9 things CFOs should know about tax in francophone Africa

In March CFO South Africa's principal sponsor KPMG brought a team of its most eminent tax experts from all corners of Africa to Johannesburg to speak to a gathering of CFOs during the Moving into Africa event in the Michelangelo Hotel in Sandton.

During the event, Louison Kiyombo, KPMG's Head of Tax and Legal in the Democratic Republic of Congo (DRC) spoke about the challenges, the peculiarities and the opportunities in countries like the DRC, Congo (Brazzaville), Ivory Coast, Senegal, Cameroon, Burkina Faso, Mali and Benin.

Here are 9 things CFOs should know about tax in francophone Africa.

  1. Firms like KPMG have to operate extra diligently in francophone countries, because French law says audit firms are not allowed to practice tax law.
  2. The accounting standard used in French-speaking African countries is GAAP and not IFRS.
  3. "English speaking business people always encounter problems, so always make sure you have a fluent French speaker with you," says Louison Kiyombo.
  4. The laws are not very sophisticated (yet). "We advise our clients, when the tax guy comes don't talk but give him tea and phone us," says Kiyombo.
  5. Tax inspectors have a lot of space for interpretation. Kiyombo: "In South Africa, if you use a mobile phone for business, you can use that for tax deductions. In countries like the DRC you might say 'I use this phone 100 percent for business', but the tax inspector says 'you are a liar, 30 percent is personal use'."
  6. Penalties for late payments or other offenses can be 20, 25, 50 or even 100 percent and on top of that there is interest, which doesn't stop until you pay everything.
  7. "Some lawyers bully their own clients into paying fines or penalties that are not based on law. They collude with magistrates. That is why it is important to have a personal advisor, like KPMG.
  8. There are tax incentives (see illustration on the right), but very few companies are using tax holidays.
  9. VAT has only started in the DRC in 2012. Kiyombo: "This is a learning process..."
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