From Uche Usim, Abuja
Vice President of Nigeria, Prof. Yemi Osinbajo, yesterday, charged African governments to urgently build robust tax regimes that will address the challenge of tax evasion, mismanagement of government revenues, under-development and other economic challenges associated with poor tax administration.
Speaking at the 3rd International Conference on Tax in Africa (ICTA) organised by the African Tax Administration Forum (ATAF), the Vice President urged tax administrators on the continent to evolve a strong intra-African synergy to improve tax collection and disbursement since the existing tax challenges were peculiar to Africa.
He said the theme, “Building Strong Domestic Tax Regimes in Africa: Strengthening VAT, PIT and CIT”, remained apt, given that tax problems in Africa could be tackled through collaborative efforts.
“The challenges range from poor domestic resource mobilisation, differences between what is collected and what could have been collected, poor technology, tax exemption, tax evasion, tax avoidance, poor tax planning and transfer mis-planning, among others.
“The Thabo Mbeki report shows sharp practices of multinationals with regards to tax under-payment. It further revealed that the loss to African nations is three times greater than the amount of foreign aids they (African countries) receive each year. So, we need to increase transparency by establishing an automatic information exchange. We need to check a lot of shady deals. African nations must develop a good framework to develop tax collection and remittances.
“In Nigeria, we recently launched the Voluntary Asset and Income Declaration Scheme (VAIDS), which is backed by an executive order and the aim is to assist tax defaulters, both individuals and corporate bodies, to, within 90 days, declare their assets and pay taxes appropriately without penalties and sanctions. It is all part of improving revenue, boosting the economy by creating a better country for Nigerians. Crude oil revenues can no longer fund our budgets and we just have to diversify.
“Various administrations in Africa are battling collection challenges. They are battling to develop the manpower to run a transparent and efficient tax administration. So we need synergy. Enforcement is also key and we must seek solutions on these tax issues,” Osinbajo said.
In her remarks, the Minister of Finance, Mrs. Kemi Adeosun, said there was a strong link between tax and economic development, underscoring the need for a robust and effective tax regimes in Africa.
She stated: “There is no rich country with a poor tax system and there is no poor country with a strong tax system. It tells you the connection. So 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 taxpayers. They need to know their money is well utilised to ensure they will be willing to pay tax. We also need legislative and judicial support to deal with wilful tax evaders. Today, we have the lowest tax to GDP in the world at 6 per cent. We are ready to take on it and correct it going forward,” she explained.
Also speaking at the conference, the Executive Secretary of ATAF, Logan Wort, said Domestic Resource Mobilisation (DRM), mainly through taxes, remains key in ensuring economic buoyancy of Africa.
“DRM is also recognised as a top priority for financing development by the African Union’s Agenda 2063, the Monterrey Consensus (2003), the New Partnership for Africa’s Development (NEPAD), the Ninth African Development Forum and the High-Level Panel on Illicit Financial Flows, the implementation of the UN Agenda on meeting Sustainable Development Goals (SDGs) and the AU’s Agenda 2063, hinge on Africa’s ability to mobilise domestic resources to fund development.
“It is important to note that the total estimate of financing the SDGs is approximately $120 billion. Closing this financing gap across nearly 100 developing countries, will require a tripling of the current level of country aid. DRM is therefore critical to close the financing gap; foster a strong social contract between a government and its citizens and to promote good governance because over-reliance on foreign aid can inadvertently undermine the social contract,” he said.