Crowe Horwath
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African Footprint
Technical Newsletter of the Crowe Horwath International African Firms
Issue 10 - January 2014
Angola – A good country to invest
Inside This Issue:
Angola is a beautiful country of 1,27 million square kms located on
the west coast of Africa, with amazing scenery all along the territory.
The country is almost the size of Germany, France, Switzerland and
Italy combined.
Angola A good country to invest 1
Impact of the New VAT
Regime in Kenya
4
Angola was formerly a Portuguese colony and became independent
on 11 November 1975. It has a Presidential regime, in which the
President, José Eduardo dos Santos, is also the Government leader
and chief of the army. The Assembly is made up of 220 members of
different parties who are elected every 5 years.
Withholding Taxes in
South Africa relating to
cross-border activity
6
Principles for effective
collaboration between the
Government of Kenya and
Public Benefit Organizations
7
Its neighbours are Namibia and Botswana in the South, with Zambia
in the East. In the north and northeast is the Democratic Republic of
the Congo and in the west there is the Atlantic ocean with a coastline
of 1600 kms. The province of Cabinda, in the north, is an enclave,
separated from the rest of the country by the Democratic Republic of
the Congo.
The population is estimated at 18 million. Most Angolans follow
the Catholic faith. The main ethnic groups are Ovimbundo 37%,
Kimbundu 25%, Bacongo 13% and 25% smaller groups. The official
language is Portuguese. Other old national languages are also
used, (mainly in the interior and away from the urban areas) such as
Umbundo, Kimbundu, Kikongo and Kwanyama.
Business opportunities in
Mauritius11
Proposed United Kingdom
Capital Gains Tax on the
disposal of UK immovable
property by UK non-residents
13
Invitation to African and
Middle-Eastern member firms
14
Audit Tax Advisory
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Angola and all its neighbours are rich in natural resources. It is the second largest producer of oil in Africa,
with 1,9 million barrels a day. It is a member of OPEC. Diamonds (with a remarkable and consistent high
quality) represents 5% of GDP. The economy is oil dependent, representing 85% of GDP.
Angola has the second largest forest in the world (Maiombe) and the second largest river in Africa (the
Kwanza, which gives the name to the national currency).
The future of Angola is not only in oil and diamonds. The country has almost every other mineral resource,
has plenty rich arable land and has one of the biggest potable water reserves in the world.
The country is currently the third largest economy in Sub-Saharan Africa.
Angola is member of several important international Organizations such as SADC, CPLP and UA, which
facilitates trade relations with several countries.
After decolonisation and a long civil war which ended in 2002, the country started a rapid development,
investing firstly in the reconstruction of the cities, infrastructure, roads, house construction, sea harbours,
hospitals, schools, airports and other initiatives of this nature.
Angola is now in the middle of a second stage of development in which the focus is the renewal of
degraded urban areas, energy production and distribution, railways, etc.
Agriculture products are transported on the new and old roads, across the country. The financial sector has
developed quickly to support commercial transactions and imports. With the development of the financial
sector, the increasing size of public companies and institutions and the rise of commerce and construction
companies, there is a growing middle class.
The main agriculture products are bananas, sugarcane, coffee, sisal, corn, cotton, cassava, tobacco,
vegetables, plantains; livestock; forest products; fish.
The main industrial products are petroleum; diamonds, iron ore, phosphates, feldspar, bauxite, uranium,
and gold; cement; basic metal products; fish processing; food processing, brewing, tobacco products,
sugar; textiles; ship repair.
The rise of a middle class is a signal of a growing social stability and an improving purchase power.
The capital of Angola is Luanda with about 6 million inhabitants. This high concentration resulted from the
civil war period and strongly determines the country’s economic and social evolution.
Industrial production is scarce
and almost everything needs
to be imported. Any positive
fluctuation in demand causes
pressure on prices. Luanda is
known as the most expensive
city in the world for expatriates.
The house rents, the restaurant
prices and hotel fares are very
high. However, in our opinion,
this is a strong indication that
there are huge opportunities for
investors in industry.
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The country has large potential for development
with the implementation of existing policies for the
diversification of the economy.
In recent years, the Government and the Central
Bank of Angola have issued regulations protecting
foreign investors and their money, and a special
state agency (named ANIP) was created to attract
investment and to administer tax benefits and their
allocation to private initiatives. Currently, Angola
has no tax agreements with any other country.
Perhaps the main weakness of the country is the
lack of skills and this also provides an opportunity
for investors.
Economic Indicators
GDP (2012 Est.) = USD 123,1 billion
GDP real growth rate (2012 Est.) = 5,2%
GDP per capita (2012 Est.) = USD 6,100 USD
Public debt = 18,4% of GDP
GDP composition = Agriculture 10,2%; Industry (oil
included) 61,4%; Services 28,4%
Industrial production growth rate = 8%
Inflation rate = 9%
Exports (oil included) = USD 71 billion
Imports = USD 67 billion
Crowe Horwath presence in Angola
Crowe Horwath has been represented in Angola
since 2005 and became a full member firm in 2012.
Crowe Horwath Angola offers audit, tax and
advisory services and has 4 partners and 12 staff
members.
Our main clients are BPC (State owned bank),
Caminhos de Ferro de Benguela and Caminhos de
Ferro de Luanda (railway public companies), Porto
de Lobito (maritime port public company), Ministry
of Tourism (Angolan Government), Barloworld
Equipamentos Angola and Champion Technologies
Angola (multinational companies).
Our office is located in Luanda, near Luanda Bay, in
President Business Center Building.
Main trends and challenges
SADC- easy trade connections with the southern
countries in Africa
CPLP - easy trade relations with Europe through
Portugal
The 2014 budget pushes for economic
diversification
Agriculture is not sufficiently exploited
Sea economy is not sufficiently explored
Increasing trade relations with neighbouring
countries
Why Angola?
Rapid growth of the economy, one of the highest in
the world in recent years;
Plenty of natural resources;
Opportunities in industrial production;
Opportunities in agriculture;
Opportunities for professional services and
technical know how;
Easy access to the neighbouring countries.
Carlos Florencio
Crowe Horwath Angola –
Auditores e Consultores, SA
Angola
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Impact of the New VAT Regime in Kenya
The process of reforming the VAT regime in Kenya
started in the financial year 2011 / 2012 with the
then Minister of Finance, Hon.Uhuru Kenyatta
undertaking a complete overhaul of the VAT law.
The desire for a complete overhaul of the VAT
system was indicative of the complexity of the VAT
law that created serious administrative challenges
for the tax administrator, the Kenya Revenue
Authority (KRA).The old VAT Act granted exemption
on 395 goods and 22 categories of services while at
the same time granting zero rated status to a total
of 416 supplies of both goods and services. The
long list of the zero rated supplies contributed to
the complexity of the system and very high volumes
of VAT refunds. The introduction of the withholding
VAT system also added to the number of taxpayers
with VAT refunds. The situation gave rise to a
clash between processing refunds to taxpayers and
raising revenues for the government. In an attempt
to address the problems, VAT Act, 2013 was
enacted and came into effect on 1 September 2013.
The new VAT Act, 2013 is a great improvement on
the old VAT law. It is much simpler to deal with both
administratively and in terms of compliance. The
direct and indirect impact of the VAT Act, 2013 on
the economy is as follows ❐❐ Increase in Revenue
The VAT Act, 2013 will definitely enhance
revenue collection. The list of exemptions and
zero rated supplies have been considerably
reduced. This creates a wide pool of taxable
supplies and will result in significant growth
in revenues. However, a simplified VAT
system needs to be efficiently and effectively
administered to generate optimum revenue.
❐❐ Efficiency in Implementing the VAT Law
The old VAT law was very complicated to
administer for the Kenya Revenue Authority
and taxpayers. VAT compliance accounted for
approximately 70% of the total time spent on
compliance related issues. The new VAT Act,
2013 is much simpler with less ambiguity and
is easy to understand both for KRA Officers
and the taxpayer. Simple law enhances
compliance and will result in efficiency in the
implementation of the VAT law.
❐❐ Reduction of Compliance Time
Simplification of the VAT law addresses the
concerns of business that too much time was
being committed to VAT compliance, which
reduced the time which would otherwise
have been committed to value enhancing
activities. Business will not need to spend a
significant amount of compliance time and this
will enhance the country’s outlook in attracting
investors and contribute to the country’s
economic growth and increase in revenue.
❐❐ VAT Refunds
The reason for reducing the list of zero
rated supplies was (partly) to address the
consequential problem of many large VAT
refunds. The VAT refunds were estimated to
grow at the rate of 1.5 billion shillings annually
under the old VAT law. Dealing with the VAT
refunds backlog was a difficult matter for
KRA and the Treasury. This has now been
addressed in the new VAT law by reducing the
list of zero rated supplies. Another contributor
to the VAT refund backlog was the introduction
of the VAT Withholding Tax Agents. The
withholding VAT regime boosted the revenue
from VAT but also became a nightmare for KRA
as taxpayers began to claim refunds.
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❐❐ Increased Burden on Consumption
VAT is a consumption tax. The reduction of zero rated supplies moving them to standard rate and
exempt supplies has resulted in an increase in prices of most goods and services and an increase in
the rate of inflation. Minimising the list of the zero rated supplies and moving them to standard rate
will in effect reduce the VAT refund claims. The burden has been shifted to consumers through the
resulting increase in prices of commodities.
❐❐ Abolition of VAT Remissions
The new VAT Law has drastically reduced the whole issue of VAT remissions. This was an important
facet of taxation aimed at facilitating development of critical sectors of the economy under the old VAT
law. The Act is silent on transitional arrangements for remissions granted under the old VAT law.
❐❐ Change in Prescribed Timelines
The Act has timelines which may constrain the taxpayer. The time limit for the issue of credit notes
has been reduced from twelve months to six months. Similarly, the period within which a taxpayer is
expected to claim input tax has been reduced from twelve months to six months.
❐❐ Change in VAT Rate
The old VAT Act had three rates; zero percent (0%), twelve percent (12 %) and sixteen percent (16%).
The new VAT Act has two rates; zero percent (0%) and sixteen percent (16%). The Act has also given
express powers to the Cabinet Secretary by order published in a Gazette to amend the rate of tax by
either increasing or decreasing any of the rates of VAT by an amount not exceeding twenty five percent
(25%). The order will however fall away if the National Assembly does not approve the order within
twenty one (21) days.
Conclusion
The VAT, Act 2013 and the implementation thereof, resulted in various stakeholders coming out to oppose
the implementation of the Act. They argued that the Act offered a significant shift from one extreme of far
too many items on zero and exempt rate status, to another extreme of too few zero rated items without
protecting the poor.
The political and market reaction was immediate. There were street protests as some retailers took
advantage of the situation to increase prices far beyond the VAT percentage. The sale of certain essential
commodities fell sharply as consumers looked for alternatives.
The Government relented on some essential commodities and introduced new definitions of certain
commodities e.g. what “processed milk” means and what it includes. This however has not fully solved the
issues raised by consumers and there is currently a Bill before Parliament proposing amendments to the
VAT Act, 2013.
The Government has proposed massive expenditure programmes to meet its campaign promises and
address key investment requirements which are necessary to boost economic growth. The revenue
authority in Kenya expects to collect up to Kshs 100 billion more in the current fiscal year from the new
VAT measures. This is a wakeup call to all persons dealing in taxable supplies to ensure full compliance as
the Government is likely to be very aggressive in ensuring not only improved collections but also greater
compliance with VAT and other tax laws.
Elizabeth N Matuku
Horwath Erastus & Co
Kenya
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Withholding Taxes in South Africa relating to cross-border activity
❐❐ Withholding Taxes on payments from South Africa of income to non-residents.
Dividends
Royalties
Interest (new)
Consultancy, Management
and Technical fees (new)
Is
Will be
Effective date
15%
12%
-
15%
15%
15%
15%
1 April 2012
1 July 2013
1 January 2015
1 January 2016
❐❐ These rates may be reduced by virtue and in terms of
applicable Double Tax Agreements which South Africa
has with certain foreign countries.
❐❐ These final taxes are payable by the recipient of the
income although collected by the payer in the form of a
withholding tax.
❐❐ The new tax relates to the provision of consulting,
management and technical services. A foreign recipient
of the consulting, management or technical fees will be
exempt from the withholding tax if –
❐❐ the foreign payee is a natural person who was
physically present in South Africa for a period
exceeding 183 days during the twelve month period preceding the date on which the fees are paid,
or
❐❐ the service fees are effectively connected to a permanent establishment in South Africa. This
exemption will also apply to interest and royalty payments.
In such cases, South African normal tax will be payable as opposed to the final withholding tax.
❐❐ Service fees paid in respect of services rendered by an employee will be exempt from the
withholding tax but will be subject to PAYE which is the normal tax collected by the employer and
withheld by the employer from the amount payable to the employee.
❐❐ Payment of the withholding taxes on service fees must be made to SARS by the close of the month
following the month in which the service fees are paid. If denominated in a foreign currency, the
amount must be converted at the spot rate on the date of withholding.
Kent Karro
Horwath Zeller Karro
Cape Town
South Africa
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Principles for effective collaboration between the Government of Kenya
and Public Benefit Organizations (PBOs)
The space for collaboration between the Government of
Kenya and Non-Governmental Organisations (NGOs) has
improved a great deal since the emotive and highly charged
political environment of the 90s when the push for improved
democratic space was at the centre stage. Obviously under
much pressure, the Government crafted what we have today
in Kenya as the NGOs Co-ordination Act No. 19 of 1990.
With time, the Government of Kenya and NGOs slowly began
to reach some degree of comfort with each other and in
fact, many former civil society members, as has happened
in many other countries in Africa, found themselves in high
Government positions including sitting in the cabinet.
Over the last ten years, it became apparent that the NGOs
Co-ordination Act of 1990 was deficient in many respects.
After stakeholder consultations over a period of three years or
so, a new act was crafted leading to what we now have and
know as the Public Benefit Organizations (PBOs) Act No. 18 of 2013. Once given a commencement date,
the outgoing act (the NGOs Co-ordination Act, 1990) will be repealed.
One of the hall-marks of attitude change is the fact that principles for effective collaboration between the
government of Kenya and PBOs in Kenya have been made part of the new law (the PBOs Act, 2013). It
is a landmark legislation, equivalent to a declaration of a ceasefire and the opening of a new chapter in
government / non-profit sector relationships. Those principles are the subject of this article.
1 Objectives of the Principles of Effective Collaboration are to ❐❐
strengthen collaboration between the Government and Civil Society Organizations (CSOs / PBOs) as key sectors in the Kenyan economy;
❐❐
reinforce complementary efforts of the Government and civil society organizations and their
contribution to enhancing the country’s development;
❐❐
enhance the enabling environment for the achievement of joint development programming of both
sectors;
❐❐
offer guidance to the Government and civil society organizations in their relations and interactions
with each other;
❐❐
serve as a basis for resolving conflicts that affect Government and civil society organization
collaboration;
❐❐
promote effective coordination and dissemination of information on Government and civil society
organization collaboration; and
❐❐
provide the basis for a legal or policy framework aimed at guiding Government and civil society
organisation collaboration.
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2
Guiding Principles for Collaboration
❐❐
address challenges to any collaboration
with open dialogue and negotiation or
acknowledge the need for re-negotiation;
❐❐
verify any risks to any collaboration at the
beginning and define ways of mitigating such
risks.
2.1 Dialogue and Communication
Government and public benefit organization
sectors shall ensure that dialogue is
open, respectful, informed, sustained and
welcomes diverse viewpoints; and that they
provide forums where they can meet each
other periodically for focused discussions,
consultation and consensus building.
2.5 Learning and Sharing
To enhance the knowledge and practice of
collaboration, the sectors shall ensure that
they –
2.2 Communication
The sectors shall aim to ensure –
❐❐
free flow of information between and to all
actors involved in any collaboration initiative
to promote similar comprehension with regard
to it and to facilitate efficiency;
❐❐
engagement in regular, open and inclusive
communication and problem solving; and
❐❐
establishment of clear and open
communication processes in which
information and ideas are shared openly and
regularly.
2.3 Managing Diverse Expectations
The sectors shall individually, and where
appropriate, collectively, inform their
respective stakeholders and the public as
well, of their roles and contributions to society
and the successes achieved through their
collaboration.
2.4 Conflict Management
The sectors shall –
❐❐
make provisions to set up agreeable
modalities or processes to manage conflicts
inherent in the work they jointly do;
❐❐
identify and address all disagreements and
conflicts immediately and devote substantial
time, resources and personal effort to the
management of all conflicts, on behalf of any
collaborative initiative’s continuation;
❐❐
convey a readiness to accept constructive
criticism;
❐❐
accommodate new ideas from each other;
❐❐
pursue a harmonized approach where this
is deemed necessary for the promotion of
the collaborative initiative and in the public
interest;
❐❐
work jointly to identify an agreed, common
vision and align collaboration activities and
programs with it;
❐❐
demonstrate a willingness to make changes in
themselves as part of the process of working
with others, that is, show flexibility; and
❐❐
share ideas, perspectives, information,
experiences and knowledge consistently in
order to contribute to a better understanding
of the different work styles, cultures and
time frames and to promote best practice in
collaboration.
2.6 Sustainability and capacity development
across the board
The sectors will work jointly to identify
capacity gaps and develop a plan to build
their capacities for successful implementation
of collaborative programs.
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2.7 Joint Initiatives
To ensure clarity of roles, synergy and
sustainability of collaborative initiatives, the
sectors shall jointly –
❐❐
embark on harmonized planning of activities
at the beginning of the initiative to identify
needs,
❐❐
develop modalities or structures that
are agreeable to each of them, for the
implementation of the collaboration;
❐❐
provide their implementing agencies or
officials with the necessary incentives,
resources, and opportunities to participate in
the collaborative effort;
❐❐
involve each other in the collaborative
initiative’s decision making.
2.8 Institutionalisation
The sectors shall aim to secure institutional
memory and ensure continuity in their
collaborative initiatives through –
❐❐
designating focal points at all relevant levels,
for all activities and issues concerning their
collaboration;
❐❐
integrating the collaboration process into
ongoing programs;
❐❐
embarking on succession planning at the
beginning of the collaboration; and
❐❐
ensuring effective representation throughout
the collaboration.
2.9 Resources
The sectors shall provide appropriate and
sufficient resources to any collaborative effort,
in order to maximize its chances of success,
growth, maturation and continuation.
2.10 Good Governance
Good Stewardship of Resources Ensure proper care, use and allocation of
resources during their collaborative initiatives.
Transparency and Accountability The sectors shall aim to convey openness
and responsibility for the activities and use of
resources during their collaboration.
2.11 Integrity Enhancement
The sectors shall work jointly to promote and
ensure –
❐❐
a culture of ethical conduct and best practices
is upheld in their collaborative initiatives;
❐❐
identification of, and adherence to or
application of quality standards of sound
management and institutional excellence, in
the implementation of collaborative initiatives;
and
❐❐
the identification of agreeable modalities to
detect and address conflicts of interest.
2.12 Equity and Equality in Partnerships
Within the context of their collaboration, the
sectors shall reinforce –
❐❐
mutual respect for each sectors’ rights;
❐❐
identification and participation of partners
in the collaborative initiative on the basis of
competence; and
❐❐
building of synergies based on their
comparative strengths.
2.13 Promotion of Trust
The sectors shall work together to provide
an enabling environment for collaboration
through –
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❐❐
promoting mutual respect, understanding,
appreciation and acceptance of each other
and of the diversity or workings of the other
partner(s) and constraints they work within;
❐❐
acknowledging and valuing each other’s core
competencies; and
❐❐
setting up measures for frequent
communication, constructive discussions and
the dissemination of information to relevant
stakeholders.
2.14 Monitoring, Evaluation and Reporting
The sectors shall work together to ensure
that –
3
Commitments
3.1 The Government commits itself to –
❐❐
establish, respect, and promote an enabling
environment for public benefit organization
work; and
❐❐
promote the use of these guiding principles
in all Government-public benefit organization
collaborative initiatives.
3.2 Public benefit organizations commit
themselves to –
❐❐
explore opportunities for principled and
structured collaboration with the Government
in their activities; and
promote the use of these guiding principles
in all Government-public benefit organization
collaborative initiatives.
❐❐
all of their collaborative efforts are aimed at
meeting identified needs of their beneficiaries
through adopting results-based management;
❐❐
❐❐
they report publicly on their collaborative
efforts using clear, consistent and transparent
reporting policies;
3.3 The sectors jointly commit themselves to –
❐❐
❐❐
they develop and use procedures and tools
agreeable to each of them to monitor and
evaluate the development impact of their
efforts; and
they evaluate, on an annual basis, any
progress observed in the number of
collaborative initiatives entered, as well as
the manner in which the initiatives are taking
place and the successes achieved through
them.
2.15 Predictability
❐❐
collaborate in a manner consistent with these
guiding principles;
❐❐
champion the repeated use of these principles
by their sectors, over the long-term.
Erastus K Omolo
Horwath Erastus & Co
Kenya
(Source: Edited extracts of the first schedule to the
Kenya Public Benefit Organizations (PBOs) Act
No. 18 of 2013 which will soon come into force in
Kenya).
The sectors shall work together to ensure that
their collaborative initiatives are predictable in
practice through –
❐❐
definition, in advance, of all processes
required;
❐❐
recognition, in advance of their relationships
with third parties, which may influence their
collaboration; and
❐❐
identification, in advance, of risks, needs and
support required.
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Business Opportunities in Mauritius
Business Facilitation:
For the fifth consecutive year, the World Bank’s 2013 Doing Business report ranks Mauritius first among
African economies (19th worldwide, out of 183 economies) in terms of overall ease of doing business. The
government’s objective is for Mauritius to rank among the top 15 most investment- and business-friendly
locations in the world.
Mauritius offers excellent business opportunities in the following industry sectors:
Healthcare and Life Sciences - manufacture of medical disposables, surgical instruments, orthopedic
devices, electro-medical devices and implantable devices.
Information Technology and Business Process Outsourcing - voice and non-voice verticals; knowledge
process outsourcing, multimedia and design.
Renewable Energies and Environment - renewable energy through the use of wind turbines and solar
power; manufacturing/assembly of renewable energy products; development of green and energy efficient
buildings; solid waste management; water management.
Knowledge Industries - education and training services in ICT/BPO, hospitality, financial services,
healthcare, and property development.
Seafood and Aquaculture - processing activities for
high-graded products such as sashimi tuna; ecofriendly aquaculture.
Agro-industries - processed fruit and vegetables;
intensive dairy farming; food crop production: potato,
corn, soybean; regional food security projects in
Mozambique for rice cultivation and other food crops.
Manufacturing and Light Engineering - high tech
and precision engineering activities.
Hospitality and Property Development - hotel
development, marinas, leisure/amusement parks,
health tourism, green tourism, residential property,
business/industrial parks, mixed use development.
Financial Services - banking; global (offshore)
business; insurance; capital markets; other financial
services e.g. brokerage houses, accountancy firms,
tax and investment advisers, international law firms,
leasing companies.
Creative Industries - international art gallery;
national symphonic orchestra; creative art schools;
professional music recording studio; photography
studio and image enhancement; integrated film
studio facilities; design and fashion: jewellery, graphic
design, products and packaging.
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Logistics and Distribution Services - warehousing and storage; breaking bulk, sorting, grading, cleaning
and mixing; labelling, packing, re-packing and repackaging; minor processing and light assembly; storage,
maintenance and repairs of empty containers; ship building, repairs and maintenance of ships and aircrafts;
quality control and inspection services.
Strategic Location:
Ideally located in the Indian Ocean, off the south-east coast of Africa, Mauritius has emerged as a natural
business hub for international trade.
The Freeport legislation provides for a comprehensive package of liberal incentives for companies looking
for a cost-effective storage, assembly and redistribution platform.
Freeport companies in Mauritius benefit from many advantages:
❐❐ Efficient customs clearing process
❐❐ Duty free and VAT free goods and equipment
❐❐ Exemption from Corporate Tax
❐❐ 100% foreign ownership is possible
❐❐ Free repatriation of profits
❐❐ No foreign exchange control
❐❐ 50% reduction on port handling charges
❐❐ 50% of turnover can be realized from local market sales
❐❐ Access to offshore banking facilities
Well established sea & air connections
Port Louis stands out as a reliable, efficient and business friendly port which provides maritime pilots,
tugboats, outer anchorage and emergency services all year round, on a 24-hour basis. Coupled with the
Freeport facilities adjacent to the container terminal, the port consists of 2.6 kms of deep water quays, post
panamax gantry cranes and a container park of over 30 hectares. Our value added port provides a variety
of services including cargo handling, bunkering through pipes and barges, ship supplies, ship repairs, fish
landing operations, pilotage, towage, round-the-clock security and fire fighting services.
Our international airport accommodates over 40 international flights per day, connecting Mauritius to the
major business centres in the world.
Suresh Sewraz
Crowe Horwath (Mur) Co
Mauritius
(Source: www.investmauritius.com; www.fscmauritius.org; www.mfd.mu)
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Proposed United Kingdom Capital Gains Tax on the disposal of UK immovable property by
UK non-residents
It has recently been announced
that UK is to charge Capital Gains
Tax (CGT) on profits made on the
sale of UK immovable property
owned by non-residents. The
proposal is that such disposals
on or after 6 January 2015 will
be subject to CGT. The rate is
proposed at 28%. No CGT was
payable by non-residents in the past.
It is important that UK non-residents owning immovable property in UK should arrange to have such assets
valued before that date so as to create a current base cost. CGT on a subsequent disposal will therefore
be calculated on the difference between the net sale proceeds and such valuation (if such valuation is in
excess of the original cost of such property).
As the date draws closer, more details will become available. Tax planning opportunities may also present
themselves during this time.
One also needs to consider the impact of such tax on your home country tax. If there is a relevant double
tax treaty (DTA) between the two countries, the terms thereof need to be consulted. As an example,
assuming no DTA, South Africa taxes its residents (for tax purposes) on their worldwide income and capital
gains. The top effective rate of tax on capital gains is currently 13,3%. Accordingly, UK will tax at 28% and
credit will be given in South Africa for such tax (paid in UK) up to the amount of the South African tax on
such gain. Therefore no further tax will be payable in South Africa as 28% will already have been paid in
UK. The South African economy loses out its 13,3% tax.
Bear in mind that the amount of the gain for UK tax purposes is reduced by the growth in value of such
property since original acquisition until April 2015. For South African tax purposes, the amount of the gain
is not reduced unless the property was purchased before 1 October 2001.
Those who own UK property need to plan carefully.
Kent Karro
Horwath Zeller Karro
Cape Town
South Africa
13
Crowe Horwath
TM
Invitation to African and Middle-Eastern member firms
Third Crowe Horwath International African network
meeting
The time is here again for our annual networking
meeting. Two years ago we held our first highly
successful meeting in Arusha, Tanzania followed
by a combined African and Middle-Eastern firm
meeting in Dubai at the beginning of 2013.
The third meeting will be held in Nairobi, Kenya
on 20 and 21 February 2014. The meeting will be
preceded by a dedicated audit training meeting to
be held at the same venue on 19 February 2014.
We urge all African and Middle-Eastern member
firms to send at least one delegate to this very
important networking meeting. It provides a unique
opportunity for partners from Africa and the MiddleEast to meet, review their respective strategies, and
discuss further developments in the two regions.
The meeting is open, as in previous years, to
partners from interested firms, not belonging to the
two regions but having interactions with Africa and
the Middle-East. That has proved very successful
on the two previous occasions and has significantly
helped build relationships and referral activities.
The audit meeting is also very important with the
objective of providing audit partners and managers
from the Africa and Middle-East regions with the
opportunity to meet and discuss professional
and regulatory developments and business
development opportunities. Networking and building
business relationships is an important feature of the
meeting. There will also be an opportunity to meet some of
the local clients who will be attending a cocktail
party with all the delegates on one of the evenings.
For those interested, there is a safari which has
been arranged and will take place after the meeting.
The safari will take place in one of Kenya`s pristine
wildlife safari resorts.
Please go to the Crowe Horwath International
website and register for this all important
meeting. We look forward to seeing you there!
Should you have any queries please feel free to
contact:
Bernard Delomenie bernard.delomenie@crowehorwath.net
Cephas Osoro cephas.osoro@crowehorwath.co.ke
Mark Watson mark.watson@crowehorwath.co.za
14
Crowe Horwath
TM
Our African Network
Contact Information
Algeria
Mauritius
Angola
Morocco
Cote d’Ivoire
Nigeria
Djibouti
Reunion
Egypt
South Africa
Hamza & Associés
Tele: +213 20 508188
Email: h.tarek@hamza-dz.com
Horwath Angola - Auditores e Consultores, Lda
Tele: +244 925 289207
Email: carlos.florencio@crowehorwath.ao
Uniconseil
Tele: +225 08212520
Email: soraya_toure@yahoo.fr
Crowe Horwath Djibouti Sarl
Tele: +253 2135 7517
Email: coutts.otolo@crowehorwathea.co.ke
Crowe Dr A M Hegazy & Co
Tele: +202 376 00516
Email: mahegaz@link.net
Ghana
Crowe Horwath (Mur) Co
Tele: +230 208 8684
Email: contactus@crowehorwath.mu
Horwath Maroc Audit
Tele: +212 537 77 46 70
Email: benbrahim@horwath.ma
Horwath Dafinone
Tele: +234 1 545 1863
Email: duvie@dafinone.com
Fiduciaire des Mascareignes
Tele: +262 2 6290 8900
Email: a.lala@fdm.re
- Cape Town
Horwath Zeller Karro
Tele: +27 21 481 7000
Email: contactus@crowehorwath.co.za
SCG Audit
Tele: +233 21 251497
Email: george.katako@scg.com.gh
Horwath HTL (South Africa)
Tele: +27 21 527 2100
Email: capetown@horwathhtl.co.za
Kenya
Crowe Horwath EA
Tele: +254 20 2329542
Email: coutts.otolo@crowehorwathea.co.ke
- Johannesburg
Horwath Leveton Boner
Tele: +27 11 217 8000
Email: info@crowehorwath.co.za
Kenya
Tanzania
Madagascar
Tunisia
Mali
Zimbabwe
Horwath Erastus & Co
Tele: +254 20 3860513
Email: erastuscpa@kenyaweb.com
Cabinet Genevieve Rabenjamina
Tele: +261 202 221121
Email: cce@moov.mg
Inter Africaine d’Audit et d’Expertise (IAE-SARL)
Tele: +223 20 286675
Email: iaecpt@orangemali.net
Horwath Tanzania
Tele: +255 22 2115251
Email: chris.msuya@crowehorwath.co.tz
Horwath ACF
Tele: +216 71 236000
Email: noureddine.benarbia@crowehorwath.com.tn
One & One Chartered Accountants
Tele: +263 4 304 576
Email: onemusi@yahoo.com
Crowe Horwath EA, Crowe Horwath (Mur) Co, Crowe Dr A M Hegazy & Co, Crowe Horwath Djibouti, Horwath Zeller Karro, SCG Audit, Horwath Leveton Boner, Horwath Maroc Audit, Horwath Dafinone, Hamza &
Associés, Horwath Angola, Uniconseil, Cabinet Genevieve Rabenjamina, Inter Africaine d’Audit et d’Expertise (IAE-SARL), Horwath ACF, Fiduciaire des Mascareignes, Horwath Erastus & Co, Horwath Tanzania
and One & One Chartered Accountants are separate and independent members or business associates of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member or business associate firm of
Crowe Horwath is a separate and independent legal entity and is not responsible or liable for any acts or omissions of Crowe Horwath or any other member or business associate of Crowe Horwath and specifically
disclaims any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member or business associate.
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