In 2017, the unweighted average tax-to-GDP ratio for the 26 countries in this publication (the “Africa (26) average”) was 17.2%. The tax-to-GDP ratio refers to total tax revenue, including social security contributions, as a percentage of gross domestic product (GDP). The Africa (26) average was below the Latin America and the Caribbean (LAC) average of 22.8% and the OECD average of 34.2%. Tax-to-GDP ratios ranged from 5.7% in Nigeria to 31.5% in the Seychelles in 2017, with nearly three quarters of the countries falling between 11.0% and 22.0%. The tax-to-GDP ratio exceeded 22% in four countries (Morocco, Seychelles, South Africa and Tunisia).
Tax revenues increased by 1.5% of GDP on average between 2008 and 2017, thanks to increases in revenues from VAT (0.7 percentage points [p.p.]) and from taxes on income and profits (0.3 p.p.) driven entirely by a 0.7 p.p. increase in revenues from personal income taxes. The increase in the Africa (26) average tax-to-GDP ratio was higher than the increase for the LAC and the OECD averages (both 1.3 p.p.). The Africa (26) average has plateaued at 17.2% since 2015, with increases in tax-to-GDP ratios in some countries being offset by decreases in others.
The greatest source of tax revenues among countries featured in this publication were taxes on goods and services, which accounted for 53.7% of total tax revenues on average in 2017, with VAT alone contributing 29.4%. Taxes on income and profits accounted for 36.2% of tax revenues. This was a similar tax structure to that of the average LAC country, except in relation to social security contributions: social security contributions as a proportion of GDP in LAC were more than twice the level seen in Africa.
Taxes on goods and services were the principal source of tax revenues for 21 countries in 2017, ranging from 36.6% of tax revenues in Tunisia to 78.5% in Togo. For the five other countries (Botswana, Equatorial Guinea, Eswatini, Nigeria and South Africa), taxes on income and profits accounted for the principal share of total tax revenue. The share of social security contributions in total tax revenue was highest in Tunisia (30.7% of total revenues), Morocco (19.3%) and Egypt (15.0%).
On average, in 2017 revenue from environmentally related taxes amounted to 1.3% of GDP in Africa, slightly lower than the OECD unweighted average of 1.6% of GDP (2016 figure) but higher than the LAC average of 0.9% of GDP. In 2017, tax revenues from energy products generated 70% of total environmentally related tax revenue on average, followed by revenues from motor vehicle and transport taxes.
The VAT revenue ratio (VRR), included for the first time in this publication, shows the difference between VAT revenues that would be expected if standard rates were uniformly applied and what was actually collected. These differences could come from exemptions and reduced rates, fraud, evasion and tax planning as well as weaknesses in tax administration. In 2016, South Africa and Togo had the highest VRR (0.66 and 0.65 respectively) whereas Nigeria, the Democratic Republic of the Congo, and Equatorial Guinea had the lowest (0.19, 0.17 and 0.07 respectively). In 2016, the VRR of 0.37 in Africa was below the LAC average of 0.59 and the OECD average of 0.56.
