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Finance and Tax matters

Angola

(a) Financial assistance

(i) Does the concept of financial assistance exist

No.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

According to the Angolan financial legislation all capital operations are subject to the authorization of the National Bank of Angola ("BNA"). Foreign banks must apply for a licence of the BNA to lend money to a company project in Angola.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

The performance of financial operations is limited to entities with head office, branch or representative office in Angola, duly registered with the BNA.

(iii) Can foreign lenders lend into the jurisdiction?

Foreign lenders are allowed to lend into the jurisdiction in the terms mentioned above.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

Pursuant to the Angolan Exchange Law (Law 5/97, of June 27) and the Private Investment Law, investors may repatriate dividends after deduction of the legal redemptions and payment of all taxes.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are some restrictions on the use of foreign currencies.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

The interest on commercial transactions cannot exceed 75% per year plus 5 or 7 %, depending on the type of security of the loan.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

Domestic dividends, interest and royalties are subject to withholding tax on income from capital under the provisions of Law 7/1997 on Tax Restraint.

The Capital Income Tax levied on income deriving from the use of capital, interest, distributed profits and royalties accrues at the rate of 15% or 10%, as applicable.

In terms of territorial incidence, the rules vary between the taxation of entities established in Angola on obtained capital income, regardless of its origin and, at the same time, the taxation of non residents in Angola which do not have a permanent establishment there, from capital income originated (established debtor) in the country - e.g. interest on loan agreements and taxation only on income from capital originated (established debtor) in Angola - e.g. distributed profits and royalties. Finally, it should be noted that credit institutions are exempted from this tax in respect of interest on loans and lines of credit and default interest, provided that they are subject to Industrial Tax.

(ii) List of double taxation treaties.

No.

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

According to the tax regime a resident company shall be taxed on income earned worldwide. The non-residents who earn income in Angola are subject to the same rules as the residents.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

Apart from the applicable specific taxes on the proceeds we are not aware of any negative consequences.

(g) Stamping costs

(i) Details of stamp duty costs

Some documents and acts concerning the project company are subject to stamp duty.

Guinea

(a) Financial assistance

(i) Are there prohibitions or restrictions on the ability of a company to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a project company; or any company which directly or indirectly owns shares in a project company; or shares in a sister subsidiary?

There are no prohibitions or restrictions on the ability of companies to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a Project Company.

(b) Lending restrictions/banking monopolies

(i) Please indicate whether there are any restrictions or requirements applicable to the importation of capital by lenders to the Project.

There are no restrictions to the importation of capital by the lenders of the Project.

(ii) Is there a requirement for the lenders/security agent to be registered in the jurisdiction?

There is no requirement for the lenders/security to be registered in the Guinean jurisdiction.

(iii) Can foreign lenders lend into the jurisdiction?

Foreign lenders can lend into the Guinean jurisdiction.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

The Investment Code and the BOT Law permit the repatriation of dividends.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are no restrictions on the convertibility of the Guinean currency. The Instruction of the Bank of Guinea n*112/DGAEM/RCH/00 regulates the financial arrangements relating to transactions between the Republic of Guinea and foreign entities.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

TO BE VERIFIED

(f) Tax

(i) Withholding tax: are there any withholding tax issues in relation to interest payments and fees to foreign lenders on loans used by a project company; payment of principal on debt; or payments received under any agreements (other than any referred to above)?

The BOT Law and the BOT Convention set up the withholding taxes on payment of interest, fees to foreign lenders on loans used by a project company, and fees on payment of principal on debt or payments received under any agreements.

(ii) Double taxation treaties: please note the existence of any double taxation treaties.

The Republic of Guinea has concluded a convention of non-double taxation with the Republic of France. This convention has been established to avoid double taxation and to set up the rules for mutual assistance in tax income, property, inheritance and donations.

(iii) Lender issues: are there any risks that lenders should be aware of in respect of tax liabilities/tax domiciliation as a result of providing debt to the project or project company and/or taking/enforcing security interests?

There are no risks the lenders should be aware in respect of tax liabilities and tax domiciliation. The Investment Code guarantees that foreign companies legally established in Guinea receive the same treatment as national companies relating to the rights and obligations in their activities.

(iv) Repayment and enforcement: please advise whether loan repayment / enforcement proceeds could be treated negatively from a tax perspective for the lenders.

TRINITY PLEASE CLARIFY

(g) Stamping costs

(i) Please advise whether stamp duty or similar applies in respect of finance and security documents and security interests (and if so advise on the rate thereof), including the registration of immovable property or vehicles; security documentation; or transfer of assets on enforcement of security; or increase in share capital.

  1. Rights in corporate actions: For share capital and capital increase, the tax is based on the capital. The contribution varies from 0.5% to 2% on "bareme degressif par tranche".
  2. The transfer of movable and immovable properties, mortgage operations, incur stamp and registration fees from 0.5% to 10% of the value of the property depending on the operation.

Ivory Coast

(a) Financial assistance

(i) Does the concept of financial assistance exist?

There are no prohibitions or restrictions on the ability of a company to guarantee or give security to support borrowing incurred to finance.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

There are no restrictions or requirements applicable to the importation of capital by lenders to the Project.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

Lenders or security agents are not required to be registered in Ivory Coast.

(iii) Can foreign lenders lend into the jurisdiction?

Foreign lenders can lend into the Ivory Coast.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

The Investment Code allows the repatriation of dividends.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are no restrictions on the convertibility of the CFA.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

There are no restrictions on the payment and compounding of interest.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

Dividends paid to residents and non-residents are taxed at a rate of 10% for distributions paid by listed companies and 18% on distributions that are exempt from the tax on industrial and commercial profits; otherwise, the rate is 12%.

Interest paid to residents and non-residents is taxed at 25% on bearer bonds, 6% on long-term government bonds and 15% on other bonds. The rate applicable to other interest and similar payments is normally 18%.

(ii) List of double taxation treaties.

Ivory Coast has ratified a bilateral double taxation treaties with France, Germany, Belgium, Norway, Canada, Great Britain, Italy, Switzerland, Tunisia.

Ivory Coast has also signed on multilateral double taxation treaties: Convention of the African and Mauritian Common Organization (OCAM) signed 29th January 1971 in N'Djamena (Chad).

Convention of the Commonwealth states of West Africa (ECOWAS) signed on 29th October 1984.

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

There are no significant risks that lenders should be aware of in respect of tax liabilities/tax domiciliation as a result of providing debt to the project or project company.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

There is no specific legislation on this point.

(g) Stamping costs

(i) Details of stamp duty costs

Stamp duty is 1% of the secured amount (i.e. the value of the asset or the amount of the debt provided by the lenders) without cap. There is also a fixed CFA 500 stamp per page of the security documents.

Kenya

(a) Financial assistance

(i) Does the concept of financial assistance exist?

The concept of financial assistance in Kenya is prohibited by virtue of section 56 of the Companies Act (Cap 486). The courts recognise the concept of commercial benefit and this would have to be proved before the issuance of guarantees by companies.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

There are no restrictions.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

According to the Banking Act (Cap 488), lenders who do not take deposits are not required to obtain a banking licence. The lenders are permitted to operate through a registered branch set up locally.

(iii) Can foreign lenders lend into the jurisdiction?

Yes.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

Dividends maybe repatriated however withholding tax is chargeable on dividends.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

None.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

There are no restrictions on the payment and compounding of interest. However, the in duplum rule is in force, and banks are only permitted to recover a maximum of twice the principal amount owing at the time the loan becomes non-performing plus the costs of recovery. This rule applies to both foreign and local lenders.

(f) Tax

(i) Are there any withholding tax issues in relation to interest? If so, does this also affect both local and foreign lenders?

Withholding tax is chargeable at different rates for residents and non-residents:

Non-Resident  Resident

Management fees                                       20%

Professional fees                     5%              20%

Royalties                                 5%              20%

Dividends                                5%              10%

Interest                                15%              15%

(ii) List of double taxation treaties:

  1. United Kingdom
  2. Germany
  3. Denmark
  4. Norway
  5. Sweden
  6. Canada
  7. India; and
  8. Zambia

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

Please contact us for further information.

(iv) Can loan repayment/enforcement proceeds be treated negatively from a tax perspective for the lenders?

Please contact us for further information.

(g) Stamping costs

(i) Details of stamp duty costs

(A) Stamp duty on principal security documents is payable at the rate of 0.2% of the principal amount, and if there is collateral security it is charged at the rate of 0.1%.

(B) For supplemental security stamp duty is at a nominal charge of K.Shs.200.00.

(C) Wth regard to the sale of immovable property, stamp duty is charged at a rate of 4% of the selling price and the same rate of stamp duty is applicable when immovable property is sold pursuant to enforcement of security.

(D) Stamp duty for the increase of share capital is calculated at the rate of 1%.

Madagascar

(a) Financial assistance

(i) Does the concept of financial assistance exist

There are no prohibitions or restrictions on the ability of companies to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a Project Company.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

There are no restrictions or requirements applicable to the importation of capital by lenders to the Project.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

There is no requirement for the lenders or security agent to be registered in Madagascar.

(iii) Can foreign lenders lend into the jurisdiction?

Foreign lenders can lend into Madagascar.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

There are no restrictions relating to repatriating dividends. Foreign investors are allowed to freely transfer abroad without prior authorization any payments relating to transactions between other current after-tax profits, dividends, wages, allowances and savings of expatriates.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are no restrictions on the convertibility of Malagasy currency. The project company must respect the Exchange Code (2006-008 dated on 02nd August 2006).

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

There are no restrictions on the payment and compounding of interest, save that statements showing interest accrued must be in writing.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

There are no withholding tax issues on repayment of interest on loans. There are no withholding issues on repayment of shareholder loans if the loan has been approved in advance by the Government body responsible (FINEX).

(ii) List of double taxation treaties

The Malagasy Government has concluded the double taxation treaties with Mauritius and France.

(iii) Lender issues in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

There are no particular risks that lenders should be aware of in respect of tax liabilities. The Investment Code provides the equality of treatment between foreign and national companies and this extends to tax liabilities.

The project company is allowed to transfer dividends freely abroad without prior authorization any payments relating transactions Shareholder current account.

(iv) Can loan repayment/enforcement proceeds be treated negatively from a tax perspective for the lenders?

Please contact us for further information.

(g) Stamping costs

(i) Details of stamp duty costs

There is stamp duty of 2% on issued share capital including capital increases.

There is no stamp duty on the transfer of assets.

Registration of Security interests incurs registration fee of 0.5% of the whole secured amount per registration-received amount per registration. Mortgages on land are registered at 1% of the secured amount at the Land services and 2% of the secured amount paid at the fiscal authority.

Mali

(a) Financial assistance

(i) Does the concept of financial assistance exist

There are no prohibitions or restrictions on the ability of companies to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a Project Company.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

The Regulation n*R09/98/CM/UEMOA dated 20 December 1998 relating to the financial affairs of the members of the Economic and Monetary Union of West Africa (UEMOA) with foreign entities allows the lenders to the Project to import capital into Mali.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

The Lenders/security agent are not required to be registered in the Mali.

(iii) Can foreign lenders lend into the jurisdiction?

Foreign lenders can lend into Mali.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

There are no restrictions relating to repatriating dividends.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are no restrictions on the convertibility of the CFA. The Law n* 95-005 regulates the financial arrangements relating to transactions between the Republic of Mali and foreign entities.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

There are no regulations which affect local or foreign commercial lenders.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

Payment of interest may be made free of withholding tax.

(ii) List of double taxation treaties.

(A) Mali has ratified double taxation treaties as follows:

(B) Fiscal Convention with Tunisia (28th April 2000);

(C) Fiscal Convention with France (22nd September 1972);

(D) Double taxation Convention with Algeria (31st January 1999);

(E) Double taxation Convention with Russia (25th June 1996);

(F) Double taxation Convention with Senegal (19th November 1972).

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

Please consider with local counsel.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

Please consider with local counsel.

(g) Stamping costs

(i) Details of stamp duty costs

Stamp duty applies on security documents on a sliding scale depending on the amount secured.

Mauritius

(a) Financial assistance

(i) Are there prohibitions or restrictions on the ability of a company to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a project company; or any company which directly or indirectly owns shares in a project company; or shares in a sister subsidiary?

Subject to the provisions of the CA 01, a company may provide such assistance in terms of guarantees and/or securities as mentioned above.

(b) Lending restrictions/banking monopolies

(i) Please indicate whether there are any restrictions or requirements applicable to the importation of capital by lenders to the Project.

There are no restrictions.

(ii) Is there a requirement for the lenders/security agent to be registered in the jurisdiction?

There are no requirements.

(iii) Can foreign lenders lend into the jurisdiction?

Yes.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

There are no restrictions in relation to the repatriation of dividends. It must be noted that, under Mauritius law, a Mauritius company may only pay dividends out of retained earnings after having settled any accumulated losses at the beginning of the accounting period and dividends must be paid in respect of all the shares in a class but not in respect of some only.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are no such restrictions. It must be noted that all exchange control regulations have been suspended in Mauritius and such suspension of these exchange control regulations may be lifted at any time.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

Other than the prohibition on capitalising interest which has been overdue for less than one (1) year under article 1154 of the Mauritius Civil Code, there is no applicable usury or interest limitation law in Mauritius. This prohibition does not affect local lenders.

(f) Tax

(i) Withholding tax: are there any withholding tax issues in relation to interest payments and fees to foreign lenders on loans used by a project company; payment of principal on debt; or payments received under any agreements (other than any referred to above)?

There is no withholding tax under the laws of Mauritius.

(ii) Double taxation treaties: please note the existence of any double taxation treaties.

Mauritius is party to double taxation treaties and a list of such treaties may be consulted on the website of the Mauritius Revenue Authority

(http://www.gov.mu/portal/sites/mra/dta.htm)

(iii) Lender issues: are there any risks that lenders should be aware of in respect of tax liabilities/tax domiciliation as a result of providing debt to the project or project company and/or taking/enforcing security interests?

Foreign lenders will not become (or deemed to have become) resident, domiciled, engaged in the carrying on of business, or subject to taxation in Mauritius as a result of providing debt to the project or project company and/or taking/enforcing security interests.

(iv) Repayment and enforcement: please advise whether loan repayment / enforcement proceeds could be treated negatively from a tax perspective for the lenders.

There is no withholding tax or other tax or duty imposed by the laws of Mauritius on any payment to be made to the lenders.

(g) Stamping costs

Please advise whether stamp duty or similar applies in respect of finance and security documents and security interests (and if so advise on the rate thereof), including the registration of immovable property or vehicles; security documentation, or transfer of assets on enforcement of security; or increase in share capital.

Registration of documents with the Mauritius Registrar General is relevant if it is intended (a) to give a "date certaine" thereto, which date, cannot as a matter of evidence, be disputed in the Mauritius courts, and (b) to make such documents opposable against third parties as from the date of such registration.

Moreover, if the documents are not drawn up in Mauritius, they must be registered with the Registrar General if it is intended to make use of such documents in Mauritius.

Registration duty payable in respect of any deed containing the creation of a fixed or floating charge, or a pledge vary between about US$ 34 to US$ 1660 depending on the value of the loan.

Registration duty payable in respect of a transfer of deed of immovable property not exceeding about US$ 3321 is payable at rate of 5%.

Finally, no registration duty is payable in respect of transfer of movable assets on enforcement of security or increase in share capital.

Morocco

(a) Financial assistance

(i) Does the concept of financial assistance exist

Please contact us for further information.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

No such restrictions or requirements are applicable.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

There is no requirement pertaining to the registration of the lender in the jurisdiction.

(iii) Can foreign lenders lend into the jurisdiction?

Yes.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

There are no restrictions pertaining to the repatriation of dividends in KoM. However, investors are obliged to inform the Moroccan Exchange Office ("Office des Changes") within 6 months following their investment.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

Moroccan Dirham is not a convertible currency.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

There are no restrictions on the payment and compounding interest, as commercial and financial interests are freely negotiable.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

There is a withholding tax charge applicable at the rate of 10%.

(ii) List of double taxation treaties.

  1. Bahrain;
  2. Belgium;
  3. Bulgaria;
  4. Canada;
  5. Korea;
  6. Denmark;
  7. Egypt;
  8. United Arab Emirates;
  9. Spain;
  10. United States of America;
  11. Finland;
  12. France;
  13. United Kingdom;
  14. Luxembourg;
  15. Greece;
  16. Hungary;
  17. India;
  18. Italy;
  19. Lebanon;
  20. Libya;
  21. Malaysia;
  22. Norway;
  23. Netherlands;
  24. Poland;
  25. Portugal;
  26. Germany;
  27. Russia;
  28. Sweden;
  29. Switzerland; and
  30. Tunisia.

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

The lenders must ensure that applicable withholding tax is duly paid by the borrower as it has joint liability with the borrower regarding the payment of withholding tax. In addition, no tax is applicable to the enforcement of security interests through judicial proceedings.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

Loan repayment / enforcement proceeds cannot be treated negatively from a tax perspective for the lenders.

(g) Stamping costs

(i) Details of stamp duty costs

Registration and stamp duties are payable depending on the type of security interest. In general, any deed that requires registration must be stamped on each page with a 20 dirham (approx. 2,5 USD) stamp. Mortgages regarding real estate and pledges on movables are subject to a 1% tax registration

Mozambique

(a) Financial assistance

(i) Are there prohibitions or restrictions on the ability of a company to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a project company; or any company which directly or indirectly owns shares in a project company; or shares in a sister subsidiary?

No. Nevertheless, please note that for the approval of both the Concession and the investment project, evidence of the company’s financial capacity is required.

(b) Lending restrictions/banking monopolies

(i) Please indicate whether there are any restrictions or requirements applicable to the importation of capital by lenders to the Project.

The legal regime in force does not prevent the importation of capital by lenders to the Project. However, the relevant loan is subject to prior approval and registration with BoM for forex control purposes.

(ii) Is there a requirement for the lenders/security agent to be registered in the jurisdiction?

No.

(iii) Can foreign lenders lend into the jurisdiction?

Yes, provided that the relevant loan is duly approved by BoM.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

Pursuant to the legal regime in force there are no restrictions on repatriating dividends, provided that (i) the distribution of dividends is deemed legal, (ii) all legal redemptions are made and taxes are paid and (iii) the above mentioned BoM’s authorization for forex purposes is approved.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction’s currency?

Yes. Pursuant to the Foreign Exchange Regulations, the convertibility of currency qualifies as a foreign exchange operation. As a rule, such operations are subject to BoM’s prior authorisation and registration therewith. Moreover, with respect to accounts in Metical (“MZM”), while non-resident entities are allowed to open and operate such bank accounts in Mozambique through a local financial institution, the balance of such accounts cannot be converted and transferred abroad.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest?  If so, does this also affect both local and foreign lenders? 

Compounding of interest is a common practice in Mozambique and specific provisions pertaining to same are often included in loan agreements. However, pursuant to the Mozambican Civil Code, so as to be enforceable compounding of interest requires either the parties to enter into an agreement when the interest is due or a court notice.

Further, as loan agreements between forex residents and foreign lenders are subject to approval by BoM, interest provisions must satisfy BoM’s requirements.

(f) Tax

(i) Withholding tax: are there any withholding tax issues in relation to interest payments and fees to foreign lenders on loans used by a project company; payment of principal on debt; or payments received under any agreements (other than any referred to above)?

Yes. Except as otherwise provided by a double taxation treaty existing between Mozambique and the lender’s home country a 20% withholding tax is levied on both interest and fees paid to foreign lenders.

Moreover, where applicable, VAT is also due and levied by the rate of 17% upon the total income in connection with services rendered for consideration in Mozambique.

(ii) Double taxation treaties: please note the existence of any double taxation treaties.

Mozambique has double taxation treaties with Portugal, Macau, South Africa, Italy, Mauritius, and UAE.

(iii) Lender issues: are there any risks that lenders should be aware of in respect of tax liabilities/tax domiciliation as a result of providing debt to the project or project company and/or taking/enforcing security interests?

In principle, foreign lenders are not required to establish a presence in Mozambique, thus tax domiciliation in Mozambique is not required.

In Mozambique, a Permanent Establishment (“PE”) for IRPC purposes is deemed to exist whenever a non-resident company has in the country a fixed facility or permanent representation through which a commercial, industrial or agricultural activity is carried on. The existence or non-existence of a local PE is rather important in view of the different taxation regime that may apply. In fact, while foreign non-resident entities with no PE in Mozambique may benefit from a final IRPC reduced withholding, a foreign non-resident having a local PE does not benefit from such a withholding regime and is subject to the general IRPC rate of 32% on year-end profits. The foreign entity deemed to have a local PE is required to register for tax purposes and obtain a so-called NUIT - stands for Single Identification Tax Number. The PE would be required to keep organised accounts in Mozambique, file the IRPC annual return and pay IRPC directly to the tax authorities.

This said, lenders shall assess whether or not their activity in Mozambique is deemed as having a local PE. While not having a PE in Mozambique, no liabilities/tax domiciliation issues arise besides those mentioned in respect of withholding tax and VAT payment, if applicable.

(iv) Repayment and enforcement: please advise whether loan repayment / enforcement proceeds could be treated negatively from a tax perspective for the lenders.

No tax issues arise in connection with repayment and enforcement proceeds further other than those mentioned herein in respect with withholding tax, VAT and/or stamp duty, if applicable.

(g) Stamping costs

Please advise whether stamp duty or similar applies in respect of finance and security documents and security interests (and if so advise on the rate thereof), including the registration of immovable property or vehicles; security documentation; or transfer of assets on enforcement of security; or increase in share capital.

Amongst others, some finance, security, corporate and transfer documents are subject to stamp duty. The rate at which stamp duty is levied varies depending on both (i) the nature of the relevant document books, papers or legal acts and (ii) the value of the respective operation therewith.

Niger

(a) Financial assistance

(i) Are there prohibitions or restrictions on the ability of a company to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a project company; or any company which directly or indirectly owns shares in a project company; or shares in a sister subsidiary?

There are no prohibitions or restrictions on the ability of companies to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a Project Company.

(b) Lending restrictions/banking monopolies

(i) Please indicate whether there are any restrictions or requirements applicable to the importation of capital by lenders to the Project.

Foreign entities within the meaning of the foreign exchange regulations, which carry an investment in Niger financed in foreign currency, may obtain, in accordance with these regulations, transfers income from any kind of capital invested.

(ii) Is there a requirement for the lenders/security agent to be registered in the jurisdiction?

There is any requirement for the lenders/security agent to be registered in Niger.

(iii) Can foreign lenders lend into the jurisdiction?

Foreign lenders can lend into Niger.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

The Investment Code provides to investors a number of promotional incentives including the right to repatriate earnings and dividends.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction’s currency?

There are any restrictions on the convertibility of the CFA.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest?  If so, does this also affect both local and foreign lenders? 

None known

(f) Tax

(i) Withholding tax: are there any withholding tax issues in relation to interest payments and fees to foreign lenders on loans used by a project company; payment of principal on debt; or payments received under any agreements (other than any referred to above)? 

The rates of withholding taxes depend on the nature of the activity:

  1. for dividends, it is 10% excluding dividends from subsidiaries,
  2. for interest payment it is 13%, 15% and 25%,
  3. for royalty it is 16%, and
  4. for fees on technical and other services it is 16%.

(ii) Double taxation treaties: please note the existence of any double taxation treaties.

Niger has not ratified any double taxation treaties.

(iii) Lender issues: are there any risks that lenders should be aware of in respect of tax liabilities/tax domiciliation as a result of providing debt to the project or project company and/or taking/enforcing security interests?

None known

(iv) Repayment and enforcement: please advise whether loan repayment / enforcement proceeds could be treated negatively from a tax perspective for the lenders.

None known

(g) Stamping costs

(i) Please advise whether stamp duty or similar applies in respect of finance and security documents and security interests (and if so advise on the rate thereof), including the registration of immovable property or vehicles; security documentation; or transfer of assets on enforcement of security; or increase in share capital.

The registration fees are proportional, progressive or fixed depending on the nature of actions and changes that are submitted.

  1. Duties applicable to acts and transactions relating to companies:
  2. The rates of registration fee on capital increase by incorporation of reserves, profits and reserves (which are taxed BIC) is 8%.
  3. Duties applicable to acts and transactions relating to immovable properties: The rate of registration fee on the sales of immovable properties is 10%.
  4. Duties applicable to acts and transactions relating to movable properties: The rate of registration fee on transfer of movable properties is 12%.

Nigeria

(a) Financial assistance

(i) Does the concept of financial assistance exist

CAMA gives a company, for the purpose of borrowing money for executing its business, all the powers of a natural person of full capacity. This includes power to charge its undertaking or assets as security for any debt, liability or obligation of the company or any third party. However, it is illegal for a company or any of its subsidiaries to grant financial assistance directly or indirectly for the acquisition of its shares before or at the same time as the acquisition takes place. Furthermore, where a person has acquired shares in a company and any liability has been incurred thereby for the purpose of the acquisition, it would be unlawful for the company to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred in the acquisition of its shares.

A company is however permitted under the CAMA to acquire its own shares or the shares of its holding company for the purpose of:

  • settling or compromising a debt or claim asserted by or against the company; or
  • eliminating fractional shares; or
  • fulfilling the terms of a non assignable agreement under which the company has an option or is obliged to purchase shares owned by an officer or any employee of the company; or
  • satisfying the claim of a dissenting shareholder; or
  • complying with a court order.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

There are no restrictions on the institutions that may lend money to a project company and foreign banks may lend capital to the project company, except that the loan/capital may only be imported into Nigeria through an authorized dealer (a bank licensed in Nigeria for the importation of capital) and the foreign investor/lender would be required to obtain evidence of capital importation "Certificate of Capital Importation" ("CCI") issued by the relevant authorized dealer within twenty-four hours of importation.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

The lender to a project company need not be an institution registered in Nigeria; however, the transaction documents underlying any loan transaction would be required to be stamped with the Nigerian Stamp Duties office if they are brought into Nigeria and where the security for the loan is situate in Nigeria, the Security Trustee is usually required to be a Nigerian Company for the purposes of enforcement of the security.

(iii) Can foreign lenders lend into the jurisdiction?

Yes; Foreign lenders can lend to Nigerian entities in Nigeria.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

No. NIPA and FEMMA guarantee the foreign investor unconditional transferability of capital, dividends and profits after payments of appropriate taxes. The certificate of capital importation which is issued upon importation of capital evidences the imported capital for the stated purpose and discloses on its face the date of importation, the conversion rate and the Naira equivalent; it also facilitates unconditional transferability and repatriation of funds with regards to both earnings (including dividends) and capital.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are no restrictions on the convertibility of the capital or proceeds thereof into the Naira. The investor may subscribe to shares or invest funds in a Nigerian company in any convertible currency. He may also maintain a domiciliary account and transfer the lodgements therein in any convertible currency. The funds must however be imported through an authorised dealer.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

Parties to lending transactions are free to agree on the terms of the facility, including the compounding of interests; this right accrues to both local and foreign lenders.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

Under the Companies Income Tax Act, interest on a loan due from a Nigerian company to a foreign lender is subject to withholding tax of 10% of the interest income. This however does not apply to payment or remittances for the principal. Tax withheld on interest or dividends represents the final tax liability when paid in respect of non-residents.

(ii) List of double taxation treaties.

Nigeria is a party to double taxation arrangements with the following countries: United Kingdom, Belgium, Ghana, Sierra Leone, Gambia, New Zealand, Sweden, Denmark, Norway, the United States, the Netherlands, Canada and Romania.

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

Lenders to an IPP should be advised that at present, any power produced under an IPP would be sold to the PHCN under a PPA and not by tariff directly to end users, hence, the income receivable under such project financing would rely mainly on the ability of PHCN to meet its obligation under such PPA.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

Repayment/enforcement proceedings would not be treated negatively from a tax perspective for the lenders. Please note however that a claim for repayment or enforcement of loan will be void against a liquidator for any amount above the value for which stamp duties was paid.

(g) Stamping costs

(i) Details of stamp duty costs

Stamp duties are payable on project documentation on an ad valorem basis, depending on the value of the transaction concerned, and must be paid within 30 days after a security document is first executed, or after it has been first received in Nigeria if it was first executed at any place outside Nigeria Traditionally, a set of comprehensive security documents covering a loan transaction, would be stamped as one batch.

Whilst failure to stamp such documentation would not render the transaction void, such instruments will be inadmissible in court for purposes of enforcement of the security.

The security documents must also be registered in the project company's corporate file with the Corporate Affairs Commission ("CAC") within 90 days of its creation, failing which the charge created shall be void against the liquidator and any creditor of the company. Registration fee is 1% of the secured amount.

South Africa

(a) Financial assistance

(i) Does the concept of financial assistance exist

There prohibitions and restrictions on the ability of a company to guarantee and/or give security are to support borrowings incurred to finance the direct or indirect acquisition of shares of that company; or any company which directly or indirectly owns shares in that company; or shares in a sister company. For many years, there was an outright prohibition on providing such assistance, and it was a criminal offence to do so (all of the company and its directors and officers being personally liable for such offence) and the transaction was void by law.

At present, a company can give such assistance but only if the directors are satisfied that the company's assets will exceed its liabilities after such assistance is given, and the assistance is sanctioned by a special resolution of the company in general meeting. The directors are personally liable for any contingent liability of the company that may arise, including any contingent liability arising pursuant to such assistance.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

South African entities and persons cannot incur financial obligations to foreign entities that are to be repaid outside of South Africa without the express approval of Excon. The consent of Excon will be required in respect of: (1) the incurring of the obligation to a non-South African resident in the first place; (2) the incurring of any financial liability expressed in a currency other than South African Rands; (3) the interest rate payable; (4) the timing of payments and the actual payments of interest and principal, and (5) the security granted to the lenders or their security agent.

Excon applies a number of broad principles set out in the Excon legislation, which principles it adapts and changes to suit the constantly changing international financial markets and South Africa's financial position. Accordingly, it is not possible to state with certainty what Excon will approve in respect of a particular transaction.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

There is no requirement for the lenders or their security agent to be registered in South Africa in order to make loans into South Africa or to take security over assets in South Africa. However, Excon's approval will be required in respect of the transfer of any shares (pursuant to a share pledge) into the name of a non-South African resident or the export of any proceeds following a realisation of any security. In addition, in the past, the Deeds Office has refused to register mortgage and notarial bonds in the name of non-South African residents because of the provisions of certain legislation. Furthermore, certain issues under South African laws governing various types of security prevent an agent from holding security on behalf of a principal. All of these issues mean that it is usual for a special purpose company to be established that has the function of holding the security as a principal and not an agent.

(iii) Can foreign lenders lend into the jurisdiction?

See above.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

There no restrictions relating to repatriating dividends provided that the share certificates issues in respect of the relevant shares held by the non-South African resident are clearly endorsed with the legend "non resident shareholder". This endorsement can only be done by an authorised dealer appointed by Excon

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

There are no restrictions on the convertibility of South Africa's currency, the Rand.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

On the size of loans that are typically given in respect of power projects, there are no restrictions on the payment and compounding of interest. However, as stated above, if the loan is being made by a foreign lender into South Africa, both the interest rate and the payment of interest will be subject to the approval of Excon.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

There are generally no withholding taxes in relation to interest payments and fees to foreign lenders on loans used by a project company; payment of principal on debt; or payments received under any agreements. However, the tax laws are extensive, constantly changing and complex and it is advisable to obtain specialist tax advice in respect of each project and loan, as a particular lender may be regarded as subject to taxation in South Africa as a result of its personal history or circumstances.

(ii) List of double taxation treaties.

South Africa is party to a large number of double tax treaties - please consult local counsel. The countries with whom South Africa has concluded DTAs include most European, East European, many Asian and African countries, as well as the USA.

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

South African lenders will be subject to taxation on the income that they earn from a loan (in accordance with the laws of South Africa that are generally applicable to them). It is advisable for foreign lenders to obtain specific advice in respect of the possible taxation of the income that they earn from a loan as, whilst generally such income is not taxable, the personal history and circumstances of that lender could make that income taxable in South Africa.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

Please consult local counsel.

(g) Stamping costs

(i) Details of stamp duty costs

No stamp duty or similar duty applies in respect of finance documents and security documents and security interests. Transfer duty or VAT is payable on the registration of the transfer of immovable property, at a rate of 8% of the value of the property where the seller of the property is not a VAT vendor and at a rate of 14% where the seller of the property is a VAT vendor. Transfer duty at 0.25% is payable on the transfer of shares. Any increase in share capital will attract creation duty at 0.5%.

Tanzania

(a) Financial assistance

(i) Does the concept of financial assistance exist?

It is unlawful for a public company to give whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company, or, where the company is a subsidiary company, in its holding company. If a company contravenes this section the company and every officer of the company who is in default shall be liable to a fine. Note however there are exceptions and these provisions do not apply to a private company.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

Foreign banks can lend to a company only if they possess a banking licence granted to them by the Bank of Tanzania. Foreign banks with a banking licence issued by the Bank of Tanzania can lend either through their headquarters or through a branch entity.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

There is no specific requirement for a lender / security agent to be registered in the jurisdiction. Although the practice of one bank / institution taking security for and on behalf of a group of lenders has been used, this approach is not much tried and tested in Tanzania.

(iii) Can foreign lenders lend into the jurisdiction?

Yes, see above.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

A company incorporated or registered in Tanzania may hold foreign currency with banks in Tanzania.

Repayment of loans and payment of dividends to foreign entities is permitted, but loans may require registration with the Bank of Tanzania. Money earned by foreigners whether by way of dividends or investment can be repatriated

(d) Convertibility

(i) Are there any restrictions on the convertibility of Tanzanian Shillings?

Tanzania currently has no convertibility restrictions in place. The Foreign Exchange Act 1992 liberalised external trade and created enabling environment for market determined exchange rates.

Any person may not, without the consent of the Governor of the Bank of Tanzania:

  • make any payment in Tanzanian Shillings to or for the credit of a person resident outside Tanzania; or
  • make any payment in Tanzanian Shillings to or for the credit of a person resident in Tanzania by order or on behalf of a person resident outside Tanzania; or
  • place any sum in Tanzanian Shillings to the credit of any person resident outside Tanzania.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

There is no general restriction on the payment of interest.

(f) Tax

(i) Are there any withholding tax issues in relation to interest? If so, does this also affect both local and foreign lenders?

Withholding tax is payable in certain circumstances on dividends, interest, royalties and management fees.

(ii) List of double taxation treaties.

There are double taxation treaties with a number of countries including:

  1. Canada
  2. Denmark
  3. Finland
  4. India
  5. Italy
  6. Sweden; and
  7. Uganda.

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

Lenders are advised to seek detailed taxation advice as under the current legislation a branch profits tax is imposed at a rate of 10%.

(iv) Can loan repayment/enforcement proceeds be treated negatively from a tax perspective for the lenders?

Tax advice should be obtained as to whether loan repayment / enforcement proceeds could be treated negatively from a tax perspective for the lenders.

(g) Stamping costs

(i) Details of stamp duty costs

Every instrument which is executed in Tanzania, or if executed outside Tanzania relates to any property in Tanzania or to any matter or thing to be performed in Tanzania, shall be chargeable with stamp duty.

The duty payable varies for various instruments.

Uganda

(a) Financial assistance

(i) Does the concept of financial assistance exist?

Under the Companies Act, Cap 110, a company may not provide financial assistance for the purpose of purchasing its own shares or the shares of its holding company.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

Save for anti money laundering guidelines and provided that the lender does not purport to take deposits locally there are no restrictions on foreign banks providing capital for a project.

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

There is no requirement for the lenders/ security agent to be registered in Uganda.

(iii) Can foreign lenders lend into the jurisdiction?

Foreign lenders can lend into the jurisdiction.

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

Dividends declared by a Ugandan-incorporated company are a shareholder's property right which may be disposed of by the shareholder in any manner they see fit, including repatriation. There is no restriction under the Companies Act in relation to this. However repatriation of dividends will attract the payment of taxes.

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

Pursuant to the liberalisation policy of Government there are no restrictions on the repatriation of funds and or dividends.

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

There is no restriction on the payment or compounding of interest by either local or foreign banks under Ugandan law.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

A withholding tax is chargeable on interest payments and fees to foreign lenders on loans used by a project company and on the payment of principal in respect of a debt.

(ii) List of double taxation treaties.

Uganda has double taxation treaties with India, UK, Zambia, Netherlands, Mauritius, Norway, South Africa, Italy and Denmark. With the exception of the UK the Withholding Tax rates are lower with the above countries than with other countries for which there are no Double Taxation Treaties.

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

In the process of providing debt to the project or Project Company and/or taking/enforcing security interests lenders should be mindful of transfer pricing concerns and thin capitalisation issues.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

A loan can be treated as equity or the rates can be changed to market rates by URA if the parties are related and transfer pricing issues arise.

(g) Stamping costs

(i) Details of stamp duty costs

Stamping Costs are determined by the Stamps Amendment Act, 2000.

A loan agreement which does not relate to the deposit of title is charged stamp duty as any other Agreement and this is currently a nominal fee of Ug Shs 5,000. Other agreements relating to deposit of title--deeds, pawn pledge etc attract a stamp duty of 1% of the total value.

Debentures and Mortgages attract a stamp duty of 0.5 %.

Zambia

(a) Financial assistance

(i) Does the concept of financial assistance exist

Yes but the 'white wash' procedure can be used.

(b) Lending restrictions/banking monopolies

(i) Any restrictions applicable to the importation of capital by lenders?

No

(ii) Requirement for the lenders/security agent to be registered in the jurisdiction?

No

(iii) Can foreign lenders lend into the jurisdiction?

Yes

(c) Restrictions relating to repatriation of dividends

(i) Are there any restrictions relating to repatriating dividends?

No

(d) Convertibility

(i) Are there any restrictions on the convertibility of the jurisdiction's currency?

No

(e) Interest payments

(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?

Compound interest is legal provided the parties expressly agree to it. However, penal interest is illegal under the law.

(f) Tax

(i) Are there any withholding tax issues in relation to interest payments and fees to foreign lenders or payments received under any agreements?

There is withholding tax on interest payments, management fees/consultancy fees.

(ii) List of double taxation treaties.

Several countries have signed a Double Taxation Agreement with Zambia that have been included in the Income Tax Act as subsidiary regulation which includes:

  1. Canada
  2. Denmark
  3. Finland
  4. France
  5. Germany
  6. Holland
  7. Ireland
  8. Italy
  9. Japan
  10. Kenya
  11. Mauritius
  12. Norway
  13. Romania
  14. South Africa
  15. Sweden
  16. Tanzania
  17. Uganda
  18. United Kingdom
  19. Yugoslavia
  20. Zimbabwe
  21. India

(iii) Lender risks in respect of tax liabilities/tax domiciliation as a result of providing debt and/or taking/enforcing security interests

None.

(iv) Can loan repayment / enforcement proceeds be treated negatively from a tax perspective for the lenders?

None.

(g) Stamping costs

(i) Details of stamp duty costs

No stamp duty is payable in Zambia

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