- as GRA hosts continents’ tax commissioners
The African Tax Administration Forum (ATAF) has said it will expand its capabilities to support revenue authorities of the African Continental Free Trade Area (AfCFTA) in navigating the trade bloc’s tax and revenue shortfall implications.
Speaking at a 3-day 7th African Tax Research Network (ATRN) Annual Congress in Accra, on the theme ‘The Tax and Revenue Implications of the AfCFTA’, Executive Secretary of ATAF Logan Wort said member-countries of AfCFTA will have to reduce tariffs on 90 percent of goods that are traded within the continent.
This, he said, may result in short-term tariff revenue loss to most African member-countries where trade taxes remain a key source of revenue.
A recent study by the United Nations Conference on Trade and Development (UNCTAD) has estimated that Africa may lose about US$4.1billion in tariff revenues in the short-term due to AfCFTA’s implementation.
Since tariff revenues are currently a vital revenue source for many African countries, we must critically strategise on innovative ways to bridge these revenue gaps, Wort said, adding: “This is where the ATAF proudly comes in to strengthen tax administrations and mobilise the much-needed revenues efficiently and effectively for member-countries.”
He said given the AfCFTA’s importance to Africa and its implications on domestic resource mobilisation, tax commissioners on the continent in the next decade will increase focus on Customs and trade by creating a dedicated unit to provide technical assistance on excise taxes and trade-based illicit financial flows (IFFs).
It is anticipated that the creation of a single market by the AfCFTA, wherein goods, services, labour and capital will flow freely, is likely to create loopholes and exacerbate the already existing challenge of illicit financial flows in the short- and long-term.
Already, UNCTAD (2020) has reported that Africa is losing approximately US$88.6billion – which is 3.7 percent of its GDP – to IFFs.
But ATAF assured that its partnership with the African Union will dwell much on supporting the continent to navigate revenue implications of the AfCFTA, while ensuring a smooth implementation to reduce the IFFs.
Commissioner General of the Ghana Revenue Authority (GRA), Dr. Ammishadai Owusu-Amoah, said the need for regional cooperation between tax authorities is now more important than ever.
“As a border control, Customs authorities are key in detecting and preventing smuggling, counterfeit goods and overall illicit trade; but in a future single market, one national authority cannot effectively execute this duty. This calls for extreme cooperation between tax authorities to prevent tax evasion and avoidance,” he indicated.
Dr. Owusu-Amoah called for a deepened engagement between the ATAF, AfCFTA and the AU to protect future revenues of the trade bloc.
About the meeting
The 7th Annual Congress will focus on three high-level policy dialogues. Day-one will deliberate on revenue implications of the AfCFTA and look at how African countries can preserve and boost their focus.
The taxation and Illicit Financial Flows (IFFs) challenges posed by the AfCFTA and possible solutions will be the deliberations on Day-two.
Finally, Day-3 will focus on the importance of regional inter-agency cooperation in light of the AfCFTA.
The African Tax Research Network (ATRN), hosted by the African Tax Administration Forum (ATAF), is a platform of choice for African tax research that aims to facilitate African capacity for credible research in tax policy, administration, law and leadership.
The ATRN was created to meet the need for identifying potential synergies and linkage areas between academics and tax officials from the African Tax Administration Forum’s (ATAF) 38 member-countries.
