From taxes to mining, key policy changes across Africa

Welcome back to the Vault.

Here’s what we’re spotlighting this week:

  • Kenya Introduces Motor Vehicle Tax, Eco Levy and Economic Presence Tax
  • Tanzania reconsiders mining policy to amplify local value chain
  • Zambia: enforcement of goods’ pre-clearance begins
  • Nigeria to issue Visas within 48 hours
  • Data Vault: Low inter-Africa trade presents a challenge

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Kenya Introduces Motor Vehicle Tax, Eco Levy and Economic Presence Tax

The Kenyan government has published its Finance Bill, which proposes new taxes and seeks to amend some existing legislation in Kenya, including the Tax Act, Value Added Tax Act, Excise Duty Act, Tax Procedures Act and Miscellaneous Fees and Levies Act. If approved, the country would see a number of significant policy changes, including:

  • Introduction of a motor vehicle tax at 2.5% of the value of the vehicle(at a minimum rate of Kes 5000 and cap at Kes 100,000). Insurance companies have been mandated to collect and remit the tax to the government, and will face significant penalties if they fail to do so.
  • Imposition of an eco-levy for manufacturers and importers of goods that are viewed as detrimental to the environment(i.e. goods that contribute to noise, soil and air pollution). Affected products include smartphones, diapers, microphones, monitors, projectors, ATMs, rubber tires used in vehicles, batteries and plastic packing bags.
  • Increase in the limit of employees’ tax-deductible contributions to registered pension schemes and provident funds from KES 20,000 a month to KES 30,000 a month. The ability to deduct such contributions in the computation of taxable income makes the pension contributions tax free.
  • Replacement of the Digital Service Tax with a new tax known as Significant Economic Presence Taxpayable by a non-resident person whose income from the provision of services is derived from or accrues in Kenya through a business carried out over a digital marketplace.
  • Amendment of the Data Protection Act to exempt the Kenya Revenue Authority (KRA) from restrictions for processing personal data that relates to the assessment, enforcement, or collection of any tax or duty. This enhances the KRA’s capacity to effectively carry out its tax-related functions by allowing access to personal data necessary for assessment and improve tax compliance.

Tanzania revises mining policy to secure local value addition

Like Nigeria and Ghana, the Tanzanian government is making changes to its mining regulatory environmentto induce local addition by industry players.

In its renewed bid to increase the mining sector’s contribution to GDP and other related benefits, Tanzania’s Minerals Minister declaredduring a recent parliamentary session that the government will cease the issuance of all mining licenses for medium and large-scale operations if an investor is unable to show a comprehensive plan for local value addition. The Tanzanian Mining Commission recently rejected 227 license applications for various reasons.

  • Tanzania is rich in abundant essential minerals vital for the modern world’s energy transition, including lithium, cobalt, and copper.
  • The mining sector is a significant contributor to the economy. In line with the Tanzanian President’s pledge in 2021 to grow the sector to at least 10% of the country’s GDP in 2025, the sector has grown from 7.3% in 2021 to 9.1% in 2022 and even better, to 10.9% of the GDP as at the third quarter of 2023.
  • The sector also accounts for a substantial 60% of the country’s foreign exchange revenue.

Enforcement of pre-clearance for commercial goods begins in Zambia

The Zambia Revenue Authority (“ZRA”) has announced its intention to enforce mandatory pre-clearance of commercial goods.Importers, exporters, and clearing agents are now required to conduct pre-clearance for all commercial goods and goods cannot enter the customs area without evidence of pre-clearance. Accordingly, details of the goods must be filed before entry into the country. Failure to comply will result in a fine of K500, and any false filing will lead to goods seizure.

According to the ZRA, this measure is targeted at enhancing efficiency and improving the turnaround time for clearance and movement of goods at the country’s borders.

Investors and tourists to secure Nigeria visas within 48 hours

The Nigerian federal cabinet has endorsed the government’s move to further revise its visa policy to ensure that investors and tourists receive visas within 48 hours.

In an honest admission of the cumbersome nature of Nigeria’s visa processes, especially in the face of its desire to attract greater foreign direct investment, the Information Minister, Mohammed Idris, confirmed the constitution of a ‘tripartite committee’ to expedite visa processing and acquisition for investors interested in doing business in Nigeria, as well as tourists. Details of the committee membership were not provided.

In 2017, the previous administration of President Muhammadu Buhari launched the current (online) visa-on-arrival system aimed at enabling business executives to apply for a visa online and collect it on arrival 48 hours later. The system has been relatively successful, but constraints continue to exist, including insufficient clarity on the criteria and requirements for applications e.g. disqualification of registered business names from issuance of letters of invitation to visitors.

Data Vault: Low inter-Africa trade continues to be a challenge

Despite the increasing interest in African integration and AfCFTA’s emergence, intra-African trade volume continues to be disappointing. Trade with the rest of the world appears more popular than trade within Africa. There remains a pressing need for African leaders and policymakers to address issues hindering intra-African trade, including infrastructural gaps that impact market access and supply chain efficiency within the continent.

Read our articleon the AfCFTA trade deal for more insights.

Intra-regional, intra-African, and foreign trade in Africa

Source: UNCTAD (2022)

What we are also following

We’re also tracking some events in the news, and how they may affect the decisions of policymakers.

Nigeria| Revised Energy Policy and Master Plan

The Energy Commission of Nigeria unveiled two new policy documents: the Revised National Energy Policy and the Revised National Energy Master Plan. These updated policies made several key changes to the 2022 version, particularly in respect of energy transition, efficiency, and reliability.

The government has also committed to supporting these policies with $50 billion, which will be released in three phases. This funding is intended to bolster energy transition efforts, enhance climate resilience, and promote environmental protection initiatives nationwide.

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