By Elizabeth Adegbesan
Chief Executive Officers (CEOs) across Africa are anticipating increase in taxes caused by government efforts to address rising public debts.
The above is one of the highlights of the PricewaterhouseCoopers (PwC) Africa Business Agenda 2021 Report which also indicate that the rising trend in government debts across Africa could trigger tax aggression, increases in tax rates or introduction of new taxes.
Speaking at the virtual media presentation of the report, Taiwo Oyedele, Fiscal Policy Partner & PwC Africa Tax Leader, said: “Plummeting government revenues and fragile economic growth are fuelling an increase in government debt across Africa. This could result in tax aggression by government, increases in tax rates or introduction of new taxes. These could include, for example, digital taxes on platform-based companies that have profited during the pandemic.
“Solving the government revenue challenge will require making tough but informed decisions, which should include stopping wastage in government spending, rationalisation of incentives and subsidies, and boosting tax morale through accountability and transparency. Undue aggression against businesses and new or higher taxes will harm economic recovery and discourage investments.”
According to the Oyedele, “In the wake of the pandemic and its impact on government revenues in African economies, it is no surprise that tax policy uncertainty made a notable rise on the list of threats. In Africa, it is ranked third, up from seventh last year.
“Chief Executive Officers (CEOs) are undoubtedly watching debts accumulate as governments intervene with stimulus packages, and realise that the public will expect businesses to pay their fair share. In Africa, 56 per cent of CEOs are already factoring increasing tax obligations into their strategic risk management activities.”
The Africa Business Agenda which draws on the results of PwC’s 24th Annual Global CEO Survey showed that 68 percent of CEOs in Africa believe global economic growth will improve in 2021 (Global: 76 percent).
It stated: “56 percent of CEOs in Africa are extremely concerned about tax policy uncertainty (Global: 31 percent).
“54 percent of CEOs on the continent are extremely concerned about cyber-security, up significantly from 38 percent last year.
“74 percent of CEOs are concerned about supply chain disruption and trade conflicts, less so about protectionism (Global: 62 percent) and 44 percent of CEOs in Africa are changing their workforce strategy to improve competitiveness.”
Commenting on the report, Uyi Akpata, Regional Senior Partner PwC West Africa, advised CEOs to re-imagine every aspect of their operating model.
He said: “In the light of the concerns that Africa’s CEOs have on policy uncertainty, tax policy uncertainty, cyber threats, and over-regulation, this is an opportunity for African business leaders to re-imagine every aspect of their operating model.
“Further, companies and countries in West Africa should take advantage of the Africa Continental Free Trade Area (AfCFTA) Agreement, which came into force on January 1st 2021, to drive growth and bolster their economies through increased continental trade.”