Despite mistrust of multinational companies by governments in Africa and allegations of their role in moving money offshore illicitly, they account for the majority of tax paid in many countries. In Rwanda it is 70% of the total tax base, for example, and 80% in Nigeria.
The 2016 Africa tax survey released by PwC a few weeks ago indicates that companies believe tax poses the second-most significant threat to business growth in Africa, with political instability the first.
Since PwC’s last tax survey in 2013, transfer pricing, which is now on the radar of African governments, has overtaken withholding tax as the biggest tax area of concern for multinational companies.
The authorities in many countries have become overzealous in their application of tax laws, with levels of harassment rising over the past few years.
At issue is not the principle of paying tax but a range of related issues such as the ambiguity of tax legislation, the ad hoc application of tax laws and the uncertainty regarding the obligations.