Consultancy PwC says Africa, with its 54 countries, is a complex and challenging environment to administer in terms of tax legislation and rules.

Businesses entering Africa’s markets are often faced with the difficulty of having to adapt to the various countries’ tax laws.

PwC says debates on matters such as transparent tax regimes, regulations and policy relating to the taxation of nascent industries such as the digital economy and increased intra-African trade have become the norm.

These factors are contributing to numerous reforms around value-added tax (VAT) and goods and services tax (GST), compliance reporting and the expansion of the excise duty net to cover services and increased scrutiny of inbound cross-border activities.

PwC on May 7 published the sixth edition of its 'VAT in Africa Guide', which reports that African governments have been forced to be agile in response to the expanding socioeconomic demands of the continent, as a result of a rapidly growing and urbanising population.

PwC Africa indirect taxes leader Job Kabochi says that, in compiling the report, the consultancy has seen jurisdictions such as South Africa and Nigeria increase their VAT rates and countries such as Angola and Egypt making a shift from sales tax to embracing VAT, not to mention the reduction of VAT rates by countries such as Kenya.

The publication has also sought to highlight the basic principles relating to other indirect taxes across Africa. As an example, PwC points out environmental taxes and levies in Namibia and South Africa, the plastic bag ban levies in Namibia and Senegal and health levies and sugar tax in South Africa.

The guide is based on VAT laws in force as at April 1 and outlines pertinent technical principles on VAT/GST such as taxable compared to non-taxable goods and services, VAT rates and registration with the relevant authorities. In addition, the publication has focused on compliance requirements such as record keeping and revenue authority audits.

The report was compiled using data from 33 countries, including nine countries from its fifth edition report.

ENVIRONMENTAL LEVIES

In August 2019, Namibia started charging an environmental levy of 50c a bag on most bags made from plastic, excluding refuse and zipper bags.

Additionally, Namibia imposes environmental duties on electric filament lamps at N$3 a lamp, as well as a carbon emissions tax. The country also charges a levy if a tyre is fitted to a wheel or rim at N$10 a tyre.

In Senegal, a tax on plastic bags is instituted for the benefit of the State budget. It is levied on plastic bags of all kinds, produced or imported into Senegal. The tax tariff is XOF300 a kilogram of plastic bags.

South Africa charges an environmental levy on certain locally manufactured and imported plastic carrier bags and flat bags, electric filament lamps and carbon dioxide vehicle emissions. The country also imposes carbon tax.

DIGITAL TAX

Congo-Brazzavile has a digital hub tax at the rate of 1% on all financial electronic transactions.

While Eqypt does not have specific rules for the digital economy and the general VAT rules that should apply, there are potential changes in the making on the regulation to present clearer guidance on how to apply VAT to the digital economy. 

Kenya established a Finance Act in November 2019, which introduced amendments to VAT legislation to reiterate applicability of VAT on supplies made through a digital marketplace.

In Tanzania, electronic services supplied to customers in Mainland Tanzania who are not registered for VAT are regarded as supplies made in Mainland Tanzania and therefore locally taxable. These services include Web-hosting, software programming or updating, and broadcast television services.