By Emma Ujah, Abuja Bureau Chief
Vice President (VP) Yemi Osinbajo has charged African tax administrators to urgently halt tax evasion and mismanagement of tax revenues.
He gave the charge at the 3rd International Conference of the African Tax Administration Forum (ATAF) in Abuja, Tuesday.
According to the VP, there have been reports of massive tax evasion, abuse of pioneer status, tax holidays and mismanagement of collected tax revenues, across the continent, a situation he said must end.
Quoting the Thabo Mbeki Report, Prof. Osinbajo noted that multinational companies had often been found to hide under pionner status and other forms of tax holidays to evade tax on the continent.
His words, “The challenges range from poor domestic resources mobilization, 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.
“The Thabo Mbeki report shows sharp practices of multinationals with regards to tax under-payment. It further revealed that the loss to African nations is three times greater than the amount of foreign aids they (African countries) receive each year.
“So, we need to increase transparency by establishing an automatic information exchange. We need to check a lot of shady deals. African nations must develop a good framework to develop tax collection and remittances.”
“In Nigeria, we recently launched the Voluntary Asset and Income Declaration Scheme which is backed by an executive order and the aim is to assist tax defaulters both individual and corporate bodies to, within 90 days, declare their assets and pay taxes appropriately without penalties and sanctions.
“It is all part of improving revenue, boosting the economy by creating a better country for Nigerians. Crude oil revenues can no longer fund our budgets and we just have to diversify.
“Various administrations in Africa are battling collection challenges. They are battling to develop the manpower to run a transparent and efficient tax administration. So, we need synergy. Enforcement is also key And we must seek solutions on these tax issues.”
In her, remarks, the Minister of Finance, Mrs Kemi Adeosun, said that economic development could only be a reality with a strong tax system.
“There is no rich country with a 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.” she said.
In Nigeria, under the current administration, she said, the federal government has been working assiduously to improve revenue generation through an efficient tax system and transparency.
According to her, “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 utilized to ensure they will be willing to pay tax.”
In his address, Executive Secretary of ATAF, Logan Wort, blamed inappropriate use of tax incentives as a major hinderance to domestic revenue miobilisation.
He said, “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.”
“It is important to note that the total estimate of financing the SDGs is approximately $120bn. Closing this financing gap across nearly 100 developing countries, will require a tripling of the current level of country aid.
“Domestic resource mobilisation is therefore critical to close the financing gap; foster a strong social contract between a government and its citizens and to promote good governance because over-reliance on foreign aid can inadvertently undermine the social contract.”
The Chairman of Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, said that the conference would focus on initiatives aimed at broadening tax base of the countries in the region.