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African Tax Administration Forum Implications for Multinationals

08 July 2011   (0 Comments)
Posted by: Author: Karl Muller
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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 revenue administration.

(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 Administrations. 

(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 Zimbabwe. 


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 information.


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)



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