“South Africa is being seen as a headquarter [for] companies – they have special regulations for that. People are more interested in using those to go into Africa because of, for example, the big Africa treaty network that South Africa has,” senior manager for international tax at PricewaterhouseCoopers (PwC) Jelle Keijmel told CNBC Africa.
“What we typically do is reach out to our local offices in countries – we have a big network in Africa which we leverage from. A lot of South African companies are going into Africa but also from outside of South Africa.”
Keijmel believes that Africa, as a whole, is a continent of opportunity but that there are challenges. One of those challenges is tax which, according to a survey by PwC, is the second-most significant threat for companies doing business in Africa, after political instability.
“What we see is that a lot of the countries remain the same in terms of being difficult. Tax is becoming a much more interesting topic for business – a very significant item on the agenda of businesses when deciding when to go into Africa,” he explained.
“Tax burden is the biggest threat so you need to account for it. Certainty around tax positions is very important and you’ll see that a lot of companies don’t have that sort of certainty.”
As it stands, Mozambique, Nigeria and the DRC pose the most difficult tax challenges. In South Africa however, exchange controls have become the biggest hindrance when doing business.
“South Africa is mentioned a lot in being a very difficult country from a business perspective primarily, and I think exchange control is majority of where it’s coming from,” Keijmel indicated.
“If you look to the survey, you must account for the fact that a lot of South African companies were interviewed or at least have a basis in South Africa, so they were mentioned frequently.”