Tax authorities brace for continental indaba
SOUTH Africa is set to host this year’s edition of the African Tax Administration Forum (Ataf) General Assembly where the continent’s heads of tax administrations will meet to map out ways of optimally using Africa’s untapped tax base.
Scheduled for October 3-7 in Durban, the conference will run under the theme: “Harnessing the African Cash Economy: Contributing towards Expansion of the African Tax Base.”
Zimbabwe is chairing the Ataf council, deputised by Senegal. Ataf media and communications officer Mr Taungana Ndoro reported that the informal sector, which uses unrecorded cash transactions, has prejudiced the African economy at least 38 percent of its Gross Domestic Product.
A key outcome of the conference, he said, will be laying the foundation for development of action plans to be pursued by African tax administrations until the next general assembly in 2018.
Mr Ndoro is the chief of corporate communications at the country’s tax authority, the Zimbabwe Revenue Authority.
“At least 38 African states and development partners in the international community are expected to converge for discussions aimed at understanding underlying aspects, reasons and consequences of the cash economy, and its implications for tax revenues, tax burden as well as revenue foregone due to noncompliance with tax laws,” he said.
“The tax indaba will focus on providing practical solutions in dealing with a cash economy in order to broaden the tax base in Africa in a bid to maximise revenues within the current cash environment as well as encourage migration to the non-formal economy such as e-wallet and both mobile phone and internet banking.”
A cash economy is where goods and services are substantially paid for in cash and where transactions are generally unrecorded making it extremely difficult for potential revenue to be harnessed into the tax net.
Commenting on the conference, Logan Wort, the Executive Secretary of ATAF said: “It’s widely believed that the African tax base is yet to be optimally explored. This is partly due to non-contribution of a fair share of taxes by cash economies in Africa.
“Although efforts are being made to close the tax gap through various initiatives aimed at the multinational enterprises and cross border transactions, cash economies in Africa pose base erosion threats that have not been adequately addressed.”
The conference, he said, would provide an ideal opportunity for the exchange of views in anticipation of special attention being given to the cash sector of the economy.
He added that administrations would have an opportunity to share experiences, which would collectively provide a sound basis for appropriate remedial action plan such as for instance, the implementation of digitalisation of transactions.
Reports estimate that on average the size of the informal economy in Africa (in percentage of GDP) was 42 percent for the years 1999-2000. Zimbabwe (at 59,4 percent), Tanzania (58,3 percent) and Nigeria (57,9 percent) have the largest informal economies on the continent.