Africa: January 2024 Employee Tax Changes
The fiscal year of several African countries is from January to December. Consequently, a raft of legislation is promulgated at the end of each calendar year which becomes effective on 1 January of the following year, and which affects the tax deducted from employees and/or changes the cost of employment for employers.
Below we have highlighted changes, effective 1 January 2024 in the following countries:
- Togo
- Angola
- Ivory Coast
- Zambia
- Niger
TOGO - Universal Health Insurance
On 11 October 2023, The Council of Ministers, under the chairmanship of the President of the Republic adopted seven decrees which would in effect accelerate the process of implementing universal health insurance. The universal health coverage aims to achieve equal access to essential or primary health care for all. The Government aims to complete the rollout of the universal health system by 2025.
The proposals that will impact the Client’s payroll include the following:
- The contribution base for salaried workers is the basic salary and all taxable bonuses and allowances, excluding reimbursements of expenses and family benefits.
- The amount of remuneration used as the basis for calculating the contributions cannot be lower than the Guaranteed Interprofessional Minimum Wage (SMIG) which is currently fixed at 52.500 CFA per month.
- It is important to note that if a worker is employed by several employers, each of them is responsible for the payment of the calculated share of contributions in proportion to the remuneration he pays to the person concerned.
- Contribution rate: The contribution rate is set at 10% of the monthly remuneration, of which at least 50% is payable by the employer and the remainder is payable by the employee.
PAYROLL IMPACT
The deduction towards Universal Health Insurance will add a burden to the employee and it will also be an additional cost to the employer.
ANGOLA - Tax Table Changes 2024
The General State Budget (OGE) for 2024 was approved by the National Assembly on 13 December 2023 and enacted on 26 December 2023. The amendments to the 2024 Economic Year (OGE-2024) appear in Law No. 15/23, of 29 December 2023 (OGE-2024 Law), and in all its annexes. The Law, and concomitantly the changes to payroll, are effective from 1 January 2024.
Article 20 amends the Employment Income Tax Code (Imposto sobre os Rendimentos do Trabalho) and will affect employee’s taxes as follows:
- Income earned up to a limit of Kz 100,000 per month is now exempt from IRT. Previously the zero-rated bucket was set at Kz 70 000 per month.
- The old tax brackets have been amended for the 2024 tax year- refer to the table below.
- The 10% bracket of Kz 70 000 to Kz 100 000 is removed.
New Tax Tables for 2024
PAYROLL IMPACT
The changes to the tax table will provide some relief to employees at all levels of income.
However, cognizance should be taken of the fact that Angola has experienced high inflation over the second half of 2023 (refer to the graph below) which will have eroded employees purchasing power. Any reduction in taxes paid in 2024 will therefore be a welcome relief.
IVORY COAST - Tax Changes 2024
The Presidency of the Republic published ‘Ordonnance No 2023-179 du 13 September 2023″ which will take effect on 1 January 2024. The consequence of the Ordinance is a comprehensive reform of the calculation of personal taxes relating to salary, wages, pensions, and life annuities. The reform is the result of suggestions by the IMF which stated that the previous “… personal income tax regime is complex and regressive”.
Previously, ITS comprised of three different taxes which were payable by the employee, namely:
- IS (Tax on Salary/Wages) which was 1.5% of 80% of taxable employment income.
- CN (National Contribution) which was taxed at progressive tax tables based on 80% of taxable employment income, and
- IGR (General Income Tax) which was calculated using a specific formula and progressive tax tables, taking into consideration the employee’s family situation.
The ITS reform consists of the following:
- Merging the three taxes payable by the employee (IS, CN, and IGR) into one single payroll tax.
- Adopting a progressive tax table (which will consist of 6 brackets).
- Instituting a tax reduction/credit mechanism for dependents to replace the family quotient, to consider the employee’s family situation. For example, if the employee is:
- Single, divorced, or widowed with no children, will have 1 share,
- Married individuals with no children, single or divorced individuals with one dependent child will have 2 shares,
- These values will increase with 0,5 shares for each additional dependent child limited to 5 shares, or it will increase with 1 for each disabled minor or adult dependent child.
- Establishing a zero-rate tax bracket for monthly taxable employment income less than 75,000 francs per month.
- Increasing the monthly exempt portion of retirement pensions and life annuities from 300 000 francs to 320 000 francs.
- Reducing tax on retired employees over 70 years of age, by reducing the tax with an abatement of 75%.
- The standard abatement/deduction of 20% will be repealed and the progressive tax tables will be applied to 100% of the taxable employment income.
New Tax Tables for 2024
Tax Rebate Table for Family Charge 2024
PAYROLL IMPACT
In general, most employees will experience a small increase in net take-home pay. Some employees will experience slightly higher taxes and concomitantly, lower take-home pay. This will depend on the number of dependents which is applied to the above Tax Rebate for Family Charge table.
ZAMBIA - Tax Table Changes 2024
The 2024 Budget Address was enacted on 26 December 2023 and thus the legislation and the impact on payroll will become effective on 1 January 2024.
Limited changes were made to the tax tables:
- The exempt threshold has increased from K4 800.00 to K5 100.00 per month.
- This represents an increase of 6.25% which is disappointing given that inflation in November 2023 was 13.1%.
- The marginal tax rate for the highest income bracket has been reduced slightly from 37.5% to 37.0%.
- The exempt threshold has increased from K4 800.00 to K5 100.00 per month.
Annual Tax Table
PAYROLL IMPACT
The increase in the exempt threshold as well as the reduction of the highest income tax bracket will benefit all employees, and their net income will increase marginally.
NAPSA Ceiling Increase 2024
The National Pension Scheme Authority is mandated to review the contribution ceiling and pension payments annually and adjust them in line with any change in the National Average Earnings (NAE).
This is in accordance with Section 35 of the National Pension Scheme Act No 40 of 1996. The NAE figure for 2024 has increased to K7,454.00 from K6,710.00 in 2023 as determined by the Zambia Statistics Agency.
Accordingly, on 4 January 2024, the National Pension Scheme Authority advised that the maximum monthly employee contribution for the year 2024 has been revised to K1,490.80 from K1,342.00- an 11% increase. Given that the employee and employer both contribute 5%, the maximum total monthly contribution will increase to K2,981.60.
- The contribution rate remains unchanged at 10% of an employee’s monthly gross earnings; and
- For NAPSA purposes, earnings refer to any benefit given by an employer in exchange for the employee’s service. Earnings therefore include basic salary, bonuses, commission, severance pay, overtime allowance, leave allowance, acting allowance, and commuted leave days.
PAYROLL IMPACT
The upward adjustment to the ceiling will increase the contributions of most employees and concomitantly have a direct impact on their net pay.
NIGER - ANPE Contribution Increase
Currently, employers are required to pay 0.50% of the employee’s social security base to the Agence Nationale pour la Promotion de l’Emploi (the Employment Promotion Agency or ANPE). This government organisation is responsible, among other things, for jobseeker placements and contribution to the development and implementation of a national employment policy, through the implementation of programmes of integration and reintegration of the unemployed
In accordance with Decree No. 2023-258/P/CNSP/MFP/T/E of November 3, 2023, which modified and supplemented Decree No. 2002-277/PRN/MFP /T of November 29, 2002, employers in the para-public and private sectors are informed that the rate of the employer contribution has increased from 0.5% to 1% of the payroll, from 1 January 2024.
The contribution is recovered by the National Social Security Fund (CNSS) according to the same terms as social contributions.
PAYROLL IMPACT
This contribution is only made by employers and as such, there will be no impact on employees. It will however increase the employment cost for companies.
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