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Wharton School - Overview of Sub Saharan Tax
1. EY Africa
Sub Saharan Africa tax overview
Wharton School of Business
The University of Pennsylvania
September 2015
2. Page 2
1
Welcome
Jim Deiotte, EY Africa Tax Lead and member of AMCHAM (American
Chamber of Commerce)
8:00 – 8:30
2
Africa attractiveness Survey 2015 - Making choices
Sylvester Taku, EY Africa Assurance
Q&A and open floor discussion
8:30 – 9:30
3a
Financial Services: Extending reach into Africa
Presented by Graham Thompson, EY Africa Knowledge Leader
10:00 – 10:50
3b
Sub-Saharan Africa tax overview
Presented by Jim Deiotte
10:00 – 10:50
3c
Africa Private Equity
Presented by Graham Stokoe, EY Africa Private Equity Leader
10:00 – 10:50
4
Guest speaker
Jeff Nemeth
President Ford Motor Company of SA, AMCHAM Board
11:00 – 11:30
5
Welcome
Jim Deiotte,
11:30 – 12:00
Agenda
6. Page 6
1 EY in Africa 4 – 6
2 The Africa landscape 7 – 12
3 The Africa Tax landscape 13 – 19
4 Sub Saharan Africa tax filing landscape 20 – 23
5 Transfer Pricing in Africa 24 – 29
6 Africa Tax Coordination Services 30 – 32
7
Overview of considerations when
establishing a legal presence in Africa
33 – 34
8 Upcoming EY Africa events 35 - 40
Contents
9. Page 9
EY Africa tax practice
Size of tax practice by cluster
Africa Tax Leader 28 countries East cluster 6 countries
Jim Deiotte
70 Partners &
Executive Directors
890 Professional staff
Catherine Mbogo
9 Partners &
Executive
Directors
116 Professional staff
Francophone cluster 9
countries
Central cluster 3 countries
Joseph Pagop
Noupoue
8 Partners &
Executive Directors
181 Professional staff
Nigel Forsgate
7 Partners & Executive
Directors
62 Professional staff
West cluster 2 countries Southern cluster 8 countries
Abass A Adeniji
5 Partners & Executive
Directors
94 Professional staff
Mark Goulding
41 Partners &
Executive Directors
437 Professional staff
11. Page 11
Africa Tax Administration Forum member countries
Great potential for exchange of information
ATAF member countries
EY office
No EY office, but support
available
With the active
role that ATAF is
taking in driving
the focus on
transfer pricing
and BEPS, we
expect the
transfer pricing
controversy
landscape to
change
significantly in
the near future.
► ATAF is an
international
organisation which
provides a
platform for
cooperation
among African tax
authorities.
Through mutual
cooperation
between member
states, ATAF
works towards
increasing the
level of voluntary
tax compliance
whilst combating
tax evasion and
avoidance
13. Page 13
Currency devaluation in Africa against the
US Dollar over 12 months
-35.00%
-30.00%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
1 July 2014 - 30 June 2015
Botswana Pula
Egyptian Pound
Ghanaian Cedi
Kenya Shilling
Nigerian Naira
South Africa Rand
Uganda Shilling
Zambian Kwacha
14. Page 14
Reporting language considerations in Africa
► With an estimated 1,500 to
2,000 African languages
spoken, Africa is a continent
with exceptional linguistic
diversity.
► In both Angola & Mozambique
returns are completed in
Portuguese.
► UEMOA countries complete
returns in French.
French speaking
Portuguese
Spanish
Amharic
Arabic
15. Page 15
Statutory reporting considerations in Africa
OHADA member states
Benin Burkina Faso Cameroon
Central African
Republic
Chad Comoros
Congo Cote d’Ivoire
Democratic Republic
of Congo
Equatorial
Guinea
Gabon Guinea
Guinea-Bissau Mali Niger Senegal Togo
Statutory reporting
No information available
Local GAAP
OHADA
IFRS
24. Page 24
Due dates for various tax returns for African
countries
5
9
4
6
2 2
0
1
2
3
4
5
6
7
8
9
10
CIT return submission due date
6
5
7
10
4
16
7
4
13
6
5
14
0
2
4
6
8
10
12
14
16
18
Provisional Tax due per month
25. Page 25
Due dates for various tax returns in Africa
1
3
1
14
5
1
3
1
2
0
2
4
6
8
10
12
14
16
7th 10th 14th 15th 20th 21st 30th 31st N/A
Number of Monthly WHT
returns to be filed
► N/A = South Africa is based on transactions date
1
10
1
4
2
1
3 3
1
2
0
2
4
6
8
10
12
Number of Monthly VAT
returns to be filed
26. Page 26
Due dates for various tax returns in Africa
2 2 2
15
5
1
3
1
0
2
4
6
8
10
12
14
16
7th 10th 14th 15th 20th 21st 30th N/A
Number of Monthly PAYE
returns to be filed
► N/A = South Africa is based on transactions date
7
3 3
1 1
2
1
9
0
1
2
3
4
5
6
7
8
9
10
Number of Annual PAYE
returns to be filed
28. Page 28
Setting the scene
Transfer pricing in Africa over the last 20 years
Countries with transfer pricing legislation / rules
There has been more than a 100% increase in transfer pricing legislation in Africa over the past
5 years.
* TP legislation came into effect 1 January 2015
** Draft TP legislation
1995 - 2000 2001 - 2005 2006 - 2010 2011 – 2015
South Africa Namibia Algeria Algeria Malawi
Zambia South Africa Egypt Angola Mozambique**
Zambia Kenya Burkina Faso Nigeria
Malawi Egypt Namibia
Namibia Cameroon Senegal
South Africa Congo South Africa
Zambia DRC* Tanzania
Ghana Uganda
Gabon Zambia
Kenya Zimbabwe
Sierra Leone
29. Page 29
Africa transfer pricing landscape
Southern Africa
East Africa
West Africa
Central Africa
North Africa
Countries with TP legislation / rules
The nature of TP
legislation varies across
the continent
Tanzania
DRC
Angola
Namibia
South
Africa
Zambia
Zimbabwe
Malawi
Mozambique
Nigeria
Egypt
Algeria
Ghana
Senegal
KenyaCameroon
Gabon
Burkina
Faso
Congo
Uganda
Sierra
Leone
30. Page 30
Transfer pricing audit landscape
High audit activity and numerous queries
Medium audit activity
Low or no audit activity to date
We expect there to be considerable audit
activity in the near future
Mauritius
NigerMali
Morocco
Algeria
Sudan
Chad
Ethiopia
South Africa
Ghana
Nigeria
Tanzania
Zambia
Central African
Republic
Botswana
Angola
Democratic
Republic
of Congo
Kenya
Lesotho
Malawi
Mozambique
Swaziland
Uganda
Zimbabwe
Mayotte
Comoros
Tunisia
Cameroon
Gabon
Equatorial
Guinea
Cote d’Ivoire
Togo
Benin
Senegal
Gambia
Guinea
Burkina Faso
South
Sudan
31. Page 31
Be audit ready
Understanding key TP risks
Ensure alignment with the commercial reality of the operationsFunctional analysis
Legal agreements
Implementation of policy
TP method applied
Non-disclosure in tax return
Non-disclosure of transactions
Comparables
Support for negative results
Ensure alignment with the commercial reality and TP documentation
Ensure proper justification for TP method used
Ensure TP policy has been correctly implemented
Ensure all material transactions are properly disclosed in TP policy
Availability of appropriate internal or external comparables
Provide detailed support where poor results were achieved
Tax Administration Act penalties may apply if non disclosure
32. Page 32
Risks associated with not having an appropriate
transfer pricing policy properly implemented
Higher
possibility of a
tax dispute
Significant
reputational
damage caused
by perceptions of
inappropriate
pricing
Risks
Double
taxation, penalties
and late payment
interest
Internal
challenges due to
inconsistencies in
pricing
Scrutiny
by local tax
authorities
with respect
to other
taxes
Unnecessary
difficulties with
repatriation of
funds
66% of
companies
identified “risk
management” as
their highest
priority for
transfer pricing
in the EY 2013
Global Transfer
Pricing Survey.
This is a 32%
increase from
2010.
34. Page 34
Africa Tax Coordination Services (ATCS)
Our Africa Tax Coordination Services (ATCS) team was established 8 years ago, the purpose being to project manage tax engagements
for clients and provide them with visibility and oversight of their tax affairs across the continent. Our team consist of 18 full time tax
resources whose primary function daily is to track and monitor that we meet the deadlines of our clients; respond timeously to requests
and provide regular feedback and updates to our clients.
The ATCS team has vast experience in coordinating tax advisory and tax compliance services for multinationals with operations across
Africa and the Globe. Many of our clients provide feedback that the EY team’s approach of combining a central point of contact with
access to in-country professionals has positively impacted their service experience.
The role of the coordination team is to ensure:
► You have a central-point-of-contact
► Your goals, objectives and needs are clearly articulated to our teams
► A consistent approach and service delivery
► Connecting the right people at the right time
► Visibility and access to your compliance status and progress on specific projects
Natasha Meintjes
Africa Tax Coordination Services Leader
Tel: +27 11 772 3923
Mobile +27 83 611 1859
E-mail: Natasha.Meintjes@za.ey.com
36. Page 36
Overview of considerations when establishing
a legal presence in Africa
37. Page 37
Overview of considerations when establishing a legal
presence in Africa
► Minimum Nominal amounts of less than US$1 (e.g. Botswana) up to
US$50,000 (e.g. Ghana)
► Local shareholding requirements may exceed 50% (e.g. Angola 50% shares
+1)
► Also consider minimum investment requirements e.g. US$1mil in Angola
► Minimum 1 to 2 directors
► Consideration for Local director requirements in many countries
► 3 days (Mauritius) to 6 months (DRC) calculated from date of submission
of all required documentation
► Subsidiary – limited (private) and public entities
► Branch is an option in most countries (limited activity allowed – auxiliary
services mostly)
► REP office – not always recognised legal form e.g. Botswana; Tanzania;
Kenya; Mauritius; Namibia
Timeframe to register an entity
Legal Entity Form
Director requirements
Shareholding requirements
► Appointment of local director if no local employees’ in management
positions
► Opening of a bank account
► Translation of documentation
► Not having all the required documents available
► More than one registration required – business & regulatory
► Business premise address
Lessons learned on what delays
registrations (examples)
39. Page 39
EY Strategic Growth Forum™ Africa 2015
Accelerating progress. A better story, told better
40. Page 40
Profile of attendees includes:
► EY Entrepreneur of the Year Awards 2015 Finalists, Judges, EOY Alumni, Entrepreneurial Winning Women Alumni and a
renewed focus on attracting Africa entrepreneurs as delegates.
► Board, CEO and C-Suite, CFO, Strategic Directors of our G360; Focussed core accounts, in addition to clients and
companies from across Africa and Global. Public and private sector and leading government officials.
Why SGF?
► Offers dynamic speakers, topical sessions, panel discussions, networking opportunities and inspirational entrepreneurs
and executives – all exploring and sharing strategies for growth.
► Plays a significant role in the Entrepreneurship/Middle Market, MSL and Sector agenda in terms of the proven direct
impact it has on reputation, relationships, and revenue with clients.
► Help to break down barriers and explore a wealth of growth opportunities in growth markets. Clearly demonstrate EY’s
convening power, insight, expertise and point of view on operating internationally. Provides the opportunity to spend 2-3
days exclusively with your target/client. The results can be immediate and long lasting!
A stimulating environment | Networking | Reinforcing relationships
Competitive advantage | Insightful | Connected | Revenue
EY Strategic Growth Forum™ Africa 2015
Accelerating progress. A better story, told better
41. Page 41
EY Africa Tax Conference 2014
Building a better working world in Africa
42. Page 42
EY Africa Tax Conference™ 2015
Towards tax harmony in Africa
43. Page 43
Africa Thought Leadership
Africa 2030
Africa 2030: Realizing the possibilities builds on EY’s flagship
Africa attractiveness series, reinforcing the tremendous
progress that has been made in Africa over the past 15 years.
EY Survey: growing war for talent in Africa
A growing war for talent is emerging in Africa, as firms are
recruiting to support their growth ambitions on the continent.
Africa by numbers
Whether entering into or expanding across Africa, we believe
it is critical to develop a structured analytical framework for
prioritising markets into which to expand and for assessing
different strategic options
Africa by Numbers: a focus on Nigeria
Nigeria continues its robust and sustained economic growth.
Harvesting growth: the rise of private equity exits in
Africa
Africa’s economic development over the last few years has
been impressive, with many countries across the continent
starting to see the benefits of government and economic
reforms and increased FDI flows.
Unlocking value in Africa
In the current global economic context, it would be difficult to
find an alternative investment destination that offers 10 to15
years of sustained economic growth.
EY Africa Business Centre Thought Leadership
Africa Attractiveness surveys
Making choices
We remain confident that, despite economic headwinds, the
“Africa rising” narrative remains intact and sustainable.
Executing Growth
Our 2014 Africa attractiveness survey reveals a dramatic
improvement in the continent’s perceived attractiveness, now
at second place, and although FDI numbers paint a mixed
picture, companies are successfully growing in Africa
Getting down to business
Africa’s rise over the past decade has been very real. While
sceptics still abound, and there are people who still seek to
debate the point, the evidence of the continent’s clear
progress over the past decade is irrefutable
Building Bridges
Our second edition of Africa Attractiveness builds on the
theme of the African growth story, while emphasising the
need to bridge a perception gap that continues to exist among
many potential investors not yet doing business on the
continent.
2011: It’s time for Africa
Understanding Africa’s strengths and challenges and bring
strategic within the framework of these can help African
countries position themselves more competitively and also
help focus investment for optimal returns.
44. Page 44
Disclaimer
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this document do not constitute advice by EY.
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