A well-functioning tax system promotes economic stability by providing governments with a consistent source of revenue to weather recessions and reduce fiscal imbalances.
African countries may strengthen their resilience to external shocks and promote long-term prosperity by diversifying revenue streams and lowering reliance on commodities exports.
This is perhaps why numerous countries in the region have implemented one tax policy or the other in the last 3 years.
Many countries introduced new tax policy measures, including new taxes on hotels and financial services (Burundi), increased taxes on telecom (Mauritania) and tourism services (Cabo Verde), increased taxes on imported luxury goods (Cameroon), strengthening of the progressive scale in personal income tax regimes (Côte d’Ivoire and Rwanda), introduction of an excise tax on telecom services (Ethiopia and Madagascar),” the report mentions.
“A set of new taxes on used goods and services (The Gambia), the introduction of a turnover tax for informal businesses (Malawi), and an increase in the value-added tax rate to 15 percent (Zimbabwe). A few countries simplified or reduced corporate income taxes (the Democratic Republic of Congo, Kenya, and Rwanda),” it adds.
In addition, the report also noted that in Kenya, the government eliminated advantageous corporation tax rates for special economic zones and export processing zones. Rwanda adopted similar steps.
“Several countries eliminated or reduced value-added tax exemptions (Mozambique and Senegal), goods and services tax exemptions (Sierra Leone), import duty exemptions (Cameroon, Malawi, and Sierra Leone), and sector-specific tax exemptions (Comoros). Tanzania decided to limit tax exemptions to under one percent of GDP. Liberia introduced duty waivers on high-yield and climate-resilient seeds and quality-verified solar products to benefit farmers and rural dwellers,” the report reads.
“Tax administration measures included the introduction of digital solutions, including data-matching platforms to detect tax fraud (Cabo Verde and Malawi), an electronic single window at border posts, compulsory use of the electronic platform for filing taxes for large and medium-size taxpayers (Burundi), measures to limit tax arrears (Mozambique), strengthened technical skills and capacity of tax officials (the Republic of Congo), and abolishment of the two-tier taxation system in the telecom sector (Zambia),” it adds.