Home » Real Estate » Osinbajo advises AU to review some of its tax laws
Osinbajo advises AU to review some of its tax laws

Osinbajo advises AU to review some of its tax laws

Premium times reports that the Vice President 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.

Mr. Osinbajo was speaking in Abuja at the opening of the International Conference on Tax in Africa organised by the African Tax Administration Forum, ATAF on the theme: Building Strong Domestic Tax Regimes in Africa: Strengthening VAT, PIT & CIT.

”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,” he said.

The Vice President, who lamented the huge loss African countries suffer through tax avoidance by multinationals, said enforcement of tax laws by tax authorities, especially in sub-Saharan Africa, was one issue to deal with.

“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.”

He said the constraints to tax collection were similar in varying degrees across the continent, including a large informal and subsistence agricultural sectors, tax evasion and avoidance, tax exemptions, and inequitable and opaque rent-sharing arrangements in the extractive sector.

Besides, he identified other constraints to include the use of aggressive and often suspicious tax planning and transfer mis-pricing by multinationals that minimise their tax payments or dodge taxes.

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.

Urging Africans to follow the debate on global tax issues closely, Mr. Osibanjo 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.

On the other hand, he said, BEPS involved checking transfer mis-pricing, country-by-country reporting by transnational companies, international tax law, standards for international tax treaties, limits on tax planning activities and the tax treatment of the digital economy.

He said the processes for the collection of the Value Added Tax, VAT, seen as the tax of the future, needed to be reviewed for effectiveness and efficiency in its administration.

Mr. Osinbajo said the Corporate Income Tax, CIT was in the spotlight, as more manufacturing industries were taking roots in Africa, just as in the growing service sector, made up of the financial, telecommunications and real estate.

For Nigeria, Mr. Osinbajo said, the government was trying to strengthen the tax system in order to make a strong revenue generating source for the country.

Recently, he said, there have been calls for the government to reconsider tax incentives granted to some individuals and businesses in Nigeria.

He said one of the continent’s tax bodies had cited an inappropriate use of tax incentives and exemptions as one of the reasons why DRM was not optimised across Africa.

The Executive Secretary of the African Tax Administration Forum, ATAF, Logan Wort, said in his speech at the conference that inappropriate tax incentives were bad for revenue mobilisation.

“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.

The ATAF, he noted, was geared towards 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.

Other challenges he cited include tax base broadening initiatives; improving tax administration capabilities; strengthening tax policies and providing a platform for African countries to voice matters at regional and international levels.

Source: Premium Times

Leave a Reply

Your email address will not be published. Required fields are marked *