Q&A: Tax disputes in Africa
October 2026 | SPECIAL REPORT: CORPORATE TAX
Financier Worldwide Magazine
October 2026 Issue
FW discusses tax disputes in Africa with Dominic Stuttaford at Norton Rose Fulbright, Elle-Sarah Rossato at PwC South Africa and Jashwin Baijoo at Tax Consulting South Africa (Pty) Ltd.
FW: How would you characterise the overall direction of tax dispute activity across Africa in recent years? What are the most significant changes and challenges multinational businesses should be aware of?
Stuttaford: It is hard to generalise on the overall direction of tax dispute activity as Africa is not one jurisdiction. Tax authorities and courts in different countries often take very different approaches to the same conceptual issues. However, the overall direction of travel is that tax authorities are becoming more active about enforcement, with the result being that dispute activity is very much increasing. This is both for purely domestic issues as well as international transactions. As far as multinational enterprises (MNEs) are concerned, many historic structures which have been used for investment into Africa are likely to come under increasing scrutiny, if they are not robust. This is something that should be increasingly monitored – treaties are changing both on a bilateral and multilateral basis and jurisdictions are introducing domestic provisions that seek to cut across or limit treaty protection. Equally, companies should ensure that their local tax function is well-equipped to deal with the day-to-day challenges of routine tax compliance. Both these areas are likely to come under the microscope, especially at the time of any change in ownership or control, both from an incoming buyer or investor and the tax authority. At such time, the tax authority is likely to seek to tax any growth in the value of the underlying assets or investments.
Rossato: Tax dispute activity across Africa has intensified, driven by fiscal pressures and revenue authorities’ efforts to maximise domestic collections. Transfer pricing (TP) remains the primary area of contention, with heightened scrutiny of cross‑border intragroup transactions, M&A structuring and sector‑specific issues such as bad debt deductibility in financial services. Revenue authorities are deploying advanced analytics and specialised audit teams to target perceived risks more effectively. South Africa is emblematic of these trends. The South African Revenue Service (SARS) is committed to the Organisation for Economic Co-operation and Development’s (OECD’s) Tax Administration 3.0 vision, seeking to embed compliance into routine economic activity through greater use of data and automation, while the general anti‑avoidance rule has become a central litigation theme following several favourable court decisions in favour of SARS. Regionally, dispute prevention is gaining traction through new advance pricing agreement (APA) regimes in Kenya, Nigeria and South Africa, alongside the implementation of Pillar Two measures that add further complexity to multinational tax planning.
Baijoo: Cross-border tax compliance is becoming an increasingly important governance issue for MNEs and foreign digital businesses operating in South Africa. As international tax transparency continues to evolve, the SARS, for one, has intensified its focus on value added tax (VAT) compliance, TP governance and cross-border reporting obligations. The trend reflects broader efforts by African revenue authorities to protect their tax bases while aligning domestic legislation with global standards aimed at addressing base erosion and profit shifting (BEPS). For example, the Ghana Revenue Authority has become increasingly proactive in conducting targeted tax audits and investigations, especially for large taxpayers and MNEs. TP has become one of the most significant sources of tax disputes, particularly where taxpayers are unable to demonstrate that related-party transactions comply with the arm’s length principle or where documentation is incomplete or inconsistent.
“Many African tax administrations have invested significantly in specialist TP units, resulting in more sophisticated audits and greater scrutiny of cross-border related-party transactions.”
FW: To what extent are revenue authorities becoming more sophisticated in their audit techniques, use of data-driven insights and automatic exchange of information, and enforcement strategies? How is that changing the nature of disputes?
Rossato: Revenue authorities across Africa are becoming more sophisticated, leveraging data analytics, common reporting standard (CRS) frameworks for automatic exchange of information and specialised audit units. In South Africa, SARS is deploying TP experts earlier in audits, intensifying focus on mining royalties, customs classification disputes, the illicit economy and sharpening scrutiny of high-net-worth individuals. Namibia’s revenue authority, rapidly upskilled with African Tax Administration Forum support, is conducting five-year audits targeting mining and fishing sectors. Kenya’s revenue authority has shifted to risk-based, data-driven enforcement using electronic tax invoice management systems (eTIMS) and CRS, with disputes increasingly triggered by data mismatches rather than pure legal interpretation. The modern tax dispute is therefore more evidence-based and data- and technology-driven, demanding stronger data integrity and documentation from taxpayers, especially from a cross-border perspective.
Baijoo: Several revenue authorities have been steadily building their institutional capacity and investing heavily in digital modernisation, as well engaging in automatic exchanges of information with their foreign counterparts. In practical terms, this means SARS is increasingly integrating vast streams of third-party financial data into its compliance ecosystem. Financial institutions, employers, medical schemes, investment platforms and other reporting entities provide structured data to the respective revenue authority, enabling it to compare taxpayer declarations against independently sourced financial information. The Kenya Revenue Authority (KRA) has significantly advanced its enforcement capabilities, transitioning from reactive post-facto audits to real-time transaction verification via eTIMS. From 1 January 2026, the KRA has been systematically cross-verifying domestic corporate income tax returns against real-time eTIMS datasets, withholding tax filings and customs declarations. This technological leap has structurally altered tax disputes. Instead of debating legal interpretations during physical audits, taxpayers now face automated discrepancy alerts and must continuously reconcile their internal sales ledgers with KRA databases to prevent immediate unilateral assessments. This shift forces businesses to maintain ongoing, daily compliance checks.
Stuttaford: African tax authorities are like many other tax authorities across the globe. They are much more sophisticated today in how they collect data and information and how they use it. Any taxpayer should expect the tax authorities to be in possession of much of the relevant material. This can either be collected from a variety of sources – first, public sources including media and increasingly public tax reporting, secondly from the local operations and lastly, using exchange of information provisions from another tax authority in relation to any offshore affiliates of the local entity. All of this will be available and is likely to be used. This does mean that disputes can be more protracted as not only does the taxpayer have to answer technical questions, but it may also need to provide convincing explanations to factual queries. Tax disputes are rarely dealt with quickly and the availability and accessibility of so much information can in many cases slow matters down.
FW: With transfer pricing a major focus area across many jurisdictions, what types of related-party transactions are currently attracting the greatest scrutiny from tax and exchange control authorities?
Baijoo: TP continues to represent one of the most significant tax risk areas for MNEs operating in Africa. The transactions attracting the greatest attention include management and technical service fees, intercompany loans, royalties and intellectual property (IP) payments, procurement and distribution arrangements, business restructurings and cost-sharing agreements. In-practice, this means revenue authorities are placing greater emphasis on the commercial substance of these transactions, requiring taxpayers to demonstrate that services were rendered, economic benefits were received and that pricing reflects market conditions. Countries like Kenya focus more heavily on the benefit of intragroup transactions that erode the local tax base. The KRA strictly applies the ‘benefit test’, requiring contemporaneous proof that the local subsidiary received direct, quantifiable economic value from these offshore services. In an environment where tax authorities are increasingly collaborating across borders and leveraging international transparency measures, organisations that embed tax governance into their broader business strategy will be better positioned to manage regulatory expectations, minimise disputes and support sustainable cross-border growth.
Stuttaford: TP is a major focus area, which is true globally, and the focus in Africa is a microcosm of this. Other related areas of exposure in the international space as ever are withholding tax, on payments for services, interest or royalties, capital gains tax on share sales, and permanent establishment. Key is the substance of the offshore holding structure that the group has put in place as much of the protection offered by the relevant network of double tax treaties. The 2026 Indian tax case of Tiger Global, which involved a challenge to an offshore structure using Mauritius and Singapore, is already starting to be cited by tax authorities. There is of course a debate as to the precise implications of this case, and it may not be as far-reaching as people have been suggesting. What it does indicate is an increased tendency of tax authorities and courts not to accept treaty relief claims at face value or simply by reference to any tax residence certificate issued by the offshore country. It also illustrates how the focus is the ultimate beneficial owner. This is an issue that has been particularly relevant in the European Union, especially since the Danish cases in 2019. This is not to say that the intermediate holding or financing company is automatically going to be struck down, but only those properly implemented and reinforced as appropriate to meet the new challenges will withstand the now inevitable scrutiny.
Rossato: In-country distribution services, inbound services and fee arrangements, and intragroup financing remain the primary focus across Africa. In South Africa, intellectual property and intangibles are drawing increased attention, though benchmarking practice across the continent remains underdeveloped. Namibia’s authorities are focused on management fee arrangements, while Kenya scrutinises related-party financing, management fees, IP arrangements and transactions routed through low-tax jurisdictions. BEPS-driven transparency tools, including country-by-country reporting (CbCR) and exchange of information, are giving authorities greater visibility into group structures and transactions. Audits increasingly test whether reported profits align with local value creation. Taxpayers must substantiate arrangements with robust, contemporaneous documentation and clear evidence of commercial substance. Pillar Two’s impact on controversy risk remains untested, and while currently more a compliance exercise than a dispute driver, effective tax rate calculations may emerge as future flashpoints.
“Tax dispute activity across Africa has intensified, driven by fiscal pressures and revenue authorities’ efforts to maximise domestic collections.”
FW: How is the continued implementation of anti-base erosion and profit shifting measures – and the emergence of Pillar Two – shaping controversy risk and audit priorities in practice?
Stuttaford: The BEPs measures are just part of the increased focus on international groups and their structures. While African jurisdictions themselves may be more focused on enforcing domestic rules than aligning themselves internationally, the impact for MNEs lies in the potential pick-up in other jurisdictions. Most MNEs have been aware of the focus on substance, and in the world of TP, the development, enhancement, maintenance, protection and exploitation functions for some time. Again, all of this is likely to bring more controversy risk, rather than less. That does not mean every structure is to be struck down, but rather it needs to be robust.
Rossato: The implementation of anti-BEPS measures is driving a notable rise in aggressive TP disputes across Africa. Revenue authorities are leveraging enhanced transparency requirements, including CbCR and exchange of information mechanisms, to gain greater visibility into MNE structures and cross-border transactions. Audits increasingly test whether reported profits align with local value creation, with scrutiny concentrated on related-party financing, fees, IP and transactions involving low-tax jurisdictions. While Pillar Two’s controversy impact remains largely prospective, its implementation is progressing. South Africa’s legislation is new and will take time to settle, with mutual agreement procedure cases potentially increasing. Namibia has no Pillar Two legislation yet and is likely to follow South Africa’s approach. Kenya’s domestic minimum top-up tax, effective January 2025, is still too new to generate meaningful dispute experience, making it primarily a compliance exercise for now.
Baijoo: The implementation of anti-BEPS measures has escalated controversy risks for large MNEs. With many African jurisdictions recently accepting the OECD’s global minimum tax rules, a standardisation is happening across the continent in respect of tax transparency and balance of ‘benefits’. The greatest audit scrutiny targets outbound management fees, professional services, IP royalties and interest rates on intercompany financing. Kenya, with the aim of mitigating this extensive audit risk from an MNE perspective, specifically on the TP front, introduced an APA framework under section 18G of the Income Tax Act, effective 1 January 2026. South Africa did the same, effective December 2023, but with the pilot phase for APAs only starting in 2026 – the largest contributing factor to the delay in implementation stems from the niche expertise needed in the arena of TP.
FW: What impact is greater transparency through country-by-country reporting, information exchange and international cooperation having on taxpayers’ cross-border dispute exposure?
Rossato: Enhanced tax transparency is increasing taxpayers’ exposure to cross-border audits and ultimately disputes by giving revenue authorities more data to identify mismatches in reported profits, commercial substance and intercompany pricing. In South Africa, SARS received 775 CRS and 712 CbCR information packages in 2024/25, supporting more targeted, higher-value TP audits, although it is unclear whether overall audit volumes have increased. Namibia’s revenue authority similarly has greater access to information on multinational structures, cross-border transactions and profit allocations, resulting in more TP audits. In Kenya, transparency and digitalisation are fuelling disputes involving digital business models, VAT and cross-border services. Taxpayers must therefore maintain robust, contemporaneous documentation for complex cross-border and digital transactions. Overall, CbCR, information exchange and international cooperation are shifting the emphasis from reactive audit defence to proactive dispute prevention.
Baijoo: CbCR, automatic exchanges of information and international cooperation have given revenue authorities across the world the ability to enforce sanctions on non-compliance more surgically and with far greater access to third-party data. TP compliance extends well beyond determining an appropriate pricing methodology. Depending on the applicable thresholds, MNEs may also be required to prepare and maintain comprehensive TP documentation, including master files, local files and CbCR. These reporting obligations form part of the OECD’s BEPS framework and are intended to provide tax authorities with greater transparency regarding MNE operations and profit allocation. In practice, documentation prepared retrospectively or without sufficient commercial analysis may offer limited protection during an audit. Businesses should therefore ensure that TP policies are commercially defensible, consistently implemented across jurisdictions and supported by contemporaneous documentation.
Stuttaford: CbCR is just another weapon that tax authorities are using to access information on international group structures. Any group should assume that the tax authority will access all information that it is able to source, either because it is immediately accessible to it or because of a request to another tax authority. While there are protections under the terms of double tax agreements as to what information can be sourced, they may be of limited practical benefit in the long run. We do see tax authorities referring to this material in audits and disputes. Sometimes the material may not in fact be relevant, but it is still used by the authority concerned to paint the picture.
“While African jurisdictions themselves may be more focused on enforcing domestic rules than aligning themselves internationally, the impact for MNEs lies in the potential pick-up in other jurisdictions.”
FW: Are you seeing a rise in disputes involving digital business models, indirect taxes such as value-added tax, or cross-border services? What is driving those disputes and what practical challenges are taxpayers facing?
Baijoo: Across Africa we are seeing a clear increase in disputes involving digital business models, VAT and cross-border services, driven by revenue authorities placing greater emphasis on protecting their tax bases in an increasingly digital and global economy. Tax authorities are adopting broader interpretations of concepts such as permanent establishment, the place of supply, the source of income and the characterisation of digital services, while also making greater use of data analytics and information exchange. For taxpayers, the greatest challenge is often not the underlying tax liability, but the uncertainty created by inconsistent legislation, evolving administrative practice and differing interpretations between jurisdictions. Many businesses operate across multiple African countries with varying VAT and withholding tax rules, creating a real risk of double taxation, duplicate compliance obligations and prolonged disputes. Proactive structuring, robust documentation and obtaining technical certainty before implementing cross-border arrangements are becoming increasingly important risk management tools, rather than merely compliance exercises.
Stuttaford: Cross-border services have always been an area of controversy, both as to withholding, VAT and TP. VAT disputes are on the rise, as business models become much more sophisticated and the compliance itself becomes more complicated. This is particularly with digital business models, where the application of the VAT rules to the new way of operating may not be that clear. Record-keeping is crucial here; is it possible to supply clear evidence as required by the local law as to who supplied what to whom, and for what consideration, and the basis for determining that consideration?
Rossato: Digital and indirect tax disputes are rising as authorities modernise VAT systems and intensify scrutiny of cross-border services. In South Africa, SARS’s draft VAT modernisation programme is moving beyond information-gathering toward the elevated five-corner model that leverages taxpayers’ enterprise resource planning (ERP) systems and global best practice, together with tighter invoicing controls, to address invoice factories, ghost exports and imports, and weak supporting documentation. In Kenya, the growth of e-commerce, digital marketplaces, payment platforms and fintech lending is generating disputes over VAT liability, exemptions and deductibility. Recent cases have considered whether a platform is merely an intermediary or the principal VAT-liable supplier, the VAT treatment of digital payment processing, and documentation for bad debt deductions and related-party expenses. Documentary evidence and supporting records therefore remain a practical challenge, requiring taxpayers to be prepared, proactive and forward-thinking in their tax governance practices and ERP systems.
FW: Looking ahead, which developments are most likely to influence tax disputes across Africa over the next few years? What should businesses be doing now to prepare?
Stuttaford: Tax disputes are likely to only increase. Businesses should prepare for this by ensuring that they are fully advised at the start of any new venture and that advice given is fully and properly implemented. At the same time, they should monitor ongoing developments to ensure that any new or changing requirements are met. Routine audits are likely to become increasingly thorough; audits and enquiries into major transactions, such as changes in ownership or financing arrangements, will increase in volume and complexity. Neither of these should prevent a business making major investments into an African country, given the opportunities presented. But some of the more esoteric solutions used historically may no longer work. The great unknown is of course the use of technology by tax authorities and in particular artificial intelligence (AI), as it starts to be used in data collection and more widely across tax disputes. How far this goes is yet to be seen.
Rossato: Third-party data, AI, machine learning and automated assessments will increasingly shape African tax disputes, with TP remaining a key focus as South African businesses expand across the continent. Namibia’s proposed e-invoicing regime should give its revenue authority greater access to transactional data and improve its ability to identify discrepancies between invoices, returns and financial statements, although the timing and mechanics remain uncertain. In Kenya, continued eTIMS expansion, legislative change, wider disclosure obligations and exchange of information frameworks are likely to drive more targeted audits and closer scrutiny of cross-border transactions. Businesses should treat tax as a board-level risk, strengthen data governance, maintain contemporaneous documentation, and regularly reconcile finance, tax and accounting records. They should also make proactive litigation-informed decisions, retain evidence to support positions taken, seek professional advice where uncertainty arises and err on the side of caution in tax matters.
Baijoo: TP disputes have become increasingly common throughout Africa as revenue authorities continue to strengthen enforcement capabilities and expand international cooperation through information exchange agreements. Many African tax administrations have invested significantly in specialist TP units, resulting in more sophisticated audits and greater scrutiny of cross-border related-party transactions. These technological advancements make the detection of BEPS a far more seamless process, requiring minimal human intervention. At the same time, MNEs frequently operate across jurisdictions with differing legislative frameworks, varying economic conditions and limited comparable market data. These practical challenges often result in differing interpretations of the arm’s length principle and competing claims over taxable profits. The consequence can be lengthy audits, significant TP adjustments and, in certain circumstances, double taxation where corresponding relief is unavailable or delayed. For MNEs, it is essential to retain full and correct documentary transactional records. Against this backdrop, TP should no longer be viewed purely as a technical tax exercise. Instead, it forms an essential component of enterprise risk management, requiring businesses to proactively align between commercial decision making, financial reporting and tax governance.
Dominic Stuttaford is global head of tax, based in London. He focuses on the tax aspects of corporate finance and other finance transactions and structures, with a particular interest in the insurance, resources and technology sectors. His experience includes mergers and acquisitions of public and private companies, group restructurings, acquisitions and other finance structures. He also has a very active litigation practice, both in the UK and internationally. He can be contacted on +44 (0)20 7444 3379 or by email: dominic.stuttaford@nortonrosefulbright.com.
Elle-Sarah Rossato is a partner in PwC South Africa’s tax controversy and dispute resolution team. She is an admitted attorney with 24 years of experience, including 20 years focused on dispute resolution, tax litigation, debt management and international revenue assistance. She advises clients on complex South African Revenue Service disputes and controversy matters, combining legal insight with practical resolution strategies across all stages of engagement with revenue authorities. She can be contacted by email: elle-sarah.rossato@pwc.com.
Jashwin Baijoo is a partner and head of strategic engagement and compliance at Tax Consulting South Africa (Pty) Ltd. He holds both an LLB and LLM degree, specialising in international tax and business law, and is an admitted attorney of the High Court of South Africa. He moved from pure practice of law to the consulting industry several years ago and has entrenched himself within the sphere of tax law, holding the designations of master tax practitioner and professional tax specialist (SA), historically serving on both the SAIT board of directors and SAIPA tax committee. He can be contacted on +27 11 467 0810 or by email: jashwin@taxconsulting.co.za.
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