10 Countries with the lowest taxes in Africa

This article will speak about the lowest tax countries in Africa. For any questions, or if you are looking to invest, you can contact me using  this form, or use the WhatsApp function below.

Introduction:

There are 54 countries in Africa and all these countries tax individuals with different tax rates. Given below are the tax rates of all the countries in Africa.

  • Nigeria – 7% to 24%
  • Ethiopia – 35%
  • Egypt – 0% to 22.5%
  • DR Congo – 3% to 40%
  • Tanzania – 0% to 30%
  • South Africa – 18% to 45%
  • Kenya – 10% to 30%
  • Uganda – 0% to 40%
  • Algeria – 0% to 35%
  • Sudan – 15%
  • Morocco – 0% to 38%
  • Angola – 0% to 17%
  • Mozambique – 10% to 32%
  • Ghana – 0% to 30%
  • Madagascar – 20%
  • Cameroon – 11% to 38.5%
  • Côte d’Ivoire – 60%
  • Niger – up to 60%
  • Burkina Faso – 25%
  • Mali – 3% or 30%
  • Malawi – 0% to 30%
  • Zambia – 0% to 37.5%
  • Senegal – 0% to 40%
  • Chad – 0% to 30%
  • Somalia – 0%
  • Zimbabwe – 0% to 40%
  • Guinea – 0% to 35%
  • Rwanda – 0% to 30%
  • Benin – 0% to 30%
  • Burundi – 0% to 30%
  • Tunisia – 1% to 36%
  • South Sudan – 0% to 15%
  • Togo – 0.5% to 35%
  • Sierra Leone – 0% to 30%
  • Libya – 5% and 10%
  • Congo – 1% to 40%
  • Liberia – 0% to 25%
  • Central African Republic – up to 50%
  • Mauritania – 15% to 40%
  • Eritrea – 2%
  • Namibia – 0% to 37% (+ 429,000 NAD)
  • Gambia – 0% to 25%
  • Botswana – 0% to 25% (+ BWP 13,050)
  • Gabon – 0% to 35%
  • Lesotho – 20% and 30%
  • Guinea-Bissau – N/A
  • Equatorial Guinea – 0% to 35%
  • Mauritius – 15%
  • Eswatini – SZL 47,500 + 33% of the income that is taxable
  • Djibouti – 2% to 30%
  • Comoros – 0% to 30%
  • Cabo Verde – 16.5% to 27.5%
  • Sao Tome & Principe – N/A
  • Seychelles – 0% to 30%

Depending on the lowest marginal tax rates that are imposed on individuals while excluding the highest marginal tax rates that can be charged, the countries with the lowest tax rates in Africa are as follows:

  • Somalia – 0% (standard tax rate).
  • South Sudan – 0%, while the highest tax rate that can be imposed is 15%.
  • Angola – 0%, while the highest tax rate that can be imposed is 17%.
  • Egypt – 0%, while the highest tax rate that can be imposed is 22.5%.
  • Liberia – 0%, while the highest tax rate that can be imposed is 25%.
  • Gambia – 0%, while the highest tax rate that can be imposed is 25%.
  • Botswana – 0%, while the highest tax rate that can be imposed is 25% plus BWP 13,050.
  • Ghana – 0%, while the highest tax rate that can be imposed is 30%.
  • Malawi – 0%, while the highest tax rate that can be imposed is 30%.
  • Chad – 0%, while the highest tax rate that can be imposed is 30%.
  • Rwanda – 0%, while the highest tax rate that can be imposed is 30%.
  • Benin – 0%, while the highest tax rate that can be imposed is 30%.
  • Burundi – 0%, while the highest tax rate that can be imposed is 30%.
  • Sierra Leone – 0%, while the highest tax rate that can be imposed is 30%.
  • Nigeria – 0%, while the highest tax rate that can be imposed is 30%.
  • Gabon – 0%, while the highest tax rate that can be imposed is 35%.
  • Algeria – 0%, while the highest tax rate that can be imposed is 35%.
  • Equatorial Guinea – 0%, while the highest tax rate that can be imposed is 35%.
  • Namibia – 0%, while the highest tax rate that can be imposed is 37% plus NAD 429,000.
  • Zambia – 0%, while the highest tax rate that can be imposed is 37.5%.
  • Morocco – 0%, while the highest tax rate that can be imposed is 38%.
  • Zimbabwe – 0%, while the highest tax rate that can be imposed is 40%.
  • Guinea – 0%, while the highest tax rate that can be imposed is 40%.
  • Senegal – 0%, while the highest tax rate that can be imposed is 40%.
  • Uganda – 0%, while the highest tax rate that can be imposed is 40%.
  • Togo – 0.5%, while the highest tax rate that can be imposed is 35%.

The countries that have been listed above have the lowest tax rates, which is around 0% to 0.5%. However, it is only applicable up to a certain amount of income that has been earned.

To avoid confusion that the tax rates provided above are the lowest rates, we have also provided you with the highest marginal tax rates that can be applicable to an individual based on their income bracket.

Now, we will come to details of the countries that impose the lowest tax rates on individuals on the basis of the highest tax rates that can be levied.

Given below are the tax rates of the 10 countries that impose the lowest possible tax rates on individuals as per the highest marginal tax rates. It should be noticed that this evaluation is done on the basis of personal income tax rates.

  1. Somalia – 0%
  1. Eritrea – 2%
  1. Libya – 5% and 10%
  1. Mauritius – 10% and 15%
  1. South Sudan – 0% to 15%
  1. Sudan – 0% to 15%
  1. Angola – 0% to 17%
  1. Madagascar – 20%
  1. Egypt – 22.5%
  1. Burkina Faso – 25%
  1. Somalia:

Somalia happens to be the best example of a tax haven, which usually makes it easy for the people who want to live a lavish lifestyle nearby beaches. 

However, it won’t be considered the best option for people to move because of many years of civil war, a higher rate of crime which involves murders, kidnappings, and general disturbance.

As the government failed to control these types of issues, there is no income tax imposed on the individuals. 

The safest place (or rather said as least dangerous than other parts) in Somalia is Hargeisa, which is the capital and has a population of 760,000.

Locals can be friendly yet there have been certain incidents in which there have been threats of violence made against foreigners that came to live there or tourists.

There are no traffic lights, street signs, streetlights, etc., and men can’t wear shorts while women can’t wear shorter dresses. It is not much of a tourist destination either. 

Other taxes in Somalia – Given below are some other taxes, which are imposed on individuals and companies in Somalia.

Sales tax – 5%

Corporate tax – 35%

Withholding taxes (WHT):

Dividends – 5% or 15% or 35%

Interest – 10% or 35%

Social Security Contributions – No mandatory regime.

  1. Eritrea:

The tax rate imposed on individuals, whether they are residents or non-residents, is 2% and it is a flat rate. 

These tax rates are usually subject to change and are reviewed by the country’s government on an annual basis.

Other taxes – Given below is the information about other taxes that are applicable to individuals and companies in Eritrea.

Corporate tax – The corporate tax imposed on all profits in Eritrea is 34%, which consists of a 30% corporate income tax and a 4% municipal tax. 

Companies and business entities involved in the petroleum business are imposed with a tax rate of 35%. Branches, on the other hand, pay taxes at a rate of 34%.

Capital gains – Capital gains are also imposed with a standard corporate tax rate of 34%.

VAT – There is no specified value-added tax in Eritrea, however, a general service tax with a tax rate varying between 5% to 12% is applicable.

Withholding taxes (WHT): 

Dividends – 0%

Interests – 10%

Royalties – 5%

Social Security Contributions – Usually, social security contributions are to be made by employers at a rate of 4% on behalf of their employees. Eritrea hasn’t introduced a social security system until now.

  1. Libya:

Libya has an income tax imposed on individuals at two different rates. 

On the taxable income of up LYD 12,000 (LYD 1,000 per month), the tax rate is 5%.

On the taxable income of more than LYD 12,000 (more than LYD 1,000 per month), the tax rate is 10%.

Additionally, there is a Jehad tax, which is also applicable to the taxable income of an individual. 

If the income does not exceed LYD 50 per month, then the jehad tax is imposed at a tax rate of 1%.

If the income does not exceed LYD 100 per month, then the jehad tax is imposed at a tax rate of 2%.

If the income exceeds LYD 100 per month, then the jehad tax is imposed at a rate of 3%.

Along with these, an additional tax is imposed on Palestine nationals at a rate of 7% on the income earned.

Other taxes – Given below is the information about other types of taxes imposed on individuals and companies in Libya.

Corporate tax – companies and other business entities are imposed with a CIT (Corporate Income Tax) at a tax rate of 20%. 

Additionally, a surtax is imposed in Libya at a tax rate of 4%. Capital gains are also taxed at the same CIT rate of 24%. 

There is also a Jehad tax that is levied on all the taxable corporate profits at a flat rate of 4%.

VAT – There is no value-added tax imposed on individuals and companies in Libya.

Withholding tax – There are no withholding taxes imposed in Libya, excluding the interest paid on bank deposits. For interest on bank deposits, the WHT is levied at a rate of 5%.

Social Security Contributions – Both employers and employees are required to pay social security contributions.

The employer has to contribute 11.25% (of the gross salary) in the case of a foreign company or 10.5% (of the gross salary) in the case of a Libyan company.

On the other hand, employees are required to contribute an amount of 3.5% of their gross salary.

  1. Mauritius:

Individuals are imposed with income tax at a tax rate of 15%, while there is also a reduced rate of 10% imposed on individuals who do not earn more than MUR 650,000. 

Moreover, people who earn more than MUR 3.5 million are imposed with a solidarity levy of 5% additionally.

Taxable income for income tax purposes includes income earned from employment, pensions, income from a trade or professional service, rent, and interest.

Other taxes – Given below are other types of taxes that are levied on individuals and companies in Mauritius.

Corporate tax – The companies and business entities operating within Mauritius are charged with a CIT rate of 15%. Companies that are involved in the export of goods are subject to a tax of 3% on the taxable income traced back to exports.

Capital gains – There is no capital gains tax levied in Mauritius.

Withholding tax – Given below are the withholding tax rates imposed on individuals as well as companies in Mauritius. 

Dividends – 0%

Interest – 0% for companies and 15% for individuals.

Royalties – 10%

VAT – A value-added tax is imposed on the supply of goods and provision of services at a tax rate of 15%. Certain types of goods and services are exempt from VAT in Mauritius.

Social Security Contributions – Employers are required to contribute 6% as National Pension Fund (NPF), 2.5% as National Solidarity Fund (NSF), and 1.5% as Human Resource Development Council levy of the monthly basic salary.

On the other hand, employees must contribute 3% as NPF and 1% as NSF of the monthly basic salary.

  1. South Sudan:

The people who earn up to SSP 600 are exempt from income tax. For taxable income ranging between SSP 601 to SSP 5,000 the tax rate is 10% and for more than SSP 5,000 is taxed at a rate of 15%.

Employment income in South Sudan is taxable unless it is exempt under some special conditions. Salaries, bonuses, commissions from employment, income from temporary contracts, pensions, etc., are considered as taxable income.

Other taxes – Give below is the information of other types of taxes imposed on individuals and companies in South Sudan.

Corporate tax – The corporate income tax rates vary from 10% to 25% in South Sudan on the basis of the revenue of a specific company or a business entity.

Small businesses, where the revenue is less than SSP 1 million, are taxed at a CIT rate of 10%.

Medium-sized businesses, where the revenue ranges between SSP 1 million and SSP 30 million, are taxed at a CIT rate of 20%.

Large businesses, where the revenue exceeds an amount of SSP 30 million, are taxed at a CIT rate of 25%.

Additionally, companies involved in businesses related to trading and manufacturing are imposed with a tax rate of 28%. Companies involved in businesses related to oil are taxed at a rate of 30%.

Mining companies are taxed at a rate of 15% and Telecommunication companies are taxed at a rate of 20%.

Withholding taxes (WHT) – Given below are withholding taxes applicable to individuals in South Sudan.

Dividends – 10%

Interest – 10%

Royalties – 10%

Rent – 20%

VAT – Instead of a traditional VAT, South Sudan imposes a sales tax on manufacturers, importers, and service providers at a standard tax rate of 20%.

Social Security Contributions – Employers are required to contribute an amount equal to 17% of an employee’s monthly basic salary (capped).

  1. Sudan:

The income tax rate imposed on individuals in Sudan varies from 0% to 15% on the basis of the taxable income that has been earned. It is as follows:

  • For taxable income up to SDG 3,000, the tax rate is 0%. 
  • For taxable income ranging between SDG 3,000 to SDG 6,000, the tax rate is 5%.
  • For taxable income ranging between SDG 6,000 to SDG 10,000, the tax rate is 10%.
  • For taxable income more than SDG 10,000, the tax rate is 15%.

All sorts of employment income in Sudan is considered taxable income unless it is specifically exempt. Business profits, income from trade, income from a profession, income from lease, and income from investments are also taxable.

Other taxes – Given below are the taxes that are imposed on individuals and companies in Sudan.

Corporate tax – The corporate income tax in Sudan is levied on companies on the basis of business activity, and the CIT rate varies from 0% to 35%.

The CIT rate is 0% for agricultural activities, 10% for industrial activities, 15% for commercial activities, 30% for banks & tobacco-related activities, and 35% for oil and gas activities.

Capital gains – The rates for capital gains tax in Sudan are 5% on the sale of real estate property, 2.5% on the sale of vehicles, and 2% on the sale of shares, bonds, securities, etc.

Value-added tax (VAT) – The standard rate for VAT in Sudan is 17% on the supply of goods and provision of services.

Withholding tax (WHT) – given below are the withholding taxes imposed in Sudan.

Dividends – 0%

Interest – 15%

Royalties – 15%

Others – 5% or 7% or 15%

Social Security Contributions – Employers must make a contribution of 17% of the monthly salary of an employee and employees must contribute 8% of their monthly salary.

  1. Angola:

On the basis of the specific type of income earned by an individual, the income tax is imposed. There are three specific groups, according to which the tax rates are imposed. 

Group – A: Under this category are the people usually earning money from employment. The income tax is levied as per the progressive rates for this category of people.

The tax is exempt for taxable income up to AOA 34,450. The highest marginal tax rate is 17% plus AOA 25,750 for the people earning more than AOA 230,001. In between these two rates, there are some other marginal rates.

Group – B: Under this category are the people usually earning money from self-employment. These types of people are taxed at a flat rate of 15%.

Actually, this 15% tax rate is only applicable to the 70% income of a self-employed individual. This results in an effective rate of 10.5% when calculated as per the calculation done on 100% of the income.

Group – C: Under this category are the people usually earning money from industrial or commercial activity. For the income earned by these types of people, the rates are 30% or 6.5%.

Individuals with organized accounting and the number of profits confirmed in the minimum profits table are taxed at a tax rate of 30%.

A tax rate of 6.5% is applicable to a certain category of people that are involved in industrial or commercial activity.

Other taxes – Given below are the other taxes imposed on individuals and companies in Angola.

Corporate tax – The current rate for Corporate Income Tax is 30%.

Value-added tax (VAT) – The tax rate for VAT in Angola is 14%.

Social Security Contributions – Employers in Angola must contribute 8% of the gross income of an employee and employees must contribute 3%.

  1. Madagascar:

IRSA (Salary Income Tax) – For an income up to MGA 350,000 earned by an individual as a salary, then the income tax that has to be paid is MGA 2,000. If the taxable income exceeds MGA 350,000, then the tax rate is 20% with a minimum tax of MGA 2,000.

IR (Individual Business Income Tax) – the IR rate is 5% for an individual having an annual turnover of less than MGA 200 million. 

Individual business having a turnover of more than MGA 200 million is taxed as per the corporate income tax rates.

Other taxes – Given below are the other taxes imposed on individuals and companies in Madagascar.

Corporate tax – The tax rate for a business entity or company having an annual turnover of more than MGA 200 million is 20%.

Value-added tax – The rate for value-added tax in Madagascar is 20%, while the VAT rate for exports is 0%.

Social Security Contributions – Employers must contribute 13% to NPF and 5% to the Statutory Health Organization. These contributions must be made at least 8 times the monthly maximum salary of an employee.

Employees must contribute 1% to NPF and 1% to the Statutory Health Organization. These contributions must be made at least 8 times the monthly maximum salary.

  1. Egypt:

Individuals are exempt from income tax in Egypt if the taxable income earned by them is up to EGP 8,000. For individuals earning more than EGP 200,000, the income tax rate is 22.5%.

If the income earned lies in between the above-mentioned income brackets, then the individuals are taxed as per the marginal tax rates.

Other taxes – Given below is the information about other taxes imposed on individuals and corporations in Egypt.

Corporate tax – The corporate income tax rate for the companies and business entities in Egypt is 22.5%.

The branch tax rate is 22.5% along with an additional 5% taxed as a branch remittance tax.

Capital gains – The rate for capital gains is 10% and can be taxed as per the progressive rates up to a tax rate of 22.5%.

Withholding tax (WHT) – given below are the withholding tax rates imposed in Egypt.

Dividends – 5% or 10%

Interest – 0% or 20%

Royalties – 3%

Value-added tax (VAT) – The standard rate for VAT is 14% in Egypt and the reduced rate varies on the specific types of goods and services.

Social Security Contributions – Employers must contribute 18.75% in Egypt as Social Security Contribution and employees are required to contribute 11%.

  1. 10.Burkina Faso:

People who earn an income that does not exceed XOF 30,000 are exempt from individual income tax. The highest marginal tax rate is 25% for individuals who earn more than XOF 250,000.

People who earn income in between XOF 30,000 and XOF 250,000 are taxed as per the income brackets and their marginal tax rates.

Other taxes – Given below are other types of taxes imposed on individuals and companies in Burkina Faso.

Corporate tax – The usual rate for corporate income tax in Burkina Faso is 27.5% and applicable to all types of business profits.

Additional branches are taxed with a withholding tax of 12.5%, which is applicable to 75% of the branch’s total corporate income.

Capital gains – capital gains tax is imposed only on 50% of the profits earned as capital gains.

Withholding taxes (WHT) – given below are the withholding taxes imposed in Burkina Faso.

Dividends – N/A

Interests – 6% and 25%

Value-added tax (VAT) – The standard rate for VAT in Burkina Faso is 18% and is exempt on some specific types of goods and services.

Social Security Contributions – Employers in Burkina Faso are required to contribute an amount of 16% and employees must contribute 5.5%.

Bottom line:

These are the countries in Africa that are known to have comparatively lower tax rates. The rates might differ by the time you read this article, yet, these are accurate by the time of writing this article. 

That being said, we hope that you were successful in finding the relevant information in this article for which you have been searching. 

If you plan to move to another country, we can help with the second passport or permanent residency process.

Moreover, if you are looking for a financial advisor to guide you with your investments or if you want a wealth manager to look after your assets, you can avail of the expert services offered by us.

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