Enforced tax policies for expatriates in African countries

As one of the fastest-growing economies in the world, Africa offers considerable opportunities for businesses which are looking to tap into new developments. The influx of multi-national companies employing expatriates within African countries hasn’t gone unnoticed. African governments are now tightening their labour, tax and immigration policies.

For years, the African market has been particularly lucrative for companies and staff who have reaped the rewards of being paid offshore to avoid in-country tax and social security deductions. Recent projections even estimate that economic growth in Africa could exceed 5% during 2015/2016. As a result of this continued growth, many African governments actively encourage the employment of skilled expats. However, they are becoming more perceptive when it comes to receiving appropriate tax remuneration for work carried out within their continent.

Compliancy crack down

Improvements in telecoms and communications between governments have closed the many loopholes which allowed multi-national companies to stay ‘under the radar’ when it came to tax and employment requirements. It became clear that in order to sustain their long period of economic growth, their needed to be a considered tax reform within African countries.

This recognition has resulted in a shift within Africa’s revenue authorities, which are starting to follow the lead of Europe’s ‘chain law’ concept. This means that every company within the service chain must meet the minimum requirements for in-company employment compliancy.

Who is responsible?

The responsibility lies with multi-national companies, and the crack down on taxation policies means that there are no more excuses. Companies are now held accountable for each employee that works on company premises or facilities within Africa; this means drawing up appropriate employment contracts, work permits and immigration documents as well as ensuring that revenues are taxed appropriately.

Revenue authorities now expect and require solid documentation for tax returns – if these can’t be provided, companies will be asked to pay what they owe, as well as a hefty fine.  These instances are being reported regularly, which has resulted in an influx of concerned companies employing the skills of international tax experts.

The African economy is set to contribute a considerable chunk of the world’s GDP over the next 10 years, so the need for expert advice is crucial. As you might expect, a number of companies operating across the continent are based within the oil and gas sector, but the lucrative economy has also attracted retail, banking and telecommunications businesses.

This opens up a number of long-term career opportunities for tax professionals, so if you are interested in seeking out a new challenge in this emerging area, then please get in touch with a member of our team. 


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