In Africa today, tax is no longer just a cost of doing business – it’s becoming a constant business battleground. All across the continent, governments are ramping up real-time reporting systems, expanding digital taxes, and tightening cross-border scrutiny in a race to widen their revenue nets.
Until recently, Africa had always been soft on tax collection. OECD estimates that the continent has an average tax-to-GDP ratio of 16%, much lower than the global average of 34%, and with a significant fall in the external support on which some nations have depended, it is not surprising that they are now looking inward to raise revenues. The African Development Bank estimates that Africa will need about US$400bn annually just to finance its infrastructure gap by 2030. Where will this money come from if not from taxes?
Bold action
Many governments are now realising that it is no longer about raising rates but better enforcement. In February 2024, Kenya Revenue Authority (KRA) made the Electronic Tax Invoice Management System mandatory for all VAT-registered businesses. Under this regime, businesses must issue digital invoices that automatically relay transaction data to KRA in real time. KRA aims to collect a record KES 3 trillion (about US$22bn) in 2024-25, up from KES 2.4 trillion in 2022-23.
Frustrated at unfair transfer pricing activities, the South African Revenue Service (SARS) is taking a much more aggressive stance, especially with multinationals. It has established a dedicated transfer pricing audit unit, with a remit to scrutinise transfer pricing reports of multinationals to prevent profit shifting. SARS also plans to introduce mechanisms to pre-agree transfer pricing terms. Businesses must ready themselves for greater documentation and higher risk of tax audits on cross-border business.
Non-resident companies providing digital services are now subject to Nigerian taxes
Broader reach
The Nigerian taxman is also extending his reach. Non-resident companies providing digital services are now subject to Nigerian taxes if they have significant economic presence (SEP) in Nigeria. The broad definition of SEP includes sales, downloads and advertising services, while non-resident suppliers must now register for and remit VAT. There is also greater scrutiny on transfer pricing, with mandatory filing of country-by-country reporting for qualifying multinationals.
Many other regulations are coming from Nigeria’s new tax laws, which accountants and finance professionals must pay attention to. CFOs must manage higher compliance costs and navigate complex transfer pricing requirements.
Ghana, meanwhile, introduced the E-Levy, a tax applied on transactions made on electronic or digital platforms, in 2022. First proposed at 1.75%, it was reduced to 1.5% after public outcry. This tax helped reduce the country’s fiscal gap but was so unpopular that it became a key factor during the most recent presidential elections.
Living partly in Ghana at the time, I witnessed firsthand how vexed Ghanaians were by this tax, and it is no surprise that the new government abolished it earlier this year. This has, however, left a gaping hole in the country’s tax revenues that must be plugged somehow. It is therefore reasonable to expect new taxes, and businesses must prepare for these.
The taxman is no longer knocking; he is already inside your ERP system
Rapid evolution
Across Africa, the taxman is no longer knocking; he is already inside your ERP system. If you move profits across borders, expect tax authorities to move in on you. Digital profits are now taxable even without a local office, local staff or local servers. In Africa’s new tax landscape, non-compliance is not cheaper; it is much, much costlier.
As Africa’s economies modernise and diversify, tax systems are evolving just as rapidly – and sometimes even faster. For accountants and finance professionals, this new tax landscape demands not just compliance but strategic navigation. This is not the time to treat tax as an annual ritual or a back-office task – it’s a front-line strategic function, critical to managing risk, protecting value and unlocking growth opportunities. Those who anticipate these shifts, invest in real-time compliance and engage proactively with evolving regulations will not just survive Africa’s tax revolution; they will lead it.
