Africa Incentive Survey 2016
“Africa is open for business” A guide to tax / incentives in Africa
March 2016 Foreword
Africa is open for business
Leaders in Africa are no strangers to dealing with difficult economic and political challenges, and this resilience will stand them in good stead to institute a framework of intra-Africa trade that will benefit all African economies. I say this with conviction because this Africa Incentive Survey - Africa is open for business, is a clear indication of how Africa is rising. I believe that the survey is an invaluable guide and if you’re looking to understand the various incentives available in Africa, this is the perfect roadmap for you. The response from our African team in conducting this survey was tremendous, and we are grateful to all of our personnel that have contributed to it. KPMG’s African footprint is well established, with professionals ready to assist in advising you across the continent. In addition, I am pleased to let you know that we are developing an Africa Incentives desk which will be headed up by Mohammed Jada (Head: R&D Tax and Incentives) and his thoughts are on page 5, including the impact of trade agreements and the growing trend of trade regionalism within Africa. There’s an African Proverb that says “If you want to go fast, go alone. If you want to go far, go together.”
Trevor Hoole. Chief Executive, KPMG in Southern Africa
Not only does this Survey provide a very good insight on the tax regimes in 28 countries across Southern, Eastern, Northern and Western Africa, but it also provides valuable local “Good to Know” facts from our KPMG network of tax professionals across Africa. For example, if purchase orders for capital equipment are placed before receipt of Ministerial pre-approval confirmation, then a company would be precluded from accessing the grants intended to be available for such capital investment in South Africa! It is interesting to note that more than three-quarters of the countries surveyed have Special Economic Zones regimes in place, and this confirms my view that Africa is very much part of the global trend wherein governments are rapidly moving to create specialised, bespoke regional zones of development to stimulate trade and investment. I believe that this survey is an excellent first reference for any company looking to invest or expand their business into Africa, and this survey cements the fact that Africa is indeed open to business.
Jane McCormick, KPMG Global2016 AfricaHead Incentive of Tax Survey 2 Contents
Overview – Africa is rising 4 Tables and useful data 8 — Survey Comparison Table 9 — GDP and Population data 10
Southern Africa
— Angola 13 — Botswana 15 — Malawi 17 — Mauritius 19 — Mozambique 20 — Namibia 22 — South Africa 23 — Swaziland 26 — Zambia 27 — Zimbabwe 28 Eastern Africa Northern Africa
— Djibouti 30 — Algeria 43 — Ethiopia 31 — Chad 45 — Kenya 33 — Libya 46 — Rwanda 35 — Morocco 48 — Tanzania 37 — Sudan 50 — Uganda 39 — Tunisia 51 Western Africa
— Cameroon 54
Special Economic Zones — DRC 55 (SEZ), Export Processing — Ghana 56 Zones (EPZ) and Free Trade Zones (FTZ) are — Nigeria 58 trending as an industrial developmental model in — Senegal 62 African countries after the — success of these zones in Sierra Leone 64 Asia. At least 21 of the 28 References/Sources 65 countries surveyed in Africa have incentives Acronyms 66 relating to SEZ, EPZ or FTZ Highlights of the survey 67
2016 Africa Incentive Survey 3 Overview – Africa is rising
Introduction The purpose of the survey is to understand the landscape of incentives offered by African countries, both to local and foreign investors. Whilst in an ideal world, information relating to all countries in Africa would have been included in such a survey, for a variety of reasons (including time limitations), this survey contains information across 28 countries in Africa that represent 81% of Africa’s USD 2.4 trillion GDP and which are home to three-quarters of Africa’s 1.2 billion population[1]. More than a third of the 28 countries surveyed have incentives related to manufacturing. It appears that African countries are reforming the incentive policies to include manufacturing incentives, to attract manufacturing FDI within their countries. South Africa, Nigeria and Morocco are notably the only countries in Africa that offer cash grants in addition to tax incentives, all of which require prior approval by government. Summary tables for quick reference have been provided on Pages 9 to 11, and these have been divided into four regional areas, with detailed information provided for each country from page 13 to 64:
Countries included in the Survey Average CIT Rate Southern Africa Angola, Botswana, Malawi, Mauritius, Mozambique, 27.8% Namibia, South Africa, Swaziland, Zambia, Zimbabwe Eastern Africa Djibouti, Ethiopia, Kenya, Rwanda, Tanzania, Uganda 30% Northern Africa Algeria, Chad, Libya, Morocco, Sudan, Tunisia 28.8% Western Africa Cameroon, DRC, Ghana, Nigeria, Senegal, Sierra 30.5% Leone Source: https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online.html
The countries participating in this survey have achieved a 9% average growth in their GDP (2012 to 2014), whilst their populations have grown by 43.2 million to just under 870 million people during this period. What this means is that the sheer size of the population in Africa (approximately 18% of the world’s population) and the opportunities this affords to business – cannot be ignored.
The global average corporate tax rate is 23%, with the average rate for countries surveyed being 29%.
2016 Africa Incentive Survey 4 Overview – Africa is rising (cont.)
Global trend towards regionalism We note the plethora of FTAs that have been When conducting a survey on the tax/cash concluded within Asia, the EU and most recently incentives that African countries avail to both local the Trans Pacific Partnership (TPP) involving the and foreign investors, it is also important to USA and 12 countries across the Pacific Rim in understand this against the background of the what President Obama has described as a political and economic trade relations between prototype for a 21st Century trade agreement and a African countries, as well as that between Africa potential vehicle to establish a free market in the and other regional trading blocks outside of Africa. Asia Pacific region. In this context, an understanding of the various The world has also seen an increasing number of trade agreements that African countries have bilateral and multilateral trade agreements being entered into and the ability to traverse the unique entered into in the past decade. More than 130 complexities of each trade agreement, is necessary new trading arrangements have been notified since in order for business to understand the level of the creation of the World Trade Organisation, and access for their products into and within Africa. more than 400 regional trade agreements are This, together with the extent of costs associated currently being implemented. to get such products to the markets that need them – is essential in any supply chain operating The ASEAN countries are central to the within Africa. development of regionalism in the East Asian In the current global economic downturn, region, and it is expected that their ‘circle’ would protectionism on both a local and regional level is extend to encompass China, Korea and Japan expected to gain momentum. In particular, food (known as ASEAN + 3), and later possibly to and domestic manufacturing production capabilities include Australia, New Zealand and India (referred are expected to take on much more political to as ASEAN + 6). The latter process would create significance in many countries across the world. An a market of over 3 billion people, having a example is the recent year-long prolonged combined GDP of US$14 trillion. This has come negotiations on the continuation of the AGOA[2] close to fruition in that the TPP mentioned above, treaty benefits between South Africa and the USA, has recently being signed by 12 countries in Asia with South Africa being compelled to compromise and the Americas across the Pacific rim, and is in allowing US poultry and beef imports into South currently awaiting ratification by the US Senate. Africa in order to continue to benefit from the valuable AGOA trade agreement. According to the World Bank, 5 Free Trade Agreements (FTAs) can mitigate the African countries impact of protectionist measures, reducing or in Sub – Saharan removing tariff duties and opening access to a Africa (Uganda, market or markets. Kenya, Mauritania, Benin and Senegal) were among the top ten improvers globally in the 2015 Doing Business rankings for 2013/2014.
[1] Figures are at 2014, Source: World Development Indicators (World Bank) http://data.worldbank.org/country [2] The African Growth and Opportunity Act (AGOA) offers tangible incentives for African countries to continue their efforts to open their economies and build free markets with preferential access to the USA. Reference 1 : see Page 65
2016 Africa Incentive Survey 5 Overview – Africa is rising (cont.)
The future: a united African trade market Africa too, is party to a growing number of bilateral and multi-lateral trade agreements, providing African exporters with an opportunity to claim preferential treatment. Africa’s answer to the above is the Tripartite Free Trade Area (TFTA), which covers 26 (out of 54) African countries and is aimed at creating the biggest free-trade area on the African continent. The African continent features 17 trade blocs and the TFTA will result in consolidating the three significant trade blocks: the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA). The graph below[3] is a good illustration of the impact that the TFTA could have.
As can be seen by the almost decade long time-frame for the TPP to be negotiated, getting a TFTA across Africa would also not be without its own challenges. Not only would African countries need to significantly expand its range and volume of goods manufactured and produced, but it would also need to focus on Africa-2-Africa supply chains and its means of production.
[3] Tear down these walls, 27 Feb 2016, The Economist www.economist.com/news/21693562
2016 Africa Incentive Survey 6 Overview – Africa is rising (cont.)
From the survey conducted it is clear that many Lessons to learn African countries specifically offer tax incentives to stimulate the manufacturing, agricultural, and No trade deal provides any country with a industrial base in their respective countries, with guaranteed return of extra revenue, and every some more advanced economies also offering trade agreement is unique with complex incentives to localise financial services industries. A negotiations on the details therein. Teamwork and case in point is Kenya and Cameroon which commitment is required by African leaders to provides tax breaks for companies that list on its remedy common problems, such as regional stock exchange. power production, local supply chain beneficiation of mineral wealth and rolling out port, rail and road We have noticed a recent trend in more African infrastructure. This, in itself, offers the opportunity countries attempting to diversify their economies to for Africa to start doing business with itself, for shift away from an over-reliance on extractive itself, and will no doubt assist in better regional industries and to branch into mainstream industries integration. such as manufacturing and value-added services industries. African countries appear to be The benefits to Africa of a Pan- African FTA (when introducing new or revised incentives, seemingly to this eventually is negotiated!), would be mainly compete more favourably for both local and foreign accessible to those companies that are prepared direct investment. to do the hard yards understanding the many regional agreements, building relationships with The success of South Africa in having a diversified potential customers and developing the products economy appears to be rubbing off on its northern that meet their requirements. In the interim, neighbours. For example: companies that are best at ‘sorting the chaff from • Nigeria is currently striving to attract foreign the wheat’ will be able to take full advantage of direct investment to grow other sectors of the the potential of such trade agreements. economy (such as the motor manufacturing industry) given the decline of revenue from the oil sector. This is evident in the various tax incentives and government grants that have been introduced; • Rwanda has recently published in the Official Gazette of the Republic of Rwanda, the new The top recipients of Regulating Investment Promotion and facilitation FDI inflows in Africa (Investment code), which contains a package of during 2014 were investment incentives to Foreign as well as local South Africa (USD 5.7 billion); DRC (USD5.5 investors; and billion), Mozambique (USD4.9 billion); Egypt • Kenya has recently enacted a Special Economic (USD4.8 billion) and Zone Act to extend incentives to other sectors Nigeria (USD 4.7 including Services which are established in billion). The primary designated zones. industries of FDI were in the extractive industries, such as oil and gas and mining.
Reference 2 : see Page 65
2016 Africa Incentive Survey 7 Tables and useful data
Four of the 28 African countries in this survey offer a CIT rate of 23% or lower, with Mauritius being the lowest (15%).
2016 Africa Incentive Survey 8 Survey Comparison Table
Offer Offer CIT Reduced CIT Pre-approval SEZ/Export Job creation Training Country Tax Cash Rate Rate (SEZ requirements Free-zones requirement incentive Incentives Grants (%) /Free-zones)
Algeria Yes No Yes Yes 23 0 (i) Yes No Angola Yes No Yes Yes 30 - Yes No Botswana Yes No Yes No 22 15 Yes Yes Cameroon Yes No Yes Yes 33 0 No No Chad Yes No Yes No 40 - No No DRC Yes No Yes No 35 0 (ii) No No Djibouti Yes No Yes Yes 25 0 No No Yes No Yes Yes Tax Holiday No No Ethiopia 30 Period Ghana Yes No Yes Yes 25 0 No No Kenya Yes No Yes Yes 30 0 No Yes Yes No Yes No Tax Holiday No No Libya 20 Period Malawi Yes No No Yes 30 - No No Mauritius Yes No No Yes 15 15 No No Morocco Yes Yes (iii) Yes Yes 30 10 No Yes Yes No Yes Yes Tax Holiday No Yes Mozambique 32 Period Namibia Yes No Yes Yes 33 - No Yes Nigeria Yes Yes Yes Yes 30 0 Yes Yes Rwanda Yes No Yes Yes 30 0 Yes No Senegal Yes No Yes No 30 15 (iv) No No Sierra Leone Yes No Yes No 30 - Yes Yes South Africa Yes Yes Yes Yes 28 15 Yes Yes Sudan Yes No Yes Yes 35 0 No No Swaziland Yes No No Yes (v) 27.5 - No Yes Yes No Yes Yes Tax Holiday No No Tanzania 30 Period Tunisia Yes Yes Yes No 25 - No Yes Uganda Yes No Yes Yes 35 - No No Zambia Yes No Yes Yes 35 15 No No Zimbabwe Yes No Yes No 25.75 15 (iii) No No i. For 5 years when creating 100 jobs. ii. Provided DRC government has approved specific project or co-operation agreement entered into. iii. Contribution by Moroccan government of 20% of expenses where large scale projects > MAD 100m are undertaken, and co-operation agreement is entered into. iv. For approved export centred companies. v. Not yet in-force.
2016 Africa Incentive Survey 9 GDP and Population data of countries surveyed
Growth in GDP (2014) USD Population Growth in GDP Southern Africa Population (billion) (2014) million (2012 – 2014) (2012-2014) Angola 138.4 24.2 10.25% 6.80% Botswana 15.8 2.2 6.90% 4.08% Malawi 4.3 16.7 0.41% 6.34% Mauritius 12.6 1.3 10.35% 0.40% Mozambique 15.9 27.2 9.66% 5.76% Namibia 13.0 2.4 -0.16% 4.85% South Africa 350.1 54.0 -11.90% 3.17% Swaziland 4.4 1.3 -10.18% 3.04% Zambia 27.1 15.7 8.53% 6.32% Zimbabwe 14.2 15.2 14.56% 4.67% Average growth Average growth Total 595 billion 160.3 million in population: in GDP: 3.84% 4.5% Source: http://data.worldbank.org/country
Growth in GDP (2014) USD Population Growth in GDP Eastern Africa Population (billion) (2014) million (2012 – 2014) (2012-2014) Djibouti 1.6 0.9 17.39% 2.71% Ethiopia 55.6 97.0 28.40% 5.17% Kenya 60.9 44.9 20.88% 5.45% Rwanda 7.9 11.3 9.29% 4.85% Tanzania 48.1 51.8 22.95% 6.53% Uganda 27.0 37.8 16.19% 6.73% Average growth Average growth Total 201.1 billion 243.6 million in population: in GDP: 19.1% 5.2%
Source: http://data.worldbank.org/country
2016 Africa Incentive Survey 10 GDP and Population data of countries surveyed (cont.)
Growth in GDP (2014) USD Population Growth in GDP Northern Africa Population (billion) (2014) million (2012 – 2014) (2012-2014)
213.5 38.9 Algeria 2.14% 3.99% 13.9 13.6 Chad 12.57% 6.85% 41.1 6.3 Libya -49.77% -0.39% 110.0 33.9 Morocco 11.95% 2.84% 73.8 39.4 Sudan 17.75% 4.34% 48.6 11.0 Tunisia 7.71% 2.03%
Average growth Average growth Total 501 billion 143 million in population: in GDP: 0.4% 3.3%
Source: http://data.worldbank.org/country
Growth in GDP (2014) USD Population Growth in GDP Western Africa Population (billion) (2014) million (2012 – 2014) (2012-2014) Cameroon 32.1 22.8 21.07% 5.14% DRC 33.1 74.9 20.60% 6.52% Ghana 38.6 26.8 -7.92% 4.86% Nigeria 568.5 177.5 23.33% 5.49% Senegal 15.7 14.7 11.48% 6.48% Sierra Leone 4.8 6.3 29.33% 4.51% Average growth Average growth Total 692.8 billion 322.9 million in population: in GDP: 16.3% 5.5%
Source: http://data.worldbank.org/country
2016 Africa Incentive Survey 11 Southern Africa
Green Point stadium, Cape Town Southern Africa: Angola
A New Private Investment Law (“PIL”) was published in Angola establishing the general basis of private investment in the Republic of Angola. The PIL sets out the principles and rules regarding the eligibility of incentives and other facilities to be granted by the State. For further information please contact: Amaral, Gustavo Associate Partner, Corporate Tax +244 227 280 101 [email protected]
Tax incentive Industrial Tax Code New PIL Special Economic Zones New PIL Tax Benefit regarding the Extraordinary tax ("SEZ") Tax incentives Reinvestment of benefits Luanda-Bengo Voluntary Reserves
• Foreign investments - total amount equal or Investments equal or higher than the amount in Profits which were taken to higher than USD 50M. Kwanzas corresponding reserves and reinvested, Minimum to USD 1 Million. Criteria: within the following three Investment fiscal years, in new facilities None. • Domestic investments - • Create 500 or 200 jobs required or equipment for total amount equal or for Angolan citizens, in manufacturing or higher than the amount Zone A or B, administrative activities. equivalent in Kwanzas respectively. corresponding to USD 0.5 Million.
100% tax reduction on Industrial Tax, Real Estate Transfer Tax ("Sisa") and Tax on Invested Capital for To be negotiated with the Up to 50% of the Maximum a period of 10 years (the relevant authorities, and To be negotiated with the investment amount may be benefit percentage of reduction is expected to be more SEZ Management deducted to the taxable available based on a certain score beneficial than the standard Company. income. attributed to each PIL Tax Incentive. investment project according to a table attached to the new PIL). Tax exemption, Tax Type of benefit Tax reduction Extraordinary Tax benefits Tax deduction reduction, Financial Support. Up to negotiation with SEZ Training Benefit None Management Company.
2016 Africa Incentive Survey 13 Southern Africa: Angola (cont.)
Tax incentive Industrial Tax Code New PIL New PIL Tax Benefit regarding the SEZ Extraordinary Tax Tax incentives Reinvestment of Luanda-Bengo benefits Voluntary Reserves The incentive is available for a period between 4 to The incentive can only be The deduction is divided in Timeframe / 10 years and can only be claimed after submission the three years following How to claim claimed after submission and approval of the the conclusion of the and approval of the investment project. investment. investment project. Criteria for the granting of tax benefits: • Investment amount; • National jobs creation; • Investment location;
• Angolan shareholders • The right to access participation; Luanda-Bengo SEZ • It is not entirely clear • Domestic value-added; depends on the whether the limits related submission of proposal to • Export-oriented to the PIL regarding the the SEZ Management production; percentage of reduction Company. and its duration period • Agricultural, livestock, should also be applicable This tax deduction is not • The implementation of and agro-industries; to the extraordinary tax automatic and to obtain this SEZ is subject to certain tax benefit, taxpayers must requirements. • Investment location benefits. We recommend that this is classified prior submit an application to the (Zone A or Zone B). • Prior interaction with the to investment decisions General Tax Administration Good to know authorities and the Zone A: being effected. before the end of February of the following year after Luanda-Bango SEZ is Province of Luanda and the • “APIEX – Angola” since the conclusion of the essential before head municipalities of the September 2015, is the investment, with investment decisions are Provinces of Benguela, entity responsible for the supporting documentation. made. Huíla and the municipality promotion of domestic of Lobito. and foreign investment projects. Zone B: Provinces of Cabinda, Bié, Cunene, Huambo, Cuango Cubango, Lunda-Norte, Lunda-Sul, Moxico, Zaire, Bengo, Cuanza-Norte, Cuanza-Sul, Malanje, Namibe and Uíge and the other municipalities of the Provinces of Benguela and Huíla.
2016 Africa Incentive Survey 14 Southern Africa: Botswana
The Ministry of Finance and Development Planning administers manufacturing and development incentives within Botswana. In this regard, a number of incentives are available, particularly in the manufacturing and financial sectors. For further information please contact: Nigel Dixon-Warren Tax and Advisory Partner +267 3912400 [email protected]
Tax incentive Manufacturing International Financial Development approval Development Approval Tax agreements Services Centre (IFSC) order Order Minimum Investment None required • A reduced corporate tax rate of 15% applies to approved activities. • The Minister of Finance • No withholding tax on may issue a development approval dividends, interest, • The Minister of Finance order granting additional royalties and and Development relief to any project management or planning can enter into which he considers consultancy fees paid to an agreement with any a non-resident. would be beneficial to A reduced corporate tax taxpayer. Maximum the development of the • Capital gains on rate of 15% and additional benefit Botswana economy or • Once the agreement is disposal of qualifying deductions as prescribed available to the economic approved, a reduced tax foreign shareholdings by the Minister. advancement of its rate, additional are exempt. citizens. deductions and exemptions prescribed • Dividends from • Any order issued will by the Minister, would qualifying foreign specify the types and be available. participation are rates of additional tax exempt. relief to be granted to the project in question. • Investors exempt from capital gains tax on divestment.
Tax reduction, Tax Tax reduction, Tax Type of benefit Tax reduction, Tax deduction exemption deduction, Tax exemption
Training 200% tax deduction for approved citizen training, only to the extent to which such expenditure is not entitled to Benefit reimbursement.
2016 Africa Incentive Survey 15 Southern Africa: Botswana (cont.)
Tax incentive Manufacturing International Financial Development approval Development Tax agreements Services Centre (IFSC) order Approval Order The Company needs The company needs to apply The agreement has to be How to claim / The Company needs to to apply for pre – for pre-approval before it can approved by resolution of Timeframe first apply for certification. approval before it can claim. the National Assembly. claim. The order is issued on condition that business The economic significance of has to contribute to the project is a major economic determining factor in the Certification is dependent development and up- award of a Development on the level of The agreement can only skilling of citizens. If Approval Order. In addition, Good to know participation of citizens in be amended or cancelled conditions of the order consideration will be given to management and training by the National Assembly. are breached the the plans or facilities in place of citizen employees. Minister may amend or for the training of citizens revoke the and localisation plans of non- development approval citizen held positions. order.
The Financial Services sector has specific incentives available for investors in Botswana, Morocco, Kenya and Mauritius.
2016 Africa Incentive Survey 16 Southern Africa: Malawi
Malawi introduced a one stop incentive platform known as Malawi Investment Trade Centre (“MITC”) where investors can go and get hold of all information on incentives available in Malawi. MITC collaborates with Ministry of Trade and Industry including other parastatal organizations like the Malawi Revenue Authority (“MRA”). For further information please contact: Jimmy Gonndwe Partner, Tax +265 (1) 773 855/392 [email protected]
Tax incentive Tax Allowances Export Processing Zones (EPZ) Claimed once-off Claimed Annually
Minimum None. Investment required
Initial allowances Annual allowances Initial allowances are available on Annual allowances are available for capital expenditure during the year of qualifying assets on a declining acquisition at the following Rates: balance basis at the following (i) Industrial buildings, Rates: improvements, railway line 10% • Industrial buildings, farm (ii) Farm fencing 33.33% improvements & railway lines (iii) Machinery 20% 5% (iv) Automobiles forming part of a • Farm fencing 10% commercial hire fleet 20%. • Capital Equipment and raw • Heavy machinery and materials are duty free. installations 15% Investment allowances • No excise tax is imposed on • Light machinery 10% purchase of raw materials Maximum benefit • There is also an additional of 15% and packaging materials available allowance for investment in • Trucks and tractors 33.33% made in Malawi. designated areas of the country. • Light commercial vehicles • No Value Added Tax, to • Loss carry forward of up to six 25% enjoy this you need to be years. • Motor vehicles 20% operating in the designated • Manufacturing companies may • Commercial Buildings costing areas. also deduct operating expenses more than K100 million 2.5% incurred up to 25months prior to Export allowance the start of the operations. A registered exporter, shall in • There is also duty draw back when every financial year during which dealing in non-traditional exports he exports products of Malawi, be for all raw materials including entitled to an income tax packaging when registered with allowance of 25 percent of his Malawi Export Promotion Council. taxable income derived from his export sales.
2016 Africa Incentive Survey 17 Southern Africa: Malawi (cont.)
Tax incentive Tax Allowances Export Processing Zones (EPZ) Claimed once-off Claimed Annually Minimum None. Investment required Transport allowance An additional allowance may be granted of 25 percent of the international transport costs incurred by a taxpayer for his exports whether produced by manufacturing in bond or otherwise, but other than exports of products specified in the Schedule to the Export Incentives Maximum benefit (Exclusion) Order made under the available Export Incentives Act.
Mining allowance A person carrying on mining operations incurs mining expenditure in any year of assessment shall be entitled to an allowance equal to 100 percent of such expenditure in the first year of assessment Type of benefit Tax deduction
Training Benefit None
Good to Know Initial and investment allowance may be claimed once but other incentives are annually claimed.
2016 Africa Incentive Survey 18 Southern Africa: Mauritius
Some of the government incentives include a single corporate income tax rate (“CIT”) of 15 percent; exemption from customs and excise duties on import of equipment and raw materials; exemption from tax on payment of dividends, no capital gains tax; a low 5% registration duty on registration of notarial deeds; free repatriation of profits, dividends, and capital; and reduced tariffs for electricity and water for vulnerable people. For further information please contact: Wasoudeo Balloo Partner, Tax +230 406 9891 [email protected]
Tax incentive Global Business Global Business Smart Cities Scheme Companies Category 1 Companies Category Freeport Zone (SCS) (GBC 1) 2 (GBC 2) Minimum Investment None required • Exemption from CIT for 8 years from the • A GBC1 flat CIT rate issue of the SCS of 15%. However, a Certificate; deemed foreign tax • Exemption from VAT on credit of 80% is capital goods; available against the Mauritian tax liability • Exemption from CIT except • Exemption from customs so that a GBC 1 will • Exemption from for sale to local market. duty on import or Maximum pay a net effective tax CIT. • Exemption from customs purchase of any dutiable benefit rate of 3% only. duties on all goods good; • No requirement to available • A GBC1 may also file corporate tax imported into the Freeport • Exemption from transfer claim actual foreign return. zone. tax and registration duty tax credit suffered, • Free repatriation of profits. on transfer of land to a subject to meeting SPV subject to certain certain conditions, conditions; and which may reduce its • Exemption from Capital effective tax rate to Gains (morcellement) nil. tax. Type of benefit Tax exemption Tax reduction Tax exemption Training None Benefit Mauritius also benefits from • The Incentive is effective trade agreements such as the as from 12 June 2015 GBC1 can avail the Interim Economic Partnership • The Smart City Scheme double taxation treaty Agreement (EPA), the network Mauritius has Generalized System of provides an enabling GBC2 cannot avail with other countries, Preferences (GSP) and the Good to know framework and a package Mauritius treaty including that of the Africa Growth & Opportunity of attractive fiscal and network. non-fiscal incentives to Southern African Act (AGOA), which provide investors for the Development preferential access for goods development of smart Community (SADC). of Mauritian origin to the cities across the island. European Union and the United States, respectively.
2016 Africa Incentive Survey 19 Southern Africa: Mozambique
The incentives are authorized by a Government entity, Centro de Promoção de Investimentos (CPI). The government entity, GAZEDA, is responsible for the approval for Special Economic Zones (“SEZ”) and Industrial Freeports/Zones (“IFZ”). A number of incentives are available depending on the investment sector and location. For further information please contact: Yussuf Mahomed Partner +258 21 355 200 [email protected]
Tax incentive
Foreign or Manufacturing Large Special Industrial National Basic Infra- and Assembly Agriculture Hotel and Dimension Economic Zones / General structure Industry and Fishing Tourism Projects Zones Freeports Investment
MZN Annual turnover over MZN Minimum 2,500,000 MZN 3,000,000 and MZN MZN MZN MZN MZN Investment (1 USD = 2,500,000 add value to the 2,500,000 2,500,000 12,500,000 2,500,000 2,500,000 required 49.0900 MZN) product of more than 20%
• CIT reduction: exemption • CIT • Accelerated on the first reduction: • CIT depreciation ten years- • Accelerated exemption • Accelerated reduction: (more than reduction of depreciation on the first depreciation 80% on the • CIT 50%) for 50% (more 50%) five years- (more than first five reduction: eligible between for eligible reduction of 50%) for years- 60% 80% until assets; eleventh assets; 50% eligible between 31 • Tax credit of and Exemption of • Tax credit of between assets; sixth and December 5%-10% of fifteenth customs duties 5%-10% of sixth and • Tax credit of tenth year- 2015- 50% the years- of material the tenth years- Maximum 5%-10% 25% between investment; reduction of necessary for investment reduction of benefit of the between 2016 to 25% for the the production • Exemption done; 25% for the available investment; eleventh to 2025. rest of the or assembly, for customs rest of the and fifteenth • Exemption project life. including raw • Exemption duties and project life. year. for customs for customs • Exemption • Exemption material. VAT on K • Exemption • Exemption duties and duties and for customs for customs class for customs for customs VAT on K VAT on all duties and duties and equipment duties and duties and class equipment VAT on VAT on K plus other VAT on VAT on K equipment. necessary equipment class equipment equipment class for the necessary equipment. necessary necessary equipment. project. for the for the for the project project project. including goods and materials. Type of Tax deduction benefit
2016 Africa Incentive Survey 20 Southern Africa: Mozambique (cont.)
Tax incentive
Foreign or Manufacturing Large Special Industrial National Basic Infra- and Assembly Agriculture Hotel and Dimension Economic Zones/ General structure Industry and Fishing Tourism Projects Zones Freeports Investment
Training costs up to Training Training costs up to 5%-10% of the 5%-10% of None None Benefit taxable profit. the taxable profit. • Need to • Need to apply for pre- apply for • Need to apply approval pre- for pre- Need to before apply for approval approval Need to Need to company can pre- before before apply for pre- apply for pre- claim. The approval • Need to apply for pre- company company can approval approval process before approval before company can claim. claim. The before before Good to takes around company can claim. The process The process takes company can company can know 3 months. can claim. takes around 6 months. process around 9 claim. The claim. The The takes • The benefit months. process process • GAZEDA is the approving is available process entity. around 3 • Benefit is takes around takes around for 5 years takes months. available for 9 months. 12 months. for the around 6 • Benefits the project customs months. valid for 5 period. duties and 15 In 2014, South years. year for CIT. Africa attracted the most number of FDI projects by project numbers - with 116 FDI projects. (Ref 3)
2016 Africa Incentive Survey 21 Southern Africa: Namibia
All manufacturing and Export Processing Zones (“EPZ”) enterprises claiming incentives must register with the Ministry of Trade and Industry and in terms of taxation incentives, and the entities are also required to register with the Namibia Inland Revenue Authority ("NIRA"). For further information please contact: Adeline Beukes Senior Manager, Tax +264 61 387 500 [email protected]
Tax incentive Export Processing Zone (EPZ) Tax Registered Manufacturers Tax Exporters of manufactured goods Incentives Incentives Tax Incentives Minimum Investment None required • An additional 25% deduction on any expenditure incurred directly in the manufacturing process; • Exemption from: VAT, CIT, Stamp • An additional 25% deduction of and Transfer duty, Customs and transportation cost incurred by Excise duty, No duty or tax on any road or by rail; Maximum goods exported from Namibia; A deduction of 80% of taxable benefit and • Building allowance of 20% in the income (excluding the exporting of first year and the balance at 8% available • Exemption from import VAT fish and meat products). per year over the ensuing 10 charged on the import of raw years; and materials and machinery used in the manufacturing process. • An additional 25% deduction of expenditure incurred as a result of marketing for exportation purposes. Type of benefit Tax exemption Tax deduction 75% refund of expenditure incurred An additional deduction of 25% None Training in training Namibian citizens. from income will be allowed on Benefit approved technical training expenses. • Tax incentives are of unlimited duration. • Tax incentives are limited to the • No strikes or lock-outs are period the enterprise retains its allowed in an EPZ thus the manufacturing status. enterprises should enjoy industrial Registration with authorities is Good to know • A physical inspection of the calm. EPZ enterprises are allowed required. premises is required before to hold foreign currency accounts manufacturing status can be in local banks and they are free to granted. locate their operations anywhere in Namibia.
2016 Africa Incentive Survey 22 Southern Africa: South Africa
The South African government has introduced a range of generous incentives, from tax incentives (see Table 1 below) to financial grants (see Table 2 below), covering diverse activities primarily in the area of manufacturing, infrastructure and research and development (“R&D”) projects. The Department of Trade and Industry (“DTI”) administers the manufacturing and development incentives and provides grant funding to applicants. The R&D Tax Incentive is administered by the Department of Science and Technology (“DST”) and the South African Revenue Service (“SARS”) to increase private sector investment and conducting of R&D in the country. South Africa also has a long history of supporting the Automotive Industry (both manufacturing of vehicles and components), through a range of cash grants and rebates (more details are available on request in this regard). For further information on the full range of tax / incentives, please contact: Mohammed Jada Partner, Head of R&D Tax and Incentives +2782 719 5531 [email protected]
Tax Incentives (Table 1) Research and Greenfield and Development Brownfield Energy Efficiency Tax Special Economic Employment Tax (“R&D”) Tax Expansion Deduction Zones Incentive Incentive projects (Section 12L) (Section 11D) (Section 12I) Greenfield projects: • R50 million. None, but need to be an Brownfields: employer duly registered None, however Minimum for Pay As You Earn • R30 million; or project needs to be Investment None None (“PAYE”) and must located in a required • employ employees Lesser of designated SEZ. R50 million; or earning between R2 000 25% of to R6 000 per month. expenditure on existing assets. Unlimited benefit. 150% • Reduction in 50% of tax deduction on PAYE during each 15% corporate tax qualifying month of the first 12 rate, accelerated 10 expenditure at a months in respect of year allowance on The deduction is corporate tax rate which an employer buildings, VAT and calculated at 95 cents of 28%. This is employs a qualifying Maximum R98 million to Customs relief and per kilowatt hour of effectively an employee; and benefit R252 million net the Section 12I tax energy efficiency additional 14% available tax benefit. incentive is available savings or energy • Reduction in 25% of tax saving on as well as an efficiency savings PAYE during each of qualifying employment tax equivalent. the 12 months after the expenditure with incentive to hire more first 12 months that the no upper cap or people. same employer limit on the employs the qualifying allowed employee. expenditure.
2016 Africa Incentive Survey 23 Southern Africa: South Africa (cont.)
Tax Incentives (Table 1 – continued) Research and Greenfield and Development Brownfield Energy Efficiency Special Economic (“R&D”) Tax Expansion Tax Deduction Employment Tax Incentive Zones Incentive projects (Section 12L) (Section 11D) (Section 12I) Type of benefit Tax deduction R36 000 per employee up to a Training Benefit Not applicable. None maximum of R30 million. From 1 October 2012, the A Company needs The energy effective 14% The incentive is available to submit an efficiency savings tax saving can The SEZ Act was from 1 January 2014 to 31 application, which have to be How to claim / only be claimed promulgated on 9 December 2017. must be approved measured and Timeframe from the date a February 2016, and is before contracting confirmed by a pre – approval currently effective. for or acquiring any certified and application form assets. accredited body. has been lodged with the DST. • No deduction is Various zones have allowed if the been identified taxpayer receives across South Africa: a concurrent • Dube Trade Port; government benefit in respect • Eligible employers must • Richards Bay; of energy The time frame employ qualifying efficiency for pre – approval employees who are • Saldanha Bay; savings; and from date of between 18 to 29 years old lodgement is • Atlantis; • A deduction for at the end of the month generally about 9 The time frame for • Upington; captive the incentive is claimed, months, with approval from date renewable energy and who have South Good to know expenditure of lodgement is • Harrismith; is only allowed African Identity documents qualifying from generally at least 2 - under section 12L or asylum seeker permits; • Johannesburg (x2); the date of 3 months. if the kilowatt and lodgement of the hours of energy • Rustenburg; • Age limit is not applicable if pre – approval output of the the employee renders their application to the • Tubatse; respective captive services to an employer DST. power plant is • Port Elizabeth; who operates in a SEZ. more than 35% • East London; and of the kilowatt hours of energy • Messina. input in respect of that year of assessment. “Global economic conditions are affecting all countries and in an increasingly inter-connected world, no country is immune from its effects. South Africa remains an attractive investment destination that is open for business” — Minister Rob Davies in the article “South Africa open for business”, published by The Public Sector Manager, February 2016
2016 Africa Incentive Survey 24 Southern Africa: South Africa (cont.)
Government Grants (Table 2) Aquaculture Business Process Development and Critical Infrastructure Services (BPS) Film Incentive Enhancement Program (CIP) (e.g. call centre / shared Programme (“ADEP”) services) None, but need to conduct activities that fall under the Standard Create at least 50 new Industry classifying code • R 12 Million for foreign Minimum jobs in South Africa over a (SIC) 132 (fish hatcheries Films. Investment None three year period and and fish farms) and SIC required maintain the jobs for a • R 2.5 Million for South 301 and 3012 (production, period of five years. African Films. processing and preserving of aquaculture fish). • Average cash incentive of R22 000 to R34 000 per job retained (2014 The grant ranges to 2023). between 25% and 45% 20% - 50% of production Cash grant of between Maximum of the cost for a new, • 20% bonus if more than expenditure and up to 10% to 30% of benefit upgrade or expansion greater than 400 but 5%- 25% of Post investment, Capped at available project (based on a point less than 800 jobs production Expenditure. R30 million. scoring system), capped created. Capped at R50 million. at R40 million. • 30% bonus if more than greater than 800 jobs created. Type of benefit Cash grant Training None Benefit • Claim application must be submitted to the DTI at least 2 months • The incentive consists before commencement of three categories: of operations, for grant – Foreign Film and to be disbursed. Television Production • Applications must be and Post-Production • Projects will be granted submitted 3 months incentive; an incentive payment before start of • Must commence and disbursement construction of commercial BPS – South African Film period based on their infrastructures; and operations no later than and Television investment spread as: six months from the Production and Co- • Incentive applies to Good to Know (i) Projects with a approval date. Production incentive; proposed one year both mining and and investment are granted manufacturing • The 50 new jobs an incentive, and industries. created must be – South African disbursement over two retained. Emerging Black • Applicants claim is six monthly periods Filmmakers incentive. linked to a scorecard, (ii) Projects with a measuring level of • Applications must be proposed two year investment and submitted before investment are granted percentage of black commencement of an incentive payment ownership. principal photography and disbursement over or post production. four six monthly periods.
2016 Africa Incentive Survey 25 Southern Africa: Swaziland
Swaziland does not offer cash grants to companies, but has put in place a relatively competitive incentive package. The rationale for incentives is premised on the notion that it eliminates the need for direct government funding to business, indicates a generous long term environment with a promise of competitive return to the investor and it offsets the low domestic savings which are oftentimes insufficient to finance investment expansions. There is no capital gains tax in Swaziland. For further information please contact: Rob Webb Partner +26824057000 [email protected]
Tax Incentives Development Duty free access for Rebates for raw Special Economic Approval Order capital goods and Building Initial Allowance material Zones (DAO) machinery Minimum Investment None required Exemption from 10% maximum Exemption of import duty on CIT payable for equipment and raw material Industrial Building Allowance. Royal Science Initial allowance of 50% of Maximum 10 years and no machinery from used to and Technology the actual cost of a building, benefit withholding tax duties (only those manufacture Park and the on dividends imported for goods to be for the first year and 4% King Mswati III available paid. The normal purposes of exported outside thereafter. International CIT rate is manufacturing or the Southern Airport have 27.5%. direct operations). African Customs been earmarked Union (“SACU”). as SEZ’s. Type of Tax reduction Tax exemption Tax reduction benefit Training Yes None Benefit
• An application needs to be submitted to the Swaziland • The incentive can be claimed upon Revenue Authority (“SRA”) Government is The incentive is importation by completing certain on commencement of the currently working available for 10 documents at the border. Private project. An inspection of on the legislation Good to years and can be clearing agents are also available to the completed project will to ratify these Know renewed after assist taxpayers. be conducted by SRA. areas and the the 10 year • This incentive is administered under the • Similar allowances are additional period. SACU Common External Tariff (“CET”) available for hotel buildings benefits to be Framework. and plant and machinery made available. used in a manufacturing process.
2016 Africa Incentive Survey 26 Southern Africa: Zambia
Fiscal and non-fiscal incentives are available for investors in specific 'priority sectors' (currently manufacturing, infrastructure development and energy and water development) where the investments are made in an industrial area, rural area or multi-facility economic zone. These incentives are available for certain sizes of investments which receive approval from the Zambia Development Agency (“ZDA”). For further information please contact: Michael Phiri Partner + 260 211 372900 [email protected]
Tax incentive Special Economic Zones ZDA investment incentives Industry Specific Incentives (Industrial Zones/Freeport's) Currently $500k, (please note that Multi-facility economic zones or Minimum this may be been increased to industrial parks are located both in Investment $2.5m per latest proposed Lusaka and the Copper belt. None required amendment of ZDA bill). Investment in rural areas also qualifies for incentives. • 10% corporate income tax rate • 0% corporate income tax for 5 (35% standard rate) and years; increased capital allowances; • Dividend withholding tax at 0% • The export of non-traditional for 5 years; ZDA incentives as described across goods benefits from a 15% Maximum are only available in the approved corporate income tax rate; benefit • Improvement allowances of multi-facility economic zones, available 100% on certain capital • The manufacture of certain expenditure; and industrial parks or rural areas. fertilizers benefits from a 15% corporate income tax rate; and • The suspension/deferment of import duties and import VAT on • Rural enterprises benefit from a plant and machinery for 5 years. 30% corporate income tax rate for the first 5 years.
Type of benefit Tax reduction Training None Benefit
In order to claim these, the investment must initially be approved by the Zambia Development Agency, and then confirmed by the Zambia Revenue Authority. The incentives are available for 5 years from the commencement of Good to Know the business. Please also note that companies listed on the Lusaka Stock Exchange can benefit from slightly reduced corporate income tax rates in the year after listing, provided that certain conditions are met.
2016 Africa Incentive Survey 27 Southern Africa: Zimbabwe
Investment incentives in Zimbabwe are outlined in the Income Tax Act [Chapter 23:060, and the rates are outlined in the Finance Act [Chapter 23:04]. The incentives are administered by the Commissioner General, of the Zimbabwe Revenue Authority (“ZRA”). Incoming investments have to be registered by the Zimbabwe Investment Centre (“ZIC”). Currently Zimbabwe is working towards developing an SEZ regime but this is still in a very preliminary phase. For further information please contact: Steve Matoushaya Partner +2634302600 [email protected]
Tax Incentives (Table 1) Build, own, operate Industrial Park Tourist development and transfer (BOOT or Manufacturing exporter Developer zones BOT) None, but needs to conduct manufacturing None, but usually operations in Zimbabwe Minimum encompasses large scale None, but needs to None, but needs to and, in any year of Investment construction projects operate in an approved operate in tourist assessment, 30% or more required such as construction of industrial park. development zone. of its total manufacturing roads, infrastructure, etc. output is exported from Zimbabwe. Company which exports between 30% to 41% of its output will be taxed at The rate of tax for BOOT the preferential rate of or BOT operations is 0% 20%. If the Company Maximum Benefit in the first five years, Taxed at 0% in first five years and 25% thereafter. exports more than 41% available 15% in respect of the but less than 51% , the CIT second five years and rate drops to 17.5%; If the then 25% thereafter. company exports more than 51%, then the CIT rate comes down to 15%.
Type of benefit Tax reduction Tax exemptions, Tax reduction Tax reduction
Training Benefit None “Industrial park” means An approved BOOT or any premises or area BOT arrangement is a which is approved by the contract / arrangement An “approved tourist Minister by statutory approved by the development zone” instrument and in which Commissioner-General, means a tourist two or more persons, to construct an item of development zone independently of the Percentages of a infrastructure for the declared under industrial park developer, company’s manufacturing state or a statutory regulations made in Good to know carry on the business of: output are calculated by corporation, and the right terms of section 57(2) manufacturing or quantity or volume rather to operate or control it (k) of the Tourism Act processing goods for than according to value. for a specified period, [Cap. 14:20] and export from Zimbabwe; (after which period the approved by the or manufacturing or ownership or control is Commissioner- processing components transferred or restored to General. of goods which are the state or the statutory intended for export from corporation). Zimbabwe.
2016 Africa Incentive Survey 28 Eastern Africa
Mount Kilimanjaro Tanzania Eastern Africa: Djibouti
There are various tax incentives put in place by the government of Djibouti to stimulate investment. For further information please contact: Ndiaga Sarr Senior Partner +221338492705 [email protected]
Tax incentive The Investment code (Regime A and Regime B) Special regime applicable to Free zone companies • Minimum investment amount : 5.000.000 FDj Minimum (~ 28 000 US$) to benefit from the regime A. Investment None required • Minimum investment amount : 50.000.000 FDj (~ 281 000 US$) to benefit from the regime B . REGIME A : • Exemption from domestic consumption tax on the materials and equipment necessary for the realisation of the investment program as well as imported raw • The companies and operators individual operating in materials and those used effectively during the first free zones are not subject to any direct or indirect tax 3 years by the approved company. or taxation including income tax, except in respect of VAT. For VAT purpose the entities of the free zone REGIME B: are subject to the provisions of the General Code Maximum • Exemption from land tax for construction of buildings taxes. Benefit for a period of 7 years; available • Goods imported or manufactured in the free zone are • Exemption from tax on business profits resulting from exempt from all customs and tax liability, unless they the approved activities, subject to a maximum of 7 are imported into the customs territory of the years; Republic of Djibouti. Thus, the flow in the local market of goods from the free zone is subject to the • Exemption from domestic consumption tax for raw payment of duties and taxes due on importation. materials imported and used in the first year; and • Authorized investments pursuant to provisions of Plan B may be exempt from the tax on building permits. Type of benefit Tax exemption Training Benefit None
• Need to apply for pre-approval before company can claim • The company has to apply for the free zone license during its incorporation, so it can benefit from all the advantages. • Need to apply for pre-approval before company can Good to know claim. • This tax exemption is granted for a period of up to 50 years, which run from the date of issuance of the free zone license. • Conditions: The Company has to export at least 80% of its production. The benefits of this regime remain valid for a period of 25 years and can be renewed.
2016 Africa Incentive Survey 30 Eastern Africa: Ethiopia
Ethiopia offers a comprehensive set of fiscal and non-fiscal incentives to encourage investment into priority areas and industries, of which investments are regulated by the Ethiopian Investment Agency (EIA). The incentives are applicable to both domestic and foreign investors. Industries applicable for incentives include, but are not limited to, Manufacturing, Agro-industries, ICT, Textiles, Timber, Chemical and Pharmaceutical, Food and Minerals. Non- fiscal incentives are given to all investors who produce export products. For further information please contact: Robert Waruiru Director, Tax +25 420 280 6000 [email protected]
Tax incentive Regional Income Tax Non Fiscal (Export) Customs Duty Income Tax Holidays deductions Incentives Exemptions
None, but an investor must establish a new enterprise • None, but all foreign in one of the following investors in Ethiopia are regions: required to invest at least Gambella; Benshangul/ US$ 200,000 (or an None, but an investor Gumuz; Afar; Somali; Guji equivalent amount in must be engaged in and Borena Zones (in None, but must be Ethiopian birr at the manufacturing, designated as either a prevailing exchange rate) Minimum Oromia); or agribusiness; ‘producer exporter’, in a single investment Investment South Omo Zone, Segen generation, ‘indirect producer project; and required (Derashe, Amaro, Konso transmission and and Burji) Area Peoples exporter’, ‘raw material • Investor must be supply of electrical Zone, Bench-Maji Zone, supplier’ and ‘exporter’. engaged in energy; and ICT. Sheka Zone, Dawro Zone, manufacturing, Keffa Zone, Konta and agribusiness, generation, Basketo Special Woredas transmission and supply (in Southern Nations, of electrical energy; and Nationalities and Peoples ICT. Region).
100% exemption from Income tax customs duties and other 30% income tax deduction • Qualifying investors are exemptions for a taxes levied on: for three consecutive years allowed to import period ranging • importation of capital Maximum after the expiry of the tax machinery and between 1 and 9 goods and construction benefit holiday period, as shown equipment necessary years, depending on material; and on the left hand column, for their investment available the specific activity under “Income Tax projects through a • imports on spare parts and the location of the Holidays”. suppliers’ credit. (the value of which is not investor. greater than 15% of the total value capital goods).
2016 Africa Incentive Survey 31 Eastern Africa: Ethiopia (cont.)
Tax incentive Regional Income Tax Non Fiscal (Export) Customs Duty Income Tax Holidays deductions Incentives Exemptions Suppliers Credit, Tax Type of benefit Tax exemption Tax deduction Customs Duty Exemption exemption • Companies that incur losses during the income tax holiday period are allowed to carry An investor who expands forward such losses or upgrades his existing • Although no particular for half of the enterprise and increases its Business enterprises that time frames are given for income tax holiday production or service suffer losses during the approval, approvals must period after the capacity by at least 50%, income tax exemption be obtained in advance expiry of the holiday or introduces a new period can carry forward before such importation period, however the production or service line such losses, following the Good to Know of duty free goods. period may not at least by 100% percent expiration of the income exceed a 5-year of an existing enterprise, tax exemption period, for • The incentive is available income tax period. may be entitled to the half of the tax exemption for the importation of income tax exemption on period but up to a spare parts is limited to a • The tax holidays the left hand column, maximum of 5 years. period of 5 years. may be extended under “Income Tax for an additional Holidays”. period of 2 years subject to meeting certain export requirements.
Africa accounted for the largest number of regulatory policy reforms in 2014, with 75 of the 230 policy reforms worldwide coming from Africa.
Reference 3 : see Page 65
2016 Africa Incentive Survey 32 Eastern Africa: Kenya
Kenya provides a number of incentives, especially for investors in the manufacturing sector. However, the recently enacted Special Economic Zone Act extends incentives to other sectors including services which are established in designated zones. For further information please contact: Richard Ndungu Partner and Head of Tax +25(20) 280 6000 [email protected]
Tax incentive Export Processing Special Economic Zones Nairobi Stock Exchange Investment Deduction Zones (EPZ) (SEZ) (NSE) listing incentive (ID) • 100% ID no minimum investment is required. Minimum None, but need to be None, but need to be • 150% ID in an area Investment located in a designated located in a designated 20% issued shares. outside major cities and required EPZ. SEZ. a minimum investment of KES 200 million is required. • 10 year corporate tax holiday and 25% tax rate for next 10 years. • 10 year withholding tax holiday on dividends and other remittances to non-residents. • Exemption from VAT Exemption from Corporate tax rate at 20% Maximum and customs import 150% Deduction on Corporation tax, VAT, for first 5 years after benefit duty on inputs and qualifying cost of import duties and excise listing 40% or more available stamp duty. investment. duty. issued shares. • Exemption from VAT registration. • Exemption from payment of excise duty. • 100% investment deduction on new buildings and machinery within the EPZ. Tax exemption, Tax Type of benefit Tax exemption Tax reduction Tax deduction reduction Taxpayers registered with the National Industrial Training Authority (NITA) contribute monthly Industrial Training Training Levy and are entitled to a reimbursement of training costs so long as the training is carried out by NITA Certified Benefit Trainers.
2016 Africa Incentive Survey 33 Eastern Africa: Kenya (cont.)
Tax incentive Export Processing Zones (EPZ) Special Economic Zones Nairobi Stock Exchange Investment Deduction (SEZ) (NSE) listing incentive (ID)
3 – 5 years depending on Timeframe 10-20 years. None None listed shares. • Company that lists 20% issued shares enjoy • Manufacturing, • Available to qualifying 27% corporate tax for commercial or service investments the first three years. activities may be (infrastructure or undertaken in an EPZ. • Company that lists 30% development). The enabling legislation is issued shares enjoy Good to Know • May be 100% foreign effective from • Investments located 25% corporate tax for owned. 15 December 2015. within Nairobi, first five years. Mombasa, Kisumu and • Licensing of EPZ done • Company that lists 40% below KES 200 million by EPZ Authority of issued shares enjoy qualify for 100% Kenya. 20% corporate tax for deduction. first five years.
2016 Africa Incentive Survey 34 Eastern Africa: Rwanda
To attract more foreign and local investors in Rwanda, the Agency of Investment, called the Rwanda Development Board (RDB), in partnership with the Government of Rwanda has recently published (in 2015) in the Official Gazette of the Republic of Rwanda, the new Regulating Investment Promotion and facilitation (Investment code), which contains a package of investment incentives to foreign as well as local investors. For further information please contact: Angello Musinguzi Senior Manager + 250 252 579 790 or +250788507695 [email protected]
Tax Incentives
Preferential Preferential Corporate corporate corporate Corporate income Special Economic Zones income tax income tax income tax rate tax holiday of up to (Industrial Zones/ holiday of up to rate of zero per of fifteen percent seven (7) years Freeports) five (5) years cent (0%) (15%) An international Company with headquarters or regional office in Rwanda, fulfilling An investor An investor investment exporting at least Microfinance investing at least requirements 50% of its institutions 50,000 USD and such as to turnover or approved by contributing at least invest investing in one of National Bank of None, but the investor thirty percent (30%) Minimum 10,000,000 the Economic Rwanda (TBNR) need to be located in a of this investment in Investment USD, provide priority sector, are entitled to a designated SEZ (such as form of equity in the required employment to such as tax holiday of five Kigali) investing in products Economic Priority Rwandans, Information years from the for Export purposes. Sectors, such as conduct Communication time of their Energy, Tourism, international Technology (ICT), approval, which Health, financial Transport, Energy may be renewed. Manufacturing, ICT. transactions of etc. at least 5,000,000 USD a year, as well as others requirements. The investor is exempted from customs tax for products used in Export Maximum Corporate Corporate Income Tax holiday for a Tax holiday for a processing zone, pays benefit Income Tax at a Tax at a rate of period of seven(7) period of five (5) corporate Income tax at a available rate of 0%. 15%. years. years. rate of 0%, exemption from withholding tax, tax free repatriation of profit.
2016 Africa Incentive Survey 35 Eastern Africa: Rwanda (cont.)
Tax Incentives Preferential Preferential Corporate corporate corporate Corporate income Special Economic Zones income tax income tax income tax rate tax holiday of up to (Industrial holiday of up to rate of zero per of fifteen percent seven (7) years Zones/Freeports) five (5) years cent (0%) (15%) Tax reduction. VAT refunded within 15 Type of benefit Tax reduction days and benefits of duty free or free trade zones.
Training None Benefit
Applications must Application must Application of the incentives is Effective from 27 May Timeframe / be submitted 60 be approved by applied during the registration 2015, with the investment How to claim days before start of the National Bank process. code. production. of Rwanda (BNR).
All registered However, this investor shall period may be not pay capital renewed upon gains tax, and all The Ministerial Order will come to list all fulfilling conditions An SEZ was prepared in Good to know foreign Specific sectors which will be subjected to prescribed in the Kigali. investors are this Incentive. Order of the entitled to Minister in charge immigration of finance. assistance.
2016 Africa Incentive Survey 36 Eastern Africa: Tanzania
Tanzania applies a wide range of tax incentives for both local and foreign investors provided they are registered in the Tanzania Investment center (TIC) and/or the Tanzania Revenue Authority. The incentives are structured according to the lead and priority sectors including; Agriculture & Livestock, Tourism, Manufacturing, Commercial Building, Transportation, Broadcasting and Telecommunication, Natural Resources, Financial Institutions, Energy, Human Resources Development, Economic/Infrastructure. For further information please contact: Nsanyiwa Donald Senior Manager, Tax and Corporate Services +255 22 2113343 [email protected]
Tax incentive Export processing zones (EPZs) Special Economic Zones (SEZ) Other incentives • Qualifying investments are investments made in the priority sectors with an investment capital amount of above US$ For EPZ User Licence, the 100,000 in the case of local minimum capital is US$ 500,000 for For SEZ User Licence, the Minimum investors and above US$ 300,000 foreign investors and US$ 100,000 minimum capital is US$ 500,000 for Investment in the case of foreign investors. for local investors. The investment foreign investors and US$ 100,000 required must be new and the project needs for local investors. • Special strategic investment to be located in a designated EPZ. status may be granted to project, which meet among other criteria of which, a minimum investment capital of not less than US$ 300,000,000 is required. • Exemption from payment of corporate tax for 10 years; A certificate of incentives • Exemption from payment of withholding tax on rent, dividends and guarantees: interest for 10 years; • fiscal stability for a 5-year period, i.e. protection against adverse Maximum • Reduction of customs duty, VAT and any other tax payable on raw changes in taxation legislation; benefit materials and goods of a capital nature; and available • Exemption from payment of all local taxes and levies imposed on goods and services produced or purchased in the EPZ for a period of 10 years; • the right to transfer outside the country 100% of profits (including • Exemption from VAT on utility and wharfage charges; and foreign exchange earned) and capital. • No stamp duty. Type of benefit Tax exemptions Tax reduction Tax reduction Training None Benefit
2016 Africa Incentive Survey 37 Eastern Africa: Tanzania (cont.)
Tax incentive Export processing zones (EPZs) Special Economic Zones (SEZ) Other incentives
For certain type of taxes, you will need to show the certificate of incentives Timeframe / issued by the EPZ or SEZ and an application letter in order to claim An application must be submitted How to claim exemption. However, for certain tax exemption, there is no pre-approval to the TIC. requirements.
Only holders of licences granted by the EPZA may: • Conduct a business or undertake a retail trade in an EPZ in respect of any goods manufactured in, or imported into, such EPZ; The Investment Act (“IA”) provides • Remove goods manufactured in The investment must be new and for issuance of “certificates of Good to know an EPZ for any purpose other the project needs to be located in a incentives” to qualifying investors than conveyance to another EPZ designated SEZ. who have made applications for or export into a foreign market, or such certificates to the TIC. for purposes of processing such goods only; or • Use goods manufactured in an EPZ for consumption in such EPZ or in any other EPZ.
2016 Africa Incentive Survey 38 Eastern Africa: Uganda
The government of Uganda is providing a wide range of tax incentives to businesses to attract greater levels of foreign direct investment (FDI) into the country. The Government has prioritized building and improving infrastructure, including boosting energy production, lowered tariffs and trade barriers for regional trade, and generally welcomes foreign direct investment. The Ministry of Finance, Planning and Economic Development is responsible for granting tax incentives and exemptions. For further information please contact: Peter Kyambadde Director, Tax +256 414 340315 [email protected]
Tax Incentives (Table 1) Energy and Natural Agriculture Horticulture Training Resources Minimum Investment USD100,000 required • Licensees for mining operations are allowed 100% • The supply of deduction of mining livestock, exploration unprocessed expenditure. foodstuffs and agricultural • Licensees of • 100% of training expenditure products except 20% of the amount of petroleum incurred during the year of wheat grain is an expenditure on the operations are income on a citizen or exempt supply for establishment or allowed 100% permanent resident who is VAT purposes. acquisition of a deduction of employed by the employer in a horticulture plant or the exploration and business, the income of which Maximum benefit • The supply of construction of a green development is included in gross income, is machinery, tools house, in the year of expenditure. an allowable deduction. available and implements for income and in the use only in following four years • The supply of power • This allowance should not agriculture is an income in which the generated by solar exceed five years in exempt supply plant or green house is is an exempt supply aggregate, and the education under the VAT Act. used in the business of under the VAT Act. should be relevant to the horticulture. person’s employment but not • The supply of • The supply of goods leading to a degree. seeds, fertilizers, and services to the pesticides and hoes contractors and sub- is a zero-rated contractors of supply. hydro-electric power projects is an exempt supply under the VAT Act. Tax deductions, Type of benefit Tax deduction Tax deduction exemptions and Tax deduction incentives Training Benefit Yes
2016 Africa Incentive Survey 39 Eastern Africa: Uganda (cont.)
Tax Incentives (Table 1 – continued) Energy and Natural Agriculture Horticulture Training Resources • The mineral exploration expenditure, rehabilitation expenditure, decommissioning expenditure, and The benefit is to be petroleum exploration and claimed within 5 (five) development expenditure Training expenditure is years inclusive of the is allowed in the year of limited to training or The benefit arises when year of income in How to Claim / income in which it is tertiary education not the zero-rated or exempt which it was incurred. Timeframe incurred. exceeding 5 years in supply is made. It is claimed at a rate aggregate for an of 20% of the • The supply of power employee. expenditure per year generated by solar and over the 5 years. goods and services to contractors and sub- contractors of hydro- electric power projects is exempt when a supply is made. Horticulture includes propagation or A permanent resident cultivation of seeds, means a resident Pesticides packaged for The above deductions and bulbs, spores, fungi or individual who has been Good to Know personal or domestic use exemptions are only similar things in present in Uganda for a are not zero-rated. available for licensees. environments other period or periods in total than soil, whether of five years or more. natural or artificial.
2016 Africa Incentive Survey 40 Eastern Africa: Uganda (cont.)
Tax Incentives (Table 2) Export Processing Manufacturing Manufacturing Start-up costs Zone and Manufacturing Continued Continued Freeports Minimum USD100,000 Investment required • Goods entering an export Manufacturing processing zone Under Bond facility or a Freeport are can be extended to Expenditure exempt from Income derived manufacturers to Drawback of import incurred in starting duty. from exportation of import plant, duty may be up a business is finished consumer machinery, claimed by an Maximum benefit 100% an allowable • The exports are and capital goods equipment and raw exporter on deduction. The zero rated under available may be exempt for materials tax free, exportation. It’s a allowances are the VAT Act a period of 10 (ten) exclusive for use in 100% tax consumed in four which allows the years. the manufacture of incentive. equal instalments. exporter to claim VAT incurred in goods for export. Uganda in It’s a 100% tax relation to the incentive. exports.
Reduced Tax, VAT and Customs charges and Type of benefit Tax deduction Tax exemption Tax Incentive Tax Incentive benefits of duty free or free trade zones. Training Benefit Yes 25% of the amount of expenditure in starting up the business in the As long as the year of income the Manufacture How to Claim / business is started remains compliant As long as the licence is still valid Timeframe up and 25% of the with the conditions in the following given by the three years of commissioner. income in which the business is carried on. The Commissioner Drawback will not has the mandate of be allowed in Non-recurring pre- Application for a designating areas Export means to respect of any linear costs such as licence is in a that are take or cause to be goods registration prescribed form Good to Know export processing taken out of the where—the import charges, legal fees and the licence zones or freeports East African duty on the goods etc., form part of must be paid for in which customs Partner States. was less than one the start-up costs. annually. formalities are to hundred be carried out. dollars.
2016 Africa Incentive Survey 41 Northern Africa
Ouarzazate Solar Power Plant in Morocco Northern Africa: Algeria
In Algeria, investment projects carried out in activities of manufacturing and/or services may benefit from tax exemption and/reduction according to the nature of the project, its location, and impact on economic and social development. Other incentive's were also introduced by Finance Law 2015 for certain industrial activities. For further information please contact: Ouali, Ramzi Partner, Diversified Industries +213982400877 [email protected]
Tax Incentives Investment of Residents of Investment in particular interest Employment The general tax Illizi, Tindouf, Hydrocarbon development for the national creation regime Adrar or activities Zone economy incentives Tamanghasset (convention) None, but must Investment Minimum be located in IIIizi, project needs Investment None None Tindouf, Adrar or to create 100 required Tamanghasset. Jobs. Upstream activities Realisation period: • Exemption from Realisation VAT on goods and • Exemption period : services, intended from customs Realisation period: for use in the duties on non- • Exemption from • Exemption from exploration of excluded transfer tax on duties and taxes hydrocarbons; and imported real estate on all goods and equipment; acquisitions; • Exemption from services that are customs duties; • Exemption • Exemption from necessary for the and from VAT on VAT on goods realisation of the non-excluded and services; investment; and • Exemption from goods and and CIT. • Exemption from services; and • 5% reduced property tax on Downstream Exemption customs duty on Maximum • Exemption real estate. activities from CIT imported goods benefit from property 50% reduction in • Exemption from when creating directly for the Exploitation transfer tax in CIT for 5 years VAT on goods and up to 100 available project. period: return for all services, and employment property Exploitation • Exemption from positions; • Exemption from acquisitions. period CIT for 10 years; customs duties on • Exemption from Exploitation • Exemption from the importation of Professional period: CIT for 10 years; equipment, activity tax; and • Exemption • Exemption from materials and from company Professional • Other benefits products intended profits tax; and activity tax; and upon decision of for use in relevant the National activities relating to • Exemption • Exemption from Council of pipeline from property tax on Investment. transportation, gas Professional developed land liquefaction and activity tax (tax for 10 years. the separation of of 2% on the liquefied petroleum turnover). gases. 2016 Africa Incentive Survey 43 Northern Africa: Algeria (cont.)
Tax Incentives Investment of Investment particular Residents of Employment The general tax in interest for the Illizi, Tindouf, Hydrocarbon creation regime development national Adrar or activities incentives Zone economy Tamanghasset (convention) Type of Tax exemption, Tax reduction. Tax reduction Tax exemption benefit Training None Benefit • Investments exceeding equivalent 20 million are subject to pre- approval from the Activities other CNI. than those relating to • Beneficiaries research and who receive exploitation (e.g. Investment Mining exemptions or transportation needs to companies The exemption reductions for all by pipeline, contribute to which are period is taxes, are refining, Pre-approval environmental established in increased to 5 required to hydrocarbon Good to from the CNI for protection and this area are no years when reinvest the processing, Know all investments Natural longer entitled more than 100 percentage of marketing, is required. resources, Safe to the 50% employment profits storage and oil Energy or reduction of positions are corresponding to distribution) are Sustainable corporate created. exploitation entitled to other development. income tax. period. tax incentives, but are still • Failure to respect subject to the this obligation general tax results in regime. repayment of the tax benefit and the application of a tax penalty of 30%.
2016 Africa Incentive Survey 44 Northern Africa: Chad
The government of Chad offers a tax reduction for investments by private individuals and corporate bodies. These incentives are detailed out in the Chadian tax code. For further information please contact: Jacques Pierre Bounang Director, Tax +23733439679 [email protected]
Tax incentive Exemption for reinvested capital Tax reduction for investments Incentives for new companies gains Minimum Minimum 60 Million FCFA. Investment N/A N/A required An exemption from taxation on 40% of the invested amounts shall capital gains realized from the Time-limited exemption from be deducted from the taxable base disposal of fixed assets if the gains corporate tax or from the tax on for personal income tax and are reinvested within a period of 3 industrial and commercial profits. corporate income tax. years.
Type of benefit Tax reduction Tax exemption
Training None Benefit • To benefit from this regime, the company must file a request with the Minister of Finance before its Investors have a two years deadline Timeframe 3 Year time limit incorporation or the setting up of to realize the investment. the new business. • The exemption is granted up to the end of the fifth year. The activity that the company is involved in should not be a simple development of an activity already performed by the company; • The new company should not have as its main object to Good to know Delay in processing to be expected. compete with the activities of an existing company which are being performed satisfactorily; and • The activity should be of particular interest for the economic development of Chad given the size of the investment.
2016 Africa Incentive Survey 45 Northern Africa: Libya
The Libyan Investments' Incentives regime are ruled by the Law 9 of 2010 which applies to national, foreign, or joint venture capital jointly invested in specific business industries. The Free Trade Act of 1999 implemented the legal framework for establishing offshore free trade zones in Libya. The New Income Tax Law (“NITL”) provides for a permanent exemption for income from farming activities. In 1999 the General People’s Committee established the General Authority for Free Zones (GAFZ) with the purpose of supervising the establishment and development of Free Trade Zones (“FTZ”) in Libya. For further information please contact: Slim Gargouri Director, Accounting Advisory Services +216 71 194 344 [email protected] Tax Incentives Incentives under The Foreign Capital Investment Law 5 Incentives under the Law 9 of 2010 of 1997 (The Law) Project must achieve one or more of the following goals: • increased exports or decreased imports; • creation of new employment or training opportunities to improve the technical skills of Libyan manpower; • use of modern technology or technical expertise; • provision of service(s) deemed necessary to the national economy or a contribution to the development of such Minimum services; Investment N/A required • contribution to integration between existing economic activities through the reduction of the production costs of other activities; • projects or provision of materials and supplies for their operations; • use or help in making use of local raw materials; and • Contribution to the development of remote or less developed areas. • Exemption from customs duties, import fees, service charges and other fees and taxes of a similar nature on the importation of machinery, equipment; • Exemption from CIT for a period of 5 years; • Exemption from all fees and taxes for a period of 5 • Exemption from customs duties and similar taxes on the years, on facilities, spare parts, transport means, importation of machinery, tools and equipment; furniture, requirements, raw materials, publicity • Exemption from customs duties and similar taxes for a and advertising items, related to the operation and period of 5 years on the importation of equipment, spare management of the project; parts and raw materials required for the running of the Maximum • Exemption from CIT for a period of 5 years; project; benefit available • Exemption of the returns of shares and equities, • Carry-forward of losses sustained within the exemption arising from the distribution of the investment period to subsequent years; project’s interests; • Exemption of exported goods from fees and taxes on • Exemption from interest arising from the project’s exports; and activity if re-invested; and • Exemption from stamp duty on commercial documents • Exemption from all documentary records, and bills. registers, transactions, agreements that are made, ratified, signed or used by the investment project, from the stamp duty. 2016 Africa Incentive Survey 46 Northern Africa: Libya (cont.)
Tax Incentives Incentives under The Foreign Capital Investment Law Incentives under the Law 9 of 2010 5 of 1997 (The Law) Type of benefit Tax exemption Training Benefit None
• The exemption is granted by a decision of the General People’s Committee upon a request of the Secretary of the General People’s Committee for Economy and Other incentives are available, subject to a decision Commerce. from the General People’s Committee, under a proposal from the Secretary, to offer for the • The Law applies to projects funded by foreign capital investment projects, tax privileges and exemptions (whether held by Libyan nationals or foreigners) in the for a period, not exceeding 3 years, or other following sectors: industry, Health, tourism, services additional privileges, if those projects prove that: and agriculture. Good to know • They contribute to the achievement of food • Time frames as set out above, additionally, the Law security. provides that the exemption period from income taxes and customs duties may be doubled if the project: • Utilize measures that are capable of achieving abundance in energy or water or contribute to • is established in a local development area; or environmental protection. • contributes to food security; or • Contribute to the development of the area. • uses installations and means conducive to saving energy or water; or • contributes to the protection of the environment.
2016 Africa Incentive Survey 47 Northern Africa: Morocco
The Moroccan tax code provides several tax incentives to promote foreign investment (Export activities, Casablanca finance city, agricultural actives, listed shares, Export free zones, etc.) The Agency Marocaine De Développement Des Investissements (AMDI) is an organization which is in charge of the development and promotion of investment in Morocco. For further information please contact: Insaf Haitof Partner, Tax +212 537 633 702 [email protected]
Tax Incentives Entities Specific incentives Bank and holding Export Promotion Business activities established in granted to companies and hotel within Export free Casablanca important located in incentives zones (EFZs) Finance City projects offshore zones A minima of the Investments Minimum turnover with exceeding 100 Investment foreign companies Million MAD (Other None required between 20% and criteria can be taken 60%. into account). Offshore holding: • National or international • Flat-rate of CIT headquarters are (USD 500 during subject to the first 15 reduced years); corporate tax at a rate of 10%; • Up to 20% • 20% flat rate participation of personal income • Profit relating to the Government tax for first 5 export turnovers in the expenses years; and are fully exempt (i.e. external • Exemption from CIT from CIT during infrastructure • Profit relating to • Dividends are for the first 5 years the first 5 years expenses, land export turnovers exempt from and applicable rate are fully exempt WHT in Maximum of operations acquisition, of 8.75% for the from CIT during the proportion to the benefit and subject to vocational following 20 years; first 5 years of offshore available 8.75% for the training); and following years; operations. The turnover. • Exemption from applicable CIT rate • Exemption for the • Gross salaries customs duties is 17.5%. Offshore banks: dividends paid to and wages paid non-residents. on equipment • Can opt during to employees imported; and the first 15 years are subject to for the CIT income tax on • Exemption from reduced rate of salaries at a rate VAT. 10% or pay USD of 20% during 5 25,000 as a flat years; and amount; and • Foreign • Dividends are exchange exempt from facilities. WHT. Type of Tax exemption, Tax reduction Tax exemption benefit Cash grant
2016 Africa Incentive Survey 48 Northern Africa: Morocco (cont.)
Tax Incentives Entities Specific incentives Bank and holding Export Promotion Business activities established in granted to companies and hotel within Export free Casablanca important located in incentives zones (EFZs) Finance City projects offshore zones Yes.Contribution to Yes. Contribution to Yes. Contribution professional training Yes. Refund of Yes. Refund of professional training Training up to 20% for costs may be part of vocational part of vocational costs may be available Benefit professional training available depending training. training depending on the costs. on the sector of sector of activities activities. • Need to apply for pre-approval before company • Need to apply is incorporated. • Need to apply for for pre-approval pre-approval before company • Casablanca before company can claim. Finance City can claim. (“CFC”) is a • An offshore financial area • The incentives are bank/holding Need to apply for pre- Good to governed by the granted to N/A should carry out approval before know law 44-10 where important all its company can claim. financial and investments transactions in non-financial under an foreign currency companies agreement signed and its capital carrying out with the shall be national or Government. expressed in international foreign currency. activities can be located.
2016 Africa Incentive Survey 49 Northern Africa: Sudan
The Investment Supreme Council is established and designated as the authority to be responsible of investments as far as policies, plans and strategies are concerned. Moreover the Council has a coordinating role between parties concerned in the capital city and in the states. The Council may be approved to secure land for Investment activities, which may be available for use for a period range of 45 - 90 years. For further information please contact: Khaled Balbaa Partner, Infrastructure +20235362211 - E/ 1675 [email protected]
Tax incentive Special Economic Zones Exemptions under the Exemption (Industrial Zones/Freeport’s) Investment Encouragement Act Minimum 500000 SDG None, but must be located in a Gari None Investment free zone. required • Exemption from profits tax for a • Remittance of proceeds (net of all period of 15 years; taxes and other obligations) in the event of sale or acquisition of the • Exempt from personal income enterprise; tax; • An automatic exemption from • Exemption of products imported payment of customs duties, into the free zone or exported Maximum surcharges and other similar Exemption from VAT and Customs abroad from all customs fees and benefit duties relating to imported & Business Profit Tax (BPT). taxes, except service fees; available machinery, equipment or • Real estate establishments inside apparatus necessary for the free zones are exemption production; and from all taxes and fees; and • Capital allowances are granted to • Exemption from customs fees, investors who own depreciable depending on materials used and assets and use the assets in the local costs incurred in production. production of income. Type of benefit Tax exemption Training None Benefit Among the measures aimed at promoting foreign investment is the establishment of free zones by the government, including: • All exempted activities are subject to development tax at Good to Know • the Khartoum free-trade zone, at rate of (5%); and El-Gaily (45 km from Khartoum); • Agricultural activities are subject • the Port Sudan free-trade zone, to (0%) BPT tax rate. near to the port; and • The Suakin free zone.
2016 Africa Incentive Survey 50 Northern Africa: Tunisia
Except for some specific economic sectors, Incentive Investments, for both national and foreign investors, is regulated in Tunisia by the Incentive Investment Code. This Code set up the principle of free foreign investment for manufacturing activities and several services sectors, including fully export service activities covered by this Code. For further information please contact: Dhia Bouzayen Partner , Tax +21671194344 [email protected]
Tax Incentives Tax incentives for fully Regional Technology and Agricultural General Tax exporting companies developments research Promotion Developments incentives (Industry and services) Incentives Incentives Incentives None, but a minimum of None, but a equity ranging minimum of equity between 10% or of 10% or 30% of Minimum None, but a minimum of equity ranging between 30% of the the investment Investment None 10% or 30% of the investment costs is required investment costs costs is required required (depending on the category of the investment). is required (depending on the (depending on category of the the category of investment). the investment).
• • Tax relief on Reduced Corporate • Bonus for energy • Tax exemption on reinvested Income Tax rate of saving investment reinvested profits limited 10% on export and development profits; profits; to 35% of the of renewable • Full tax profits subject • Full exemption from energies: Bonus • Income tax exemption on exemption for the to tax; corporate tax on generally ranging profits for 10 or 5 years 10 first years of reinvested profits; between TND • Customs depending on the regions operation; 2500 and TND duties • VAT and Customs and a 50% tax base 500 000 • VAT suspended exemption on duties exemption on reduction for a new (generally on imported importation of importation of the period of ten or 5 years between 20% to capital goods that equipment; goods and products, depending on regions as Maximum 70% of the have no locally- • VAT limited to necessary for the well; made similar benefit export activities of the investment); 12% on • Income tax exemption on counterparts; and available company; • Reduction of importation of reinvested profits; Customs duties to • State equipment; • Local VAT suspension • Exemption of some the rate of 10% or Contribution may and on any purchases of payroll taxes; and full exemption also apply to • VAT goods and services infrastructure • Social security (depending of the Suspension required for the expenses to contribution exemption of investment); and and export activity of the develop areas 100% for 10 years. • VAT Suspension. consumption entity; meant for fish duty on the • VAT zero rate on their • Social security farming and for local exports; and contribution cultivation using acquisitions of • Exemption of payroll exemption of geothermal equipment. taxes. 50% for 5 years. water.
2016 Africa Incentive Survey 51 Northern Africa: Tunisia (cont.)
Tax Incentives Tax incentives for fully exporting Regional Technology and Agricultural General Tax companies developments research Promotion Developments incentives (Industry and Incentives Incentives Incentives services) Type of Tax exemption Tax exemption, Tax reduction Tax exemption benefit Full or partial coverage Training None by the State of training None Benefit staff costs An application process submitted within the APII An application needs to be process submitted followed with the An application within the APII An application process An application Tax authorities process needs to be How to claim needs to be needs to be followed process needs to mainly for the VAT followed with the / Timeframe followed with the with the competent be followed with suspension competent Tax authorities authorities. the APIA. authorities. mainly for the VAT Time frame of 10 suspension. Years for the reduced Corporate Income tax rate incentive.
APII generally deliver the APII declaration Good to granting the incentives within 15 days. The granting of the national social security incentives may take know longer.
8 countries offer investors additional tax incentives for companies that invest in training of its own staff;
2016 Africa Incentive Survey 52 Western Africa
Gas flair: Niger Delta Nigeria Western Africa: Cameroon
The government of Cameroon offers incentives to investments by private individuals and corporate bodies. These incentives are detailed out (as well as eligibility requirements) in the Law N° 2013/004 of 18 April 2013. For further information please contact: Jacques Pierre Bounang Director, Tax +23733439679 [email protected]
Tax Incentives Incentives for private Industrial Free Zone & PPP Contracts Stock Exchange sector investments Special Free Zone Minimum None, but need to carry Investment None. 5 million to 25 Million XAF out its activities under the required free zone regime. • Tax reduction of 20% for a period of three years for capital • Registration free of increase representing charge for deeds and 20% of the share conventions entered capital; into during the first 5 Exoneration from VAT, years of the exploitation • Tax reduction of 25% reduced rate of 5% on for a period of three custom duties, 50% phase, and 5% Tax exemption over the Maximum years for spin-offs reduction on registration reduction in the CIT first ten years of benefit representing 20% of duties, 50% to 75% rate; operation, customs the share capital; and reduction on CIT, 50% to Available exemptions on exports. • VAT is borne by the 75% reduction on tax on public entity; and • Tax reduction of 28% income from stocks and for a period of three shares. • Taxes and custom years from the date of duties is borne by the listing for capital public entity. increase or spin-off representing less than 20% of the share capital. Exemption from direct Type of benefit Tax reduction Tax exemption/reduction taxes Training None Benefit • Delays in processing • Effective 1 January are more frequent. 2012. • In addition, approval • Possibility of cumulating may be denied to an Delay in processing are Good to know the stock exchange investor in competition N/A more frequent. system with other with one or more other systems such as investors benefiting reinvestment, public- from the incentives, private partnership. provided that the investor qualifies.
2016 Africa Incentive Survey 54 Western Africa: DRC
The DRC Incentive regime is based on different codes and specific laws. The mining code, for example, is managed by the Ministry of Mines and Finances, the Investments Code is managed by “ANAPI" the National Agency for the Promotion of Investments, and the specific law on the co-operation agreement is managed by the DRC Government. For further information please contact: Louison Kiyombo Partner +243817108607 [email protected]
Tax incentive Co-operation agreement with the Mining code / tax incentive Investment code / Tax incentive government
Minimum Investment None 200,000 $ 1,000,000,000 $ required
Maximum Unlimited benefit. 30% corporate Benefit tax, decreasing method allowed, Unlimited, Corporate tax exonerated. available WHT on interest exonerated.
Type of benefit Tax deductions, Tax reduction. Tax reduction
Training None Benefit
Need to obtain the exploration or The co-operation agreement needs How to claim / Applications must be submitted and operation permit before company to be signed by both parties before Timeframe approved before start of projects. can claim. start of project.
Mining subcontractors are also a beneficiary; The reduced tax Subcontractors are also a Subcontractors are also a concerns assets (or goods) linked to beneficiary, the reduced tax beneficiary, the reduced tax Good to know the mining project; and the concerns only assets (or goods) concerns only assets (or goods) financials can be held in foreign linked to the project. linked to the project. currency.
2016 Africa Incentive Survey 55 Western Africa: Ghana
There are various tax incentives put in place by Ghana to stimulate investment. A new Income Tax Act, 2015 (Act 896) was signed into law by the President on 1 September 2015 and became effective on 1 January 2016. Specific incentives depending on the nature of the business and its importance or how strategic it is to the country can also be granted by The Ghana Investment Promotion Centre (“GIPC”) in conjunction with the Commissioner General of the Ghana Revenue Authority (“GRA”). All such incentives or waivers will however, have to be approved by the Parliament of Ghana through the sector Ministry. For further information please contact: Kofi Frempong-Kore Partner, Tax +233 302770454 [email protected]
Tax Incentives Incentives Location Tax incentives available to incentives General investment (available to companies (manufacturing Ghana free zones incentives on companies in engaged in agro- companies (industrial zones/ registration with the specific industries processing and except agro freeports) Ghana Investment for specified number cocoa by- processing/cocoa Promotion Center (GIPC) of years) products by-products) • For Joint Ventures with Ghanaian partners, a No minimum capital minimum contribution of required. However, an USD 200,000 in cash or Minimum investor should be able capital goods. Investment None to show evidence of required funding and also fulfill • For wholly owned the 70% export foreign ventures, the requirement. minimum equity is USD 500,000 in cash or capital goods. • 100% exemption Automatic Immigrant from direct and Quota’s available: indirect taxes on all • imports and exports; For One expatriate when • New companies • Tax payable at the equity invested is over are taxed at 1% rate of 1% of • 25% Tax rebate • 100% exemption USD 50,000 and not for the first 5 chargeable income for companies in from payment of more than USD 250,000; years. income tax on profit for the indicated the regional • for 10 years; For Two expatriates number of years • Subsequently, a capitals; and when equity is over USD Maximum after which they 25% tax rebate • 50% Tax rebate • Relief from double 250,000 and not more benefit will pay a standard if located in the for taxation; than USD 500,000; available rate of 25% CIT; regional capitals manufacturing of the country, • Minimal customs • For Three expatriates • NB. The indicated companies and 50% tax formalities; and when equity is over USD number of years located rebate if located 500,000.00 and not varies for different elsewhere. • Total exemption from elsewhere, more than USD 700,000; industries / sectors. payment of applies. and withholding taxes on dividends arising out • For Four expatriates of free zone when equity is more investments. than USD 700,000.
2016 Africa Incentive Survey 56 Western Africa: Ghana (cont.)
Tax Incentives General investment Tax incentives Location incentives Incentives available incentives on (available to (manufacturing to companies Ghana free zones registration with companies in companies except engaged in agro- (industrial zones/ the Ghana specific industries agro processing and freeports) Investment for specified number processing/cocoa cocoa by-products Promotion Center of years) by-products) (GIPC) Tax exemption / Tax holidays for first ten years; 15% CIT after 10 years for exports; and 25% for local Automatic Immigrant Type of benefit Tax reduction Tax rebate sales. All other reliefs Quota. and exemptions will be taxed at their respective applicable rates. Training None Benefit The time frame applicable for the How to claim/ benefit differs for None 10 years None Timeframe each respective industry or sector. • Unrealised losses can be carried forward for between 3 to 5 • The minimum years (5 years are capital requirement for priority sectors does not apply to and 3 years for all • A condition for the portfolio investment other sectors). grant of a free zone and an enterprise license is that the set up solely for • Currently, priority licensed entity export trading and sectors have not must export at least manufacturing. been defined but it 70% of its output. Good to know is believed it will be • Free transferability the same sectors N/A • 30% output is of convertible which had losses allowed on the currency through an carry forward in the domestic market. authorised dealer repealed Act. Those bank of investment • A free zone guarantee, transfer sectors were; enterprise could be Mining, Farming, of capital, profit, wholly-owned by a dividend and Agro-processing, foreigner. Timber, personal manufacturing for remittances. export, Tourism, ICT (software development) and Venture Capital.
2016 Africa Incentive Survey 57 Western Africa: Nigeria
Nigeria is currently striving to attract foreign direct investments to grow other sectors of the economy given the decline of revenue from the oil sector. Various Ministries, Departments, Agencies and Commissions are charged with administering these incentives. For further information please contact: Victor Onyenkpa Partner +23412718 935 [email protected]
Tax incentives (Table 1) Bonds & Short Term Gas Work Government Companies utilization Experience Infrastructure Securities engaged in Pioneer Status Employment incentive Acquisition Tax Relief (bonds issued gas utilisation Incentive (PSI) Tax Relief program Program (ITR) by corporate (Downstream (Upstream Relief bodies and Operations) operations) supranational also inclusive) Minimum Capital Minimum net net expenditure of employment employment Minimum not less than of 10 of 5 new Investment N10 million to employees in None employees, required qualify for the the relevant for a pioneer status assessment minimum of incentive. period. 2 years. • Tax free period of 3 years renewable • Gas income for 2 years is subject to or 35% tax at the investment rate of 30%. Exemption allowance. • 5 year tax from CIT up • Gas to 5% of transferred holiday; Exemption CIT Gains from • Additional assessable from a from CIT up exemption of acquisition / investment • Dividends paid profit in the Natural Gas to 5% of 30% of cost disposal and allowance of out of pioneer tax year to Liquid (NGL) Maximum assessable incurred in interest 15% (only profits shall be which the facility to benefit profit in the providing earned by where the tax exempt profits relate the gas-to- available tax year in infrastructure holders of the company when but limited to liquids which the or facilities of securities chooses the distributed to the gross facilities is company a public above are tax tax free the emoluments subject to qualifies. nature. exempt. period). Company's paid to 0% shareholders. qualifying • Accelerated Petroleum employees. capital Profits Tax allowance. and 0% royalty. • Tax free dividend during the tax free period. 2016 Africa Incentive Survey 58 Western Africa: Nigeria (cont.)
Tax incentives (Table 1 – continued) Bonds & Short Term Government Work Securities Companies Gas utilization Experience Infrastructure (bonds engaged in gas incentive Pioneer Status Employment Acquisition Tax Relief issued by utilisation program Incentive (PSI) Tax Relief Program (ITR) corporate (Downstream (Upstream Relief bodies and Operations) operations) supranationa l also inclusive) Tax holiday of 3 to 5 years, accelerated Tax holiday of 3 to 5years, Type of capital Tax exemption, accelerated capital allowance, Tax exemption benefit allowance, tax Tax reduction. tax free dividend. free dividend and interest deductibility. Training None Benefit Claimed in There is a the statutory Only Can only be assessment requirement for claimable in utilised in period in Exception is companies Within every the third the first tax How to Within the which for a 10 year engaged in gas fiscal year of year of year in Claim / pioneer period. infrastructure period from utilisation to filing tax employmen which Timeframe or facility is 2 January obtain returns. t of the new employees provided, 2012. Ministerial employees were first over 2 approval to retained. employed. assessment claim interest periods. deductions. At least Recently, the 60% of To qualify for Nigerian those the Investment employees exemption, Promotion must be the Commission individuals infrastructure Investment proposed a without facilities Interest on required to processing fee prior work must be federal Grant of tax separate crude of 2% of Relief experience completed government holiday is oil and gas projected cannot be and and be in use bonds subject to from the profits and that carried employed by both the enjoys Good to confirmation reservoir into existing forward to within 3 Company indefinite Know that company is usable companies other tax years of and the exemption engaged in gas products is applying for years. graduating public. Any from CIT & utilisation. also PSI are from unutilised Capital Gains considered as required to schools or portion can Tax. part of oil field have additional vocation. be utilised development. investment up Relief within 2 to 200% of cannot be subsequent company's carried assessment original forward to periods. investment. another tax year.
2016 Africa Incentive Survey 59 Western Africa: Nigeria (cont.)
Tax incentives (Table 2) Deep Offshore Duty Drawback/ and Inland Basin Free Trade Zones Export Expansion Mining of Solid Suspension Production (FTZ) Grant (EEG)* Minerals Scheme Sharing Contracts Fiscal Incentives Current minimum In practice, the value of annual minimum export turnover is N5 Minimum investment varies million. Investment from one FTZ to This is subject to None required another depending review from time to on the approved time by the Nigerian activities. Export Promotion Council (NEPC). • Investment Tax Credit (ITC) at 50% of Qualifying Capital Expenditure (QCE) for Production Sharing • Tax holiday of 3 Contracts (PSC) years renewable • Exemption from signed pre- July for 2 years. all federal, state 1998. • Exemption from and local • Royalty rate of customs and government import duties in Claim a refund of 10% for taxes, levies and respect of plant, rates. import duty paid on companies operating in the machinery Cash inducement for raw materials and • Approved Inland Basin and equipment and qualifying exporters intermediate enterprises to graduated accessories to facilitate increase products imported Maximum import free of all royalties rate for imported in export volume and for use in the benefit available duties any capital companies in exclusively for diversify export production of and consumer Deep Offshore mining products and market finished goods for goods, raw operations operations. coverage. export. materials, (ranging from 0% (However, the components, or to 12% plant and articles to be depending on equipment can used in respect water depth). only be disposed of any approved of locally upon activity within payment of the the zone . applicable customs and import duties).
2016 Africa Incentive Survey 60 Western Africa: Nigeria (cont.)
Tax incentives (Table 2 – continued)
Deep Offshore and Duty Inland Basin Export Expansion Drawback/ Mining of Solid Free Trade Zones (FTZ) Production Sharing Grant (EEG)* Suspension Minerals Contracts Fiscal Scheme Incentives
• Accelerated capital allowance on mining expenditure (95% initial allowance and • Repatriation of foreign retention of 5% until capital investment and asset is disposed). 100% foreign ownership • Actual amount allowable. Maximum incurred out of benefit • No import and export reserves made for available license required and environmental (cont.) remittance of profits and protection, mine dividends earned by rehabilitation, foreign investors in the reclamation and export free zone mine closure shall allowable. be tax deductible, subject to certification by an independent qualified person. Cash grant (Against Type of Tax exemption Future duty Tax exemption Tax credit Grant benefit payments) Training None Benefit
Applications must be submitted to the How to Entire period of operating Within every fiscal authority, along with claim / within the export free None year of filing tax None evidence of full Timeframe zone. returns. repatriation of export proceeds.
• The 2 major legislation Apply for that regulate FTZ in exemption or A company may Nigeria are; Nigeria suspension of also be entitled to In practice, import duty to claim an additional Export Processing Petroleum qualifying exporters actual rural investment Zone Act (NEPZA) and Investment must have fully importation. allowance on its Good to Oil & Gas Export Free Allowance (PIA) at repatriated all (when this is infrastructure cost, Know Zone Act (OGEFZA). 50% of QCE for proceeds within 180 done, the depending on the PSCC’s signed • Rent-free land at days from the day of exporter is location of the after July 1998. construction stage, export. conferred with company and the thereafter rent shall be the status of type of infrastructure determined by manufacturer-in- provided. authority. bond).
2016 Africa Incentive Survey 61 Western Africa: Senegal
There are various tax incentives put in place by Senegalese government to stimulate investment. For further information please contact: Mamadou Sarr Senior Manager, Corporate & Investment +221338492474 [email protected]
Incentives Tax treatment Special regime applicable Reduction tax for Oil & Gas and Law of 250 billions provided for by to approved export firms export: Mining the Investment Code Investment must be Minimum above 250 Billion Investment None FCFA (1 USD= required 582.282 CFA). • The benefits of this regime remain valid for a period of 25 years and can be renewed. The New enterprises corporate tax rate is 15%; and extension • Exemption from customs projects: duties and duty stamps on • Custom duty utilitarian vehicles and exemptions tourism vehicles and means of transportation (three years); • Allowed to For investments clearly intended for Exemption from deduct 50% of above two hundred • VAT production; VAT and their taxable and fifty billion CFA suspension additional taxes • Exemption from taxes income in the francs, the (three years); on imports and based on salaries paid by calculation of Government may and purchases to Maximum companies; income tax; and grant to the investor companies benefit • The tax credit special tax and • Exemption from all • Indirect exports involved in available of 40% for custom regime registration and stamp are excluded in exploration of eligible derogating from the duties when registering a the minerals through investment advantages in the company and modifying its determination of the means of an but it is investment code Articles of Association; the turnover. agreement with capped to and the mining the Government. 50% of the tax • Exemption from patent code. profit and fee, property tax on should be constructed and applied within unconstructed property, 5 years from and from the license fee; the and investment. • Exemption from the taxes on Income for Stocks and Shares drawn by the firm on the dividends distributed.
2016 Africa Incentive Survey 62 Western Africa: Senegal (cont.)
Tax Incentives
Special regime Tax treatment applicable to Reduction tax for Oil & Gas and provided for by the Law of 250 billions approved export export Mining Investment Code firms
Type of benefit Tax exemption Special tax benefit Training None Benefit Need to apply for pre-approval before company can claim • To receive this discount, • Need to apply for companies must pre-approval prove the export before company is effective and can claim. the repatriation of • The company has the revenues into Need to apply for to export at least Senegal; and No need to apply for Need to apply for Good to know pre-approval before 80% of its pre-approval, before pre-approval before • Mining and oil company can claim. production .The company can claim. company can claim. companies are benefits of this excluded from this regime remain provision. valid for a period of 25 years and • Industrial, can be renewed. agricultural and tele-services companies that export at least 80% of their production.
2016 Africa Incentive Survey 63 Western Africa: Sierra Leone
Investment in Sierra Leone is regulated by the Investment Promotions Act 2004, which provides for investment incentives for both domestic and foreign investors. The Act was instituted to promote and attract private investment, both domestic and foreign, for the development of value adding opportunities, export creation and employment opportunities. Additional incentives can be given if applied for by investors, however any agreement granting tax breaks and incentives to a taxpayer is required to be ratified by the Parliament in order to have the force of law. For further information please contact: Claudius Williams-Tucker Partner, Tax +23230444111 [email protected]
Investment and Infrastructure Donation into Skills Refinery employment incentive projects Development Fund
• For a period of 5 years: If workforce is at least 100 employees, minimum A minimum investment investment is of $20,000,000 into a Minimum Investment $5,000,000. petroleum refinery $20 Million None required • For a period of 10 years project and employing if workforce is at least at least fifty (50) Sierra 150 employees, Leonean citizens. minimum investment is $7,500,000.
As of 1 January 2015, Up to 100% of the cost Corporate tax relief not registered Businesses in incurred is tax Maximum benefit exceeding 5 years. SL that are at least 20% Not specified deductible in the same Import Duty exemption. Available Sierra Leonean owned are year entitled to corporate tax exemption.
Tax Relief and Type of benefit Tax exemption Tax Relief Tax deduction Exemption
Training Benefit None
Timeframe/ How to 5 to 10 years depending 15 years. 1 year. Up to 5 years. claim on the investment criteria.
Such a provision may be revised in subsequent Finance Acts, but will remain in force Good to know till repealed or amended.
2016 Africa Incentive Survey 64 References / Sources
Data included in the country by country tables in this survey has been obtained from the KPMG network of offices in Africa as well as from the following sources: • Source: KPMG Fiscal Guides, http://www.kpmg.com/africa/en/kpmg-in-africa/pages/2015-african-country-reports.aspx • Source : IBFD Database, http://k-online2.ibfd.org/kbase/
Data included in the tables on pages 9 to 11 have been obtained from the following sources: • Source: Country Specific Economic Data, http://data.worldbank.org/country • Source: Tax Rates Online, https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online.html
The following references relate to quote icons included in the body of this Survey. 1) Source: Sub – Saharan Africa economies among world’s Top Improvers of doing Business, World Bank, http://www.worldbank.org/en/news/press-release/2015/10/27/sub-saharan-africa-economies-among- worlds-top-improvers-of-business-climate-says-doing-business-report 2) What are the current and future roles of natural resources in attracting FDI inflows to Africa? http://www.blog.kpmgafrica.com/what-are-the-current-and-future-roles-of-natural-resources-in-attracting- fdi-inflows-to-africa/ 3) Source: Sub-Saharan regulatory reforms, World Bank, http://www.worldbank.org/en/news/press-release/2014/10/29/sub-saharan-africa-business-regulatory- reforms-worldwide
Disclaimer:
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
2016 Africa Incentive Survey 65 Acronyms
List of commonly or frequently used terms
ADEP Aquaculture Development and Enhancement IFZ Industrial Freeports/Zones Programme ITC Investment Tax Credit AGOA Africa Growth and Opportunity Act ITR Infrastructure Tax Relief AMDI Agency Marocaine De Développement Des KES Kenyan Shilling Investissements MAD Moroccan Dirham ANAPI National Agency for the Promotion of Investments MITC Malawi Investment Trade Centre APIEX The Agency for Promotion of Investment and MK Malawian Kwacha Export MZN Mozambican Metical Rate APII Agency for the Promotion of Industry and NEPC Nigerian Export Promotion Council Innovation NGL Natural Gas Liquid BNR Bank of Rwanda NIRA Namibia Inland Revenue Authority BPT Business Profit Tax NITL New Income Tax Law CET Common External Tariff NSE Nairobi Stock Exchange CFA Communauté Financière Africaine OGEFZA Oil and Gas Export Free Zone CFC Casablanca Finance City PAYE Pay As You Earn CIP Critical Infrastructure Programme PIL Private Investment Law CIT Corporate Income Tax PPP Public/Private Partnership CITA Corporate Income Tax Act PSC Product Sharing Contract CNI Conseil National de l’Investissement PSI Pioneer Status Incentive CPI Centro de Promoção de Investimentos QCE Qualifying Capital Expenditure DAO Development Approval Order R&D Research and Development DRC Democratic Republic of Congo RDB Rwanda Development Board DST Department of Science and Technology SACU Southern African Customs Union DTI Deartment of Trade and Industry SADC Southern African Development Community EEG Expat Expansion Grant SARS South African Revenue Services EIA Ethiopian Investment Authority SCS Smart Cities Scheme EFZ Export Free Zones SDG Sudanese Pound EPA Economic Partnership Agreement SEZ Special Economic Zones EPZ Export Processing Zone SIC Standard Industry classifying code FDI Foreign Direct Investment SPV Special Purpose Vehicle FDj Djiboutian Franc SRA Swaziland Revenue Authority FTZ Free Trade Zone TIC Tanzania Investment Centre GAFZ General Authority for Free Zones TND Tunisian Dinar GAZEDA Gabinete das Zonas Economicas de USD United State Dollar Desenvolvimento Acelerado VAT Value Added Tax GBC Global Business Company GIPC Ghana Investment Promotion Centre WHT Withholding Tax GRA Ghana Revenue Authority XAF Central African Franc GSP Generalized System of Preferences ZDA Zambia Development Agency ICT Information Communication Technology ZIC Zimbabwean Investment Centre ID Investment Deduction ZRA Zimbabwean Revenue Authorities IFSC International Financial Services Centre
2016 Africa Incentive Survey 66 Highlights of the survey
From the information provided by our KPMG African network of professionals, the term ‘Africa is open for business’ is apt if one considers the following highlights of the survey:
— All countries surveyed offer a range of — The introduction of Special Economic enhanced tax incentives, ranging from Zones and Free Port Zones (SEZ) now accelerated allowances for capital appear as a common theme among expenditure, special allowances for various African countries with 21 of the investments in certain industry sectors 28 countries surveyed offering SEZ (such as manufacturing, infrastructure, areas as additional incentives for tourism) as well as tax holidays companies to invest in specific regions ranging from 3 to 10 years; within a country; — South Africa have also passed into law — Only 7 countries have local during Feb 2016 enabling legislation that participation or local job creation will see an initial 15 areas designated as requirements for accessing the SEZ’s, and countries such as Swaziland respective incentives; and Zimbabwe working on similar SEZ’s — 8 countries offer investors additional to be introduced in the near future; tax incentives for companies that — Such SEZ’s offer a reduced Corporate invest in training of its own staff; Income Tax (CIT) rate of between 0% to — Nigeria and South Africa offer a 15% (which compares favourably to the diverse range of both tax incentives average 29% CIT rate across the and cash grants from government countries surveyed), as well as other agencies for investing in defined benefits for example exemptions from Value Added Tax and Customs and sectors (such as manufacturing, oil & Import/Export Duties together with gas, tourism, financial services and the accelerated capital allowances; ‘green’ environmental economy); — All countries have a requirement for — Morocco offers a cash contribution to either pre-qualification or pre-approval to expenditure for large scale projects be granted to the investing company by greater than MAD 100 million; the respective country’s regulatory — South Africa appears to be the only agency, and in certain instances (such as country on the African continent that in Botswana and the DRC for example) offers a dedicated R&D tax incentive government agencies are also willing to regime, with an enhanced tax enter into tax agreements and/or co- deduction (150%), equivalent to that operation agreements for investment certainty. offered by OECD countries.
2016 Africa Incentive Survey 67 Contact details
Mohammed Jada Partner Head: R&D Tax and incentives KPMG in South Africa T: +27116477419 T: +27827195531 E: [email protected]
kpmg.com kpmg.com/za
kpmg.com/app
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Designed by KPMG South Africa Publication name: Africa Incentive Survey 2016 Publication number: MC14401 Publication date: March 2016