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African Countries' Tax Bases Expanding, New Report Says

by Lorys Charalambous,, Cyprus

18 October 2017

African countries are steadily improving their tax revenue collections, according to Revenue Statistics in Africa 2017, a new report released recently at a meeting of tax and finance officials from 21 African countries.

The average tax-to-GDP ratio for the 16 African countries covered in the second edition of the report was 19.1 percent in 2015, an increase of 0.4 percentage points compared to 2014. Every country has experienced an increase in its tax-to-GDP ratio compared with 2000, with an average rise of five percentage points.

Revenue Statistics in Africa 2017 includes revenue data for twice as many countries as the first edition, providing comparable data on tax and non-tax revenues for 16 participating countries: Cabo Verde, Cameroon, Democratic Republic of Congo, Côte d'Ivoire, Ghana, Kenya, Mauritius, Morocco, Niger, Rwanda, Senegal, South Africa, Swaziland, Togo, Tunisia, and Uganda.

The average tax burden, at 19.1 percent of GDP, is lower than the average tax-to-GDP ratios for Latin America and the Caribbean (LAC) and the OECD: 22.8 percent and 34.3 percent, respectively. The average tax structure of the African countries resembled that of the LAC region, except that social security contributions are a more significant component of revenues in the latter.

In 2015, taxes on goods and services were the largest contributor to total tax revenues in the African countries (57.2 percent on average), mostly in the form of value-added taxes, followed by taxes on income and profits (32.4 percent). Kenya, South Africa, and Swaziland were outliers in this respect, obtaining about half of their tax revenues from taxes on income and profits in 2015.

Tax-to-GDP ratios in 2015 ranged from 10.8 percent in the Democratic Republic of the Congo to 30.3 percent in Tunisia. Between 2014 and 2015, all featured countries except Kenya, Tunisia, and Morocco increased their tax-to-GDP ratios. On average, they increased their tax-to-GDP ratios by 0.4 percentage points, a slightly lower increase than for the LAC average (0.6 percentage points) but above the OECD average (less than 0.1 percentage point).

TAGS: Morocco | South Africa | environment | tax | business | value added tax (VAT) | Mauritius | Swaziland | royalties | Organisation for Economic Co-operation and Development (OECD) | social security | Cameroon | Kenya | Rwanda | Senegal | Togo | Tunisia | Uganda | Ghana | services | Europe | Africa | Tax

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