Tax and customs in the resources sector: an expanding toolkit for states

African governments are rapidly modernising their approach to tax and customs in the resources sector. Fiscal tools, tighter compliance frameworks and procedural reforms are reshaping investment and operational conditions across the continent.

Strengthening the tax and customs arsenal available to administrations

The extractive industry remains central to many African States’ finances, often representing 25–50% of governmental revenues. Recently, States have adopted increasingly assertive approaches to resource sovereignty and profit-sharing, amending mining, oil and gas, and related tax and customs regimes. Current geopolitical and economic pressures further accelerate this transformation, with certain common trends.

Increasing the tax burden

States are raising extractive-sector revenues by:

• introducing new taxes (for example, DRC's 50% tax on gross operating surpluses);
• increasing the rates or broadening the scope of existing taxes and duties (for example, flat 8% royalty on gold production in Côte d'Ivoire); and
• limiting tax incentives, derogations, exemptions and stability regimes, for example Madagascar's 2023 Mining Code restricting tax stability to five years, renewable.

These measures affect not only new investors and those transitioning from exploration to production or renewing permits, but also longstanding operators, as States increasingly seek to renegotiate existing contracts to align them with reformed legal frameworks.

Implementing global tax standards

Many African States are increasingly incorporating international tax standards, including those developed under the OECD’s Inclusive Framework. For example, South Africa has enacted the OECD’s Pillar Two global minimum tax (15%) to curb profit shifting by multinational enterprises, while Kenya has ratified the Multilateral Instrument to counter tax treaty abuse.

The implementation of these soft-law standards entails practical risks, as tax authorities increasingly invoke them to challenge, notably, intragroup structuring, especially those based on transfer pricing rules, abnormal acts of management or fictitious transactions.

Reforming customs and FX rules

Extractive projects rely heavily on importation of goods, materials, machinery, fuels and industrial equipment, and often on exports of products. Customs and FX reforms thus have a central role in the fiscal landscape.

At the regional level in West Africa, WAEMU’s foreign‑exchange regulation n°06/2024 tightens control over cross‑border flows through mandatory bank domiciliation, expanded reporting obligations for investments and loans, and stricter requirements for the repatriation of proceeds to the BCEAO. Other developments include:

• import-duty reforms (for example, the DRC’s removal of mining fuel‑import exemptions (2025));
• renegotiation of mining lists that previously authorised exempt or low-rate imports of listed assets; and
• restrictions on exports.

Procedural scrutiny

Procedural rules increasingly reinforce control, raise evidentiary burdens, sanction compliance failures and restrict remedies. Several States (notably Ghana, Côte d’Ivoire, Kenya and Senegal) also implement electronic declaration platforms, software and e invoicing systems with digital VAT mechanisms, with sanctions for non-compliant filings.

This implies:

• greater transparency in customs declarations;
• enhanced audit and data matching capabilities, enabling better detection of transfer pricing risks or unreported cross border flows; and
• increased risks of non-compliant declarations and penalties.

Increasing revenues through assertive enforcement

We are also seeing a revival of significant tax and customs audits and reassessments as routine instruments. Aggressive and recurring procedures have multiplied for extractive companies across Africa (for example, Gabon's reported nationwide audit of oil and mining companies), leading to litigation and arbitration proceedings, including an ICSID arbitration against Senegal.

Implications for local and international players

Recent tax audits in the extractive and oil-and-gas sectors show a growing trend of tax authorities asserting permanent establishment status, taxing indirect capital gains, and challenging financing structures on grounds of sham or lack of substance. Authorities are also increasingly applying domestic‑rate withholding taxes where documentation is insufficient and imposing corporate tax adjustments upon exit, including when local entities are liquidated or operations cease.

On the customs side, customs audits reveal an increasing number of adjustments arising from missing or insufficient documentation, leading to customs reassessments accompanied by penalties that frequently reach 100% of the principal amount.

In this context, stakeholders operating in or entering African extractive markets should anticipate:

• close monitoring of their tax and customs benefits, especially derogations, stabilised regimes and dispute resolution clauses, to protect their rights and avoid the risk of waiver;
• increasingly difficult (re)negotiation of exemptions and derogations;
• potentially increased tax burden, driven by States' financing needs in a challenging economic environment;
• more complex compliance and monitoring obligations across tax, customs and FX regimes, particularly where software or e-invoicing platforms are used, necessitating rigorous tracking and ongoing engagement with authorities in case of technical or procedural failures; 
• scrutiny of cross border transactions;
• audits, reassessments and related dispute resolution procedures; and
• new opportunities, as States continue to redesign frameworks to attract investments and promote sustainable projects.

Early engagement, careful structuring and proactive compliance planning can make all the difference. In the current context, a prudent legal and tax strategy is not optional but a prerequisite for sustainable operations across Africa’s rapidly transforming resources sector.