Companies are flocking into Africa to tap into new developments and the demand for expatriates is extremely high. But African governments are becoming more astute about being paid the tax they are due.
The days of staff being paid offshore to avoid in-country tax and social security responsibilities are fast drawing to an end. Companies and staff currently involved in these under-the-radar activities should be concerned.
More so than ever, foreign companies working in Africa need to ensure they meet regulated responsibilities in employment structures in the areas of immigration, labour law, social security and employee tax.
While many African governments encourage employing expatriates with critical skills, the challenges can be varied and complex.
The concept of 'Chain Law' in Europe, which links every company in the service chain and binds them jointly in terms of meeting minimum in-country employment compliancy requirements, is becoming a norm on the African continent.
Revenue services across the continent have put in measures to ensure compliance. Companies owe it to themselves and the countries in which they work to pay their dues.
We're seeing revenue authorities across the continent being far more in tune with businesses on the ground. They're asking for more documentation when you do your tax returns. They are closing loopholes. Improved telecommunications and inter-governmental communication has helped this to happen.
Recently, an African revenue authority turned up at a contractor's house and questioned why his bank account only had $1000 in it, yet they discovered he was earning far more offshore and was not paying any local taxes or social securities. He, apparently, was obliged to pay all the tax he owed, as well as interest, and a huge fine.
Stories like these are not going to be isolated cases in the future.
As an expatriate, you can't complain about the roads, the potholes and the infrastructure if you are not paying tax in the country.
Where employment parameters are not in line with in-country policy, internal revenue services will hold foreign companies responsible as their staff members work on the company premises and in their facilities.
In our work on the continent, we're seeing an increase in the number of companies who want to be compliant. We've been approached by companies operating in several African countries to draw up employment contracts and work permits, as well as assist with immigration documents to ensure that all expatriate employee affairs are in order.
We need to ensure that the flow of funds is correctly administered and is fully transparent.
There's also a great need for expert advice on more complex cases, such as companies that operate across borders, where tax and tariff harmonisation is key.
Apart from the more obvious industries of oil and gas exploration and extraction, there's been a spike in employing expatriates from companies involved in banking services and retail in Africa.
Africa boasts some of the fastest-growing economies in the world. Multinationals are taking note and moving in fast to ensure they stake their claim. In the next ten years, the world will draw much of its GDP growth from activities in Africa.
With tremendous opportunity on the continent, Africa is wide open for business with companies that have fair and transparent employment contracts that benefit the employee, the company and the country in which they work.
