Media Coverage

TAX is an issue of fundamental importance for development. To many developed countries, lower taxes may just mean less revenue, but to many African countries, this has a direct impact on the lives of millions of people’s access to healthcare; basic education; proper nutrition; water and security.

However, African countries have for many years faced difficult challenges of tax collection and administration. Because most economic activities in Africa are informally organised, it is hard for governments to raise revenue from them to finance public services and development projects. 

But most African economies are now growing steadily. Africa is also integrating into the global economy in new ways – notably through a large increase in private overseas investment. Although this new investment is mostly very welcome, it might raise problems for tax authorities.

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The revised Chapter VI of the OCED’s Transfer Pricing Guidelines on transfer pricing aspects of intangibles proposed for delivery in September 2014 will not be final guidance on the subject, Michelle Levac, Chair of Working Party No 6 of the OECD Committee on Fiscal Affairs, has said.

Levac made the announcement at the NABE Transfer Pricing Symposium held on 22-24 July 2014, in Washington, DC, USA, where she provided a behind-the-scenes insight into efforts by the OECD’s Working Party No 6 on the kinds of special measures proposed to be implemented as part of BEPS action points 8, 9, and 10, to address the existing flaws in the transfer pricing system with respect to the taxation of intangibles.

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A new dataset is throwing fresh light on old assumptions about government revenue in developing countries

We know that public finance statistics are open to interpretation. And we know that creative accounting can turn a fiscal deficit into a surplus, or obscure the extent of under-investment in public infrastructure. But most of us expect that the fiscal fundamentals are reported accurately for most countries in the world. That is, we – as citizens, as economic advisers, as investors, as aid donors, as bankers, and as managers of the world economy – should be able lay our hands on accurate information about, for example, how much revenue Peru raises relative to Gross Domestic Production; how that figure has changed over the past 20 years, and how it compares with Mexico over the same period. And we imagine that we can access all this information online from some large well-resourced international organisation like the OECD or the IMF.

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Taxation is zipping up the development agenda, but the discussion is often focussed on international aspects such as tax havens or the Robin Hood Tax. Both very important, but arguably, even more important is what happens domestically – are developing country tax systems regressive or progressive?

Are they raising enough cash to fund state services? Are they efficient and free of corruption? This absolutely magisterial overview of the state of tax systems in Africa comes from Mick Moore (right), who runs theInternational Centre for Tax and Development (ICTD). It was first published by the Africa Research Institute.

Anglophone countries have led the way in reforming tax administration in Africa, considerably more so than their francophone peers. The reasons for this are numerous. Networks of international tax specialists are based mainly in English-speaking countries. Many of the modern systems that promote best practice within tax authorities were developed in anglophone countries, especially Australia. International donors, and particularly the UK’s Department for International Development (DFID), have directly and indirectly promoted a lot of reform of national tax authorities. In fact, this has been one of the success stories of British aid.

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Taxation is zipping up the development agenda, but the discussion is often focussed on international aspects such as tax havens or the Robin HoodTax. Both very important, but arguably, even more important is what happens domestically – are developing country tax systems regressive or progressive? Are they raising enough cash to fund state services? Are they efficient and free of corruption? This absolutely magisterial overview of the state of tax systems in Africa comes from Mick Moore (right), who runs the International Centre for Tax and Development (ICTD). It was first published by the Africa Research Institute.

Anglophone countries have led the way in reforming tax administration in Africa, considerably more so than their francophone peers. The reasons for this are numerous. Networks of international tax specialists are based mainly in English-speaking countries. Many of the modern systems that promote best practice within tax authorities were developed in anglophone countries, especially Australia. International donors, and particularly the UK’s Department for International Development (DFID), have directly and indirectly promoted a lot of reform of national tax authorities. In fact, this has been one of the success stories of British aid.

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THE International Centre for Tax and Development (ICTD) has expressed concern over the unequal distribution of wealth from natural resource investments in Africa.

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A Zambian NGO has urged the UK to continue its support for Zambia’s tax authority to ensure that more revenue is raised from mining companies and other multinationals.

The Centre for Trade Policy and Development (CTPD) said the new Zambian government has taken steps to increase the country’s tax base – but, compared with the total amount of revenue that could be raised, there is a long way to go.

Savior Mwambwa, executive director of the CTPD, gave evidence on Tuesday before the UK parliamentary international development committee, which is looking at taxation in developing countries, focusing on Zambia, which committee members will visit in the next few weeks.

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Nothing is certain in life but death and taxes. Needless to say, nowhere is it possible to escape the former; but it’s all too easy to shun taxes in South Sudan.  The system as it presently stands is too complex, difficult to understand, enforce, and comply with.  Meanwhile, abundant oil rents and aid – in combination with an underdeveloped economy – threaten to undermine incentives to tax in the first place.

Though we all may despise paying them and no matter how dry one might find the subject, taxes are important – and arguably central – to state-building efforts, or the arduous process of establishing mutually accountable, legitimate, public institutions. Indeed, beyond bankrolling basic public goods and services, taxes can help forge more accountable, responsive, and representative governments.

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Sri Lankan tax authorities should cooperate more with South Asian counterparts to be more vigilant of tax evasion by cross-border enterprises, international experts said in Colombo.

 “African national tax administrators have been cooperating on technical professional issues over quite a few years,” Allen Kagina, commissioner general of the Uganda Revenue Authority said.

 “And it has proved extremely valuable in increasing compliance by enterprises operating across one or more countries in the region.”

 She was speaking at an Pulling Ourselves Up: Taxation, State-Building, and Away from Aid organized by the Institute of Policy Studies together with the International Centre for Tax and Development ICTD in UK.

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