PricewaterhouseCoopers (PwC) Africa says notable tax trends by some Africa governments include enforcement of atypical taxes, taxation of digital economy and adoption of Environmental, Social and Governance (ESG) to mobilize revenue.
The company made this known in its eighth edition Value Added Tax (VAT) in Africa Guide -Africa Re-emerging on Thursday in Lagos.
According to the report, the edition, which has been compiled by PwC Africa’s indirect tax experts, covers a total of 41 African countries.
“It is geared towards sharing insight with our clients based on the constantly changing tax environments that can have a significant impact on business operations,” it said.
It added that PwC Africa observed that various governments revenue authorities had continue to take keen interests in indirect taxes as part of revenue mobilisation initiatives.
The report noted that within Africa, many governments continue to focus on expanding the tax net by improving revenue collection through efficient compliance systems and procedures.
PwC Africa Tax Leader, Mr Taiwo Oyedele, said that monitoring regional changes across the continent revealed some atypical taxes on certain transaction types.
In Ghana, Oyedele said the government had rolled out an electronic transactions levy (E-levy) of 1.5 per cent on the value of digital transactions above a daily threshold of GH₵100.
Similarly, Chad introduced a tax on money transfer effective January 2022, that applies to transactions carried out by any means that leaves a trace.
This, he said, could be in the form of electronic, mobile telephone, telegraphic or fax means, or cash withdrawals related to transfers by financial institutions and multinational network operators.
Oyedele said that another notable trend was the operationalisation of dormant aspects of the law, with a particular laser focus on the digital economy.
He said that in Egypt, the tax authority had established an e-commerce unit to regulate the digital economy inside the country touching on both electronic goods and services.
In Mauritius, the Tax Expert noted that the Finance Act of 2020 introduced VAT on digital or electronic services.
In this case, he explained that VAT was chargeable on any digital or electronic service supplied by a foreign supplier to a person in Mauritius.
“Zambia has also shown an interest in digital economy taxation, with similar initiatives currently underway.
“There is a growing trend to impose VAT on foreign digital transactions especially by countries favouring unilateral tax measures over the global deal on the taxation of the digital economy.
“VAT is increasingly coming under focus given the need for governments across the world, and in Africa, to mobilise revenue in order to balance the budget deficits created during the pandemic.
“At the same time, the various interventions by monetary authorities have resulted in rising inflation with VAT playing a key role in the pricing of goods and services
“This is not only an emerging source of revenue for the government but also a policy tool.
“Therefore, organisations in Africa need to be agile to manage this trend and the inherent challenges that will emerge,” he said.
Mr Job Kabochi, PwC Africa’s Indirect Tax Leader, said that key strides have also been made within the Environmental, Social and Governance (ESG) space.
He added that companies needed to consider how ESG and tax intersected since tax was a significant value driver for businesses to deliver on their ESG goals.
“ESG leadership, strategizing and reporting is essential now for organisations that wish to flourish and remain relevant.
“ESG standards are rapidly expanding to include taxes paid, and governments are progressively using tax incentives for sustainability to encourage responsible corporate behaviour and meet sustainability goals.
“At PwC, we are continuously focused on our renewed global strategy, ‘the New Equation’.
“Through this strategy, a key focus area for PwC Africa is to support clients in adding value to their ESG ambitions and building trust through sustained outcomes,” he said.
