The report said value-added taxes remains the most commonly charged form of tax accounting for 29.3 percent of revenues. However, the contribution of income taxes is increasing: taxes on income and profits accounted for 34.3 percent of total revenues across the continent and have contributed the most to growth in tax revenues since 2000, increasing by 2.6 percent of gross domestic product to reach 6.2 percent GDP in 2016.
“Corporate income tax revenue increased by 1.4 percentage points over this period to 2.8 percent of GDP, while revenue from personal income tax rose from 2.1 percent to 3.0 percent of GDP in 2016,” which the report termed as a historic high.
The report also contains data on non-tax revenues, which continued to decline across the 21 countries on average in 2016 but remain an important source of income in certain countries. These revenues, which include income from natural resources and grants, exceeded 5 percent of GDP in nine of the 21 countries.
Africa has sustained gains in domestic resource mobilisation made since 2000, as tax revenues remained stable in 2016, according to the report dubbed, Revenue Statistics in Africa 2018.
“Providing internationally comparable data for 21 participating countries, the report finds that the average tax-to-GDP ratio was 18.2 percent in 2016, the same level as in 2015, which represents a strong improvement from 13.1 percent in 2000,” it stated.
The third edition of Revenue Statistics in Africa, released on 31 October 2018 in Paris during the 18th International Economic Forum on Africa, shows that tax-to-GDP ratios varied widely across African countries, ranging from 7.6 percent in Democratic Republic of the Congo to 29.4 percent in Tunisia in 2016.
Six countries – Mauritius, Morocco, Senegal, South Africa, Togo and Tunisia – had tax-to-GDP ratios greater than or equal to 20 percent in 2016. In comparison, the average tax-to-GDP ratio for Latin America and the Caribbean was 22.7 percent and 34.3 percent for OECD countries in 2016.
Revenue Statistics in Africa is a joint initiative between the African Tax Administration Forum (ATAF), the African Union Commission (AUC) and the Organisation for Economic Co-operation and Development (OECD) and its Development Centre, with the support of the European Union.
The publication, which now covers 21 countries, shows that revenue trends are mixed. Between 2015 and 2016, the tax-to-GDP ratios of 11 countries increased while those of 10 countries in the sample decreased.
Botswana registered the highest increase (1.3 percentage points) followed by Mali (1.2 percentage points). The largest decreases (of over 2.0 percentage points) occurred in the Democratic Republic of the Congo and Niger, the report added.
The changes in tax-to-GDP ratios were primarily due to economic factors. Declines in oil prices coupled with lower activity among mining and oil companies contributed to the decreases in the Democratic Republic of the Congo and Niger, while a significant increase in the sale of diamonds in Botswana has increased revenues. In contrast, the increased tax-to-GDP ratio in Mali is partly explained by improvements to tax administration, the report stressed.
Between 2015 and 2016, the tax-to-GDP ratios of 11 countries increased while those of 10 countries in the sample decreased. This contrasts with 2015, when the Africa tax-to-GDP ratio increased by 0.5 percentage points from the previous year on average and in 15 of the 21 countries, the report concluded.