Nigeria issued a clarification related to its recently announced value-added tax exemption for food items, according to a May 22 KPMG post. For VAT purposes, Nigeria's definition of “basic food items” does not include items sold at restaurants, hotels, “eateries, lounges and other similar premises,” KPMG said. In addition, basic food items sold by “contractors, caterers and other similar vendors” do not qualify for the exemption.
The 16 member countries of the Southern African Development Community announced they will soon introduce an electronic certificate of origin system, according to a May 19 report from the Hong Kong Trade Development Council. The system will first feature a test rollout this month in six member states: Botswana, Eswatini, Malawi, Namibia, Tanzania and Zambia. After the test, the system will be in use across all member nations, which includes nearly all African countries south of the equator, the HKTDC said. The system is expected to save exporters time and money by no longer requiring hard copy submissions.
KPMG posted a series of questions and answers regarding Saudi Arabia’s recent spike in value-added taxes (see 2005110024). In a May 18 post, KPMG said it expects the Saudi government to issue industry guidance on the change before it takes effect July 1. The firm also provided guidance on how the rate may apply to goods and services received before the effective date but invoiced after, how the changes will impact contracts, a potential grace period and more.
Kenya, Rwanda and Uganda announced increased restrictions on cargo movement due to a rise in coronavirus cases attributed to truck drivers, according to a May 18 report from the Hong Kong Trade Development Council. Truck drivers in Kenya must now undergo virus screening at border points and “fumigate” their trucks at international borders, the report said. Kenya is also “strongly” urging traders to conduct all customs-related actions online. Rwanda announced a “driver relay” system in which cargo transportation companies must employ two drivers per truck: one who will drive the truck from the departure point to the border and another who will drive to the final destination after undergoing health checks. Uganda introduced a similar relay system and is also prohibiting truck drivers from “stopping at any point of their journey in order to reduce their interaction with the public,” except for three designated stops per route.
Morocco extended its suspension of customs duties on wheat imports through December 2020, according to a U.S. Department of Agriculture Foreign Agricultural Service report released May 13. The measure, which applies to all wheat classes and products except durum, is intended to maintain the “competitive” price level of wheat imports and build the country’s stocks, the report said. USDA called Morocco’s decision to lift wheat duties through the summer “unprecedented,” adding that the country typically raised tariffs during summer months to ensure “strong prices for local wheat producers. The change is based on Morocco’s upcoming yield, which is expected to drop at least 50% below the country’s 10-year production average, the report said.
Saudi Arabia’s decision to triple is value-added tax rate could lead to a spike in consumer spending before the new rate takes effect July 1, according to a May 11 KPMG post. This could lead to a rise in sales in Saudi Arabia's automotive, retail and electrical markets, the post said. While companies in these markets might see a short-term increase in sales, businesses will likely need to take measures to remain competitive in the Saudi market after the new rate takes effect, including potentially absorbing part or all of the VAT increase so “goods and services are affected as little as possible,” KPMG said. Companies should also review VAT clauses in their contracts. Despite Saudi Arabia’s VAT increase, the United Arab Emirates has no plans to raise its VAT rate, according to a separate KPMG alert.
Saudi Arabia will triple its value-added tax rate in an attempt to “shore up finances” as global demand drops for its oil exports, according to a May 11 Reuters report. The country’s VAT will increase from 5% to 15%, Saudi Arabia's Finance Minister Mohammed al-Jadaan said, citing the “unprecedented coronavirus crisis.” Saudi Arabia, the world’s largest oil exporter, has been significantly impacted by an oversupply of oil coupled with low oil prices, the report said.
Egypt’s Suez Canal Authority temporarily reduced toll rates for container ships traveling to Asia, according to a May 8 report. The reduced fees, which will be in place through June 30, are aimed at bolstering “slumping traffic,” the Hong Kong Trade Development Council said, and feature rebates as high as 75% on toll fees. Egypt hopes the reduced fees will attract ships “amid a growing trend of vessels rerouting via the Cape of Good Hope in southern Africa,” due to lower sea freight demand amid the COVID-19 pandemic, the report said.
Nigeria announced tax and tariff exemptions for certain medical imports due to the COVID-19 pandemic, according to a May 4 KPMG post. The measures, which took effect May 1, exempt medical supply imports from value-added taxes and customs duties for six months, the post said.
Kenya recently reintroduced “verification charges” on traders importing container cargoes, according to a May 5 report from the Hong Kong Trade Development Council. The measure, which took effect April 21, will establish fees ranging from $80 to $120 for verifications of 20-foot to 40-foot containers, respectively. The fees have met “stiff opposition” from industry, the report said, who say it will increase logistics costs during a time when companies are already struggling due to the COVID-19 pandemic.