African Tax Administration Forum Implications for Multinationals
08 July 2011
Posted by: Author: Karl Muller
African Tax Administration Forum Implications for Multinationals
In August 2008, an International Conference on Taxation, State Building
and Capacity Development in Africa was held in Pretoria.Attending this
meeting were commissioners, senior tax officials and policy makers from 39
African countries.It was this conference that led to the establishment of the
African Tax Administration Forum (ATAF).The inaugural meeting of this body took
place in Kampala, Uganda in November 2009.
Purpose of the forum
The purpose of this forum is clearly articulated in its mission
statement and objectives that are contained in the establishment agreement that
was adopted at the second meeting of the ATAF council in Tunisia in November
2010.Its mission statement reads:"ATAF shall provide a platform to improve
the performance of tax administration in Africa. Better tax administration will
enhance economic growth, increase accountability of the state to its citizens
and more effectively mobilise domestic resources.”
Its objectives are:
(a)Strengthen African tax administrations to improve domestic resource
mobilisation for economic development.
(b)Enhance the professionalism of African tax administrators through
capacity development, dialogue and interaction.
(c)Innovate, develop, share and implement best practices in African
(d)Combat tax evasion and avoidance through co-operation between African
tax administrations, authorities and international stakeholders.
(e)Develop key relations with civil society.
(f) Improve good governance, transparency and accountability.
(g)Ensure greater synergy and co-operation in capacity development
among all relevant stakeholders in order to give greater support to African Tax
(h)Provide a mechanism allowing African perspectives on tax issues to
inform and influence the global dialogue on tax issues.
South Africa was elected as the permanent seat for the Secretariat of
the ATAF.In November 2010,the ATAF Agreement was signed by nine of the 10 ATAF
council members and will enter into force 30 calendar days after at least
five of the 30 member countries have ratified it.This will pave the way
for the establishment of a legal entity to be housed in Pretoria to be
formed and become operational.
It is clear that the forum will focus on African issues and a new era
of co-operation between Africa Tax Administrations is dawning that has been
sorely lacking in the past. While the ties with the OECD and other revenue
services across the globe will persist, there will be far greater emphasis on
the activities of multinationals in Africa than has been the case before. Some
of the aspects that multinationals and all taxpayers in Africa should be aware
of will be discussed in greater detail later in this article.
Member countries and council members
The member countries are Benin, Botswana, Chad, Cote d’Ivoire, Egypt,
Eritrea, Gabon, Ghana, Kenya,Lesotho, Liberia, Madagascar, Malawi, Mauritania,
Mauritius, Morocco, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone,
South Africa, Sudan, Swaziland, Tanzania, The Gambia, Uganda, Zambia and
The ATAF Council is chaired by SARS Commissioner Oupa Magashula and the
other members are Mr Keneilwe Robert Morris from Botswana; Mr Michael G. Waweru from
Kenya; Mr George Blankson from Ghana; Ms Ifueko Omoigui Okauru from
Nigeria; Ms Mary Baine from Rwanda; Mr Gershem T. Pasi from
Zimbabwe; Mr Ogouma Joel from Gabon; Mr Brahim Kettani from Morocco; and Mr
Diop Ebbes from Senegal.
Activities of the ATAF since 2009
The first three conferences or workshops of the ATAF focussed on
taxpayers.The first conference held before the official launch of the ATAF
in November 2009 was held in Botswana where taxation of mining, oil and gas
sectors was discussed.The discussions included the use of incentives, tax
avoidance and general policy issues. Not surprisingly, the next sector to be
tackled was the financial services industry in Vienna.Under the spotlight came
banks, insurance companies and financial instruments.Tax residency, attribution
of profits to permanent establishments as well as withholding regimes was
focussed on.Egypt kicked off the 2010 agenda with transfer pricing being the
topic. Focus areas were intra-group services, central cost sharing
agreements and also intangible assets.
In keeping with the objectives of improving capabilities, the focus then
shifted to what can be termed internal or administrative issues.Risk management
and taxpayer service were dealt with in Uganda, followed by Pretoria where tax
treaty negotiation was discussed and Rwanda rounded off with the organisation
and management of a tax administration.
Audit of taxpayers was the next item. Kenya started off with the topic
of financial sector audits, followed by Ghana which dealt with the audit
of small and medium enterprises, with Mauritius completing the theme with
auditing of multinational enterprises.
All in all, 2010 was a busy year for the ATAF with the eighth and final
conference in Botswana dealing with the exchange of information under double
tax treaties.There will be a similar level of activity in 2011 with Kenya
having already hosted a conference on large business units.
Planned activities for 2011 include developing tax information exchange
agreements; taxpayer services;
transfer pricing for policymakers; organisation and management of tax
administrations; transfer pricing
implementation and case studies; and a further session on exchange of
Implications for taxpayers
The activities outlined give a clear indication that the ATAF has
mobilised and that capability is being grown and the levels of co-operation are
being increased. Media reports also clearly prove increased activity.In Zambia,
renewed focus on administration has led to the collection of arrear mining
windfall taxes of K200 billion out of an estimated K1 trillion. The
remainder is expected to be collected by June 2011.
Uganda, Ghana, Rwanda and Zimbabwe have signed a treaty which allows
the sharing of information to curb growing tax fraud. This treaty threatens the
privacy of multinational corporations’ privacy according to some experts.
SAB Miller, who strongly denied any wrongdoing, was accused of tax
avoidance by ActionAid International and the ATAF led by South Africa,
together with Ghana, Zambia, Tanzania and Mauritius agreed to work as a team to
investigate the tax affairs of SAB Miller.
The actions by the ATAF member countries shows that they are openly
sharing information and co-operating in relation to the tax affairs of
multinational enterprises.Not all the reports are negative and the necessity
for taxpayer education is also being stressed.An example is Malawi where the
deputy commissioner stated that customs excellence can be achieved only if tax
education is promoted.Tax education should be introduced at all levels and
even in secondary schools and universities.Taxpayers should be reached before they make mistakes and preventative tax
education programmes can serve this purpose.
Taxpayers are advised to take note of the activities of the ATAF and
to be far more vigilant in the management of their tax affairs.Multinationals can expect more audit activity and increased focus
on transfer pricing, withholding taxes and should be mindful that information
is being shared across the region in an unprecedented manner.
Source: By Karl Muller (TaxTALK)