In the past year, Africa has experienced stronger economic headwinds than in recent times. Economic expansion this year is likely to be at its lowest in five years, dragged down by the impact of lower oil prices on the Nigerian and Angolan economies.
As we see the tightening of budgets both within government and the private sector, reforms required to create shared value for communities in which businesses operate, are urgent and far reaching.
The complexities of global markets and the high velocity change create opportunities, however, many times; these changes are not conducive to the legal and regulatory certainty that businesses need. What is certain, though, is that if policy makers and the revenue authorities on the continent get it right, multinational companies and entrepreneurs can and will play a hugely important role in Africa’s development.
That’s according to Jim Deiotte, EY Africa Tax Leader. He says the focus of this year’s 12th annual Africa Tax Conference will be to explore the feasibility of a harmonised African tax system and administration.
“Our conference will explore a number of emerging issues and opportunities in front of businesses today. Governments are using policy to influence economic trends in Africa. We saw earlier this year that Kenya eliminated certain taxes on profits earned by foreign firms that supply electricity to the national grid in a move aimed at cutting generation costs and attracting offshore capital.
We see funds accumulating for investment into Africa, yet these funds are not fully deployed. We will continue to look at this issue including a review of whether our entrepreneurial ecosystem can support businesses that are struggling or could potentially fail without business rescue and compromise support,” says Deiotte.
Among the challenges, we hear most often is the challenges around the interpretation of the laws, which pertain to any one jurisdiction and not another. Deiotte says an emerging trend is that international standards and precedents are drawn upon by authorities, providing a best practice yardstick against which to gauge their tax legislation and tax policies.
But many of these new standards and approaches are still behind the emergence of new technologies that are introducing many new approaches to increase efficiency and reduce risk.
The conference will also look at the future megatrends on taxation in Africa, cloud computing and ride sharing programmes, enabled by smart phones that are changing the dynamics of our economies.
“Tax policy must be defined and aligned to capture appropriate levels of taxes from such economic gains, using rules that are clear and respected across multiple borders,” concludes Deiotte.
* The annual EY Tax Conference takes place in Sandton, South Africa, from 30 – 2 October 2015: http://www.ey.com/ZA/en/Services/Tax/EY-africa-tax-conference-2015-overview
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