African and OECD TP updates: March 2025

OECD updates

OECD: Tax Administration 2024 released

This report marks the 12th edition of the OECD’s Tax Administration Series, offering the following:

• Comparative international data on various aspects of tax systems and their administration in 58 advanced and emerging economies;
• It serves as a resource for tax administration analysts, helping them understand how tax systems are designed and managed across different jurisdictions to facilitate cross-border comparisons; and
• Assists to identify best practices.

The report was published on 13 November 2024.

OECD: Revenue Statistics 2024

This annual publication provides a conceptual framework to define which government receipts should be regarded as taxes. It presents a unique set of detailed and internationally comparable tax data in a common format for all OECD countries from 1965 onwards. This year’s edition includes a special feature on health taxes across OECD countries.

OECD Eighth Annual Peer Review reports on the exchange of information on tax rulings

The OECD’s “Harmful Tax Practices – 2023 Peer Review Reports on the Exchange of Information on Tax Rulings” evaluates the transparency frameworks of various jurisdictions, including several African nations. The report assesses the effectiveness of these countries in exchanging tax rulings to combat harmful tax practices. Key findings indicate that while some African jurisdictions have made significant progress in implementing the necessary frameworks for information exchange, others still face challenges in meeting OECD standards. The report emphasises the importance of continued efforts to enhance transparency and cooperation in tax matters across the continent.

In addition to the peer review reports, the OECD has released several updates pertinent to transfer pricing in Africa. These include guidance on the application of the arm’s length principle in the context of the COVID-19 pandemic, which addresses challenges faced by multinational enterprises and tax administrations. Furthermore, the OECD has provided insights into the taxation of the digital economy, offering recommendations that are particularly relevant for African countries adapting to the evolving global tax landscape.

These developments underscore the OECD’s commitment to assisting African nations in aligning with international tax standards and improving their transfer pricing practices.

Key findings include:

Volume of tax rulings:

By 31 December 2023, over 26,000 tax rulings falling within the transparency framework had been issued across the reviewed jurisdictions. In 2023 alone, more than 1,900 such rulings were issued.

Information exchange activity:

Since the framework’s inception, over 58,000 exchanges of tax ruling information have taken place. In 2023, approximately 4,000 exchanges were conducted, following annual trends ranging from 5,000 to 14,000 exchanges in prior years.

Compliance and recommendations:

• 104 jurisdictions met all transparency requirements and received no recommendations.
• Nine jurisdictions received only one recommendation.
• A total of 56 recommendations for improvement were issued for 2023.

Peer input and process improvements:

• 83 peer input questionnaires were submitted, providing valuable feedback on how tax ruling exchanges are conducted.
• Although peer input is voluntary, it has helped some jurisdictions refine their processes and improve the clarity and quality of exchanged information.
• The review process has also enabled jurisdictions to identify areas for improvement and implement changes in 2024. However, these adjustments will only be assessed in subsequent reviews.

Access the full report here.

OECD updates ICAP risk assessments documentation package

The OECD has updated the Main Documentation Package requirements for multinational enterprises (MNEs) participating in the International Compliance Assurance Programme (ICAP), simplifying the process by removing the requirement for a Country-by-Country Reporting (CbCR) self-assessment.

Key updates:

• New templates published:
  • Main Documentation Package – Checklist
  • Covered Transactions Schedule
• Main Documentation Package requirements:
  • Updates to previously submitted documents.
  • Covered Transactions Schedule detailing key transaction information.
  • Transfer pricing Local Files (or equivalent).
  • Audited consolidated financial statements.
  • MNE group’s tax strategy and tax control framework (if documented).
  • Value chain analysis explaining profit drivers.
  • Permanent establishment documentation.
• Covered Transactions Schedule includes:
  • Transaction parties, tax IDs, and tax residence.
  • Descriptions, values, and transfer pricing methods.
  • Benchmarking ranges and APA coverage.
  • Changes in transactions across covered periods.
• Simplified application process: The removal of the CbCR self-assessment requirement reduces compliance burdens for MNEs.

Implications:

• The update clarifies ICAP’s documentation expectations, aiding companies considering participation.
• Tax certainty mechanisms like ICAP and joint audits are becoming more relevant, particularly in the context of Pillar Two global minimum tax implementation.

 

Release of compilation of qualified legislation and information filing and exchange tools

In January 2025, the OECD released a compilation of qualified legislation and information filing and exchange tools. These provide new guidance on Pillar 2 GloBE rules, including clarifying how jurisdictions must calculate an MNE’s tax liability based on local legislation. These calculations may differ from those under OECD model rules due to jurisdictional variations and priority rules. The guidance also sets requirements for completing the Globe Information Return (GIR), mandating separate reporting of differences between OECD model rule calculations and local tax rules.

MNEs must carefully track Pillar 2 implementation across jurisdictions, apply safe harbours, and ensure correct sequencing of calculations (e.g., QDMTT before IIR or UTPR). The OECD guidance emphasises the need for a systematic approach to reporting and tax compliance under Pillar 2.

Read the release here.

 

Pillar One update: progress on implementation

The OECD has published an update from the Co-Chairs of the BEPS Inclusive Framework on the progress made in developing a final package for Pillar One of the two-pillar solution to address the tax challenges arising from the digitalisation of the economy. The final package includes a multilateral convention (MLC) to implement Amount A and a framework for Amount B.

Amount A

Amount A reallocates taxing rights over a share of residual profits of large multinational enterprises (MNEs) to market jurisdictions. The MLC, released in October 2023, was refined in early 2024 to clarify the treatment of digital services taxes (DSTs), introduce election provisions for non-state jurisdictions, and adjust profit allocation mechanisms. In June, the revised text was submitted for adoption, with only one member objecting due to unresolved issues with the Amount B framework.

Amount B

Amount B simplifies the application of the arm’s length principle to marketing and distribution activities, particularly benefiting low-capacity countries. A voluntary version was added to the OECD Transfer Pricing Guidelines in February 2024, but discussions continue around making it mandatory under the MLC. Key outstanding issues include the relationship between Amount B and the MLC, dispute resolution filters, an optional qualitative test, and concerns over the pricing matrix.

While significant progress has been made, final consensus on Amount B is still required before full adoption and implementation of Pillar One.

 

Public consultation on ring-fencing mining income

The OECD and the Intergovernmental Forum on Mining (IGF) invited public comments on a new toolkit designed to help developing countries address tax policy and administration challenges related to ring-fencing mining income. The comments have been published and are available for download here.

Background
For resource-rich developing countries, mining presents a major revenue opportunity, but tax base erosion and profit shifting (BEPS) threaten these potential earnings. The OECD and IGF have partnered to provide guidance on key BEPS risks in the mining sector, combining IGF’s industry expertise with the OECD’s tax knowledge.

Ring-fencing rules isolate income from specific mining projects to prevent companies from offsetting costs and revenues across multiple operations, which can delay government revenues and erode the tax base. This toolkit explains the benefits and risks of ring-fencing, offers practical policy recommendations, and outlines implementation challenges based on international experience.

Report on revenue statistics in Africa 2024

The latest edition of Revenue Statistics in Africa provides internationally comparable data on tax and non-tax revenues for 36 African countries, including Mozambique, Somalia, and Zambia for the first time. This initiative helps track domestic resource mobilization efforts and informs tax policy design across the continent, supporting global and regional development goals.

Tax revenues

In 2022, the average tax-to-GDP ratio across the 36 countries was 16.0%, marking a 0.5 percentage point (p.p.) increase from 2021. While this reflects a steady post-pandemic recovery, Africa’s tax-to-GDP ratio remains below those of Asia and the Pacific (19.3%), Latin America and the Caribbean (21.5%), and OECD countries (34.0%).

Key trends in 2022:

• Tax-to-GDP ratios ranged from 2.6% in Somalia to 33.5% in Tunisia.
• 23 countries saw increases in their tax-to-GDP ratio, with the largest gains in Chad (+3.3 p.p.) and the Democratic Republic of the Congo (+3.6 p.p.), driven by higher corporate income tax revenues from the extractive sector.
• The biggest declines occurred in Mali and Sierra Leone (-1.9 p.p.), largely due to reduced tax revenues from goods and services.
• Corporate income tax revenues rose by 0.4 p.p. on average, benefiting from higher commodity prices in the oil and gas sector.
• Over the past decade (2013–2022), Africa’s average tax-to-GDP ratio increased by 1.1 p.p., reflecting sustained efforts to strengthen fiscal systems. Taxes on goods and services remained the primary revenue source, accounting for 51.3% of total tax revenues, with VAT contributing 27.0%.

Non-tax revenues

In 2022, non-tax revenues averaged 6.2% of GDP across 35 reporting countries, with notable variations:

• South Africa had the lowest non-tax revenue at 0.7% of GDP, while the Republic of the Congo recorded the highest at 23.7%.
• Non-tax revenues exceeded 10% of GDP in five countries, including Botswana, Lesotho, and Namibia, where Southern African Customs Union (SACU) transfers were a major source.
• Increased oil and gas royalties, interest, and dividends contributed to the overall rise in non-tax revenues (+0.4 p.p.), though SACU revenues declined.
• Between 2013 and 2022, non-tax revenues fell by 1.1 p.p. of GDP, largely due to declining grants and SACU revenues, highlighting ongoing fiscal challenges despite rising tax revenues.

Facilitation and trust in tax compliance

A special feature in this edition, authored by ATAF, explores how improving tax administration and public trust can enhance voluntary tax compliance. Digitalization and taxpayer education initiatives are driving improvements, but greater investment is needed to automate tax systems and ensure transparency in the use of tax revenues.

Read the full report here.

 

Kenya deposits ratification instrument for BEPS MLI

On 8 January 2025, Kenya deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI will enter into force for Kenya on 1 May 2025, although its entry into force for Kenya’s covered agreements (tax treaties) will depend on the ratification of the MLI by the counterparty to a particular covered agreement.

The MLI will generally enter into force for a particular covered agreement on the first day of the month following a three-month period after both parties to the covered agreement have deposited their ratification instrument. Once in force, the provisions of the MLI will generally apply for a covered agreement from 1 January of the year following its entry into force in respect of withholding taxes. The MLI will generally apply for all other taxes with respect to taxable periods beginning on or after the expiration of a 6-month period following the date of entry into force.

Access Kenya’s definitive list of reservations and notifications made upon deposit of the ratification instrument.

 

Nigeria issues APA guidelines

Nigeria’s Federal Inland Revenue Service (FIRS) has issued Information Circular No. 2024/006, outlining new Guidelines on Advance Pricing Agreements (APAs), effective from 1 January 2025. The guidelines provide a framework for unilateral, bilateral, and multilateral APAs, detailing eligibility, the application process, and compliance requirements.

Key highlights:

• Eligibility thresholds:
  • USD 10 million per year for a single controlled transaction.
  • USD 50 million per year for a group of controlled transactions.
• Five-stage APA process:

• • Pre-filing meeting
  • Formal application
  • Analysis and evaluation
  • Negotiation and agreement
  • Drafting, execution, and monitoring

• Costs:
  • Non-refundable application fee: USD 20,000 (payable after pre-filing).
  • Renewal fee: USD 5,000.
  • Any additional costs incurred by FIRS must be reimbursed.
• Timelines:
  • Unilateral APAs: 24 months to conclude.
  • Bilateral/multilateral APAs: 36 months to conclude.

Papua New Guinea signs multilateral agreement on exchange of financial account information

According to an update from the OECD, Papua New Guinea signed the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (CRS-MCAA) on 26 November 2024. Papua New Guinea intends to begin the automatic exchange of financial account information under the Common Reporting Standard by September 2027.

South Africa introduces Pillar 2 Global Minimum Tax from 2024

South Africa Published the Global Minimum Tax Act 2024 (Act No. 46 of 2024) in the Official Gazette on 24 December 2024. The Act provides for the introduction of the Pillar 2 Global Anti-Base Erosion (GloBE) Rules in South Africa. South Africa’s implementation of the rules includes an Income Inclusion Rule and a Domestic Minimum Top-up Tax. It does not include an Undertaxed Payments/Profits Rule. The Act is deemed to have come into operation on 1 January 2024 and applies to fiscal years beginning on or after that date.

Note that measures for the administration of the Global Minimum Tax Act are provided by the Global Minimum Tax Administration Bill, which has not yet been enacted/published. This is expected soon.