The ATAF Transfer Pricing Is A High Priority
12 November 2012
Posted by: Author: Logan Wort
The ATAF Transfer Pricing Is A High Priority
Originally there were 34 members of ATAF; is this number still the same or has membership increased? How do you anticipate increasing the membership? What is the cost of membership and where do these fees get paid to?
The ATAF membership has grown to 35 member states, geographically positioned within the African continent. The latest members include Chad, Seychelles, Mozambique and Burundi; with the recent addition of the Comoros Islands. ATAF has increased its membership by reputation and has not sought an aggressive recruitment process as we are in the process of legally establishing ATAF as an international organisation.
We have extended invitations to the forth coming second meeting of the ATAF general assembly, taking place in September 2012, to several African states that are not currently members of the organisation. Ourobjective is for these countries to attend some of the sessions of the meeting and engage with active members to experience the benefits that membership can offer.
In mentioning one of these benefits, only members may attend ATAF technical events as part of ATAF’s capacity-building programme.The cost of membership is based on the GDP of a particular country, and ATAF currently has a three-tier structure in place for the payment of annual membership fees. The ATAF rules and procedures contain the exact fees of each tier. The annual contribution of fees range from US$5 000 at the lowest tier to US$32 000 at the top tier.
What are the priority areas for 2011/2012? I would imagine that transfer pricing would be high on the list.Yes, transfer pricing (TP) will remain a priority item on our agenda for a long while. Studies by civil society organisations have shown that TP is responsible for up to 60% of tax loss on the continent. The formation of the ATAF Working Group on Transfer Pricing last year serves to assess the areas of need for our members in the technical realm of transfer pricing. We also conduct capacity-building training events for our members on transfer pricing, which are facilitated by highly skilled international experts.
The ATAF Technical Conference on Transfer Pricing will also take place in March next year, which will allow members to engage with and participate in discussions with these seasoned experts.Another priority area is the establishment of the ATAF Technical Assistance Unit (TAU).This facility will form part of the broader ATAF capacity-building programme and seeks to deliver technical assistance to African revenue administrations in areas of scarce skills, specialised tax functions, and audits and investigations. ATAF has already received numerous requests from various members to assist with the provision of transfer pricing experts to receive hands-on advice in their respective revenue administrations.
The other priority areas for this year, which will no doubt be carried forward into next year,will be exchange of information in tax matters.The ATAF Working Group on Exchange of Information and Tax Treaties is doing great work in developing agreements such as double taxation agreements (DTA) and tax information exchange agreements (TIEA) to facilitate negotiations between members.
In April this year, ATAF held a technical conference on the exchange of information and tax treaties, which was well attended by our members. The conference, supported by the European Commission, drew guest speakers from the Global Forum, SADC, the OECD and the Norwegian Ministry of Finance, to present a global perspective in this area.
We have now completed a multi-country negotiation of an ATAF agreement on mutual assistance in tax matters that has been presented to members to sign up to in terms of their domestic legal processes. This agreement will allow for mutual information exchange of taxpayer information, joint assessment and audits as well as inter country support on complex tax matters. With the support of the GIZ, 22 ATAF members met and agreed on the final text of the agreement.ATAF is also focused on establishing itself as an international organisation with full legal status.
In this regard we are finalising the host country agreement with South Africa and rolling out the structure of the permanent secretariat.In line with our 2013 work plan, we aim to launch our first online training programme and conduct a further six technical events. In addition, we will finalise the research on the reform priorities of African tax administrations and continue with work on the establishment of an African tax centre.
How many employees does ATAF employ?
The ATAF secretariat currently has 14 personnel members. The majority have been seconded to ATAF from the South African Revenue Services (SARS). At this stage,the secretariat also employs five short-term consultants who assist in the research stream.We have two virtually seconded personnel members; one from the Botswana Unified Revenue Service (BURS), and another from the Federal Inland Revenue Service of Nigeria(FIRS).Each of these seconded staff members assists with the co-ordination of the various ATAF working groups.The final independent secretariat will employ 13 full-time staff members.
What is the progress on the African tax centre? What will its focus be and who are the developmental partners?
A feasibility study on the establishment and maintenance of the ATC has been finalised and will be presented at the second meeting of the ATAF general assembly for further consideration. The outcome of the deliberations will indicate whether or not it is viable to proceed with the implementation process of the ATC. Based on the options detailed in the feasibility study, the final decision regarding the focus and collaboration of development partners in the process of establishing and maintaining the ATC rests with the general assembly. More information will be made available shortly.
How many of the current members attended the meeting, ‘ATAF Agreement on Mutual Assistance in Tax Matters’(AMATM) held in Pretoria from 25 to 27July 2012?
Twenty-two ATAF member states participated at the recent AMATM meeting: Benin,Botswana, Burundi, Cameroon, the Comoros,Ghana, Kenya, Lesotho, Malawi, Mauritius,Mozambique, Namibia, Niger, Nigeria,Rwanda, Seychelles, South Africa, Swaziland,Tanzania, Uganda, Zambia and Zimbabwe.
Securing the attendance of the majority of the ATAF members at such an important meeting shows that our members are serious about taking the necessary steps to promote exchange of tax information for the prevention of fiscal evasion and avoidance.
The focus of the meeting was to consider and agree on the text of the mutual assistance agreement in order for each member state to sign up to the agreement, which entails that they would be required to proceed with their domestic processes of ratification/accession of the agreement.
How will ATAF manage the exchange of information in the absence of the to-be negotiated info ex agreement in Africa,which will take a few years to finalise?
Information exchange can proceed with those countries that have existing bilateral and double taxation agreements. In the case of the ATAF agreement on mutual assistance in tax matters, it comes into effect once five countries have signed up.The signatories can then immediately benefit from the provisions of the agreement.
What are the focus areas for ATAF in looking into the tax affairs of cross border taxpayers in Africa?
This is a matter for individual tax administrations. ATAF will facilitate where requested and, with the AMATM agreement,provide support to countries that co-operate on cross-border assessment, service and audits. However, transfer pricing and company financials will be an important focus.
Where do you think the biggest tax leakage is in Africa?
Various research efforts, by mainly tax NGOs,shows inter company transactions resulting in aggressive transfer pricing structures and especially thin capitalisation, as major culprits. There are concerns with aggressive financial structures, corruption and the narrow tax base on the continent.
How closely do you work with US and European tax authorities?
ATAF’s co-operation with Europe and the US tax authorities is mainly through the OECD and its forum on tax administration. ATAF also co-chairs the OECD task force on tax and development. We have, however, been in direct contact with the tax authorities of the United Kingdom and the Netherlands,both of whom have supported ATAF technical events.We have also been contacted by the US Inland Revenue Service with a view to co-operate on several projects. We expect that as ATAF grows and establishes itself as a continental tax body, more and more of these engagements will take place.
Source: By Logan Wort (TaxTalk)