April 2016
Some wealthy individuals in private and public sector either do not pay taxes or grossly under-declare their income. But if all these individuals remitted their income tax, the country’s revenue would be boosted.
Read the full piece here.
Media Coverage
April 2016
Roadside eatery in India. Garrett Ziegler/Flickr, CC BY-NC
ICTD CEO Prof. Mick Moore was recently interviewed by BBC World Service, about india’s plan to raise more revenues by going after the smallest businesses – especially samosa vendors.
According to Prof. Moore, “Though these small businesses can’t be ignored entirely, most governments rarely succeed when they go after the informal sector.”
“Instead of going after these very small businesses, the government should concentrate their efforts on administering tax systems that they already have in place in order to plug their loopholes. That will go a long way in ensuring people pay their taxes in the long run”. Said Prof. Moore.
The full interview which was aired on Friday 15 April 2016 can be found here.
April 2016
Our Research Officer Rhiannon McCluskey had a live radio interview on 19 April 2016, which airs on 702 and CapeTalk, commonly known as “The Money Show with Bruce Whitfield. This show is hosted each weeknight on two radio stations in Johannesburg and Cape Town (South Africa) by Bruce Whitfield, and focuses on business/economic news on the continent.
You can listen to the full interview here.
The interview was based on Rhiannon’s highly acclaimed and timely blog piece that was published on The Conversation website titled, “Why African countries are not taxing their rich. Why they should.”
According to Rhiannon, “The number of dollar millionaires in Africa rose at twice the pace of the rest of the world in the past 15 years. However, it is challenging for African governments to tax these wealthy people.” Read The Conversation article here.
Rhiannon’s article drew from a recent ICTD study titled, “Boosting Revenue Collection through Taxing High Net Worth Individuals: The Case of Uganda.” You can download the Working Paper here.
October 2015
Would you like an official value added tax receipt with that 40inch TV? No problem, that will only cost you an extra $42.
We watched a woman in downtown Nairobi in this very situation. She left with the TV, but without the receipt. Would you choose differently?
But do you know how much money the government loses each time you buy goods from vendors who don’t issue you with VAT/ETR receipts?
Do you understand that by doing this you are actually helping these businessmen evade taxes, and deny the government much
seded revenue to provide free primary education; fund hospitals; build roads etc?
July 2015
Rwanda has been urged to embrace best international practices on taxation and transfer pricing to boost cross-border trade and enhance the investment environment.
Dr. Thomas Balco, a tax expert from the International Centre for Taxation and Development (ICTD), said adopting global best practices in tax administration helps promote tax rights, as well as eliminate harmful tax competition that often affects competitiveness of companies.
“Apart from referring to rules that regulate tax liabilities, and the interaction of tax systems on cross-border trade, it is equally critical for Rwanda to strengthen its tax policies and align them with international tax systems,” Balco pointed out.
The ICTD expert and others from the Central Asia Tax Research Centre are conducting a five-day training for 100 tax inspectors, auditors and legal experts from across the country.
July 2015
Low-income countries are being called on to generate their own financial resources for development. One of the ways they can do that is through taxes. It’s being discussed at the Third International Conference on Financing for Development in Addis Ababa (July 13-16).
Britain’s Institute of Development Studies has issued a policy brief on Building Tax Capacity in Developing Countries. It says that “governments will be urged to tax more effectively” and donors will be called upon to help build the capacity to do so.
Professor Mick Moore, CEO of the International Center for Tax and Development and one of the authors of the brief, said, “I think there’s now a very widespread understanding that a lot of low income countries could probably raise more of their own money themselves. And many of them understand this. You know, we’ve had an era of what I call ‘big aid’ for quite a long time now. And I think it’s clear to most people in the world that that era of ‘big aid’ is going to draw to an end.”
July 2015
SOMALIA is not only one of the world’s poorest and least developed countries, it is also one of the most dangerous for tax collectors. By one reckoning a fifth of tax collectors in the capital, Mogadishu, were killed in 2012-14. Armed guards now accompany the remainder on their rounds. That may be an extreme case, but most poor countries struggle to raise much revenue, and therefore to pay for basic infrastructure and services.
Such difficulties will be one of the main topics of discussion at a United Nations conference in mid-July in Addis Ababa, the capital of Ethiopia, which will debate ways to finance developing countries’ most urgent needs. It is a precursor to two more big powwows this year that hope to set the agenda for development for the next 15 years. At the first, in New York in September, the UN plans to adopt global targets for development, called the “sustainable development goals”. At the second, in Paris in December, it hopes to agree a global scheme to combat climate change. Christine Lagarde, the head of the IMF, calls the three meetings a “once-in-a-generation opportunity for global development”.
February 2015
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.
February 2015
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.
December 2014
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.
December 2014
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.
December 2014
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.