Osinbajo Tasks African Tax Experts On Profit Shifting, Base Erosion
BY COBHAM NSA, ABUJA – Vice President Professor Yemi Osinbajo has blamed Base Erosion and Profit Shifting (BEPS) as well as lack of transparency for the poor resource mobilisation in Africa.
He therefore insist that Africa tax administrators must urgently develop robust systems that would address these touchy issues that have not only caused significant damage to domestic resource mobilization but also the drive at sustainable socio-economic growth and development in the continent.
Addressing participants at the opening of Africa Tax Administration Forum (ATAF) international conference in Abuja on Tuesday, Vice President Osinbajo said the continent also needs to ensure transparency and information sharing among member states for effective service delivery to the citizenry.
According to him, information sharing involves establishing automatic information exchange as the new global standard for cooperation in tax matters and ending legal secrecy of companies’ ownership and trusts, especially those based in tax havens.
Speaking against the backdrop of submissions by the Executive Secretary ATAF, Logan Wort, and FIRS Executive Chairman, Tunde Fowler at the Senate hearing on new tax bills that Africa loses about $1 trillion Naira to BEPS and Illicit Financial Flows (IFF) from Africa, Osinbajo said containing BEPS, with its momentous hurt to Africa’s economy, would help address a wide range of potential actions being planned by OECD countries.
“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 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 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.
The Vice President, who flayed the use of aggressive and often suspicious tax planning and transfer mis-pricing by multinationals to minimize their tax payments or put more graphically, dodge taxes, said; “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.”
The Vice President lauded ATAF for this most relevant knowledge exchange opportunity and FIRS that prides itself as the most innovative and forward looking tax administrator in Africa.
For the Minister of Finance, Mrs. Kemi Adeosun, who noted a strong link between an efficient tax system and economic development, the need for a strong, robust and effective tax regimes across Africa cannot be overemphasized.
According to her: “There is no rich country with poor tax system and there is no poor country with a strong tax system”, adding, “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.”
The Minister stated that, “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 utilized to ensure they will be willing to pay tax.
“We also need legislative and judicial support to deal with wilful tax evaders. Today, we have the lowest tax to GDP in the world at six percent. We are ready to take on it and correct it going forward.”
In his remarks, Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler canvassed improved tax systems and accountability of states to its citizenry.
He said Africa must enhance domestic resource mobilisation; reduce over reliance on aids from developed countries; and the exploitation of natural resources to fund her developmental agenda.
Fowler, who also doubles as the Chairman of ATAF, said member states must strives to build and become leaders on African tax matters through efficient and effective tax administrations to improve the living standards of their 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 the Forum’s core mandate is to strengthen capabilities not only in the international front but also in domestic tax jurisdictions, adding that tax administrations and tax experts would focus on opportunities and challenges of building strong tax regimes on the African continent.
He said, “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 mobilize sustainable revenue streams to finance Africa’s own development agenda.’’
