This is a recap of our online discussion on tax measures that different African countries have taken to deal with COVID -19. We had tax experts from Kenya, Zambia and Liberia. They highlighted the different measures that their countries have taken to deal with COVID -19.
In Liberia, the government relaxed the rules on obtaining tax clearance certificates and tax payment deadlines for tax payers. Unlike Kenya and Zambia, Liberia did not reduce any rate of tax. An interesting point on Liberia was that there was a noted increase in sales tax coming from use of internet over the period of COVID-19 lock down. Understandably so, as most people are working remotely over this period. There are a number of interesting tax measures to look out for in Liberia including tax on gasoline pump prices and introduction of excise duty on tobacco and alcohol. There is also a proposal to consolidate income earned from other government departments like shipping into one government purse which is not currently the case.
In Kenya, there were a number of tax measures taken to help deal with COVID -19. Some of the main measures were reduction in the corporation rate of tax from 30% to 25%. Reduction in the Value Added Tax (VAT) rate from 16% to 14%. Additionally, those falling within the lower tax bracket for PAYE purposes were exempt from tax. It was however interesting to note that while these measures were being passed a number of adverse measures were also passed. For instance, the capital allowance regime was overhauled which would throw off any people who had planned their tax affairs around such incentives. Additionally, a number of transactions that were previously exempt or zero rated for VAT were taken off either category. While unrelated to COVID-19, Kenya has also put in place a tax amnesty dubbed ‘voluntary tax disclosure programme’.
In Zambia, the situation was somewhat similar to Kenya. Top of the measures taken was granting of relief on interest and penalties for those whose tax affairs were not already under investigation by the revenue authority. Zambia also put in place a customs duty exemption for products imported for manufacture of Personal Protective Equipment (‘PPE’). There was also duty exemption on importation of certain lubricants. An interesting tax measure in Zambia was tax exemption on crocodile hides. The Zambia expert noted that it would be plausible if the government gave more tax benefits like reduced corporation rate from the current rate of 35%.
It was noted that tax measures avail themselves as an easy tool for manipulation by a government to deal with an economic crises. Hence, more thought and seriousness should be accorded in dealing with taxes for any country. Top on the list towards this was an appeal for countries to avail to the public the tax policies that the governments follow to formulate any tax laws and rules. Albeit, this should be in the constitution of a country.
For the future, it was noted that African countries should consider increasing trade among themselves. This is should be a lesson learnt from the COVID-19 situation where most international trade came to a halt. African countries could, possibly, have cautioned themselves if they had their neighbours as priority trading partners.
We will be moving to discuss tax measures that other different African countries have taken to deal with COVID 19. Look out for our future discussion topics here. Also consider joining the Africa iShare community to join in these types of discussion. You can join here.
Listen to the full discussion here.
Should you have a query on above, want more information or want to suggest a discussion topic please email: firstname.lastname@example.org. Also look out for a complied at a list of tax experts from around Africa here.