BrandArena: Navigating Africa’s changing tax terrain

Thursday 23 July 2015

Navigating Africa’s changing tax terrain

South African businesses must access local tax expertise, invest in sound business systems, and take the time to understand local tax frameworks and regulations if they are to succeed as they expand into new territories in sub-Saharan Africa.

That’s according to Gerhard Hartman, Head of Department: Sage HR & Payroll International Division, who says that the growing focus on compliance across Africa means that it’s important for companies to have all their paperwork in order.
Gerhard Hartman

“Most African governments are eager to expand their tax bases, and are investing heavily in modernising and streamlining tax administration. They understand that more efficient tax collection is their best way to access funds for social spending and infrastructure investment,” says Hartman.

“Plus, there is a growing debate about the role multinationals play within African economies and the contribution they are making in developing these economies. Against this backdrop, it’s important for companies to be on top of country specific tax legislations.

Hartman says that governments and tax authorities in most African countries have been working hard to harmonise their employee tax, company tax, and VAT with international best practices. The upside is that it is easier than ever to get the necessary tax information and to interpret it.

The environment is rapidly becoming more consistently regulated, more transparent, and easier to navigate. “Sophisticated legislation in South Africa and tools such as e-filing mean our environment is very mature,” says Hartman. “But other African countries are quickly catching up - for example, Kenya with its iTax system. Multi-national companies need to be aware of auditing and reporting requirements.”

What this means is that South African companies expanding into the rest of Africa should have payroll and accounting systems and processes in place that enable them to easily comply with local tax laws, says Hartman. The key to this, he adds, is empowering your business with payroll and accounting experts who understand the environment and are able to implementing a business solution that is tailored to the needs of the local market.

Companies that plan to expand into multiple African countries should seek solutions that support multiple currencies, languages, and legislations. They should ensure that these solutions are kept up to date with the latest tax regulations and calculations since these tend to change every tax year.

When it comes to payroll and HR, a good solution should be compliant, have the ability to easily integrate with other business software and the automation of HR processes is key. Finally, a really good solution may feature value-adds such as reconciliations, mobility and business intelligent reporting.” says Hartman.

“We’re seeing a rapid swing from manual processes to electronic systems in the taxation environment across Africa,” says Hartman. “Companies must put in place robust automated solutions to meet the demands of tax authorities, ensure that their calculations are correct, and get their tax returns in on time.”

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