Challenges for African Policy Makers

For the sake of analysis, the main tax challenges facing African countries may be grouped in three categories, although in reality many of them are interrelated. Firstly, there are key cross-cutting structural issues: the difficulty of taxing the widespread “informal economy”, the limited capacity of fiscal administrations and limited support from development partners on tax matters. Secondly, there are problems with the African tax base: tax evasion and fraud, including the misuse of transfer pricing techniques, the difficulty of taxing extractive industries and overuse of tax preferences. Thirdly, there are tax mix imbalances compounded by the challenges of declining trade tax revenues and of ineffective urban property taxes.