PwC launches specialist Africa Tax Desk

PricewaterhouseCoopers has recently launched an Africa Tax Desk in Johannesburg in response to the needs of South African companies increasingly expanding their footprint into Africa. Similarly, foreign companies wanting to invest in Africa are increasingly using South Africa and, more specifically, Gauteng, as a base to further investigate business opportunities in other African countries.

Tino Saladino, PwC SA senior tax manager, says the need for the Africa Tax Desk, which is presently staffed by tax specialists from Nigeria, Uganda, Kenya and South Africa, was driven by increasing interest in Africa. One area of interest, is Africa’s vast mineral resource. “With Africa producing about 13% of global oil, 46% of diamonds, 21% of gold, 57% of cobalt, and half of the world’s platinum-group metals, understandably there is heightened interest in commodities. For example we are seeing South African and offshore resource groups expanding into sub-Saharan countries like the DRC, Zambia, Tanzania and Namibia, with the oil and gas sector specifically focused on Angola and Nigeria.”

Saladino says that the divergent cultures, business landscapes and unique legal, regulatory and political environments found on the continent can make these ventures particularly challenging. “So our Africa Tax Desk in Johannesburg works closely and seamlessly with colleagues in PricewaterhouseCoopers offices in other African countries. We provide investors with access to the right contacts for tax and legal advisory services, as well as coordinate between companies investing into Africa and respective PricewaterhouseCoopers offices in other countries.”

The Africa Tax Desks in Johannesburg (and New York) offer services that include cross-border structuring, acquisition and divestiture planning, financing arrangements, withholding tax minimisation, and foreign tax credit utilisation, among others.

For companies investing into Africa, Saladino says the most common concern is that corporate tax rates can be quite high, from around 30-35% or more. “Another challenge is that numerous withholding taxes are imposed on payments such as dividends, interest, royalties and management/technical fees, at high rates (in some countries as high as 30%). Additionally, there are not many double taxation treaties between African countries and offshore jurisdictions, or between African countries themselves, that minimise these high withholding tax rates.”

Saladino cautions companies moving into the rest of Africa to ensure they comply with the relevant regulatory requirements and obtain the necessary approvals and documentation in the early stages of establishing themselves in the new African country. “If this is not in order, we sometimes see companies experiencing problems and delays when they want to remit funds back to the home country or even exit permanently.”