The Vice President, Professor Yemi Osinbajo, has challenged African tax administrators to address issues relating to Base Erosion and Profit Shifting (BEPS) and increase transparency in resource mobilisation.
Osinbanjo spoke while declaring open the 3rd International Conference of Africa Tax Administration Forum (ATAF) in Abuja, yesterday.
The vice president added that the continent also needs to ensure transparency and information sharing among member states. He explained that 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.
ecutive secretary, ATAF, Mr Logan Wort, and the executive chairman, Federal Inland Revenue Service (FIRS), Mr Tunde Fowler, also said yesterday at the senate hearing on new tax bills that Africa loses about $1 trillion naira to BEPS and Illicit Financial Flows (IFF) from Africa.
According to the vice president, to contain Base Erosion and Profit Shifting (BEPS), which has done significant damage to domestic resource mobilisation in Africa, a range of potential actions are being planned by member countries of the Organization for Economic Cooperation and Development (OECD).
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 policymakers 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 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,” the Vice President said.
He also noted that the elephant in the room in most discussions on tax in developing countries remains the problems of domestic resource mobilisation.
“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.
“Significantly also, by the use of aggressive and often suspicious tax planning and transfer mis-pricing, multinationals minimise their tax payments or put more graphically, dodge taxes,” he stated.
He equally noted that the The Thambo Mbeki report on illicit financial flows disclosed shocking details of tax losses to African economies by the identified practices of multinationals and their local collaborators.