VP Osinbajo attends 3rd ATAF International Conference on Tax in Africa on 26/09/2017

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Video Transcript

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 mobilization, 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 minimize their tax payments or, to put more graphically, dodge taxes.

The Thabo Mbeki report on illicit financial flows discloses shocking details of tax losses to African economies by these practices of multinationals and their local collaborators. Paradoxically the report shows that these practices lead to an estimated revenue loss for developing countries that is three times greater than the amount they receive in foreign aid each year.

However, the trend of the international debate on global tax issues is favourable to African economies and most African tax administrators must be following them closely.

There are two main items; the first is increasing transparency and information exchange, while the second is Base Erosion and Profit-Shifting (BEPS).

The former 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.