Pillar Two Meets Africa’s Hyperinflation Head-On
The world’s 15% global minimum tax was meant to simplify life for tax teams. In parts of Africa, it’s doing the opposite. A fresh analysis warns that hyperinflation, alternative minimum taxes and currency swings are turning the new OECD Pillar Two rules into a high-wire act for multinationals operating on the continent, Bloomberg Tax reports.
Africa’s 54 jurisdictions are anything but uniform. Six of them, Burundi, Ghana, Malawi, Sierra Leone, South Sudan and Sudan, are officially in hyperinflation territory, while Egypt and Nigeria sit on the monitoring list. Under hyperinflation accounting, companies must restate non-monetary assets, inflating profit figures and, in turn, Pillar Two income. The twist: taxes aren’t adjusted upward in the same way, so effective tax rates (ETRs) can look deceptively low, potentially triggering top-up tax.
Add 33 domestic alternative minimum taxes and a kaleidoscope of local GAAP and currencies, and compliance teams are staring at what one adviser calls a “perfect ETR distortion storm.” The report cautions that distorted ETRs could curb badly needed investment in lower-income states already battling soaring prices.
Reactions were swift. Nigerian practitioners say the blind spot “risks penalizing economies that most need capital,” while South African advisers are urging the OECD to release clarifications before 2026 filings begin.
Around the Tax World
• G20 stays the course. Leaders reaffirmed their “full commitment” to the 15% minimum at last week’s New Delhi summit, even as U.S. adoption remains uncertain (Serrari Group).
• London eyes a ‘tourist tax.’ UK ministers are studying a city-specific levy on international visitors to fund local services, stoking flashbacks to New York’s hotel occupancy tax (ABC News).
• $4 billion stuck in limbo. The Palestinian Authority urged Israel to release withheld tax revenues to ease a mounting fiscal crisis (Euronews).
• Talent watch. Veteran GCC tax hand Hany Elnaggar has jumped to Acquisory as Partner & Tax Compliance Leader just weeks after the Indian firm opened its first Dubai office (Consultancy-me).
By the Numbers
Tax Stat of the Day: 33 out of 54 African countries already run domestic alternative minimum taxes, raising questions about double-minimum overlap under Pillar Two (Bloomberg Tax).
Looking Ahead
All eyes are now on the OECD Secretariat, which is expected to issue additional guidance on hyperinflation accounting and covered taxes before the next Inclusive Framework meeting in early 2026.