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AFRICA FOOT PRINT

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Finance Minister states that NPF beneficiaries will still receive their due

 Government is taking the lead to reform the current pension system by abolishing the contribution to the National Pension Fund (NPF), while continuing to pay benefits to each and every one who has previously contributed to this fund.
The Minister of Finance, Economic Planning and Development, Dr Renganaden Padayachy, made this statement 12 June 2020: in the National Assembly, in reply to a Private Notice Question pertaining to the pension reform.
 
Dr Padayachy highlighted that prior to the introduction of a contributory, participative and collective system, the Contribution Sociale Généralisée (CSG), a High-Level Committee on pension reform had already been set up since 2016 which is composed of members of both public and private organisations.
 
Furthermore, Dr Padayachy, underscored that despite the lockdown in the wake of the Covid-19 pandemic, discussions regarding the reform of the pension system with relevant stakeholders were ongoing. He added that the Ministry of Finance had proposed to institutional actors and civil society to send their proposals via an online platform.
 
The Finance Minister emphasised that the Basic Retirement Pension is being maintained at Rs 9 000 monthly, which is 20% above the relative poverty line. The first payment of benefits under the CSG will be effected in July 2023 as mentioned in Budget 2020-2021.
 
Published in Southern Africa

Expert prescribes measures for industrial, economic growth

A pension expert has underscored the need to replicate the successes achieved in the industry to other struggling sectors to boost economic growth.

Specifically, the Managing Director of Sigma Pensions, Dave Uduanu, listed the reforms that transformed the pension industry to include: adequate capitalisation, good corporate governance, the right policies, and a renewed interest in enhancing domestic investments.

Speaking at a webinar on digital dialogue, he pointed out that the power sector is one of the sectors that are currently in dire need of adequate recapitalisation.

He explained that insufficient electricity production/distribution is the biggest infrastructural challenge facing Nigeria, which has lingered for many years, adversely affecting the economy.

He recalled that countless attempts have been made to resolve the problem, but these attempts have, however, failed to yield any result.
 
He said: “On the power sector, I think one of the things we have seen is that we have players who are not well-capitalised but overleveraged. One of the things regulators must do beyond the technical assessment is also the commercial assessment of these players.

“But more importantly is to encourage players and companies who are already successful to either come into this sector or support entrepreneurs coming to this sector with capital.

“I think ensuring well-capitalised operators are very important to the growth of this sector; we have seen that happen in the banking and in the pension industry.”

On what would prompt growth in other sectors across the spectrum, he said: “We need to encourage domestic investors; we need to grow local firms to boost scale. This is important because we have a lot of fragmentation in some of these industries, and we have companies that have achieved scale and they can become national and regional leaders.

“We can see what Dangote is doing in the area of cement and also what Nigerian banks are doing. We can also have Nigerian insurance and pension companies dominate the local environment, and then go regional.”

“So, it is important to encourage domestic investors. We always talk about foreign investors and we do not give incentives for domestic investors to come in.”

Furthermore, he stressed the need for local firms to operate with high levels of corporate governance to reduce business collapses.

“What is needed is a combination of well-capitalised operators and domestic operators who are building businesses of scale.  Also, we need to encourage companies to build strong corporate governance standards.
 
“Today, we have about $30 billion of pension assets and with 8.5 million contributors; and more importantly, we have about 256,000 retirees who receive their pensions regularly, and I can say unfailingly before the 24th of every month.
 
“Indeed, it is a success story to be celebrated and I do not think we should take it for granted because our national savings has increased from practically zero to five per cent of GDP and it could be more.”

Published in West & North Africa

Kenya's retirement benefits eroded by coronavirus

Pension managers in Kenya project depressed growth of retirees’ funds due to the coronavirus pandemic that has negatively impacted the financial markets. 

About 17.5 per cent of retirees’ money was invested in quoted securities at the Nairobi Securities Exchange as at December 2019. This amounted to $2.1 billion, up from $1.8 billion in 2018.

In its 2019 industry report, the Retirement Benefits Authority (RBA) said: “The growth in the retirement benefits sector is projected to drop in the first half of 2020 given the effects of Covid-19, which has in the shortest time negatively impacted the financial markets and is postulated to significantly affect the global economy.”

Last week Kenya’s stock market plunged to a 17-year low with the NSE 20 Share Index nose-diving to 1,958.5 points, down from 2,666.9 points in January.

The report shows that efforts to encourage pension and fund managers to invest in new asset classes are not bearing fruit as most schemes continue to prefer traditional asset classes.

The lack of risk appetite by scheme managers throws into disarray plans by the Kenyan government to tap into pension funds to finance infrastructure projects.

The government had identified pension funds as a potential financing alternative for projects, and wanted schemes to pool funds to be directed towards manufacturing, food security, universal health coverage and affordable housing.

The RBA report showed that pension managers prefer to invest in safe havens like government securities, immovable property and quoted equities, while growth in private equity and real estate investment trusts remains muted.

The report shows that assets under management in Kenya increased by 11.2 per cent to $12 billion, from $10.8 billion in 2018. RBA attributed the growth in assets to the relative stability of the stock market during the past year.

The report indicates that pension schemes continued to invest heavily in government securities, with the asset class recording 42 per cent of the total assets under management, up from 39.4 per cent in 2018.

It was followed by immovable property, which accounted for 18.4 per cent, quoted equities at 17.5 per cent and guaranteed funds at 15.5 per cent.

The report shows that investment in alternative assets by schemes has gained traction with private equity and venture capital increased by 12 per cent from $8 million in 2018 to $9 million in 2019, accounting for 0.07 per cent of the total assets.

“The asset diversification remained almost similar to the previous periods with most of the asset classes recording minimal increases/decreases,” stated the report.

 

Published in East & Central Africa

An alliance between South Africa’s ruling party and labour unions is pushing for the mobilization of domestic pension funds to drive economic growth and urging caution about borrowing money from international financial institutions.

A discussion document dated 25 May, prepared for meetings of the alliance members, cited the use of so-called prescribed assets during the apartheid era to fund infrastructure.

South Africa has been ruled by the African National Congress, which is in an informal alliance with the Congress of South African Trade Unions and the South African Communist Party, since white-minority rule ended in 1994.

Attempts to fuel growth “must include a large drive toward domestic resource mobilization from both the public and private sectors,” according to the document seen by Bloomberg and verified by Cosatu.

Measures taken must include “among others, impact investments, interchangeably developmental and productive-asset investment requirements,” it said.

The alliance encouraged the use of both privately managed pensions and civil-servant retirement funds administered by the state-owned Public Investment Corp.

South Africa’s economy is forecast by the country’s central bank to contract 7% this year as a result of the coronavirus outbreak and the loss of the last investment-grade rating on the nation’s debt.

While South Africa has shunned the use of funds from institutions such as the International Monetary Fund in the democratic era, labour groups have now backed the government’s approach to the lender to seek $4.2 billion from its Covid-19 relief facility.

“International finance should therefore only be accepted if the conditions do not undermine, compromise or subvert South Africa’s national sovereignty, democracy or independence,” the document said.

It should “neither interfere with our domestic development policies and goals nor our fundamental right to self-determination,” it said.

 

Source; Business tech. you can read original article here.https://businesstech.co.za/news/finance/405095/anc-and-unions-plan-to-use-private-pensions-to-fund-south-africas-growth/

Published in Southern Africa

15th Pensions Africa Summit 2020  | 14-16 October | Hilton Mauritius|

OVERVIEW
We live in disruptive times, as the old world order is breaking down to make way for the new. Changing times need new solutions – how are the world’s most sophisticated adapting? The signifi cance of pension funds during these times cannot be underestimated. Emerging fundamental shifts in this industry indicate that pension funds across the African continent need to build the capacity to lead, rather than follow, investment activity to establish demands on governments and markets.
Our Summit this year will look at how Africa’s asset owners are planning to run their investment strategies in a changing global economic environment.
We will provide a platform for in-depth discussion of challenges and opportunities that investors face today and should anticipate going forward.
The agenda will also take into account a variety of considerations such as: ESG; the future of work, technology and the associated opportunities and challenges. This will include both public and private markets, consideration of the latest trends and the
performance potential of strategies as well as practical issues such as risk management, reporting, implementation, governance and other local investor requirements.

To sponsor or request brochure email stevem@pensions-africa.com or call +2711019 2200 +27828349490

 

Published in October2020
Monday, 09 September 2019 11:32

Women excel in the retirement industry

 The Pensions Industry has historically been predominantly a male dominated sector in South Africa, but a few women have taken up the challenge and excelled. This Women’s month, we profile a few of them to highlight the fact that, despite the challenges-women can excel and rise up to leadership positions in any industry of their choice.


Dr. Renosi Mokate- GEPF / Executive Chairman at Concentric Alliance (Pty) Ltd

Dr. Renosi Mokate is a highly experienced economist and policy analyst of international repute, specialising in development economics and finance. Renosi gained her academic qualifications in the United States of America, where she was based during her early academic career. She returned to South Africa in the early 1990s, serving in the multi-party negotiations process and as Chief Executive of the Independent Electoral Commission in the run-up to South Africa’s first democratic election in 1994.

Dr. Renosi Mokate- GEPF / Executive Chairman at Concentric Alliance (Pty) Ltd

She became a key adviser on macro-economic and fiscal policy to the Government, and later Chief Executive of the Central Energy Fund (the South African Government’s State-owned energy exploration, production, refining, and investment group). She was Deputy Governor of the South African Reserve Bank between 2005 and 2010, and a key member of the Monetary Policy Committee and the G20 Group of Nations Central Bank Forum.nosi left the Reserve Bank to become an Executive Director of the World Bank Group, based in New York, where she represented the interests of Angola, Nigeria, and South Africa at Board level. Since joining Concentric Alliance, Renosi has primarily been involved in strategy planning on behalf of clients, where her twenty years of experience at the highest levels of policy formulation in South Africa, and internationally, come into full play.

Q: Do you think there has been sufficient transformation in terms of gender within the retirement industry in South Africa?

A: “Progress has (been) made with respect to gender transformation, driven primarily by the country’s legal and policy frameworks on employment equity and Broad-Based Black Economic Empowerment, which require companies to take into account gender equity when employing staff and appointing executive and non-executive directors on their Boards. In addition, the Independent Institute of Directors and other similar bodies have reinforced the message the companies that are gender diverse perform better than those that are not.

However, more needs to be done throughout all the facets of the industry, namely asset owners, institutional investors and the pension service industry. The extent of gender representation within the pension industry is impacted by the generally low representation of women in the financial sector, particularly at the decision-making level. This is also the case in the areas that are peculiar to the industry, such as investment analysis and actuarial sciences.

It is important that the pension industry develop focused strategies for building a pool of skilled professionals and non-executive directors, if progress is to be made. In doing so we must also keep in mind that transformation is not just about numbers; it is also about changing the culture of the organisations in the industry and ensuring that the services that we offer support gender transformation throughout our society”.


Mabatho Seeiso- Independent Professional Trustee

Mabatho joined the Financial Services Industry at the beginning of 2001 in private equity as an Assistant Portfolio Manager for Infrastructure Investments at Old Mutual Asset Management. In 2003 she joined Cadiz Asset Management and subsequently became a Director and Head of Institutional Business Development until March 2007.

Mabatho Seeiso- Independent Professional Trustee


Mabatho now serves as a professional and independent trustee on several Boards of Management of Pension Funds. She also serves as Chairperson in some of the Funds or their Investment Committees. During her 11 years as a trustee she has had an opportunity to serve on a variety of funds including umbrella funds, parastatal funds, union funds, an unclaimed benefits fund, a beneficiary Fund and a Government Fund. She is also an independent investment committee member of the Jobs Fund. She has a passion for ensuring that we do our best for members of funds. She is also passionate about advocating for impact investing as it benefits both members and the economy. She was recently appointed as the Chair of the Investment Committee of the Truck Stops Private Equity Fund.

Mabatho’s past work experience includes working in sales, industrial development and international trade. She has also worked as a New Business Development Manager for Total SA and in management consulting for five years. She also has experience serving as a Non Executive Director on Company Boards and is a member of the Advisory Committee of the Southern African Pension Fund Investment Forum.
For 10 years, Mabatho engaged in her passion which was to facilitate the true empowerment of individuals with specific focus on women. She has been involved in teaching and facilitating personal development and the acquisition of self-leadership skills for women since 2008. She began women in financial services dialogue sessions in 2008 that ran for two years. She has worked as a professional mentor and public speaker who was facilitating leadership circles for 10 years. Her qualifications include; Honours (Economics and Marketing) University of Wales, Aberystwyth College, Honours (Financial Analysis and Portfolio Management) University of Cape Town and an MBA from Hull University.

Q: Do you think there has been sufficient transformation in terms of gender within the retirement industry in South Africa?

A: “There is still significant work that still needs to be done in developing gender diversity in the retirement fund industry. We need more women decision makers”.


Q: What would you highlight as your greatest contribution to the retirement industry in South Africa?

“I honestly believe that my biggest contribution has been getting my boards to appreciate the impact of our decisions on our members. The ability to stand in someone else’ shoes and to have empathy has been important to staying focused on what is in the best interest of members. It does not mean we always get it right but I think that is an important basis from which to make decisions. It also means you have to show courage sometimes to say things that are unpopular. The fact that I have been serving on a variety of pension boards since 2008 means I bring a depth of knowledge and industry insight to decision making.

I have also now become an advocate of impact investing on boards as a result of listening to what many members are saying is important to them. They want to retire in an environment with good infrastructure which includes good health care and education facilities; in an economy that is robust and that will provide jobs for their children. This is part of their definition of having a meaningful retirement”.


Mantuka Maisela- Chairman of the Fund, Eskom Pension and Provident Fund ((Eppf)

Since 2017 Mantuka has been the Chairman of the Fund at Eskom Pension and Provident Fund where she is also a member of the Human Resources and Remuneration Committee as well as the Strategic Investment Committee.

Mantuka Maisela- Chairman of the Fund, Eskom Pension and Provident Fund ((Eppf)

Mantuka has also been a trustee and has sat in various committees and boards of the following organisations- PetroSA, South African National Parks, Air Traffic and Navigation Services, National Consumer Council, MERSETA, Motor industry bargaining council, GEPF, Motor industry fund, Medshield medical scheme, Deloitte Best Company to work for Committee, PetroSA Egypt,World Petroleum council, Murray & Roberts among others.

She has served as an Executive for various organizations, amongst them, Vice President at PetroSA Group Human Resources at Murray and Roberts Holding as well as RUC Holdings.

Maisela is also the CEO of Khomolema Consulting and her qualifications include a Masters degree in Management from Wits University, Post Graduate Diploma in Management from Wits, Production Management Diploma ( Kyushu, Japan), Masters in Management (Wits) and has also attended a Leadership development programme from Wharton business school, University of Pennsylvania.

Professionally she holds membership to the following bodies-Member of the Society of Human Resources Management (SHRM,USA), Member of The Association of Training and Development (ATD, USA)and Fellow of The Institute of Directors of South Africa.
Mantuka has extensive experience and commands a lot of respect in both business and the pension fund industry.

 

Q: Do you think there has been sufficient transformation in terms of gender within the retirement industry in South Africa?

A: “The industry has attempted to provide opportunities to previously disadvantaged Asset Managers some of whom are women. However, there is still a lot of work to be done to ensure that gender representation is given special attention. The EPPF (has) established a Manager Development program to empower young Black Asset Manager(s) , some of which (were) women by allocating Assets to them and to grow their Businesses.

They (Asset managers) were provided the necessary assistance and (were) paid fees (to) enable them to buy the necessary equipment to operate their business as well as employ highly qualified Asset Managers that will grow the Businesses. We are continuously (..trying to) empower more women in the industry. The industry need(s) to consider imposing targets specifically for women empowerment in the industry”.

Published in Latest Articles

 The Annual Retirement Reforms Conference has run annually since 2009. Now in its 10th edition; the conference has over the years become a premier event for local policy makers and retirement funds for bench-marking progress, professional development, creating collaborations and partnerships towards the optimization of Africa’s investment opportunities and placing retirement funds at the very heart of benefit from local and international markets.

Published in October 2019

• Investment Masterclass for Trustees, Directors and Executives. 11-13 September 2019
Labourdonnais Hotel, Port Louis,Mauritius.

GET 10% DISCOUNT THROUGH PENSIONS AFRICA (See details below)

Designed specifically for directors, trustees, principal officers, portfolio & investment managers and executives with a remit for making decisions, managing and keeping track of their investment policy statement, investment strategy and portfolio performance.  The masterclass is arguably the most comprehensive practitioner-led programme designed to break away from the traditional way of teaching and start preparing your team for the future of finance. With a combination of traditional and unorthodox approach, the masterclass challenges the norms and conventions in finance.

Published in September 2019
Wednesday, 04 September 2019 06:02

GIPF to consult PG on lost money

Namibia: August 2019

THE Government Institutions Pension Fund has said its chief executive officer, David Nuyoma, will meet the prosecutor general to understand how her office concluded that some N$600 million in pensioners' money that the pension fund lent to start-up businesses between 1995 and 2005 was lost and would not be recovered.

"Since the matter is no longer sub judice, the chief executive officer will engage the Office of the Prosecutor General in order to better understand the decision taken," the fund said in a statement issued on Thursday. 

It referred to a decision, announced by prosecutor general Martha Imalwa on Wednesday, not to institute a prosecution in respect of 18 out of 20 entities investigated in connection with the alleged embezzlement of the money the pension fund had lent to or invested in businesses through its Development Capital Portfolio (DCP).

The Namibian reported this week that Imalwa said millions of Namibia dollars supposedly invested by the fund could not be traced and prosecutions could not be carried out because of lost documents, forgetful witnesses and a lack of evidence. It is unclear what documents were lost, and what they relate to.

The fund, however, said the DCP investments yielded a profit, having earned the fund dividends and interest, with some loans repaid too. According to the fund it had realised a total profit of N$458 million from its DCP investments by March this year. The total value of investment losses during the operation of the DCP from 1995 to 2005 was N$386 million, and the value of DCP assets still owned by the GIPF stood at N$988 million in March, the fund also stated.

Also reacting to Imalwa's announcement, the chairperson of the Namibian Women Lawyers Association, Ruth Herunga, in a statement on Friday encouraged the GIPF to inform Namibians about the actual impact the loss of money invested through the DCP has had on the fund's financial position and its members.

Herunga also said the association reserved its members' rights in respect of possible private prosecutions that could be carried out with regard to the loss of money invested by the GIPF.

The full statement issued by the GIPF is available on its website.

Published in Southern Africa

Nigeria:

Executive summary

Nigeria’s Tax Appeal Tribunal (TAT or the Tribunal) sitting in Lagos delivered a judgment in the case of Nexen Petroleum Nigerian Limited (NPNL) and Lagos State Internal Revenue Service (LIRS) to the effect that employers have no further obligation to account for subsequent dealings by employees with voluntary pension contributions (VPC), after the employers remit the VPC to the Pension Fund Custodians, specified by the Pension Fund Administrator (PFA).

The TAT, on 18 June 2019, in delivering its judgment, noted the following, among others:

a. NPNL’s legal obligation was to deduct and remit the pay-as-you-earn (PAYE) tax of its employees, after deducting all the statutory reliefs in compliance with the relevant provisions, which NPNL has done in this case.

b. That as the statutory agent of the LIRS, NPNL has fulfilled the obligations imposed on them by the relevant laws. Therefore, the responsibility to recover any further tax on the income of the employees that is not in the custody or control of NPNL automatically reverts to the LIRS.

c. The LIRS’ refusal to accept NPNL’s computed expatriates PAYE tax on actual gross emoluments for the 2014 year of assessment (YOA) and resort to the use of its discretionary powers of Best of Judgment (BOJ) assessment is clearly against the principles of justice, equity and good conscience.

Based on its ruling, the notices of assessment issued by the LIRS against NPNL, which were the subject of the dispute, were discharged by the TAT.

Detailed discussion

In this case, NPNL, appealed against the Notices of Refusal to Amend (NORA) for the 2013 YOA and 2014 YOA issued to them by the LIRS following a tax audit in respect of its 2013 and 2014 tax records, after which it was subjected to additional tax liabilities.

NPNL in two separate letters dated 21 March 2018 and 18 September 2018 objected to these assessment notices and subsequently filed its notice of appeal before the TAT. Both parties in arguing their positions raised the following issues for determination on whether:

  1. The NPNL has fulfilled its statutory obligation of deducting and remitting the correct PAYE for the 2013 YOA and 2014 YOA, hence exculpating itself from any additional tax obligation arising from the voluntary pension contributions made by its employees.
  2. An agency relationship exists between the parties, thus making NPNL merely an agent of the LIRS for the PAYE scheme and not a taxpayer for purposes of any future actions of its employees with their earned income or statutory deductions.
  3. VPC qualify as tax deductible contributions and remain so in relation to the NPNL as an agent of the LIRS.
  4. The LIRS acted judicially and judiciously by rejecting NPNL’s computed PAYE on actual gross emoluments for its expatriates without any basis and failure to consider documents submitted before making its BOJ assessment.
  5. Under Section 10(4) of the Pension Reform Act (PRA), for a VPC made on behalf of employees to be treated as tax exempt, it must be shown that the voluntary contribution was not withdrawn by the employee affected for a period not less than five years.

NPNL in its argument relied on the provisions of Section 81(1) of the Personal Income Tax Act and Regulations 2 and 4 of the PAYE Regulations 2002 contending that once it has deducted and remitted the PAYE of its employees, it has fully discharged its statutory obligations to the LIRS. It further contended that the right to use BOJ for the assessment of its expatriates should be based on a discretion that must be exercised judicially. NPNL argued that due consideration should have been given to the representations and justifications made by the company to substantiate the decline in the actual emoluments of the expatriates presented to the LIRS.

The LIRS argued that every employer of labor is under the obligation to deduct and remit taxes due from its employees to the tax authority. It further argued that for NPNL to claim that a portion of the emoluments is tax exempt, the company is expected to provide the evidence for such treatment. It relied on Section 10(4) of the PRA which stipulates that any VPC is subject to tax at the point of withdrawal where the withdrawal is made before the end of five years from the date the VPC was made. It stated that it is not the duty of the various PFAs to deduct and remit tax where withdrawals are made from the RSA before five years and since the VPCs form part of the emolument of the employees, the employer should continue to maintain the obligation to deduct and remit taxes on amount contributed and withdrawn before five years.

The judgment

After considering the arguments of both parties, the Tribunal ruled in favor of the NPNL as follows:

  • In compliance with the provisions of Section 11(3) of the PRA, 2014, which asserts that any relief to be granted by the authority must be done based on available and verifiable documentary evidence, NPNL had fulfilled its statutory obligations by providing to the LIRS, its pension schedules detailing the contributions made by the employees, along with copies of corresponding bank tellers evidencing deductions and remittances of the employee’s VPC through the appointed custodian and it had no further obligation in this regard.
  • NPNL, by virtue of the PAYE Scheme which places the burden of deduction and remittance of the personal income taxes on employers, is an appointed agent of the LIRS. NPNL’s legal obligation was to deduct and remit PAYE of its employees after deducting all statutory reliefs and by doing this, it had discharged its responsibility as an agent.
  • The LIRS cannot not assess NPNL to any liability for under-remitting PAYE because of tax deductions attributed to the VPC taken by its employees. The responsibility to recover any further tax on the income of the employees that is not in custody or control of the NPNL falls automatically on the LIRS. The TAT noted that VPC is statutorily recognized under the PRA and is not a fictitious scheme invented by employees.
  • The provisions of the statutes cited do not mandate an employer to be part of the transactions between the employee and the PFA. The law does not require NPNL to ensure that the provisions of Section 10(4) of the PRA are adhered to. The employer has no right over or access to an employee’s Retirement Savings Account based on the statutory obligation of confidentiality maintained on all parties engaged by the PFA or Custodian. Accordingly, NPNL could not have had access to the dealings and transactions of its employees’ accounts or that of the PFA or Custodian to insist that the employee complies with the provision of the PRA for not making withdrawals until the expiration of the mandatory gestation period.
  • The LIRS’ refusal to accept NPNL’s computed expatriate PAYE tax on actual gross emoluments for the 2014 YOA and its use of the BOJ basis of assessment was against the principles of justice, equity and good conscience. BOJ assessments should only be resorted to where the taxpayer fails to file grounds or returns or files inadequate returns. The TAT noted that the right to use a BOJ assessment is based on discretion and the TAT concluded that the LIRS by its refusal to accept the documents submitted by NPNL and its use of BOJ assessment, had not exercised its discretionary powers properly.

Implications

With this judgment, it appears that the employers will no longer be held to account for the tax due where employees withdraw their VPC before the expiration of the five years which was prescribed by the PRA. Furthermore, the LIRS may not be able to enforce the recovery of any tax due from the employer for such withdrawals which is the position announced in its public notice issued in the year 2017 where the LIRS emphasized the recovery of any tax due from employers in this regard.

The Tribunal in giving its judgment acknowledged the fact that withdrawal of VPCs before the expiration of five years is a gross violation of the provisions of the PRA and as such, taxes should be recovered for such withdrawals. As the TAT has absolved the employer from any responsibility for the recovery of taxes applicable to such withdrawals, this indicates that the responsibility now falls on the employees who withdraw VPC within five years of making the contribution. It remains to be seen the option the tax authorities may adopt to recover the applicable taxes from individual employees.

Furthermore, the TAT’s ruling against the use of discretionary powers to assess expatriates to tax on a BOJ basis of assessment has hopefully put to rest the controversy on the use of deemed income basis of assessment in instances where the employer has provided actual income and supporting documentation. In this regard, the ruling provides a basis for employers with expatriates on their payroll to file income tax returns for such employees based on actual income supported by relevant documentation.

EYG no. 003096-19Gbl

Source: EY. READ ORIGINAL ARTICLE

Published in West & North Africa
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