Sub-Saharan Africa's tax practices align with those across the world

21 January 2019 Consultancy.africa

Tax compliance is an increasingly pertinent issue across the globe and particularly in Africa, where the most pertinent regulations are still being worked out by the various governments. A new PwC report suggests that the overall tax compliance frameworks on the continent are consistent with those across the globe with varying degrees of implementation. 

Africa is becoming a vibrant centre of economic growth, particularly as newfound political stability in many regions is combining with a drive for diversification to make the continent a lucrative area for investment. Many governments are now turning their attention to ensuring that their revenue systems operate efficiently.

South Africa, in particular, is an example of a country looking to ramp up its tax compliance scenario. The country has not only introduced stringent penalties for tax defaulters, but has also hiked tax rates since last year in an attempt to reduce the strain currently being placed on public coffers.

Training for tax authorities

Big Four accounting and advisory firm PwC has released a new report that focuses on the educational aspect of taxation, operating on the principle that a lack of awareness and knowhow of the regulatory system may represent a major cause for high default rates on the continent and across the globe.

Awareness in this scenario not only represents knowhow among taxpayers but also amongst those working in the implementation bodies. As a result the report surveyed the frequency and reasons behind introducing training and education programmes amongst tax officers in Africa and around the world.

In Sub-Saharan Africa, for instance, training is most often offered to tax officers when some sort of change in the regulatory framework is introduced. Less than 20% of those entities surveyed, meanwhile, offer training and education to tax officers regularly, be it every few months or even twice a year.

Taxpayer education

This is similar to practices across the globe, in that most regions offer training to officers following a major regulatory change. However, in Eastern Europe and South Asia, tax officers are given fresh training courses every 3 to 4 months irrespective of whether a change has been introduced.

In OECD countries, on the other hand, training is offered either once every 1 or 2 months or after a major regulatory change, but nearly never at more distant intervals. The report also analysed the prevalence of education practices amongst taxpayers across the globe, which produced similar trends.

In Sub-Saharan Africa, more than 80% of the economies offer taxpayer education, which is considerably higher than those in other regions such as Latin America, the Caribbean, and much higher than the practices in the Middle East & North Africa. Even the OECD high income countries have a relatively lower level of taxpayer education practices.

Sources of information on tax

On the other hand, all the economies in South Asia offer training to their taxpayers, while the number stands at well over 90% for East Asia & Pacific. An interesting aspect of the report was analysis on the most common source of this taxpayer education.

Most taxpayers in Sub-Saharan Africa, for instance, receive their information from publications and education seminars, while the second most common source is tax rulings themselves. This is roughly similar to the trends across the globe, although most in the OECD countries receive their information from call centres.

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