The Vice President, Prof. Yemi Osinbajo, has tasked African tax administrators to enhance transparency in resource mobilisation as well as tackle challenges relating to Base Erosion and Profit Shifting (BEPS).
Osinbajo, who dropped the challenge at the opening of an international conference of Africa Tax Administration Forum (ATAF) in Abuja, noted that the continent was desirous of ensuring transparency and information sharing among ATAF member-states.
Information sharing, he noted, involves establishing 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 vice president observed that in containing Base Erosion and Profit Shifting- which has also done significant damage to domestic resource mobilisation in Africa, a range of potential actions were planned by OECD countries.
He said: “The forum had committed to this cause since August 2008. After the international conference in 2008 on a somewhat similar theme: Taxation, State building and Capacity development in Africa, senior tax administrators and policy makers from 39 African countries agreed to work towards the “establishment of the forum as a platform for sharing best practices in taxation matters in the region”.
“It is remarkable indeed that the forum has through the years been unwavering on its founding mission and ideals. But it is worth noting also that the tax problems of African states have remained much the same in complexity and character since.
“The elephant in the room in most discussions on tax in developing countries remains the problems of domestic resource mobilisation. Addressing the tax gap, or the difference between what we collect and what we could collect.
“The constraints are similar though in varying degrees across the continent, they include, a large informal sector, including large subsistence agricultural sectors, tax evasion and avoidance, tax exemptions, and inequitable and opaque rent-sharing arrangements in the extractive sector.
“Significantly also, by the use of aggressive and often suspicious tax planning and transfer mis-pricing multinationals minimise their tax payments or put more graphically, dodge taxes. The Thambo Mbeki report on illicit financial flows discloses shocking details of tax losses to African economies by these practices of multinationals and their local collaborators,’’ Osinbajo said.
He commended the Federal Inland Revenue Service (FIRS) as the most innovative and forward looking tax administrator in Africa.
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.
She said: “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. Outside Africa, there is a general feeling of putting their country first. Now, it is time to put Africa first.
“In Nigeria, we are working hard to improve transparency in the system so as to boost confidence of tax payers. They need to know their money is well utilised to ensure they will be willing to pay tax.
“We also need legislative and judicial support to deal with willful tax evaders. Today, we have the lowest tax to GDP in the world at six per cent. We are ready to take on it and correct it going forward”, she explained.
Earlier, Mr. Tunde Fowler, the Executive Chairman, Federal Inland Revenue Service (FIRS), said there was the need to improve tax systems, increases accountability of States to its citizenry.He 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.“
Ladies and gentlemen,ATAF serves as an African network of 39 States with the aim of improving tax systems in Africa. Since its formation in 2009, ATAF has been in the forefront of championing the cause of taxation in Africa through the exchange of information, knowledge dissemination, capacity development and active contributions to the region and global tax agenda.
Also, the ATAF Executive Secretary, Mr. Logan Wort, said ATAF’s core mandate is to strengthen capabilities not only in the international front but also in domestic tax.
He said in the next three days, tax administrations and tax experts would be discussing opportunities and challenges of building strong tax regimes on the African continent. Overall, ATAF is continuously and consistently working on both technical and policy issues to improve effectiveness and provide efficiency in DRM.
”We call upon all stakeholders to honour their commitments in pursuit of their responsibilities in the area of taxation so that together, we can mobilise sustainable revenue streams to finance Africa’s own development agenda,’’ Wort said.