Digital connectivity is transforming how many African companies and governments are doing business. As more countries bring their financial services online, digital tax returns are becoming more common. South Africa, Zambia, Botswana and Kenya were all early adopters and now offer quite advanced online tax submission services.
One of the main benefits of online tax processes is that it makes it easier to submit payroll reports. However, digital processes require a lot of information – all of which must be carefully inputted. Kenya’s online tax system, for example, is very sophisticated but it demands a large amount of detail. Each field on every sheet needs to be filled in properly, otherwise you won’t be able to successfully submit the file.
To enjoy all the benefits of digital tax, you need to ensure that your payroll processes are fully digital too. You also have to know much more about your employees than basic personal information. It might seem overwhelming at first, but you can’t afford to fall behind. To help you understand what digital tax in Africa really entails – here is a quick overview of the pros and cons, and how they will affect your business.
The manual tax submission process typically requires an official company representative to collect all the documents, and go and stand in long queues to get the necessary stamps and signatures. If your business operates in multiple countries, you’ll likely need to enlist the help of more than one local service provider to get the job done properly.
The digital tax process simplifies things considerably. You, or any authorised team member, can log in to the relevant tax service, fill in all the forms and send them off with the click of a button. As long as you have all the information you need, it really doesn’t matter where in the world you are. Imagine that, you can sort out the tax for employees based in Nairobi while sitting in the Heathrow departures lounge.
The validation process is quick and responsive – you’ll know immediately if your submission has all the correct information or not. If some details are missing, or haven’t been inputted correctly, you’ll get an alert. That way, you can fix the mistakes online without delay. Tax authorities are also introducing automatic validation systems which means that tax offices are clearing their backlogs and processing submissions far faster.
Business frustrations (and how to overcome them!)
Digital tax returns demand a lot information – we really can’t stress that point enough! Take an employee car allowance for example. In addition to the car’s make and mileage, you also need to include details like the size of its engine and the employee’s social security or identity number.
To avoid any last-minute scramble for information, make sure your employee on-boarding processes are comprehensive. Far better to gather all the details you need from the get-go, and store them on the system for easy access. When tax season swings around, you’ll be far better prepared and the online submission process will be smoother and much more efficient.
Also bear in mind that while a digital tax process does enable access from anywhere in the world, it pays to have some local experience and knowledge. If you’re processing payroll for various offices across Africa from your desk in Johannesburg, you might not know that in some countries, the TPIN has a different number of digits than a NRC number.
You need to be familiar with the legislative requirements of all the countries in which you operate. Without some knowledge, Africa’s online tax systems can be quite complex to navigate. Many of these countries are also new to the electronic submission process so when you do run into an issue, it can be difficult to find someone to help you fix the problem.
You’re not alone
The business benefits of digital tax are really worthwhile – but adapting to a new way of working is not without its challenges. These potential cons are easily eliminated with the help of a professional payroll provider like PaySpace.
Our robust African solution takes the headache out of doing digital tax in Africa. To find out more, give our team a call today.