Giving back to the community
I had a lot of respect for my guests right at the start of the
conversation when they told about their community work they do besides the work.
How many of us can tell that one is at the board of a school or sponsoring a
football club (Green Eagles)?
On happiness and motivation
It appears the tax lawyers in Africa are not that different from the
ones in the other continents – the are happy, if they make other people happy,
and they get pumped up to do more by getting energy back from the ones they are
helping – a golden circle of energy. Also teaching at a university, family
support, client success due to a tax advice are some of the proof of the
circle.
African literature suggestion
If you are a bit tired of the Western
literature, a valuable suggestion by Edward for your reading table was Ngũgĩ wa
Thiong'o from Kenya who wrote many of his books in English. Edward suggested to
start with a book Petals of Blood[1].
The Goodreads page has an inrigueing description of the book: “..as the
intertwined stories of the four suspects (of a tripple-murder) unfold, a
devastating picture emerges of a modern third-world nation whose frustrated
people feel their leaders have failed them time after time. First published in
1977, this novel was so explosive that its author was imprisoned without
charges by the Kenyan government. His incarceration was so shocking that
newspapers around the world called attention to the case, and protests were
raised by human-rights groups, scholars, and writers..”.
Coffin Dance
Everybody knows the music video about the Coffin Dance. On youtube
it might be one of the most watched videos. The video went viral when a lady
named Elizabeth's mother died in Ghana. Her mother's last wish was that
the men carrying her coffin must dance in a special style. While the men were
dancing carrying the coffin, a relative of the deceased filmed it and uploaded
it on the youtube. In Ghana
there is also a tradition of sort of coffin art – they are sometimes made in a
form of some animals, etc. Theo nicely related also the story to tax
authorities.
Viva Africa Consulting, Kenya
Edward started his law firm in
Kenya in 2009 with 3 other partners from Deloitte. Now, in 12 years the firm
has grown to 30 pure tax professionals! The firm is well known for corporate
and transaction structuring. Edward also praised the level of competence of the
tax authorities in Kenya. His one of the main guiding principles of developing
the business is – in addition to an excellent advice the client must have a
good experience with the firm – people don’t forget how you treated them.
WTS Nobisfields, Ghana
Theo adds that his firm is in a
comparably unique position in Ghana covering both legal and tax services. About
98% of their clients are multinationals having a business in Ghana. His firm was
established in 2016 and it has grown to 12 people already. Both are a part of
WTS Global international tax network. Theo stressed trust by clients and
employees as his key to success. Edward believes his firm can give a proper
guidance across many of the East African countries.
No tax rankings
Both Theo and Edward confirmed my
suspicions that there are no rankings on internet of tax firms in Kenya and
Ghana. Just to a certain extent – World Tax by the International
Tax Review, but
both believe their firms would be in the Tier 1 in their respective countries.
WTS.com in Africa
The tax
network covers 35 countries out of 50 of the African
continent. If tax advice is needed in the other 15, Edward and Theo are sure
they will be able to provide proper contacts, so they already now were sure
that businesses from other continents through the network member firms can
receive quality tax advice across the whole continent.
Industries
As Kenya is concerned Edward highlights
fintech and mobile money, tourism and telecoms as three main industries of the
country – the telecoms cover more than 30 mil. users in a country of 50 mil. Kenya
has emerged as a global leader in the development of mobile money. For Ghana
Theo highlighted financial services, telecoms, oil & gas and manufacturing,
especially agro-processing is on the raise, also mobile & electronic money
is wide-spread – by volumes they are competing with banks.
Ghana Tax Incentives
Ghana offers nice tax incentives for
manufacturers operating in free zones – no corporate tax for the first 10 years
on profits and dividend distributions. Free zones are based on a license, not a
specific place within the country – 70% of the production should be exported. Also
there are no indirect taxes for such manufacturers for making procurement or
importation. There is also a 5 year tax holiday for agro-processing companies. For
larger projects the government can give the investor a tax waiver for a certain
amount of tax not payable. Ghana has introduced Independent Tax Appeals Board.
Kenya Tax Incentives
Regarding Kenya Edward highlighted that the
tax authorities are digitally advanced, so a lot of functions can be done
online by taxpayers. And it is what not oly Edward says - in the book by the Tax
Stories previous guests Michael Keen and Joel Slemrod “Rebellion,
Rascals and Revenue” it’s said that Estonia has achieved remarkable things
by using technology to improve tax collection, and so does Kenya. Kenya already
in 2019 introduced real-time invoicing. In Europe many countries still struggle
to manage that.
There is a special economic zone in Kenya
as well. The corporate tax of 10% for the first 10 years applies there, and
then 15% for the next 10 years. In those zones the withholding tax on passive
income (management fees, dividends, interest, royalties) is reduced from 10% to
5%. The stamp duty on transferring the title to the land and some other
municipal charges have been abolished for companies operating in the zones. Both
Edward and Theo mentioned an accelerated depreciation among the tax incentives
also outside the zones – in the general regimes. Finally, it is worth noting
that more than 130 countries agreed to OECD Pillar 1&2 deal, but Kenya so
far didn’t.
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