ATAF launches new guide to help African nations’ tax high-net-worth individuals

The organisation pointed out that tax collection in many African countries remains low, especially among individuals. It said studies show that only about five per cent of Africa’s employed adult population pays Personal Income Tax, compared to about 50 per cent in richer countries.

ATAF also noted that more than 90 per cent of personal income tax revenues in many African countries come from people working in the formal sector, such as salaried employees, leaving out large amounts of income and wealth generated outside formal employment.

The body explained that across the world, governments are paying more attention to taxing wealthy individuals as part of efforts to make tax systems fairer and ensure that those with higher incomes pay their share. It added that many countries are already putting in place measures to address tax avoidance and improve compliance among high-income earners.

However, ATAF said the situation in Africa is different, as wealthy individuals still contribute relatively little to total tax revenues. According to ATAF Executive Secretary, Mary Baine, improving how high-net-worth individuals are taxed could help countries expand their tax base and generate more funds for development.

“Effective taxation of High-Net-Worth Individuals can assist African countries to broaden their tax base, improve equity within tax systems and mobilise the domestic resources needed to finance development priorities,” she said.

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ATAF explained that the new guide is based on findings from a study carried out in nine African countries, including Algeria, Eswatini, Kenya, South Africa, Tanzania, Togo, Uganda, Zambia, and Zimbabwe. The study examined current challenges and gaps in policies and administration that affect the taxation of wealthy individuals.

According to the organisation, the guide offers practical steps that countries can adopt, including how to properly define who qualifies as a high-net-worth individual within the African context. It also outlines policy options and administrative systems that can help tax authorities better track and manage compliance among wealthy taxpayers.

The publication further encourages the use of modern technology and data analysis tools to identify high-income individuals and monitor their tax obligations more effectively.

ATAF added that beyond technical measures, there is also a need to address political and institutional issues that may affect the success of such reforms. It stressed that strong support from government leaders, including ministers and top political authorities, is important to ensure that policies targeting wealthy taxpayers are successfully implemented and sustained.