Sharon Kavhu recently in Nairobi, Kenya
The Tax Justice Network Africa (TJNA), a Pan African research and advocacy organisation, has urged African governments to establish a continental tax policy coordinating platform to optimise tax revenue on intangible transactions in the digital economy.
The TJNA said the platform should be capable of protecting taxation rights by setting certain minimum standards that can result in both economic and political decisions that are binding to all.
The development, which is an outcome of TJNA’s 7th Pan-African Conference on Illicit Financial Flows IFFs (PAC) in Nairobi, Kenya, recently, comes at a time the continent is faced with challenges in handling taxation on intangible goods and the digital economy.
TJNA also called upon African countries to promote digital education programmes across Africa that will equip African people with skills to embrace and utilise smart technology under the fourth revolution.
In protecting taxation rights in the era of intangibles, the digitalised economy, finance and technology, TJNA urged Africa to actively engage in the international reform of corporate income tax leading to an equitable rebalancing of taxing rights between developed and developing countries.
Recommendations and resolutions from the PAC also include various areas such as protecting taxing rights, taxation of financial services, digitalisation of revenue administration, and the dawn for boosting intra-Africa trade.
Below is a summary of the recommendations on each area:
Recommendations on protecting taxing rights
According to TJNA, in revisiting the laws and regulatory framework concerning taxation of the digitalised economy in Africa, consideration must be made of the reservations not to hurt the approaches targeting financial inclusion, especially with regard to women.
African countries have been urged to always have an Africa-centric agenda whenever they engage in global processes. If the countries participate without the Africa-centric agenda, they may end up co-opted into other continents’ agendas.
Taxation of financial services
African countries were urged to design smart solutions that are customised for the African economic conditions in the wake of the fourth revolution, including rolling-out in government to increase trust between citizens and governments.
TJNA also urged African governments to shape the current digital economy through regulation that puts people and the planet before profits. It should be made clear that regulating the digital economy is not regulating against technology or innovation.
Digitalisation of revenue administration
In the wake of digitalisation, revenue administrations should devise means to raise compliance levels without increasing the cost to the taxpayer.
According to TJNA, technological advancements must not be seen as punishment to the taxpayer nor a driver of inequality.
African countries were also urged to ensure that the automation of tax administration is holistic and speaks to other governments system across the continent.
The PAC meeting resolved that investment in technology for increased revenue mobilisation should be matched with increased investment in building capacity for the data analysts to make the generated data usable along the guidelines of the Africa Data Consensus.
New dawn for boosting intra-Africa trade
African countries were urged to pursue rapid reduction of non-tariff barriers as well as progressive tariff reduction to harness the benefits from the African Continental Free Trade Area (AfCFTA).
Countries were urged to revise their revenue mobilisation strategies prior to implementation of the AfCFTA to inform their negotiation capacities for concessions and mechanisms for combatting likely predatory pressure arising from tariff reductions.
TJNA suggested that trade policy reforms must be accompanied by other structural changes in the economy as a whole.
The Pan Africanist organisation recommended that tax related aspects of the digitalised economy should be discussed in-line with the ongoing trade aspects on e-commerce at the World Trade Organisation (WTO). For this to be accomplished, African ministers of finance and economy were urged to constantly engage their counterparts in the ministries of trade and of foreign affairs and international co-operation to harmonise policies and messaging.