African governments are stepping up moves to tax wealthy individuals more effectively after the African Tax Administration Forum (ATAF) released a new guide designed to help countries strengthen the taxation of High-Net-Worth Individuals (HNWI) and expand domestic revenue across the continent.
The publication comes at a time when many African economies are facing growing fiscal pressure and rising public spending needs, particularly in infrastructure, health and social services.
Policymakers are increasingly looking at wealthy taxpayers as a key source of untapped revenue while trying to avoid placing additional tax burdens on low- and middle-income earners.
Globally, the taxation of high-net-worth individuals has become a central policy issue as governments seek to reduce inequality and close revenue gaps. Many tax administrations in advanced economies have introduced specialised compliance units and targeted measures to address aggressive tax planning practices by wealthy taxpayers.
In Africa, however, the contribution of wealthy individuals to overall tax revenues remains relatively limited.
Data cited by ATAF show that only about 5% of Africa’s employed adult population pays Personal Income Tax, compared with nearly 50% in high-income countries.
In addition, more than 90% of personal income tax revenues in many African countries still come from individuals in formal employment, highlighting the limited taxation of income and wealth generated outside formal employment structures.
The figures underline the structural challenge facing African tax administrations, which often rely heavily on payroll taxes while large segments of high-income earners remain outside effective tax monitoring systems.
According to ATAF Executive Secretary Mary Baine, effective taxation of High-Net-Worth Individuals can assist African countries to broaden their tax base, improve equity within tax systems and mobilise the domestic resources needed to finance development priorities.
Her comments reflect a broader shift in policy thinking across the continent, where domestic revenue mobilisation is increasingly viewed as a sustainable alternative to external borrowing.
The new guide is based on an evidence-driven study conducted in 10 African countries to identify the main policy and administrative gaps that limit the effective taxation of high-net-worth individuals.
The document provides practical guidance to tax administrations on how to define wealthy taxpayers in the African context, design policy frameworks and strengthen administrative systems to improve compliance.
It also highlights the growing role of technology and data analytics in identifying wealthy taxpayers and monitoring their compliance more effectively.
Importantly, the guide stresses that successful reform will depend not only on technical measures but also on strong political backing.
It recognises that attempts to tax wealthy individuals often face resistance and require consistent support from senior government leadership, including finance ministries and national executives, to be implemented effectively.
In Tanzania, the policy direction outlined by ATAF is already being reflected in new institutional measures. The Tanzania Revenue Authority (TRA) recently launched a dedicated High-Net-Worth Individuals office at the Golden Jubilee Towers in Dar es Salaam as part of its strategy to strengthen compliance among wealthy taxpayers.
Speaking during the official opening, TRA Commissioner General, Yusuph Juma Mwenda said the establishment of this office demonstrates our commitment to fairness and transparency in taxation.
He added that high-net-worth individuals play an important role in the economy and that the new office is designed to provide efficient and personalised services while ensuring that taxpayers meet their legal obligations.
“The establishment of this office demonstrates our commitment to fairness and transparency in taxation,” he noted.
He added that high-net-worth individuals play a crucial role in the economy, and the new office is designed to provide efficient, professional, and personalised tax services while ensuring compliance with the law.
According to him, the initiative is not only about strengthening compliance but also about building trust and partnership between TRA and taxpayers.
He further noted that “High-net-worth individuals are important contributors to the economy, the office will provide efficient, professional, and personalised services and it will also ensure they meet their tax obligations properly”.
The release of the ATAF guide, together with Tanzania’s new HNWI office, signals a broader trend across Africa. Governments are gradually moving toward more targeted and data-driven tax systems aimed at reducing reliance on payroll-based taxation and ensuring that wealthier individuals contribute more significantly to national development.
