By Ossom Raphael
The Third International Conference on Tax in Africa has opened in Abuja, Nigeria. The flagship conference of the African Tax Administration happens every two years.
At the 3-day conference, over 38 members of African revenue authorities and tax experts from all over the world will deliberate on Building Strong Domestic Tax Regimes in Africa: Strengthening VAT, PIT And CIT.
Domestic resource mobilisation (DRM) is recognised as a top priority for financing development by the African Union’s Agenda 2063, the Monterrey Consensus (2003), the New Partnership for Africa’s Development (NEPAD), the Ninth African Development Forum and the High-Level Panel on Illicit Financial Flows. The implementation of the UN Agenda on meeting Sustainable Development Goals (SDGs) and the AU’s Agenda 2063, hinge on Africa’s ability to mobilise domestic resources to fund development.
Vice President, Prof Yemi Osinbajo, who declared the conference open said for the African Union, AU, to realise its Agenda 2063 objectives, it must review some of its tax laws to help build an integrated, prosperous, globally acclaimed and peaceful Africa driven by its own citizens.
“For Africa to realise the Agenda 2063 vision, there is a need for inclusive growth and sustainable development as well as good governance, democracy, respect for human rights, justice and the rule of law,”.
The VP lamented that the continent was losing huge tax revenue in form of illicit financial flows and urged the tax administrators to evolve a strong intra-African synergy to improve tax collection and disbursement since the existing challenges were peculiar to Africa.
“The challenges range from poor domestic resources mobilisation, differences between what is collected and what could have been collected, poor technology, tax exemption, tax evasion, tax avoidance, poor tax planning and transfer mis-planning.
Making reference to the Thabo Mbeki report on illicit financial flows, which discloses details of huge tax losses to African economies by multinationals and their local collaborators, the vice president estimated that revenue loss for developing countries was three times more than foreign aids received each year.
Prof. Osinbajo, however, called for increased transparency and information exchange as well as efforts to check Base Erosion and Profit-Shifting (BEPS).
He said the former would require automatic information exchange as the new global standard for cooperation in tax matters and ending legal secrecy of ownership of companies and trusts, especially those based in tax havens.
The Minister of Finance, Mrs. Kemi Adeosun, said there remained a strong link between an efficient tax system and economic development, even as she underscored the need for a strong, robust and effective tax regimes across Africa.
“There is no rich country with poor tax system and there is no poor country with a strong tax system. It tells you the connection.
“So, we need to develop a predictable and transparent tax administration that can guarantee efficient flow of revenue. We can do it. Interestingly, there is a collective reawakening in Africa” Adeosun, said.
Earlier, the Executive Secretary of the African Tax Administration Forum, ATAF, Logan Wort, said inappropriate tax incentives were bad for revenue mobilisation.
Mr Wort, note that ATAF was towarsd assisting member countries to address these challenges in the implementation of the basics of any revenue administration, including completing a taxpayer register, functioning audit unit and recovery processes, embedded in legislation that provides certainty.
“ATAF recognises that some of the key reasons why DRM is not optimised across the continent is due to low savings rate that equals low economic activity, illicit financial flows, inappropriate use of tax incentives and exemptions and weak tax administrative systems and capacities,” Mr. Wort said.
Also the Executive Chairman, Federal Inland Revenue Service, (FIRS), Mr. Tunde Fowler, said there was the need to improve tax systems, increases accountability of States to its citizenry.
Mr Fowler, said Africa needs to enhance domestic resource mobilisation, reduce over reliance on aids from developed countries and the exploitation of natural resources for the purpose of funding her developmental agenda.
Fowler who is the Chairman of ATAF, said member states must strives to build and become the leader on African tax matters by way of efficient and effective tax administrations to improve the living standards of the people.