6th December 2019
For contractors looking for their next overseas assignment, Africa has a wealth of opportunities on offer. However, something that contractors should know before doing business there is that tax and compliance is becoming far more complex on the continent.
In fact, last month, African tax experts conducted a four-day meeting in Uganda aimed at addressing evasion. Contractors looking to work in booming destinations like Kenya, Ghana, or Nigeria will need to be aware of the heightened scrutiny. If you are thinking of contracting in Africa, here’s what you need to know.
Contracting in Africa: A continental tax crackdown
In Kampala, the Ugandan capital, President Yoweri Museveni opened the 4th International Conference on Tax in Africa. The event was held by the African Tax Administration Forum (ATAF), Africa’s largest tax body, with 38 countries making up its membership. The theme for this year’s gathering was ‘Innovation – Digitalisation and harnessing Technology to Improve Tax Systems.’
President Musveni said that African countries need to work together to curb evasion, stating ‘this is a problem that not only affects Uganda but all our countries. The advancement of globalisation means we are now connected, and damage to one country will indirectly impact another.’
Figures produced by the organisation estimated that illicit cash flowing out of Africa was considered to be at around £47 billion annually, leading to Ugandan Minister of Finance Matia Kasaija to urge Africa to harness innovations in technology to improve tax systems.
Taxing e-commerce was also a topic of discussion, with Logan Wort, executive secretary of the ATAF, stating that the practice can be used to erode tax bases. Mr Wort commented that ‘e-commerce creates difficulties in the identification and location of taxpayers, verification of taxable transactions and ability to establish a link between taxpayers and their transactions, creating opportunities for avoidance.’
The conference is just one part of a larger continental tax crackdown. Workers thinking of contracting in Africa will need to be aware of the continental crackdown. Here’s some of the latest actions we’ve covered on our blog:
In Kenya, authorities are pursuing some of the richest individuals and largest businesses in the country for evasion. Tax chief James Mburu stated that the agency would be recovering cash by handing out several prosecutions and changing legislation.
In an exclusive interview, Mburu commented on the widespread nature of tax evasion in the country, suggesting it was ‘bleeding the country to death.’ This has led to several high profile evasion cases, with a £311 million tax evasion case brought against billionaire businessman Humphrey Kariuki, and £45 million recovered from 27 betting firms based in the country.
Nigeria introduced a tax amnesty scheme in 2018 where for 12 months companies holding offshore assets who hadn’t paid tax could declare assets and income with a one-time payment of 35% asset value. The scheme offered immunity from prosecution in exchange for this disclosure. As a result of this amnesty, Nigeria’s government recovered around £76 million.
Most recently, head of the Nigerian tax authority, Tunde Fowler, stated that from 2020 Nigeria would implement the first Automatic Exchange of Information. This was announced at a meeting of over 50 global tax experts in the country’s capital, Abuja, to discuss ways to combat offshore tax evasion. Fowler also reaffirmed the country’s commitment to improve transparency in tax administration, increase tax revenue, and enhance service delivery.
Contracting in Africa: Compliance comes first
Ultimately, for workers contracting in Africa, there are an array of nuances to be aware of, with compliance varying from region to region. Therefore, we strongly advise that international professionals pursuing business on the continent enlist the help of experts who fully understand how to navigate tax and compliance in Africa. Doing so will allow you to remove the burden of strict legal requirements from your shoulders, and get back to fully focussing on the job at hand.
Contact us today.