Osinbajo tasks African tax experts on profit shifting, base erosion
Vice President Yemi Osinbajo has said Africa’s tax administrators need to address issues relating to Base Erosion and Profit Shifting (BEPS) and increase transparency in resource mobilisation.
At the opening of an international conference of Africa Tax Administration Forum (ATAF), Osinbajo said the continent also needed to ensure transparency and information sharing among member states.
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 ownership of companies and trusts, especially those based in tax havens.
The Executive Secretary of ATAF, Logan Wort, and the Executive Chairman of Federal Inland Revenue Service (FIRS), Tunde Fowler said yesterday at the Senate hearing on new tax bills that Africa lost about $1 trillion naira to BEPS and Illicit Financial Flows (IFF) from the continent.
Osinbajo said: “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.”
The vice president said “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.”
Osinbajo, who noted that the tax constraints are similar, though in varying degrees across the continent, listed them as a large informal sector, including large subsistence agricultural sectors; tax evasion and avoidance; tax exemptions; as well as 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 put more graphically, dodge taxes.
`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,’’ Osinbajo said.
Minister of Finance, Mrs. Kemi Adeosun, said there remained a strong link between an efficient tax system and economic development, even as she underscored the need for a strong, robust and effective tax regimes across Africa.
“There is no rich country with poor tax system, and there is no poor country with a strong tax system. It tells you the connection.“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.
“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.”
Adeosun canvassed legislative and judicial support to deal with willful 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”, she explained.” Earlier, Fowler said there was need to improve tax systems and increase accountability of states to its citizenry.
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