Tax Centre for Africa

Shaun Benton (BuaNews)- An international tax centre is to be set up in Africa to assist the countries’ tax administrations with capacity building.

The idea for the African tax centre - whose exact location on the continent is yet to be decided - emerged from a two-day meeting of the Forum on Tax Administration of the Organisation for Economic Cooperation and Development (OECD) which was held in Cape Town.

This is because their traditional dependence on customs duties for revenue collection has begun to shift towards a greater reliance on individual and corporate taxpayers.

But the establishment of an International Tax Centre in Africa is "definitely going to happen", the Commissioner - General of the Uganda Revenue Authority, Allen Kagina told BuaNews, following a press conference at the end of the meeting.

Such a centre would enable African countries to handle the challenges of tax administration which are similar to those faced by the OECD countries, which themselves have far greater capacity.

The centre would pool resources, information and research, share best practices and would also assist with the training of staff of the various African tax administrations that would constitute its members, Ms Kagina said.

Such a centre would then better be able to take advantage of the advice of the OECD’s Forum on Tax Administration and other multilateral institutions whose advice and practices could be relevant to the mandate of Africa’s tax administrators, she said.

It is expected that the decision as to where the international tax centre would be located, and other logistical details, would emerge in May at the African conference of tax administrators which will be held in South Africa, she said.

The conference is set to bring together most of senior officials of Africa’s tax administrations.

The OECD itself - which represents 30 of the world’s richest countries - has expressed "a very strong commitment" to help Africa develop efficient tax administrations, said Jeffrey Owens, the director of the OECD’s Centre for Tax Policy and Administration.

The centre would help African nations put in place a modernisation programme and assist them to deal with the "enormous burden" of increasing revenue for government programmes as their revenue base "disappears", he said.

Delivering the opening address to forum, Finance Minister Trevor Manuel said sources of revenue for most countries - including South Africa - are largely from direct sources such as the profits of corporations or the earnings of individuals, or from indirect sources such as imports on sales, and in some instances royalties or capital gains.

However, poorer countries - including many African nations - still depend on customs duties for the bulk of the revenues, he said.

Minister Manuel called on the OECD to extend the beneficial effects of partnerships between nations to the world’s poorer countries, "who are often victims of organised efforts to undermine their tax bases".

South African Revenue Service Commissioner Pravin Gordhan told reporters that his institution was already working with its peers on the continent to see how to improve capacity for revenue collection and strengthen tax administrations.

Mr Gordam mentioned that a very significant number of African countries get money from customs duties rather than directly from taxpayers and free trade agreements with trading partners - which are on the increase - would likely further undermine their traditional revenue bases.

This emphasised the need for building capacity to widen the tax bases of South Africa’s peers on the continent, he said, adding that the OECD is strongly committed, as is South Africa, to the establishment of an international tax centre for Africans.

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