change, no matter how positive, is potentially destabilising. “These are not people who relinquish things without a fight,” Goldman said of Nigeria’s fuel import merchants.When Dangote initially unveiled his refinery plans in 2016, he said its aim was to challenge the status quo, which had seen the government spend about $5.8 billion to import petroleum products over the past year.“This refinery is attacking the entire system,” he said. “You export jobs and create poverty here, so that’s what we are stopping,” he told reporters at the time.Despite creating thousands of jobs, Dangote’s refinery hasn’t been universally applauded in Nigeria. The biggest issue is its Lagos location: The refinery is being built hundreds of miles from the impoverished Niger Delta, where the bulk of Nigeria’s oil is extracted.Two undersea pipelines are under construction in the Delta and will carry petroleum about 340 miles to the refinery in Lagos. Costly pipelinesThe pipelines will be costly; but also far harder to sabotage than conventional aboveground systems. And security is key in the Delta region, where local rebel groups like the Delta Avengers have kidnapped foreign oil workers and blown up pipelines to protest regional pollution and poverty.Amid Nigeria’s complex regional tensions, Dangote — a northerner by birth and Lagosian by decades of residence — is the one person, industry experts say, who could achieve a measure of détente in the region.Yet critics — and Dangote has many — worry that his new refinery will allow him to essentially take over Nigeria’s oil and gas industry. “Why would a nation leave an entire industry in the hands of one company?” they ask.The “monopoly” question has swirled around Dangote for decades. Twice divorced and currently (and vocally) looking for a third wife, Dangote made his initial fortune operating near-monopolies in cement, flour and commodities across Nigeria, where regulatory oversight is relatively lax. Dangote’s companies, including pasta producers and property management, are found across Africa.A decade ago, Dangote and other private investors tried and failed to buy the government-owned refineries. He was unavailable for comment, but previously told Reuters he does not apologize for his expansionist desires. “If you don’t have ambition,” he said, “you shouldn’t be alive.”Tough environment And for some in a tough business environment like Nigeria, a well-run monopoly is better than the current situation, where getting fuel remains an uncertainty. Indeed, despite oligarchy concerns, Goldman says he believes that Dangote’s past success actually bodes well for the refinery and Nigeria. “He has a record of success and delivery, and he doesn’t make mistakes on things like this,” Goldman said.And Nigerians are tired of power cuts and overpriced gasoline.“Most Nigerians see Aliko as a doer,” Ogunbunmi, the publisher, said. “Many quietly hope the refinery will help reduce uncertainties. Gasoline will be available, and possibly power.”Beyond solidifying his own legacy, Dangote hopes his refinery will help diversify Nigeria’s economy while reducing its dependence on imported oil.“We have other opportunities,” he said at the plant’s unveiling. “Agriculture is there. Petrochemicals are there, Nigeria has more arable land than China. If we finish our gas pipeline, it can generate 12,000 megahertz of power. That’s huge. That’s more than what we are looking for in Nigeria and we can supply the rest of West Africa.”As his refinery nears completion, Dangote says he will soon focus on his next dream, owning Britain’s Arsenal football team.“Once I have finished with that headache, I will take on football,” he said. “I love Arsenal, and I will definitely go for it.”
Turkey-Africa Economy and Business Forum sees 3 trade agreements between African countries, Turkish government and businesses.
A Turkish-African business meeting in Istanbul bore fruit Wednesday in the form of three new pacts with both private and public concerns.
Zimbabwe, Senegal, and the African Union all signed deals with parties in Turkey during the 2nd Turkey-Africa Economy and Business Forum in Turkey's economic hub.
The first agreement -- a memorandum of understanding (MoU) -- was signed by Senegal’s Mines and Geology Ministry and Turkey’s Tosyali Holding for the company to invest in iron and steel in the West African country.
Another MoU was signed between Turkey's Trade Ministry and the African Union Commission for collaboration on trade and investment.
The last trade cooperation pact was signed by the Turkish and Zimbabwean governments.
The two-day forum, which started on Wednesday in Istanbul, is bringing together 3,000 African and Turkish businesspeople.
The forum was organized by Turkey’s Foreign Economic Relations Board in coordination with Turkey’s Trade Ministry and the African Union.
Construction works on US $2bn High Grand Falls Dam in Kenya, Africa’s second largest dam is set to commence following a resolved procurement dispute which threatened to delay the project. According to Irrigation Principal Secretary Fred Segor, Public Procurement Review Board (PPRB) — the state agency that handles disputes arising from government tendering — upheld an earlier ruling that the British firm that won the multi billion contract be allowed to undertake the project. The dispute over tender number NIB/T/018/2016-2017 arose on May 29 when NIB cancelled the tender after it emerged that only GBM Consortium had met the preliminary conditions set out in the request for proposals, including a mandatory site visit.
High Grand Falls DamConstruction of the High Grand Falls Dam, which is also one of the largest undertaking by the government after the Standard Gauge Railway project, and is among President Uhuru Kenyatta’s legacy projects, conceived in 2009 during former President Mwai Kibaki’s regime as part of an ambitious effort to build 1,000 water reservoirs across the country in an attempt to revolutionize irrigation-based farming. The dam is set to produce 700MW of hydropower and facilitate irrigation in more than 250,000ha of land Kitui, Garissa and Tana River counties. It is also part of the Sh1.5 trillion Lamu Port and Southern Sudan-Ethiopia Transport Corridor (Lapsset) projects and will be built downstream the Seven Folks dams along River Tana. “The benefit to the region is enormous. Because first, it is going to form a large man made lake, where it will be easy introducing fishing and tourism activities to the communities around it,” said Prof Fred Segor.
Perennial floodingMr Fred further added that the dam will also address the perennial flooding at the Kenya’s Coast region while also serving 1.5 million people living downstream. The dam will hold more than 5.6 billion cubic metres of water with construction expected to take six years. Plans to roll out the project will begin in earnest after the Treasury agrees with the contractor on the timelines in implementing the project.The ruling also paves the way for the next phase of land acquisition where affected persons will be relocated.
NEW YORK. – Three financial institutions have agreed to guarantee a $125 million loan to Botswana’s diamond-manufacturing industry to strengthen the nation’s economic growth. The US government’s Overseas Private Investment Corporation (OPIC) has partnered with Botswana Finance – a subsidiary of diamond-manufacturing company Lazare Kaplan International (LKI) – and Stanbic Bank to provide the loan. It’s the second portion of a $250 million OPIC loan guarantee that will establish a revolving facility in which OPIC will share the credit risk, the organizations said recently. Barclays Bank of Botswana provided the first instalment in 2016. The trio’s objective is to help diversify Botswana’s economy, drive the development of the local financial sector, and give local companies access to financing. “With the support of OPIC financing, this project will keep the value-adding process of the diamond-supply chain in Botswana, promoting local job creation, diversifying economic growth and bringing global trade opportunities,” said OPIC CEO Ray Washburne. “The project will have a significant impact in local communities and further the country’s economic development.”
Egypt has reached an agreement on a new $3 billion financing deal with the World Bank, the country’s investment and international cooperation announced yesterday.
Sahar Nasr said that she had agreed with the World Bank officials on the final arrangements for a new loan for Egypt.
Nasr’s statement neither provided details on whether the loan will be offered on one tranche nor its interest rate. However, she stressed that the funding would be secured in “the next few months.”
The Egyptian minister noted that the new funding “comes within the framework of the World Bank’s confidence in Egypt’s economic reform measures and its keenness to continue to support the implementation of the nation-wide economic and social reform programme.”
The new loan, Nasr pointed out, is expected to raise the country’s total external debt, which was reported to have registered $92.64 billion at the end of last June.
In March, Egypt announced that it had received the third and final $1 billion tranche of a World Bank $3 billion loans, which was aiming to support the government budget and the country’s economic reform programme.
Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolution and to ease a dollar shortage that has crippled import activity and hampered recovery.
In November 2015, Egypt won a three-year $12 billion International Monetary Fund (IMF) loan, which aimed at reviving the country’s struggling economy, bringing down public debt and controlling inflation while seeking to protect the poor.
The concessional loan will be disbursed under the second phase of the Scale up Electricity Access Program (SEAPII), which is expected to increase on-grid access for households and productive usages, and increase off-grid access to renewable energy.The Government has borrowed $269 million (Rwf237 billion) from the African Development Bank (AfDB) to invest in sustainable, affordable and reliable electricity services. The loan agreement was signed on Tuesday. The concessional loan will be disbursed under the second phase of the Scale up Electricity Access Program (SEAPII), which is expected to increase on-grid access for households and productive usages, and increase off-grid access to renewable energy. The Minister of Finance and Economic Planning, Dr Uzziel Ndagijimana, said the programme will boost the country’s efforts to achieve universal electricity access by 2024. He said: “This project will be a key milestone in improving reliability of electricity supply, which will positively impact our economic growth, promote our private-sector-led job creating growth, particularly for the youth, and reduce poverty.” The new loan is aligned to AfDB’s 10-year strategy (2013-2022) and current Country Strategy Paper for Rwanda. It also comes to support three of the Bank’s High 5 priorities, which include the industrialisation of Africa and improving the quality of life for people on the continent. “The Bank’s energy portfolio in Rwanda will increase from €158.95 million to €388.74 million, supporting eight operations, three of which are being implemented jointly with neighbouring states,” said Martha Phiri, the Bank’s Country Manager. Phiri said she was very delighted to be signing the agreement. “This is our single biggest operation in the country impacting on on-grid and off-grid power solutions. It seeks to ensure that Rwanda has reliable electricity in homes, health centres, businesses and everywhere else.” She added; “Thanks to its strong record of performance and a results culture, Rwanda is the first country on the continent to pilot this project.” The Bank, Phiri said, recognises electricity as a strong catalyst for inclusively and general economic growth. The first SEAP project between Rwanda and the Bank worth $46 million (Approximately Rwf40.4 billion) was signed in 2013. According to the Ministry of Finance, funds were used to upgrade two major distribution substations and also constructed 1,365 km of medium and low volt networks for on-grid access to 30,636 households, 32 health centres, 210 schools and 52 sector administrative facilities in six districts. The initial project was implemented over a six-year period. As noted, the effective cost of each additional connection is $1,400. By utilising REG’S in-house skills, and local contractors, and use of country systems, the SEAP II is expected to deliver, among others, 193,366 on-grid connections within three years at an average cost of around $900 per connection. This, officials said, demonstrates the cost effectiveness of the RBF instrument and the reason it has become the instrument of choice for Government financing in various sectors including energy.
A Turkish construction company will start building Sudan's biggest airport early next year, according to the firm's chairman.
"We will lay the foundation for the Khartoum International Airport in the first quarter of 2019 and complete it in less than 36 months," Selim Bora, the chairman of construction firm Summa, told Anadolu Agency.
Bora stated that the three-phase project is worth $1.15 billion.
"First we will built a terminal with a 6 million-person [annual] capacity along with all infrastructure services, runways, and airport aprons," he said.
Bora added the airport's annual capacity will reach 9 million in the second phase and 12 million in the third phase.
The project, developed on the build-operate-transfer model, is currently in the design phase, he said.
Saying that Sudan has the largest surface area in Africa, Bora added the airport will also serve other countries in the region.
"Currently airports in Cairo and Addis Ababa are the most important and effective ones on the continent," he noted.
Investing in Africa since 2007
Bora said he hoped the air passenger traffic in those airports will shift to Khartoum International Airport, which enjoys geographical advantages.
He said Summa entered the African market in 2007 by doing several projects in Libya and then in Equatorial Guinea.
The company has continued African projects in such countries as Senegal, Rwanda, Congo, Niger, Sudan, and Benin, he added.
"Niger will host next year's African Union Summit next July, so the country needs infrastructure services and investments," Bora said.
He said the renovation of an airport and construction of a five-star hotel in Niger will be completed in July 2019.
This March Summa signed the deal with Sudan’s Finance Ministry to build the new Khartoum airport.
The Bill & Melinda Gates Foundation will contribute €54 million ($62.5 million) to EU efforts to strengthen diagnostic health services in Sub-Saharan Africa under the External Investment Plan.This cooperation will help to mobilise private investment in laboratory facilities providing timely, cost-effective and accurate diagnostic services for diseases such as tuberculosis, HIV, and malaria, as well as support maternal and child healthcare. This will allow doctors to detect diseases earlier, respond faster and better targeting treatments. Under this collaboration between the EU and the Bill & Melinda Gates Foundation, poorer people in low-income African countries will have better access to higher quality testing and, therefore, better chances of proper treatment. The articulation of this programme followed the announcement of President Juncker and Bill Gates earlier in the year on the Gates Foundation's intention to contribute to the EU's External Investment Plan. Commissioner for International Cooperation and Development Neven Mimica said: "Together with the Bill and Melinda Gates Foundation, we are showcasing the EU's engagement in Africa. Through the Gates Foundation's contribution of €54 million to our External Investment Plan, we will unlock private investment in a sector where additional investments in state-of-the-art testing facilities are urgently needed in order to meet the health needs of ample sectors of the population. This also shows that our approach under the 'Africa – Europe Alliance' works and is attractive to other stakeholders." Bill Gates, co-chair of the Bill & Melinda Gates Foundation, said: "Our foundation is delighted to partner with the European Commission to strengthen diagnostic services across Africa for the infectious diseases that still kill and harm the highest numbers of the world's poorest people. By having better tools to more accurately identify these diseases, we can provide the right treatments at the right time and, ultimately, ensure more people across sub-Saharan Africa are able to live healthy and productive lives." The majority of the Gates Foundation's contribution – €43.2 million or $50 million – will support the European Fund for Sustainable Development Guarantee, which is an important pillar of the EU's External Investment Plan. It will be used to help leverage private investment, which will in turn promote inclusive growth and job creation in Africa and the European Neighbourhood countries. €10.8 million ($12.5 million) will be invested in technical assistance under the European Health Guarantee Platform for Africa – one of twelve innovative guarantee programs under the EU's External Investment Plan. It will incentivise research and innovation in e-health in less developed and fragile environments, leading to cheaper healthcare services for people on low incomes and saving lives. Background This contribution from the Bill & Melinda Gates Foundation follows on from the announcement at last December's One Planet Summit in Paris that the Foundation would be joining forces on the EIP with the EU and several Member States, as well as in the DeSIRA initiative (Development-Smart Innovation through Research in Agriculture).
Eldoret-based Moi Teaching and Referral Hospital has sought approval to build Africa’s largest hospital with 4,000 beds to service western Kenya’s 24 million people.South Africa’s Chris Hani Baragwanath Hospital with, 3,400 beds is currently the largest.According to regulatory filings, the Sh28 billion project, earmarked for construction on 200 acres at Kiplombe on the outskirts of Eldoret town, will complement services offered at its current multi-specialty 1,000-bed centre on Nandi Road.The report says the 4,000 beds will be accommodated in six multi-storeyed buildings and an accompanying 36 nursing units. It adds that 22 new general outpatient clinics will be hosted in a three-floor complex that will also accommodate a paediatric clinic, thereby easing congestion and fast-tracking dispensation of services to residents.The notice contained in the Kenya Gazette said a five-floor medical technology block will be put up as well as a separate administration office block with new staff apartments. The plan includes a research development and innovation building on a separate block.The announcement indicates an end to a raging ownership row with a group of squatters that hampered commencement of the project last year.The new project dwarfs the biggest referral and regional hospital, Kenyatta National Hospital, that currently has 1,800 beds and 6,000 members of staff.On Monday, National Environmental Management Authority said it would make its decision known in the next 30 days.There had been a long-standing legal battle between the hospital and the Kenya Prison Service over ownership of a section of the land. But the dispute was resolved after the National Land Commission permitted the use of the property for the hospital project.
South Africa’s rand snapped three days of gains and fell the most among emerging-market peers on Wednesday after Finance Minister Tito Mboweni blindsided markets with a speech in Cape Town that outlined higher fiscal deficits and warned that state revenue will continue to undershoot. The currency was little changed as of 11:03 a.m. in Johannesburg, while the government’s benchmark rand bonds maturing in December 2026 dropped, with the yield climbing to an 11-month high of 9.38 percent. Here’s the reaction from traders, analysts and economists:
Piotr Matys, analyst with Rabobank:
- Mboweni’s budget was “the opposite of what the market was hoping” for
- “It’s also a timely reminder that the country faces tremendous fiscal challenges amid weak economic activity constrained by structural issues”
Win Thin, strategist at Brown Brothers Harriman:
- “I was clearly too optimistic that Mboweni would announce enough fiscal tightening to keep the ratings agencies at bay”
- “Risks of downgrades have gone up significantly”
Bernd Berg, strategist at Woodman Asset Management:
- “South Africa remains stuck in a low growth, high-debt environment and it is difficult to get euphoric about the outlook for the rand at this juncture”
- “With little positive domestic drivers and a challenging external environment, especially for South Africa’s main export partner China, it is hard to see the ZAR outperform its EM peers in the short run”
Razia Khan, chief Africa economist at Standard Chartered:
- “The initial, knee-jerk reaction of the market to the budget was understandably negative” and investors started to price in less benign ratings reviews
- Still, “we believe that the tax-buoyancy assumptions in the medium term are deliberately conservative”
- “Even the revenue ‘miss’ in the current year is arguably due more to VAT rebates -- a good thing, which ultimately strengthens tax compliance -- rather than just the growth slowdown”
- “Although the higher debt path outlined may trigger some concern, this is no justification for a downgrade in itself” from Moody’s
Hans Gustafson, strategist at Swedbank
- It will be a “very challenging” for South Africa with “a higher borrowing requirement in an environment with tight U.S. liquidity and weaker growth globally”
- “The rand needs to incorporate a higher risk premium”
Mehul Daya, analyst at Nedbank:
- It’s a “double whammy” for the rand and local-currency bonds as the budget was disappointing and a weaker euro is strengthening the dollar
- This means South African assets face internal as well as external headwinds
Kevin Daly, money manager with Aberdeen Standard Investments:
- South Africa’s budget was “somewhat of a disappointment” given that the deficit target for 2018-19 was increased to 4 percent from around 3.5 percent
- “But we don’t think this is enough to prompt action by Moody’s to change the outlook to negative”
Marek Drimal, analyst at Societe Generale:
- “The headline figures are discouraging, but they will not necessarily lead to a Moody’s downgrade to non-investment grade”
- “That being said, South Africa is facing a prolonged period of weak growth, elevated inflation, sizeable current-account deficits, and longer-term risks of a downgrade”
- Reserve Bank should raise rates in November
- Rand will probably fall to 16 per dollar by the end of the year and 17 by the end of September 2019
- The land-reform debate will “periodically stress financial markets”
Sri Lankan and Ethiopian entrepreneurs have been urged to work closely to strengthen the economic cooperation between the two countries.Venora Lanka Power Panels (Pvt) Ltd launched its manufacturing products in the Horn of Africa, with Ethiopia the targeted market. The Sri Lankan firm continued to attest the faith in Africa’s fastest growing economy that continues to lure foreign investments to aid in economic growth and development. The new investor joins Isebella Socks Manufacturing Plc and Hirdaramani Garments Plc, already existing Sri Lankan firms in Africa’s oldest independent country. The foreign companies not only seek to expand their market in Africa with greener pastures but look to tap in the industrial potential available in the country. Foreign investors have ventured into the industrial sector, that offers a variety of business investment opportunities. The construction of industrial parks has opened new doors of opportunities for companies with a view of creating jobs. The country looks to increase its GDP by 11 percent annually in the next ten years with the manufacturing sector growing by about 25 percent every year. Ethiopia’s target by 2025 is to be the leading manufacturing hub in Africa. The country counts on inflows of foreign investments to catapult the ambitious goal while creating a conducive business environment for businesses. Export-oriented manufacturer Venora Lanka Power Panels which works with world-renowned brands such as Schneider Electric, ABB, and Rexton has partnered with Ethiopian firms namely Eulogia Electromechanical PLC and Horra Trading PLC. Ambassador of Sri Lanka to Ethiopia Sumith Dassanayake has encouraged Sri Lankan and Ethiopian business people to work together to strengthen the bilateral ties between their respective countries through trade and investment. Venora Lanka’ was recognized by the National Chamber of Exporters (NCE) at the 25th Export Awards held at Colombo Hilton for its excellent performance clinching the Bronze category Award in the industrial sector last year. Other accolades the firm has scooped include the award for Quality and Business Prestige in November 2005 in Geneva Switzerland, Arch of Europe for Quality and Technology- Frankfurt in 2012.
On 28 September 2018, the parliament adopted the bill for corporate tax reform (Tax Proposal 17). The Council of States (the upper house of the parliament) had approved the dispatch on Tax Proposal 17 on 7 June 2018 (http://www.diacrongroup.com/en/tax-news/council-of-states-adopts-tp17/see ). The Tax Proposal 17 contains the following key measures:
- abolition of the arrangements for cantonal status companies;
- mandatory introduction of a patent box on cantonal level: upon request of the taxpayer (and provided certain conditions are met), the profits derived from patents and similar intellectual property rights are reduced by 90% (the cantons may apply a lower percentage);
- introduction of an additional (optional) deduction of up to 50% for research and development (R&D) expenditure on personnel (plus a markup for other costs (35%) and for outsourced, domestic R&D (80%)); and
- introduction of a notional interest deduction on excess equity financing up to an arm's length interest rate.
- the introduction of a tax neutral step-up upon immigration, the transfer of business operations to Switzerland or the ending of a tax exemption;
- at the Federal level, dividends from qualifying participations are currently partially exempt from taxation: 60% of the dividend is taxed where the shares are held as a private asset, and 50% is taxed where the shares are held as a business asset. This will be increased to 70% for both cases. At the cantonal level, a similar regime will be introduced with a minimum percentage of 50%;
- the cantons may apply lower wealth tax rates on patents and similar intellectual property rights held by individuals as business property;
- the cantons may apply lower capital taxes on qualifying investments (of at least 10%), patents and intra-group loans; and
- the cantons' share of direct federal tax receipts will be increased from 17% to 21.2%.
Interest rate for tax arrears and tax refunds and maximum deductions fur supplementary pension contributions for 2019 determinedOn 18 October 2018, the tax administration published press release No. DB-434.3/HAJ/ED determining the interest rate for tax arrears and tax refunds, and the maximum deductions fur supplementary pension contributions for 2019.
Interest rate for tax arrears and refundsThe 2019 interest rate for tax arrears and refunds will be 3%. The interest compensation rate for advance payments will be 0%.
Deduction for supplementary pension contributionsThe maximum deductions for supplementary pension contributions relating to old age, surviving dependants and disability pension are:
- CHF 6,826 for employees; and
- CHF 34,128 for self-employed people.
United Arab Emirates
On 12 October 2018, Botswana and the United Arab Emirates signed a tax treaty. The treaty was signed on the sidelines of the International Monetary Fund (IMF) and World Bank annual meeting, which took place in Bali from 12 to 14 October 2018. Further developments will be reported as they occur.