5th High Level Tax Policy Dialogue

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mai 05, 2021 to mai 06, 2021

The African Tax Administration Forum (ATAF) in collaboration with the African Union Commission, and supported by the African Development Bank (AfDB) is organising the 5th High-Level Tax Policy Dialogue, entitled Post-Covid Taxation: Policy and Administrative Strategies for Mobilising Enhanced Domestic Taxes in Africa. The virtual conference will be delivered over two days, bringing together tax policymakers, tax administrators, development partners, tax experts, academics, CSOs and research organisations.

ABOUT THE 5TH HIGH-LEVEL TAX POLICY DIALOGUE.

The purpose of this High-Level Dialogue is to bring together critical stakeholders from African Finance Ministries and Tax Administrations, as well as other key stakeholders to form a proposed network. This network will enhance coordinated tax policy and tax administration decisions and actions in the ever-changing global tax environment. Through a consultative process and dialogue, the meeting will outline priority as well as salient tax-related issues for collaboration between the Ministries of Finance and Tax Administrations. The framework will thus ascertain critical engagement on the objectives, impact and implementation of vital tax policies.

In building a closer link between tax policymakers and tax administration officials, the High-Level Tax Policy Dialogue delivered yearly has proffered solutions for African countries in dealing with critical issues such as the global tax agenda and taxing the digital economy. This year, the meeting will focus on domestic taxes.

As African countries strive to recover from the COVID-19 pandemic, this high-level dialogue aims to deliver outcomes that will help countries shore up domestic tax revenues. These revenues are vital for governments to meet critical expenditure needs and other requirements such as social security nets for poorer households that have been adversely impacted by the COVID-19 pandemic.

BACKGROUND INFORMATION

As a result of the COVID-19 pandemic, 2020 was a challenging year. Africa’s GDP contracted 2.1 per cent in 2020. It is estimated that about 39 million Africans could fall into extreme poverty in 2021 if appropriate support is not provided, with disproportionate effects on women (African Economic Outlook 2021). In 2020 the OECD forecasted a decline in economic growth for the world’s economies, with China having been expected to contract by 4.9%, Europe by 0.8%, with the world GDP falling by 0.412% in the first quarter of 2020.1 The ripple effect of this contraction was observed, with the IMF reporting investors withdrawing USD 83 billion from emerging markets since March 2020. Globally, to boost economies and reduce inequality, many countries have implemented significant stimulus packages, including tax breaks, financial support for businesses and social security measures.

The African Development Bank, which launched its US$3 Billion “Fight COVID–19 Social Bond” in March 2020, while the International Monetary Fund (IMF), through its various facilities, including the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI), has provided US$ 16.38 Billion3 to Sub-Saharan countries. With the closure of borders during the pandemic, and the subsequent nationalistic policies implemented by governments globally, African countries will become more reliant on domestic tax revenue sources. The contraction in world demand for commodity prices has further impacted African countries’ ability to mobilise much needed revenues. By way of example, the United Nations Economic Commission for Africa (UNECA) estimated that in 2020 alone, Angola and Nigeria were set to lose USD 65 billion in income collectively, with a concomitant adverse effect on their ability to implement much needed development programs aimed at reducing poverty, let alone vaccination against COVID-19.

The African Union4 reports that since 2006, tax revenues have been steadily growing on the continent, with the most significant contributor being tax on goods and services accounting for 53.7% of average tax revenues in 2017 and VAT representing 29.4%. While this growth has been commendable, it is estimated that the continent could lose between 20-30% of fiscal revenue. Although other revenue sources are crucial for boosting DRM efforts, domestic taxes are the most significant source of tax revenues in most African countries. Last year, as the pandemic worsened, many key sectors such as hospitality, tourism, travel, and extractives were affected, causing huge revenue losses for these businesses and governments. As the rollout of the COVID-19 vaccine brings hope of normalcy and the reopening of economies and businesses, 2021 is deemed the starting point for recovery by many countries. In improving the administration of core taxes such as Corporate Income Tax (CIT), Personal Income Tax (PIT), Value Added Tax (VAT), and Pay As You Earn (PAYE), tax policymakers and tax administration officials will have to dig deep in finding innovative solutions that will ensure increased tax compliance.

OBJECTIVES AND EXPECTED OUTCOMES OF THE DIALOGUE.

The objectives of the dialogue are summarised as follows:

Creating a platform for tax policymakers and tax administration officials on the continent to collaborate on improving tax policy decisions that will impact Domestic Resource Mobilisation efforts.
Improving African tax systems by sharing ideas, innovations and strategies successfully implemented in other jurisdictions.
Enhancing the capacity of tax officials on the continent through interactions through conferences, networking, policy papers and one-on-one collaborations.
Applying the Science Model to tax collections.
Proffering solutions and sharing ideas on DRM strategies and initiatives, especially post-COVID-19 crisis.

The expected outcomes.

Proposing strategies for African countries to shore up tax revenues, to fill gaps exacerbated by the COVID-19 pandemic through effective administration of CIT, PIT, VAT and PAYE.
Advocacy for increased tax compliance through direct engagements with the Private sector as well as applying the Science Model to taxation.
Finding innovative mechanisms to tax the resource sector.
Proffering indirect taxation solutions, including effectively administering VAT as a critical measure in Domestic Resource Mobilisation efforts.
Innovative approaches to improve tax administration to act as a long-term solution in developing tax systems.
Recommending ideas on how to tax the informal sector considering the current pressures currently facing poorer households in the light of the pandemic.
Steps required to increase collaboration between the private sector and governments in improving tax policy measures and tax administration procedures.

TARGET AUDIENCE

The High-Level Dialogue is aimed at senior officials of African Ministries of Finance (Ministers, Permanent Secretaries/Directors-General) and Tax Administrations (Commissioner-Generals/Deputy Commissioner-Generals). Senior representatives of International and Continental organisations will be invited to contribute to the understanding of the issues at hand. At the same time, the legislature, Academia, Civil Society, Research Organisations will engage not only on legal and other policy reforms but on the advocacy required to achieve the necessary change.

STRUCTURE OF THE DIALOGUE

The meeting will be delivered virtually over two days and will centre on the following topics:

• Session 1: Private Sector Development: A Balanced Approach to Direct Tax Policy and Administration for Economic Stabilisation.
The World Health Organisation (WHO), in March 2020, declared COVID-19 to be a pandemic. The spread of the coronavirus throughout various parts of the world necessitated the introduction of measures designed to ‘flatten the curve’. In many parts of the world, borders were closed, and economic activity halted. COVID-19 resulted in significant fatalities and loss of productivity and livelihood. While fatality rates were significantly lower on the continent, when compared with Europe and the US, the pandemic has had a devastating impact on the economies of many African countries that rely on sectors such as tourism, agriculture and the extractive economy. The significant decline in exports has further curtailed Gross Domestic Product (GDP) growth. In this light, African countries must take a balanced approach in creating an environment that facilitates the upturn of economic activities while optimising much needed tax revenue for the provision of socioeconomic infrastructure. The observation is that most African jurisdictions have concerted efforts on deepening the tax base through policies and processes that improve tax compliance rather than introducing new taxes. It has been a case of providing incentives necessary to ensure the survival and sustenance of economic activities affected by COVID-19 while making sure that relevant economic actors pay their fair share of taxes. This discussion explores the extent to which tax policy and administration have approached and should approach the various stages of responding to the pandemic with a balancing act between supporting government finances and inclusive economic growth.

• Session 2: COVID-19: The Role of Indirect Tax Policy and Administration in mitigating the socio-economic impact of the pandemic.
In African Tax Outlook countries, indirect tax revenue accounts for a higher share of GDP and total revenue at 9.3% and 61%, respectively, with a similar trend shown in the regional economic groupings. Specifically, VAT is the highest contributor to total tax revenue at 30.6%. Considering the contribution of indirect tax to DRM in Africa and its relationship with economic decisions at the micro and macroeconomic levels, it is not only important to consider the performance of indirect tax measures that have been adopted in containing and mitigating the impact of COVID-19, but also to exploit the lessons learned from the adaptability demonstrated by revenue authorities. The session will also discuss the role of indirect tax in fostering economic recovery and growth.

• Session 3: The Future of Resource Taxation.
For many resource-rich developing countries, mineral resources present an unparalleled economic opportunity to increase government revenue and national economic activity. However, the reality is that most developing countries have struggled to fully realize the expected revenues from the sector due to a range of challenges, both external, such as aggressive tax planning by multinationals, and internal, including weak enforcement of tax laws and overly generous tax incentives. The Future of Resource Taxation is a dedicated dialogue for governments, civil society, and industry to exchange ideas on how the current system of mining taxation can be improved, as well as alternative options available to resource-rich countries to maximize the returns from their mineral wealth. The IGF and ATAF through the Future of Resource Taxation initiative, has called for ideas from non-governmental stakeholders and will be launching the government survey during this session.

• Session 4: Tax Compliance Improvement Frameworks: Policy Issues for enabling access to information by Tax Administrations.
Due to the constrained economic environment, it has become necessary for administrations to seriously consider optimising already existing processes to increase efficiencies in Domestic Revenue Mobilization (DRM). A revenue service that will thrive in the current climate will focus on continuously enhancing both its human and process capabilities. Access to taxpayer data and the effective use thereof could serve as a critical tool for enhancing DRM. Data and the use of data analytics could be applied as a critical tool to inform revenue administrations regarding the allocation of scant human resources in order to achieve a high level of output. This session explores insights into the requisite informational frameworks (both policy and administrative) that can be put in place by revenue administrations in enhancing DRM.

• Session 5: Applying the Science Model to Tax Policies and Administration.
The Uganda Revenue Authority (URA) has been at the forefront of developing and applying Science and Digital Forensics approaches in tax administration. These approaches have been a fundamental feature of URA’s enhanced compliance management strategy. Indeed, by exploiting their versatility and novelty, the administration has realised significant benefits, including better tax-audit outcomes, identification of hitherto complex fraud schemes and improved policy, litigation and arbitration support.

• Session 6: Assessing and Improving the Performance of Tax Systems.
The improvement of tax systems is underpinned by having the necessary data and analytical tools to evaluate the performance of the tax system and deducing the areas of focus for reforms. There are various tax administration assessment tools such as the ATAF’s African Tax Outlook (ATO) project, OECD FTA Maturity Models, RA-GAP, TADAT, Tax Administration Fiscal Blueprints and Tax DIAMOND. These tools use a wide range of data to measure the performance of tax administrations and could be used collectively or individually to assess various aspects of a tax system. For African countries to sustain the progress in improving their tax systems, there is a need to periodically conduct these assessments enabled by harnessing relevant data and information from within and outside the tax administration.

REGISTRATION

The 5th High-Level Tax Policy Dialogue organizing Committee will ensure participants successfully and seamlessly register online for the two-day meeting.
Registration is now open. Participants should use this link to register- https://ataftax-org.zoom.us/meeting/register/tZwkce-prDopHdOn_VKcOD_gV9l...

RESOURCES AND REFERENCE MATERIALS