COVID-19: ATAF Report Warns Of Tax Fraud

Areport by African Tax Administration Forum (ATAF) has warned that during the COVID-19 pandemic, prevalence of fraud related to tax is likely to be rampant.

ATAF’s latest Tax Administration and Policy Development’s latest research, reiterate this assertion by advising tax administrations to remain vigilant of fraud schemes that will seek to capitalise on the pandemic.

The body, however advised country members to put necessary measures in place to identify fraud and tax crimes that may negatively affect either the functioning of the tax administration or unsuspecting taxpayers.

“COVID-19 and its uncertainties have led to increased financial volatility, which in turn has created opportunities for fraudsters to exploit,” a report by ATAF read.

“The most common fraudulent activities relating to the tax measures that have been instituted include expedited refunds processing and impersonation of officials to illegitimately benefit from the tax relief measures or dupe unsuspecting taxpayers.”

Some fraudulent schemes targeting the tax administration includes refunds fraud and abuse of relief payments or measures targeting taxpayers during the pandemic.

According to the report, Tax administrations are constrained, and due to COVID-19 pandemic, there are several risks that may cause tax fraud to thrive.

“Many of the tax administrators have adopted the strategy of staff working from home and some have introduced working in rotation. This implies that there are fewer officials to handle tax operations, resulting in officials being overwhelmed and thereby leading to reduced scrutiny and communication among relevant departments,” the report stated.

ATAF has also estimated that its member states could have lost over P5 billion in tax collections in a space of three months due to COVID-19, which is currently ravaging the economies of the Southern African Development Community (SADC) region including Botswana.

ATAF which was established by African revenue authorities, noted that on account of the pandemic, its members have lost $400-500 million (between P4. 6 to P5. 7 billion) during the period with the share of the loss in total customs revenue ranging from five to 10%.