Revenue Administration in Sub-Saharan Africa - International Tax ...

VAT• All the surveyed countries have implemented a VAT. 90• A VAT registration threshold is set to define who is liable to tax. The VATregistration threshold varies across countries—ranging from a low of US$ 9,453in Ghana to a high of US$ 80,000 in Burundi.• The VAT system also has provisions for voluntary registration—those who donot meet the mandatory registration threshold but who meet theadministrative requirements for voluntary registration. 91• Three countries (Benin, Sierra Leone and Senegal) have 2 thresholds for VATregistration (covering sale of goods and services).• The VAT system in 2 countries (Ghana and Kenya) comprises of multiple taxrates.• Three revenue bodies (Ghana, Senegal and South Africa) have designedsimplified VAT filing requirements for small enterprises.• Six countries (Benin, Mauritius, Senegal, South Africa, Uganda and Zambia)have put in place specific VAT filing requirements for selected taxpayers toenhance filing and payment compliance and/or to expedite payment of VATrefunds.• Five countries (Benin, Ethiopia, Kenya, Senegal and Zambia) have implementeda VAT withholding system (a taxpayer is assigned to withhold VAT payable to asupplier and remit it to the revenue body). 92• In addition, 7 revenue bodies require selected taxpayers to submit a detailedschedule of purchases and/or invoices with their VAT return. Theseadministrative arrangements are intended to assist in the verification of VATreturns.•All revenue bodies have set an administrative or legal timeframe within whichVAT refund claims should be settled . 93• The VAT assessment period is 30 days in most countries. 94Taxpayers arerequired to submit returns and payments within an average of 21 days in thesurvey countries.89 In Rwanda, this requirement is subject to taxpayers falling above a set turnover threshold. In South Africa, taxpayersare required by law to avail accounts to SARS on request.90 VAT is a relatively new tax, having been introduced in most SSA countries in the 1990s to replace more narrowlybased and often cascading sales taxes in a bid to improve revenue collection (VAT is generally considered to be a broadbased tax).91 Criteria for qualifying for voluntary VAT registration are not the same across revenue bodies although the generalguiding principles are the same.92 In Zambia, this arrangement involves mining companies.93 Some revenue bodies have segmented their taxpayers on the basis of compliance risk for purpose of quickening theprocessing of VAT refunds, with refunds for low risk taxpayers fast-tracked and focus put on verifying unknown andhigh risk taxpayers. For example, Zambia and Tanzania categorize their taxpayer into 3 broad groups based oncompliance levels—gold (low risk), silver and bronze (high risk). Fast-tracked VAT refunds are paid within 10, 20 and 30days in Mauritius, Uganda and Zambia respectively. Despite these reforms, most revenue bodies are believed toconsistently fail to meet set targets, thus affecting businesses’ cash-flow62