By KURIAN MUSA
Africa is making fast paces towards self-reliance on its own resources as legislators from 33 different countries agreed to work together in curbing illicit Financial Flows and Tax evasion in the Continent.
Africa Parliamentarians Network on Illicit Financial Flows and Tax (APNIFFT) meeting in Arusha, Tanzania, which also focused on tax and human rights issues, unanimously supported the push against illegitimate financial flows.
The members of parliament from various countries in Africa made resolutions to work together with the civil society in a capacity building efforts on knowledge on illicit Financial Flows. The knowledge is critical for governments signing contracts with multi-nationals companies.
According to Khanyisile Tshabalala, Chairperson APNIFFT, illicit financial flows are responsible for draining the African Continent resources and are revenue mobilization efforts.
“Abusive transfer pricing and related commercial activities attributed to multinational companies operating on the continent represent a significant source of this outflow,” said Tshabalala.
In an in depth observation, Lack of political will was mentioned to be the main challenge faced by administrators working on taming the vice.
Executive Director Tax Justice Network-Africa Alvin Mosiom said: “Issues of illicit financial flows and tax justice are not just a technical issue but are political issues which also require political will. Members of Parliament have a responsibility through the legislature to push for the enactment of policies and laws that support effective domestic resource mobilization in Africa.” He urged the MPs to use various house committees and avenues to alleviate tax evasion and IFFS to allow African Countries to rely on their own resources.
The Director of Strategy and Planning at the Africa Tax Administration Forum (ATAF), Lincoln Marais said; “The political spectrum does not understand all the issues involved in tax administration so we are very excited about APNIFFT as it provides a platform for the support that tax administrators need.”
Through the forum, African legislators share ideas and knowledge that enable them to have a sustained advocacy related discourse and debate in a simplified manner on illicit Financial Flows, Tax governance and domestic resource mobilization in the African region.
An institutional foundation for the discourses was laid down by the parliamentarians including adoption of the constitution that will guide them. The MPs developed agreed to collaborate in the efforts to curb tax evasion by the multi-nationals and those dealing in illegitimate trade.
Tax Justice Network- Africa and the East Africa Tax and Governance Network held a consultative workshop in Arusha, Tanzania involved eight civil society group representatives in the discussions with the legislators.
A damning report by Action Aid and Tax Justice Network Africa published a report estimating that East African countries were losing revenues of up to around US$1.5 billion and possibly up to US$2 billion a year.
The report says that in Kenya, government officials often say they are committed to reducing tax incentives, and some limited steps have been taken.
Tax Policy (Tax regimes) for Developing Countries is hampered by insufficient knowledge on the high levels of illegal tax flows by legislators.
However, Kenya’s actual policy has mainly been to maintain and even increase tax incentives, notably though introducing new Special Economic Zones. The amount of revenue lost is unclear since Kenya’s tax incentive regime remains completely un-transparent, but it is likely to be near the 100 billion Kenyan shillings (US$1.1 billion) a year level that our 2012 report mentions.
In the republic of Uganda, they found out that the country was losing a lot of money because more multinational firms were structuring their transactions with links to these countries. Consequently, Uganda has started renegotiating treaties on taxation it signed with countries such as Netherlands and Mauritius, which are known to be low-tax jurisdictions.
The Tax Justice Network–Africa (TJN-A) in collaboration with the East Africa Tax and Governance Network hosted the consultative forum held in Arusha 4 to 5 July 2016.
Thirty-three Members of Parliament from various countries in Africa and eight civil society group representatives, discussed the role of legislators in stopping illicit financial flows.
A press release from TJN-A stated that: “The objectives were, among other things, to update and brief MPs on the last APNIFFT meeting, update MPs on recent developments in Africa on Illicit Financial Flows.
TJN-A promised to recruit new MPs on the APNIFFT while strategizing and brainstorming on an APNIFFT programme of work for the rest of the year and to agree on coordination mechanisms between the APNIFFT and CSOs”.
Welcoming the move by TJN-A, Tanu Jalloh, who heads the OpenTax Initiative-Sierra Leone (OTI-SL), a media-led advocacy platform for openness in tax administration, said the effort was one of the greatest by policy makers on the continent to strategise around one of the biggest threats to financial and economic stability on the continent.
“In apparent support of several other such calls, the United Nations considers tax injustice as a human rights issue. To a large extent those observations speak to our efforts at OTI-SL to effectively use advocacy journalism to raise public awareness around tax administration generally and, on behalf of citizens, hold tax administrators and the government to account for our tax leones.
He added that although the UN records showed that estimates for illicit financial outflows were lower, “legal tax incentives and tax breaks for extractive industries have weakened domestic resource mobilization”. He pointed out that Christian Aid in 2015 expressed concerns that the Government of Sierra Leone will lose revenues of $ 131 million in the three years 2014–16 alone as the result of corporate income tax incentives granted to five mining companies – an average of US$ 43.7 million a year”.
Meanwhile, all tax incentives combined amounted in 2012 to eight times the health budget and seven times the education budget.
This, the journalist and editor for several years said, was not being adequately challenged through advocacy journalism for public policy reforms, adding that as journalists trying to bring such social and economic injustice to the attention of the public and the world they must go beyond mere reporting on every day happenings.
In December last year a Global Financial Integrity report on IFF from developing countries between 2004 and 2013 put was estimated at US$7.8 trillion. That’s a huge loss and the problem still persists.
“OTI-SL are working very closely with the National Advocacy Coalition on Extractives (NACE) and Politico newspaper as some of the local partners to embark on a huge nationwide training for potential advocates in tax justice campaigns, social entrepreneurship and accountable leadership in public finance management at all levels,” he said.
A member MP of the APNIFFT in Sierra Leone, who doubles as the Deputy Speaker and Chairman of the Public Accounts Committee in Parliament, Chernor R. M. Bah, told Politico that it was a good idea to get policy makers to commit themselves to the process of dealing with IFF.
“I could not travel to witness the last meeting in Arusha but I hope to be on the next one because this is very close to my heart. We stand to benefit a lot as a government and as a people if the problems associated with IFF are addressed at policy level. Although Sierra Leone has not suffered too much like other countries have, according to UN and ActionAid reports, we nonetheless are very concerned with the issue of proper tax systems,” he said.
When APNIFFT was set up in 2014, a lot of the members of parliament come into these meetings with no idea of what Illicit Financial Flows are, and we have been able to build capacity on the same which is very critical for Governments as they sign contracts with multi-national companies,’ says Khanyisile Tshabalala, the current Chairperson of APNIFFT.
Illicit financial flows are responsible for draining the African continent of resources for development and her revenue mobilization efforts. Abusive transfer pricing and related commercial activities attributed to multinational companies operating on the continent represent a significant source of this outflow.
“It is important for Governments to comprehend and demystify issues surrounding Tax even as they try to attract Foreign Direct Investments into their countries,” she added.
There has been a renewed political momentum globally to tackle the illicit financial flows through various international initiatives and efforts aimed at changing the global tax rules.
“One of the biggest challenges that tax administrators in the continent face is that there is a lack of political will and support for the work that they do. The political spectrum does not understand all the issues involved in tax administration so we’re very excited about APNIFFT as it provides a platform for the support that tax administrators need,” said Lincoln Marais the Director of Strategy and Planning at the Africa Tax Administration Forum (ATAF).
The main goal of APNIFFT is to provide a platform for African legislators / parliamentarians to undertake sustained advocacy related dialogue and debate in a simplified manner on Illicit Financial Flows, tax governance and domestic resource mobilization on the African continent.
During the two day meeting the legislators managed to lay the institutional foundation for the platform including the adoption of a constitution. To show commitments the MPs developed a work programme for the next year and agreed to collaborate in their efforts to curbing IFF from Africa.
In his closing remarks Alvin Mosioma, the Executive Director of Tax Justice Network-Africa, appealed to the leaders to pursue the Tax Justice agenda at different platforms and fora accessible to them. This includes work on the floor of Parliament and the different parliamentary committees.
“Issues of Illicit financial flows and Tax justice are not just a technical issue but are political issues which also require political will. Members of Parliament have a responsibility through the legislature to push for the enactment of policies and laws that support effective domestic resource mobilisation in Africa,’ said Alvin Mosioma.
In 2015 agenda item three of the twenty-eight session of the Human Rights Council called for the promotion and protection of all human rights, civil,
political, economic, social and cultural rights, including the right to development.
“Illicit financial flows should not be a human rights concern for States only. While States have the primary duty to respect, protect and fulfil human rights, business enterprises are also required to ‘avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur’ as set out in the Guiding Principles on Business and Human Rights (guiding principle 13). Multinational enterprises, as well as their advisers and financiers, need to understand that their tax planning strategies have potential negative impacts on human rights.
“Business enterprises that contribute through transfer mispricing, tax evasion or corruption to significant illicit financial outflows cause adverse human rights impacts by undermining the abilities of States to progressively achieve the full realization of economic, social and cultural rights. This is particularly the case when they operate in States that have difficulties in meeting the minimum core human rights obligations. One obvious way for business enterprises to show responsible behaviour and demonstrate compliance is to embrace a greater degree of transparency, in particular by publishing on a country-by-country basis their sales, profits and taxes.
“The same applies to trust and company service providers and commercial banks that do not meet basic due diligence standards when they provide services or help launder and hide illicit funds in offshore financial centres. Most illicit financial flows are facilitated by tax havens, secrecy jurisdiction, shell companies that cannot be traced back to their owners, anonymous trust accounts, bogus charitable foundations, money-laundering techniques and questionable trade practices”.
KENNY ROGERS: AWARD-WINNING MUSIC MAESTRO
Pablo Escobar: The Colombian Drug Baron
Dock Workers Union 21-day ultimatum
Mombasa court finds six foreigners guilty of trafficking heroin worth Ksh 1.3b
New mention date for visas scam suspect
Sensational swimmer, Duini Caffini, smashes her own record at Mombasa swimming gala