Uganda advised on oil tax laws
London: Uganda might have to clearly write out its tax laws to avoid any looming battles with international companies – battles that might cost it money and time.
During a seminar in London recently, experts pointed to the tax cases Uganda has had with Heritage Oil and Tullow Oil, where they commended the government for winning the cases, but feared they could later lose cases if the laws are not clear enough.
“Tullow Oil’s capital gains tax case was an open one and the Uganda Revenue Authority did a very good job and won it. However, it is quite possible that Uganda might lose the Tullow case later if Uganda doesn’t change its tax legislation,” experts who were willing to talk but sought for anonymity said recently during a course on tax and development organized in partnership with the Institute of Development Studies (IDS), University of Sussex, London, African Tax Administration Forum (ATAF) and International Centre for Tax and Development (ICTD) said.
Tullow disputed the tax assessment on the $2.9 billion farm-down of its assets to Total and Cnooc, while Heritage did the same when it sold its assets to Tullow.
Lagos proves Africa’s Property Tax potential
Declining global oil prices and a tumbling naira are threatening Nigeria’s income from exports and remittances. Whoever takes office as president in Abuja, and in the 28 states electing new governors, on 14 February, will need to address this shortfall in government revenue. Fortunately, they need look no further than Lagos, the country’s commercial capital.
Since Nigeria returned to civilian rule in 1999, Lagos State government has reformed taxes on business and property which have provided revenue for sustained improvements in local services and infrastructure.
$2.48 Billion Is What Dar Has Lost Through Trade-Mis-Invocing In A Decade
The little-understood practice of trade mis-invoicing or over-invoicing has cost Tanzania’s economy $2.48 billion in a decade. The concept of trade mis-invoicing or over-invoicing is where companies and their agents deliberately alter the prices of their exports and imports in order to justify moving money out of, or into, a country illicitly. The practice is slowly, but surely becoming common in Tanzania.
For instance, mining corporations to avoid paying income taxes inflate fuel import costs and shift taxable income out of Tanzania into tax havens abroad have allegedly used it. The amount Tanzania loses annually to trade misinvoicing or over invoicing is astounding. An international taxation researcher Ms Rhiannon McCluskey, estimates that on average $248 million worth of capital has been extracted out of Tanzania per year using this process over the past decade.
TRA: TAX EVASION STILL RAMPANT
The Tanzania Revenue Authority (TRA) has reviewed the report done by the International Centre for Tax and Development (ICTD) concerning the challenges of tax administration.
The process of analyzing the report during the 2014 ICTD Annual Meeting aims at looking at the mischief in the collection of taxes as well as improving the legal systems that regulate voluntary tax payment.
The report reveals many challenges including tax evasion, the TRA Commissioner Rished Bade said.
The report can also be used by local tax experts to learn different methods of dealing with any challenge from the taxpayers especially those who conduct international businesses.
Statistics show an increase in the number of taxpayers to 1.8 million although this is still lower than the expected number current number due to the informal business system that reduces the number of taxpayers.
How TZ loses $248m to miners
Tanzania has been losing $248 million annually, equivalent to 7.4 per cent of its gross domestic product, to trade mis-invoicing, a taxation researcher reported here at the weekend.
Ms Rhiannon McCluskey said most of the loss was from over-invoicing on fuel imports on which mining firms were exempt from paying duties.
“This suggests that mining companies are inflating their import costs to shift profits out of Tanzania and in the process, decrease their tax liability,” she said.
Ms McCluskey was presenting findings of a research on constructing Capacity to Confront Complex Tax Evasion in Africa with case studies from Tanzania and Sierra Leone.
The taxation researcher cited $705.8 million worth of over-declared capital allowances and operating expenditures the Tanzania Minerals Audit Agency TMAA) found out in 2010 when it audited 12 mining companies.
The mining firms, which were allowed to deduct their accumulated losses from their profits, had deprived Tanzania of about $176 million by declaring losses for many years before they were liable to pay corporate tax, she said.
TRA ANALYSING RESEARCH CENTRE REPORT OF THE INTERNATIONAL TAX (ICTD)
Commissioner General of the Tanzania Revenue Authority (TRA), Rished Bade, left with the chief executive officer of the Centre for rent and development, Prof Mick Moore, led the discussion on various topics presented at the annual general meeting of the International Center tax and development, held a meeting yesterday in Arusha.
Experts of international tax issues being negotiated at the annual meeting of the International Center for the study of tax issues, the meeting held yesterday in Arusha, Assistant Commissioner of the Uganda Revenue Authority (URA), Milly Nalukwago (left), Commissioner General of the Tanzania Revenue Authority (TRA), Rished Bade (center) and British tax expert, Rhiannon Mc Cluskey.
Property tax is an unexplored gold mine in sub-Saharan Africa
Despite its viability, however, the collection of property taxes in many African countries has been hampered by huge technical challenges. In most countries, there barely exist street names and house numbers. This is often compounded by difficulties in keeping property registers updated and a lack of professional property valuers.
The large property owners are usually influential people who, in most cases, have vested interests and the power to lobby to ensure that they do not pay taxes on their property.
Exploring these issues further and thereby highlighting the drawback of not having a decent property tax regime could help to reform tax systems in many African countries to raise the much-needed revenues for public services and development projects.
Forget VAT and income tax, they are easy targets in Africa but the real goldmine is property
KIGALI is a charming city. Skyscrapers are rising by the day and most foreign visitors will be impressed by its cleanliness, order and efficiency. It has been among the fastest growing cities in the world in recent years, with a highly visible residential and commercial real estate boom.
The influx of international agencies and aid workers – after the 1994 genocide – also created soaring demand for rental properties. Until recently, it was common to find a large house in Kigali rented out at $3,000-4,000 per month.
Being the capital city of Rwanda – with a population of almost one million people – one might expect that Kigali could raise high revenue in property taxes. Rwanda is also believed to have the most effective tax system. Sadly though, property taxes in Kigali amounted to a measly 3% of local revenues in recent years. This is far below the 20-30% in some neighbouring countries and the 80% it sometimes comprises in developed countries.
Taking on Big Business: Does Africa need one taxman to counter smart multinationals?
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.
OECD Intangibles Review Won’t Be Finalised in September
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.
How can we better compare fiscal fundamentals?
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.
Africa’s Tax Systems: Progress, but What Is the Next Generation of Reforms?
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.