The African Tax Administration Forum (ATAF) is preparing a treaty for the exchange of tax information among African countries in a bid to combat tax evasion and avoidance.
Executive Secretary of the Forum, Logan Wort, says the Agreement would serve as a legal instrument to ease tax cooperation on the continent, especially on matters involving multinational companies.
It modeled after the OECD’s Tax Information Exchange Agreements (TIEAs).
“We hope by next year to have African countries sign up on a multilateral exchange of information agreement that will allow them to share tax payer information with each other”, he said.
The lack of transparency and effective exchange of information is one of the key criteria in determining harmful tax practices, which involves shifting profit through inter-group transactions.
Earlier this year, ActionAid International issued a report claiming a South African multinational company was dodging tax in five African countries.
According to Wort, countries named in the report could not discuss the issue because of the non-availability of an agreement to share information.
There have been a lot of ongoing reforms in tax administration across Africa over the past ten years, including the formation of single revenue authorities.
The Ghana Revenue Authority (GRA), for instance, has the Internal Revenue Service (IRS), the Value Added Tax (VAT) Service and the Customs Excise and Preventive Service (CEPS) under its administration.
This, according to Logan Wort, has allowed the revenue authorities to be innovative in tax collection and actively engage the citizenry on revenue mobilization.
“Part of what drives the work of the African revenue authorities is to increase the amount of revenue that it is able to collect from the domestic economy through building administrative efficiencies… increasing compliance drive and improving its communication outreach and education” he stated.
Africa draws a lot of its income from customs and excise taxes as a means to compensate for the loss of trade revenue.
Wort observed that property taxation is a trend to watch out for in the coming years.
The ATAF is a platform to promote and facilitate mutual cooperation among African Tax Administrations and other relevant and interested stakeholders with the aim of improving the efficiency of their tax legislation and administration.
The Forum is developing mechanisms for experience sharing and strengthening skills and human capital in tax administration to increase domestic tax revenue for economic development.
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