Budget announcement in South Africa comparing tax comments against what we have seen in rest of Africa with their recent budget announcements

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Exciting news for the private sector who is investing into the rest of Africa, as Mr Gordhan announces that he will simplify rules that will reduce the time and costs of doing business in Africa. He further stated that Africa is our home and encouraging investment in Africa is mutually beneficial, as it “generate tax revenue; dividends and jobs both abroad as well as in South Africa’.

The tax rate in South Africa has not changed. We have seen with recent budget highlights in other African countries where CIT rates either increased or decreased. Some examples are Congo who reduced from 34% to 33%; DRC reduced from 40% to 35%; Senegal increased from 25% to 30%. The question would be is the reduction in tax rates in other countries to align them more with the average rate across Africa or to encourage investment?

In most other African countries we also don’t see changes in VAT rates, we have however seen VAT being introduced in countries who previously had GST such as DRC who introduced it in 1 January 2012; Seychelles introduced on 1 July 2012 and Swaziland on 1 April 2012.

South Africa introduced the voluntary disclosure programme and now it is permanently available from 1 October 2012. Mauritius also recently introduced a voluntary disclosure programme until June 2012, which has now extended it for a further period from 1 January 2013 to 30 September 2013. Will they in future also make it a permanent feature of their administration to increase the tax collections?

Targeting of non-compliance remains a key focus area for all Revenue Authorities across Africa. Mr Gordhan commented: “Around the world, taxpayers and their governments are challenging large multinational companies that pay little or no tax in the countries in which they operate”  This is no different in the Africa continent, where we see a lot of focus from Revenue Authorities to understand the tax base of multi-nationals operating in their countries.

It remains interesting to see how tax rules across Africa differs, but how there is also similarities when the annual budget announcements are made.