African tax experts deliberate on cross-border tax evasion

African tax experts are meeting in Accra to deliberate on how to plug loopholes that encourage cross-border tax evasion.

Member countries of the African Tax Administration Forum (ATAF) believe that while globalisation generates greater opportunities for the increase of wealth, it also results in greater risk to domestic revenue mobilisation through tax evasion, aggressive tax planning and avoidance.

Similarly, the increase in cross-border transactions and tax administrations across the world are also exposed to more challenges for the proper enforcement of their tax laws. 

Exchange of information 

Speaking at the opening ceremony of the ‘ATAF consultative meeting of African competent authorities on exchange of information’, the Commissioner-General of the Ghana Revenue Authority, Mr George Blankson, said a way to plug the loopholes was for “tax authorities to take advantage of international cooperation based on the proper implementation of international standards of transparency and effective information sharing.”

“Exchange of information between member countries of ATAF is very important in ensuring that corporate bodies and individual taxpayers have no safe haven to hide their income and assets, and that they pay the right amount of tax at the right time in the right place, “he said .

The three-day meeting, which has brought together 11-particpating countries out of the 36-member organisation, also have the participants discussing issues, including how to operate exchange of information in an effective manner, while respecting taxpayers’ rights to confidentiality and the benefit for ATAF members in utilising the ATAF Exchange of Information Programme. 

Launched in November 2009 in Uganda, ATAF has the mission of providing a platform to improve the capacity, capability and performance of tax administrations in Africa.

 Tax evasion 

With foreign direct investment increasing on the continent by 27 per cent in 2011 – totalling about $80 billion and expected to reach $150 billion by last year, according to ATAF figures, concerns for increased efficiency on exchange of information on the part of African revenue authorities have been on the table in the face of rising tax evasion. 

A study by the Global Financial Integrity (GFI) in five African countries —Ghana, Kenya, Mozambique, Tanzania and Uganda — which focused on the tax authorities, showed that authorities in all five countries lacked the trade, tax and deals data to curb the illicit flows.

The study indicated that over-invoicing and under-invoicing in the five countries facilitated the illegal inflows or outflows of more than $60 billion during the 10-year period in which the study was carried out (2001-2011).

According to the study, Ghana alone lost more than US$14 billion in mis-stated invoices over the entire period, equivalent to 6.6 per cent of GDP—the highest recorded among the five countries studied.

Governments and hard work 

With those figures in mind, Mrs Elizabeth Storbeck, the ATAF Exchange of Information Programme Coordinator, said it was important that governments worked hard to reassure taxpayers that the system was efficient and reliable to encourage compliance.

She said ATAF remained committed to using efficient systems to improve revenue collection by developing solutions that were unique to the needs of the continent.