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.

Mauritius

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. Read more here.

Contact Mohammad Akshar Maherally and Ashish Droowanand Bheekharry of WTS Global for any queries.

South Africa

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. Read more here.

Contact Stephan Spamer, Virusha Subban and Arnaaz Camay of  Baker McKenzie  for any queries.

Zambia

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. Read more here.

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. Read more here.

Contact Emmanuel Manda of Musa Dudhia & Company for any queries.

Zimbabwe
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. Read more here.

Contact Miranda Khumalo of Atherstone & Cook for any queries.

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To speak to us in relation to any tax issues in the Middle East and Africa, please feel free to contact one of the lawyers below.

Author

Reggie Mezu is a Senior Special Counsel in Baker McKenzie Habib Al Mulla, based in Dubai. He has practiced tax for nearly 30 years in the Middle East, Africa and Europe, including in the UAE for 15 years. Reggie regularly advises clients on tax planning, corporate structuring, cross-border transactions, double tax treaties, reform and development of fiscal frameworks, general advice, and most recently, the new value added tax (VAT) regime in the Gulf region.

Author

Stephan Spamer heads Baker McKenzie's Tax Practice Group in Johannesburg. With a focus on corporate tax, he advises local and foreign companies on the South African tax implications of their local operations and foreign investments, and assists in the tax structuring and reorganization of cross-border investments. He also represents clients in tax disputes.

Author

Virusha Subban is a partner and head of Indirect Tax in Baker McKenzie's Tax Practice Group in Johannesburg. She has over 20 years of experience in tax issues relating to customs and excise and international trade. Her expertise extends to all customs-related risks in the context of cross-border transactions in Africa. She also conducts customs reviews and health checks and provides training to companies that wish to avert customs and excise risk.

Author

Arnaaz Camay is a senior executive in Baker McKenzie's Tax Practice Group in Johannesburg. A qualified chartered accountant, she advises a diverse range of clients on corporate and international tax matters across a wide range of industries. She also has extensive experience conducting tax due diligence investigations.

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