Saturday, June 21, 2025
As African nations grapple with economic challenges and seek sustainable revenue sources, 2025 has witnessed the introduction of several new taxes and fiscal reforms aimed at bolstering government finances. From value-added tax (VAT) increases to digital transaction levies, these measures reflect a concerted effort to modernize tax systems and enhance compliance. Below is a detailed overview of the significant tax changes implemented across various African countries in 2025.
Kenya: Digital Platform Tax and VAT Changes
Kenya has introduced a range of new tax measures as part of the Finance Bill 2025. These measures aim to increase government revenue, especially from the growing digital economy, and strengthen the fiscal position.
Digital Platform Tax
One of the most notable new taxes in Kenya is the digital platform tax. This 1.5% tax applies to local digital platforms that offer services such as online jobs, rentals, food delivery, and ride-hailing. The government is keen to ensure that businesses operating in the digital space contribute to the national revenue, particularly as the sector grows.
This tax is expected to impact platforms such as Uber, Bolt, Jumia, and other local service providers operating within the digital economy. While this move is likely to increase the cost of services for consumers, it also opens up new revenue streams for the government.
VAT on Electric Vehicles and Solar Products
Another significant change involves the imposition of VAT on electric vehicles (EVs) and related products, such as electric bikes, buses, and solar batteries. This decision is part of a broader strategy to capture revenue from sustainable technologies. The new VAT is expected to increase the cost of solar batteries and electric vehicles, which could slow the adoption of green technologies in the short term. However, the long-term goal is to use the tax revenue to support infrastructure development and sustainable energy projects.
Significant Economic Presence (SEP) Tax
Kenya also introduced a Significant Economic Presence (SEP) tax of 6% for non-resident entities earning income through digital platforms operating within the country. The tax aims to capture revenue from foreign digital companies that benefit from the Kenyan market but do not have a physical presence in the country. The SEP tax has been a growing trend across many countries as governments seek to level the playing field for local businesses and ensure that international companies contribute their fair share to national economies.
Reactions and Modifications
While these measures are designed to increase government revenue, not all of them have been well-received. Following public backlash, the Kenyan government decided to remove a proposed VAT on essential food items and increased excise duties on products such as mobile money transfers and vegetable oils. Additionally, a proposed annual vehicle tax was withdrawn after widespread protests.
These changes demonstrate the balancing act that governments face when introducing new taxes. While the need for revenue is critical, policymakers must also consider the impact on the cost of living and public opinion.
South Africa: VAT Increases and Carbon Tax
South Africa, like many other African nations, has been under pressure to increase government revenue to address both social and economic challenges. As part of its 2025 fiscal reforms, South Africa introduced several new taxes that will directly affect both businesses and consumers.
VAT Increase
One of the most significant changes in South Africa’s 2025 tax structure is the increase in the VAT rate. From May 1, 2025, the VAT rate was increased by 0.5%, from 15% to 15.5%. The government has also outlined plans for a further 0.5% increase in April 2026, which would raise the VAT rate to 16%. This incremental increase is expected to generate substantial additional revenue for the South African government.
The VAT increase will affect a broad range of goods and services, from groceries to electricity bills, and will likely lead to higher prices for consumers. While the government has justified the hike by pointing to the need for increased public sector spending on health and defense, critics argue that the tax increase may exacerbate poverty and inequality in a country where many people already struggle to make ends meet.
Excise Duties
In addition to the VAT increase, South Africa has also raised excise duties on several products, including alcohol and tobacco. These increases are designed to curb consumption of harmful substances and raise revenue for the government. The higher excise duties will make alcohol and cigarettes more expensive, which may lead to changes in consumer behavior, especially in lower-income groups.
Carbon Tax
South Africa is also placing greater emphasis on environmental issues, and in line with global trends, it has increased the carbon tax rate. The tax, which is designed to incentivize companies to reduce their carbon emissions, will rise from R190 to R236 per tonne of carbon dioxide equivalent starting January 1, 2025. South Africa’s carbon tax is one of the highest in Africa, and it reflects the country’s growing commitment to addressing climate change.
While the carbon tax may raise costs for some industries, it is also expected to drive innovation and promote the use of cleaner technologies in sectors like mining, energy, and manufacturing.
Nigeria: VAT Increase and Oil Tax Reforms
Nigeria, Africa’s largest economy, has also made significant strides in fiscal reforms in 2025. The country’s government, faced with a burgeoning population and economic pressures, has introduced several new taxes aimed at increasing government revenue.
VAT Increase
Nigeria’s government has passed a new tax law that raises the VAT rate from 7.5% to 12.5%. This increase is expected to generate substantial revenue for the government and help fund social programs such as healthcare and infrastructure development. The VAT increase has sparked protests from businesses and consumers, who argue that the tax will increase the cost of living in an already struggling economy.
Despite these concerns, the Nigerian government has defended the move, emphasizing the importance of increasing revenue to support long-term economic growth. With a large informal economy, Nigeria’s tax base remains relatively small, and the VAT increase is seen as a crucial step in broadening the tax net.
Oil Law Amendments
Another significant tax reform in Nigeria is related to the country’s oil sector. The government has amended oil royalty and petroleum profit taxes. These changes are designed to make the oil sector more competitive, attract investment, and ensure that the Nigerian government receives a fair share of the profits generated by its natural resources.
The government has also moved to ensure that oil companies operating in the country pay their fair share of taxes, especially considering the enormous contribution the sector makes to the national economy. These reforms have been welcomed by industry stakeholders, although there remains some concern about the potential impact on foreign investment.
Rwanda: Excise Duties and Tourism Levy
Rwanda, known for its rapid economic growth and development in recent years, has introduced a number of tax reforms in 2025 to help maintain its trajectory. These reforms include increases in excise duties and a new tourism levy, which are part of a broader strategy to boost government revenue.
Excise Duties
Rwanda has raised excise duties on certain luxury goods such as cosmetics, gambling, and alcoholic beverages. The higher excise taxes are expected to have a minimal impact on lower-income groups but may affect wealthier consumers who purchase these products. The tax changes are designed to target goods that are often associated with high consumption among the more affluent segments of the population.
Tourism Levy
In addition to excise duty changes, Rwanda has introduced a tourism levy that will come into effect from July 1, 2025. This levy is aimed at generating revenue from the country’s growing tourism sector, particularly in the wake of the global recovery from the COVID-19 pandemic. The tourism levy will apply to international visitors, with the funds being used to support infrastructure development in key tourism areas.
Rwanda’s tourism sector is an important source of foreign exchange, and the levy is expected to further boost the country’s ability to fund large-scale development projects while ensuring that the benefits of tourism are distributed more equitably across the country.
Ghana: Abolition of Electronic Transaction Levy and Betting Tax
Ghana’s government has introduced tax changes in 2025 that reflect its broader goal of reducing the tax burden on citizens and stimulating economic activity.
Electronic Transaction Levy (E-Levy) Abolished
One of the most significant changes in Ghana’s tax system is the abolition of the E-Levy, a 1.75% tax on mobile money transactions that was introduced in 2022. The E-Levy was widely unpopular, particularly among the lower-income population, who rely heavily on mobile money for transactions. In 2025, the government decided to remove this tax as part of its efforts to reduce the tax burden on ordinary citizens.
Betting Tax Abolished
Similarly, the government has also abolished the betting tax, which had been implemented to capture revenue from the rapidly growing gambling industry in Ghana. This move is seen as part of the government’s effort to create a more favorable environment for businesses and promote economic growth.
These changes are likely to have positive effects on consumer spending and economic activity in Ghana, as the removal of these taxes provides individuals and businesses with more disposable income and reduces the cost of doing business.
Mali: Mining Tax Reforms
Mali, a major player in the African mining industry, introduced tax reforms in 2025 that are designed to increase revenue from the sector, which is one of the country’s most important economic drivers.
Mining Royalty Taxes
Mali has increased royalty taxes on mining companies from approximately 6% to 10.5%. The move is aimed at capturing a larger share of the profits from the country’s vast gold resources. Mali is one of Africa’s largest gold producers, and the increased tax rates reflect the country’s desire to generate more revenue from this lucrative sector.
Divestment Requirements
In addition to higher royalties, Mali has implemented divestment requirements for new mining projects. Mining companies will be required to divest at least 35% of their shares to local Malian investors. This policy aims to ensure that more of the wealth generated by the country’s natural resources remains in the hands of local businesses and individuals.
Botswana: Corporate and Individual Tax Increases
Botswana has also introduced significant tax changes in 2025, particularly in relation to corporate and individual income taxes.
Corporate and Individual Tax Increases
The government has increased the corporate tax rate from 22% to 23.5% and the individual tax rate from 25% to 26.5%. These increases are part of a broader strategy to ensure that Botswana’s tax system remains competitive while generating sufficient revenue to fund public services.
VAT on Digital Transactions
Botswana is also in the process of implementing VAT on digital transactions, which will be enforced in the coming years. This tax is expected to apply to digital services such as online purchases and mobile app downloads. The VAT on digital transactions is part of Botswana’s broader plan to modernize its tax system and increase revenue from the growing digital economy.
Zambia: New Tax Measures for Small Businesses and the Mining Sector
Zambia has also introduced new tax measures in 2025 aimed at small businesses and the mining sector.
Turnover Tax
Zambia has imposed a 5% turnover tax on small businesses that earn under K800 million per annum. This tax is aimed at informal businesses that are currently outside the formal tax system. By targeting small businesses, the government hopes to increase tax compliance and broaden the tax base.
Corporate Income Tax and Excise Duties
Zambia has also maintained its corporate income tax rate at 35%, with lower rates for specific sectors. Additionally, the government has suspended import taxes on mining equipment and machinery in an effort to attract investment to the mining sector.
The new tax measures introduced across Africa in 2025 reflect a broad trend of fiscal reform as governments seek to boost revenue and address economic challenges. From digital platform taxes in Kenya to excise duties and VAT increases in South Africa, these measures aim to strengthen national economies and provide the necessary funds to support public services and infrastructure development.
While some of these measures have been met with resistance, especially in the form of protests and public opposition, they reflect the growing recognition that taxation is a crucial tool for funding development in Africa. As these reforms are implemented, ongoing dialogue between governments, businesses, and citizens will be essential to ensure that the benefits of these tax changes are felt by all segments of society.
