"The African continent is making significant strides to redefine itself as one of the world's major economic players, with increasing interest in the continent from economic powerhouses such as the US and China," says Paul de Chalain, Head of Tax Services, PwC Africa.
The theme was 'Thinking Differently', highlighting the Middle East and Africa (MEA) region as a key environment in which businesses and investors operate. Key to this has been a focus on regulatory reform and governance in many countries, thereby strengthening the connection and ability for multinationals and investors to carry out business activities across the region.
The main growth in the African continent has been in oil-producing countries, but their economies have been impacted by the recent downturn in oil prices. In Africa, natural resources have driven real estate development and investment. A recent example is in the north of Mozambique, where an entire new city developed after the discovery of oil & gas.
The main African holding locations for investments in Africa are in South Africa and Mauritius. Outside of Africa, the main holding locations are Dubai, the Netherlands, the UK and France, since they each have a large number of treaties with African countries. Mauritius also enjoys 39 worldwide double taxation agreements, of which 13 are with African countries, and 11 are expected to come into force.
Although Africa is regarded as the continent for business opportunities, there are still a number of challenges and obstacles to overcome. Tax is still considered one of the primary constraints to doing business on the continent. PwC research in Africa shows that businesses find a number of areas challenging - such as obtaining certainty around the application of legislation and discussing or negotiating with various tax authorities.
One of the most significant impacts of globalisation has been the proliferation of cross-border flows of capital, goods and labour. As a result the taxation of cross-border trade and investment has become a complex issue, both for businesses and tax authorities globally.
In its Action Plan on Base Erosion and Profit Shifting (BEPS), issued in July 2013, the Organisation for Economic Co-operation and Development (OECD) put forward a plan for tackling BEPS and reforming the international tax system.
This culminated in the presentation of a final package of measures on 5 October 2015. The impact of many of the OECD's BEPS proposals will depend on how they are implemented not only by member states, but also by other countries.
Elsewhere, the Middle East tax environment is evolving. In an effort to become a more simple and efficient place to do business, governments in the region are looking to strengthen their fiscal frameworks by introducing measures to reduce complexity, such as electronic filing and e-payments.
According to PwC's Paying Taxes 2014 study, the Middle East continues to have the least demanding tax framework, with the lowest average total tax rate and time to comply; Qatar and UAE share equal first place globally, with Saudi Arabia in third position. This is in contrast to Africa which has a high total tax rate at 46.6%.
