'If you want to scale, you must first be seen, even by the taxman.'

Let us be honest, taxes can feel intimidating, confusing and sometimes like just another barrier for a small business that is trying to survive. But here is the truth: tax compliance is not an enemy. In fact, it is one of the biggest tools for legitimacy, growth and cross-border credibility.

a. Why You Need A TIN

Your Tax Identification Number (TIN) is like your passport into the formal economy. It signals that your business is real, active and willing to play by the rules. Without it:

• You cannot open a corporate bank account in most countries

• You may be excluded from government or donor-funded support programmes

• You can not apply for an export licence or bid for contracts

• You will not be able to trade with larger buyers who require tax compliance as part of due diligence

Example: A Nigerian agro-processor producing premium dried hibiscus couldn’t secure a retail distribution deal in Togo. Why? The buyer required thier business to be tax-registered and VAT-compliant to ensure traceability and legitimacy. Without a TIN, they missed out on a six-figure export contract.

b. VAT (Value Added Tax) And Cross-Border Trade

For businesses involved in the value chain like food processing, garment making or software licensing VAT registration is crucial. Here is why:

• It allows you to claim back VAT on inputs (e.g., packaging, machinery, fabrics)

• It is often mandatory once your turnover exceeds a certain amount

• It’s required in many countries to trade business-to-business (B2B), especially across borders

Many regional trade blocs offer VAT exemptions or deferred VAT schemes for exporters. But you can only benefit from them if you are properly registered.

Scenario: A maize milling business in Malawi wanted to expand into the SADC market. Once VAT-registered, the business could claim back VAT on equipment purchases and apply for zero-rated export VAT status which improved cash flow and made their pricing more competitive in the Mozambican market.

c. Common VAT Pitfalls For SMEs

• Late registration: Waiting until a buyer asks you for a VAT invoice before applying

• Mingling personal and business transactions: Making it difficult to separate VAT-related claims

• Failing to keep records: VAT requires detailed bookkeeping invoices, receipts, input/output logs

Tip: If bookkeeping feels overwhelming, consider partnering with a local accounting cooperative or using SME-focused platforms like Sage for Africa. You do not have to manage VAT alone!