Taxation is central to development. It provides governments with the funding required to finance the infrastructure on which economic development and growth is based. It creates an environment in which business and wealth creation is carried on. It also plays a defining role in shaping the way in which the activities of government are carried out.
It is in this context that the OECD’s Centre for Taxation Policy and Administration (CTPA) is increasing its commitment to work with African countries to develop tax systems reflecting the highest international standards of effectiveness, accountability and transparency.
Taxation is a vital issue for African countries to meet their Millennium Development Goal commitments. African governments look to tax:
- to finance their social and physical infrastructural needs;
- to provide a stable and predictable fiscal environment to promote growth; and
- to ensure that the costs and benefits of development are fairly shared.
Through CTPA, the OECD is working with African countries, other international organisations, aid agencies and key academics to:
- strengthen democratic institutions and processes in Africa through taxation, reinforcing the relationship between state and population to increase government responsiveness and accountability;
- strengthen the ability of countries to collect sufficient revenues to develop their own infrastructure and avoid aid dependency or single resource dependency;
- ensure that companies operating in a particular territory pay a fair share of tax;
- replace revenues from excise tariffs following movement towards free trade across the continent.
African Tax Administration Forum (ATAF)
Last year, the CTPA worked closely with SARS, African Tax Commissioners, the African Development Bank and the OECD’s Development Assistance Committee to support a key Conference on Taxation, State Building and Capacity Development. The Conference, held in Pretoria in August 2008, brought Tax Commissioners from African countries into dialogue with Commissioners from OECD member countries, donor agencies, other interested international organisations and academics working in the field.
The senior African Tax Administrators participating in the conference decided to work towards the launch of an African Tax Administration Forum as the central platform for African administrators to articulate African tax priorities, develop and share best practices in the region and further afield, and build capacity in African tax policy and administration through peer learning and knowledge development.
As an African-led initiative to be formally launched on 19-20 November 2009, in Uganda, the OECD’s role has been based on the priorities and needs determined by ATAF. Facilitating international dialogue through the provision of technical input on events and on research and diagnostic studies to be held within the Forum’s framework has been a central aspect of the OECD’s collaborative role. These include:
- Technical Event on the practical Implementation of Transfer Pricing rules held from 21-23 July 2009 in Entebbe, Uganda. Attended by 28 participants from 14 African countries (Uganda, Ghana, Sierre Leone, Cameroon, Morocco, South Africa, Nigeria, Burkina Faso, Botswana, Senegal, Tanzania, Mozambique, Swaziland and Zimbabwe).
- Technical Event on the Taxation of Minerals, Oil and Gas held in Gaborone, Botswana from 12 to 14 October 2009.
- Technical Event on the Taxation of Financial Markets held on 7-9 December 2009 in the OECD’s Multilateral Tax Centre in Vienna.
- Building on the work to date, the OECD’s DAC GOVNET is conducting a detailed research project to illustrate the practicalities of how tax can improve accountability and contribute to state building with the potential to provide the basis of a shared tax and state building agenda for donors and developing countries with ATAF being the main customer of the outcomes.
- Provide peer review and input to the joint ATAF/African Development Bank project on sharing experiences between Korea and East Africa on Domestic Resource Mobilisation for Poverty Reduction. The scope of work includes commissioned studies on in-depth analysis of revenue mobilization in selected countries and the role of domestic revenue mobilization in relation to alternative sources of financing for development.
An African voice setting out what Africa needs is a critically important development in the tax arena and it will continue to be strongly supported by the OECD.
CTPA’s Global Relations Programme
CTPA maintains a dialogue between African countries (and other non-OECD economies), and OECD member countries promoting international co-operation on transfer pricing, exchange of information, the negotiation, application and interpretation of tax treaties and a variety of topics in tax policy and administration.
With over 70 week-long events per year, directed towards the needs of participating countries and addressing issues of particular relevance to them, the Programme is an essential element of the global dialogue on taxation in North, Eastern and Southern Africa where significant events are held, bringing together OECD, African and other governments in the tax policy and administration areas to allow them to share –and mutally learn from- their experience and expertise.
International Tax Dialogue
Another key vehicle for the OECD’s involvement in Africa is the International Tax Dialogue, a collaborative project of the European Commission (EC), Inter-American Development Bank (IDB), International Monetary Fund (IMF), United Kingdom Department for International Development (UK-DFID), OECD and World Bank.
Aiming to facilitate dialogue to share good practices and pursue common objectives in improving the functioning of national tax systems, the ITD functions to increase co-ordination between international and regional organisations at a global level as well as a taylored programme within Africa.
Recent activities include an Africa regional conference on taxation of micro and small business which was held in Rwanda in April 2009. A pilot of comparative analysis study of 10 to 15 tax systems and tax administrations in Africa has now also been launched and, in association with ATAF, an African knowledge-sharing internet site is under development. The internet site will include a library of shared documents, a “one-click” search over all country websites, an extensive range of links and contacts and a map of current reforms underway. Implementation is expected late 2010. The comparative anlaysis study, also to be concluded in late 2010 aims to promote greater understanding between African tax officials setting out the context in which revenue bodies operate, as well as to serve as a key tool for both administrators and policy makers to identify opportunities to improve the design and administration of their respective tax systems. Should the pilot prove useful to African countries, a subsequent broader study or a wider range of countries is envisaged.
For more information visit www.itdweb.org.