Zim set to enhance tax transparency
Zimbabwe is on path to enhancing tax transparency and increasing revenue to the fiscas after joining the Organisation for Economic Co-operation and Development (OECD) initiative on tax transparency – Global Forum on Transparency and Exchange of Information for Tax Purposes.
Between 2000 and 2020 Zimbabwe is estimated to have lost over US$32 billion through illicit financial flows.
The Democratic Republic of Congo, Angola, Zimbabwe and Sierra Leone have joined the Global Forum as 165th, 166th, 167th and 168th members respectively since June 2022.
Already, the 2023 Tax Transparency in Africa progress report shows the region has realised additional revenues totalling €1,69 billion thanks to voluntary disclosures, the implementation of information exchange mechanisms and rigorous offshore investigations.
This was revealed at the 13th Meeting of the Africa Initiative in Cape Town last week. From 2009 through 2022, these measures have effectively boosted tax revenue, interest and penalties, underscoring a substantial progress in tax transparency across the continent.
The report-co-produced by the Global Forum on Transparency and Exchange of Information for Tax Purposes the African Union Commission and the African Tax Administration Forum, with support from the African Development Bank—presents the progress of 38 African countries in tackling tax evasion and other illicit financial flows (IFFs) through transparency and exchange of information.
The release of the report comes as African governments continue to step up efforts to bolster domestic resource mobilisation in the face of economic headwinds that include global inflation and mounting debt levels.
The OECD estimates that Africa loses as much as $60 billion each year in illicit financial flows.
For the first time, one African country reported collecting additional taxes—worth €10,6 million— through the use of common reporting standard data.
Now, 23 African countries are parties to the multilateral Convention on Mutual Administrative Assistance in Tax Matters, the most comprehensive instrument for all forms of co-operation to tackle tax evasion, thus substantially expanding their Exchange of information networks.
Ten African countries have committed to automatic exchange of financial account information (AEOI) by a specific date and more are expected to do so in the near future, with the assistance of the Global Forum and its partners.
A World Bank study projects that participation in exchange of information mechanisms could increase African countries’ tax revenues from 5 percent to 19 percent of GDP.
Commissioner of the South African Revenue Service (SARS) and co-chair of the Africa Initiative Edward Kieswetter, said collaboration was essential to serve our shared ambition for effective resource mobilisation.
“A tax risk anywhere, is a tax risk everywhere. Tax administrations are called to serve a transformative and higher purpose in the interest of society, Kieswetter said.
Representatives of the two new African members of the Global Forum, Zimbabwe and Angola, attended the meeting. The event also featured the publication of a new toolkit to help tax administrations set up and benefit from initiatives like the Global Forum.
-ebusinessweekly
