Delegates to the third African Tax Administration Forum’s (ATAF) International Conference on Tax in Africa in Abuja, Nigeria. Picture: FIRS Nigeria
The third African Tax Administration Forum’s (Ataf) International Conference on Tax in Africa was held in Abuja, Nigeria, last month to discuss ways in which strong domestic tax regimes could be built in Africa.

More than 500 officials from ministries of finance and tax administrations of 25 African countries, members of parliament, civil society, Ecowas, IMF, OECD, academia and individual tax policy experts met from September 26-28.

A special focus was placed on the role of personal income tax (PIT), corporate income tax (CIT) and value added tax (VAT) in domestic resource mobilisation. The event was hosted by the Nigerian Federal Inland Revenue Service (FIRS).

Vice-President of Nigeria Yemi Osinbajo opened the conference and welcomed this vital African tax initiative to address the challenges faced in Africa to improve domestic resource mobilisation. 

The vice-president challenged the participants to find a way of “fixing this car while the engine is still running” by:

– Increasing transparency and information sharing between tax administrations.

– Addressing tax evasion facilitated by secrecy of financial information held in tax havens through the use of mechanisms such as Automatic Exchange of Information (AEOI) and beneficial ownership registries.

– Taking advantage of international initiatives such as Country by Country reporting, that are aimed at base erosion and profit-shifting (BEPS) and the tax treatment of the digital economy.

– Using targeted voluntary disclosure schemes to increase the tax base, improve compliance and increase tax receipts.

Minister of Finance Kemi Adeosun noted that there had been a collective awakening on the African continent that Africans needed to shed their dependency on commodities (eg oil) and broaden their tax bases if countries were to improve low tax to GDP ratios, which is an imperative for all African countries.

Tax administrations must be responsible and transparent and fight the scourge of corruption to give taxpayers confidence that the tax they pay is the tax they should pay.

Tunde Fowler, executive chairperson of the FIRS and chairperson of ATAF Council, highlighted that compliance should be made easier for taxpayers by harnessing technology and that research should be conducted in a manner that benefits all member countries. 

Fowler emphasised the importance of a shared vision in fighting harmful tax practices and base erosion and profit shifting.

The participants welcomed the 3rd ATAF International Conference on Tax as a timely and topical initiative to strengthen domestic taxes and to build stronger tax regimes supportive of domestic resource mobilisation and building a more certain investment climate.

Participants recognised that Africa’s ability to mobilise domestic resources to fund development hinges on well-designed and appropriate tax policies, and effective and updated legislation that is supported by effective and efficient tax administrations. Participants agreed that knowledge sharing and innovation are key ingredients toward building more effective African tax regimes.

Participants reflected that many countries have very narrow tax bases, outsized informal economies and tax policy challenges that make domestic resource mobilisation a daunting task. Addressing that task requires:

– Understanding the tax base, how it is constituted and reflected on the tax register to ensure the right interventions are applied in the right place at the right time.

– Broadening the tax base requires good communication strategies, outreach and taxpayer education and fairness in the implementation of the tax law.

– Quality taxpayer service which makes it easy and less costly, to comply.

– Maximising the use of technology and IT solutions can help African revenue administrations leapfrog some advanced administrations and address the above issues.

The Panama Papers have shown the value of data analytics in analysing millions of data sets. It is therefore imperative that revenue administrations move to empower themselves with the necessary IT infrastructure and capacity to conduct in-depth data analysis.

– Deterring tax evasion by enforcement action that ensures taxpayers are fully aware of the consequences of non-compliance with a clear and proportionate penalty regime.

– Appropriate policies need to be introduced which stimulate economic growth and policies such as exemptions and incentives that lead to lost revenue with little or no economic benefit must be discarded.

Participants noted the many solutions different countries are adopting to meet these challenges and that sharing of information and best practice between tax administrations was vital to finding African wide solutions. 

The meeting called on ATAF to provide the platform for promoting this sharing of information, home-grown tools and best practice in tax administrations.

Participants welcomed the partnership between ATAF and the TADAT secretariat, which is assisting members to undertake the TADAT assessment. 

Participants reported that the TADAT assessment in a simplified format that all countries can use and it is extremely effective in measuring where the tax administration is in terms of efficiency. 

This helps the tax administration identify its short-term, medium-term and long-term actions and the support it needs to fulfil these actions.

Participants recognised that if Africa is to effectively address aggressive tax avoidance and evasion, it needs to redesign its tax policies to reflect the specific challenges faced in Africa including the capacity constraints in tax administrations. 

ATAF is already developing tax policy tools such as the ATAF "model double-tax agreement" and the ATAF-suggested approach to "drafting transfer pricing legislation", which was launched at the meeting.

Members reported that they found these tools extremely valuable for negotiating tax treaties and drafting new legislation in complex technical tax areas and called on ATAF to develop further tax policy tools. 

It was also noted that ATAF has launched tax administration tools such as technical risk-profiling tools to assist member countries in addressing transfer price abuses.

The conference noted the vital role that ATAF’s development partners play in tax reform in Africa and the need to continue to work together and strengthen those partnerships to ensure that ATAF and member countries can deliver on tax reform. 

Participants considered a central point through which all technical assistance from development partners should be channelled and that might be ATAF.

The conference called on ATAF to take the lead in tax policy work on the continent and applauded the new ATAF initiative to develop technical papers on a range of tax policy issues of particular significance in Africa. 

ATAF should increase its engagement with the AU and other regional bodies in Africa to ensure there is a concerted and cohesive African domestic resource mobilisation strategy.

* Follow ATAF & ICTA2017 on Twitter: @ATAFtax or contact Adli Jacobs at [email protected]

Wort is the executive secretary of the African Tax Administration Forum