For the first time, the International Fiscal Association (IFA) Congress is being held in Africa, underscoring the continent’s ongoing efforts to modernize its tax systems and stimulate economic growth. This historic moment signals a shift toward stronger collaboration between tax authorities and corporate taxpayers, promoting investment across various sectors in Africa.
In 2024, the IFA Congress convenes in Africa, coinciding with a period of significant transformation in how African nations approach tax administration. This global event, focusing on fiscal policy, provides a platform for showcasing how Africa’s evolving tax landscape is fostering a cooperative environment between governments and large corporations.
The congress highlights how African countries are adopting a new approach to tax compliance, shifting from an adversarial model to one based on collaboration. Traditionally, tax authorities viewed corporate taxpayers as adversaries, enforcing regulations to combat tax minimization. However, this outdated model is being replaced by a modern, risk-based compliance strategy that rewards voluntary compliance and transparency.
This development stems from international efforts to address tax evasion and aggressive tax strategies, notably through the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). BEPS 1.0, initiated a decade ago, has reshaped how multinational corporations approach taxes, encouraging a more prudent, transparent reporting system. As these measures reduce the incentive for tax avoidance, better tax administration is now seen as a competitive advantage for countries seeking investment.
The drive toward cooperative tax compliance reflects a broader goal of fostering economic growth in Africa. Governments and businesses alike recognize that a stable and predictable tax environment encourages investment, which in turn leads to job creation and sustainable revenue generation. By building trust and ensuring transparency, African tax authorities aim to create a win-win situation where businesses thrive, and governments secure the necessary revenue to meet development goals.
The South African Revenue Service, for instance, exemplifies this shift by advocating for a partnership approach, leveraging the strengths of both parties to resolve tax challenges and improve voluntary compliance. This new paradigm extends beyond specific industries, such as mining, to encompass diverse sectors, including telecommunications and energy, signaling a continent-wide commitment to reform.
This transformation in Africa’s tax landscape is not without precedent. The concept of cooperative tax compliance has been in practice for years in various countries. The Netherlands introduced “horizontal monitoring” in the early 2000s, a model where businesses and tax authorities work together to ensure compliance. The Forum on Tax Administration in 2013 further formalized cooperative compliance frameworks, and in 2020, the International Compliance Assurance Program was established to promote open multilateral engagements.
These programs focus on mutual trust, giving tax authorities earlier access to business information, which allows for better risk management and more accurate revenue forecasting. From the taxpayer’s perspective, this approach provides greater certainty, faster dispute resolution, and lower compliance costs. However, these initiatives are not one-size-fits-all solutions—they require tailored discussions between governments and businesses to adapt to local contexts.
For these partnerships to succeed, both tax officials and businesses must commit to transparency and cooperation. Tax officials need to offer certainty and be willing to accept differences without jeopardizing the relationship. Meanwhile, businesses must maintain robust internal controls and ensure accountability from senior executives.
Technology plays an increasingly pivotal role in this partnership model. Tools like e-invoicing and real-time tax payment monitoring provide a clear audit trail, instilling greater confidence in the integrity of compliance systems. Both parties benefit from increased transparency, fewer disputes, and a more conducive environment for long-term investment.
In Africa, these advancements are poised to drive substantial economic growth. According to the African Development Bank, real GDP growth in the continent is expected to reach 3.8% in 2024 and 4.2% in 2025, second only to Asia. Fast-growing economies such as Kenya exemplify this trend, with many African countries expected to surpass 6% growth rates, outpacing major economies like China and the West.
For African governments, the key to sustainable revenue generation lies in supporting profitable businesses that create jobs and attract investment. This economic growth is essential for achieving Sustainable Development Goals (SDGs), which focus on eradicating poverty, improving gender equality, and building robust education and healthcare systems.
The IFA Congress serves as a timely reminder of the importance of tax partnerships in Africa’s development journey. By fostering a collaborative environment, these partnerships not only enhance voluntary compliance but also help shift the focus toward designing tax systems that promote economic expansion.
The new wave of tax partnerships across Africa is setting the stage for long-term investment and economic growth. This collaborative approach between tax authorities and corporate taxpayers is critical for creating a stable and predictable environment that encourages business development. The discussions at the IFA Congress highlight the importance of continuing to harmonize tax control frameworks across jurisdictions, ensuring that tax administrations have the capacity to assess internal control systems effectively. As Africa continues to grow economically, these partnerships will play a key role in shaping the future of both taxation and investment across the continent.