Within Africa, governments continue to focus on expanding the tax net by improving revenue collection through efficient compliance systems and procedures.
Assurance, tax and advisory services company PwC Africa has observed that revenue authorities also continue to take a keen interest in indirect taxes as part of revenue mobilisation initiatives.
PwC Africa has released the eighth edition of the value-added tax (VAT) in Africa Guide under the theme 'Africa re-emerging'. This forms the backdrop of renewal that informs the theme and its purpose of focusing on the re-emergence of African economies and societies which have been affected by the Covid-19 pandemic, the company says.
In the past year, South Africa, Mozambique and Zimbabwe updated their VAT legislation, or introduced specific legislation targeting electronically supplied services, which is in line with the global trend of attempting to tax the digital economy, says PwC.
“The expectation is that Botswana will also introduce VAT legislation in due course, while the National Treasury in South Africa has also made mention of revising the rules to account for further developments in the digital economy,” PwC South Africa indirect tax leader Matthew Besanko says.
In South Africa, VAT is becoming more relevant as a revenue source for government. Strides have been made to upskill South African Revenue Service staff and identify VAT revenue leakages, particularly in respect of foreign suppliers of electronic services to people and businesses.
Treasury has also drafted legislation with the intention to introduce a reverse charge on gold, which is expected to come into effect later this year.
Meanwhile, revenue authorities in Zimbabwe have introduced a tax on the export of raw medicinal cannabis ranging between 10% and 20%, which came into effect on January 1, 2021.
Key strides have also been made within the environmental, social and governance (ESG) space.
ESG leadership, strategising and reporting is essential now for organisations that wish to flourish and remain relevant. Companies also need to consider how ESG and tax intersect, since tax is a significant value driver when businesses need to deliver on their ESG goals, PwC Kenya tax partner Job Kabochi says.
In South Africa, a carbon tax regime, which is being implemented in three phases, has been adopted. The second phase was scheduled to start in January 2023; however, phase one was extended by three years until December 31, 2025.
Until then, taxpayers will enjoy substantial tax-free allowances, which reduce their carbon tax liability. At the beginning of this year, the South African government increased the carbon tax rate to R144, which is expected to increase annually to enable South Africa to uphold its environmental (COP26) commitments.
Further, with effect from January 1, 2023, carbon tax payers in South Africa will also be required to submit carbon budgets and adhere to the provisions of the carbon budgeting system, which will be governed by the Climate Change Bill. Where set carbon budgets are exceeded, the government plans to impose penalties, PwC Africa says.