Nigeria markets confront a hidden compliance crisis as cross-border payments create unprecedented tax enforcement challenges, according to Bujeti's leadership team. The automated tax platform's CEO Cossi Achille Arouko and COO Samy Chiba highlighted these risks in their recent Nairametrics interview.

The Overlooked Implication: Float Management Exposure

Most analysts miss the critical float management risk embedded in cross-border tax compliance failures. When payment processors face unexpected WHT and VAT liabilities on international transactions, their working capital gets locked up in regulatory disputes. This creates liquidity crunches that can paralyze operations within days.

Flintrock and other payment companies operating across African borders know this reality well. A single tax audit can freeze millions in float capital while compliance teams scramble to reconstruct transaction histories.

Regulatory Risk: KYC Enforcement Gaps

The specific regulatory risk centers on KYC enforcement gaps between jurisdictions. Nigerian tax authorities reportedly struggle to verify the true beneficial ownership of cross-border payment recipients. This creates liability uncertainty for local payment processors who must withhold taxes without clear guidance on exemptions.

The Central Bank of Nigeria's recent forex restrictions compound this problem. Payment companies cannot easily verify whether international recipients qualify for tax treaty benefits.

AfCFTA's Unintended Consequences

The African Continental Free Trade Area promises seamless commerce but creates tax compliance nightmares. Different VAT rates across member countries mean payment processors must navigate 54 distinct tax regimes while maintaining real-time compliance.

Bujeti's automation focus reflects this complexity. Manual tax calculations become impossible when processing thousands of cross-border transactions daily across multiple African jurisdictions.

Payment companies face a stark choice: invest heavily in compliance infrastructure or exit cross-border markets entirely. The dormant account ratios at major processors suggest many customers already abandoned international transfers due to compliance friction.

This tax compliance crisis threatens Africa's digital payment revolution just as cross-border volumes reach critical mass.

Source: Nairametrics | Analysis: Africa Business News