Multinational companies shifting their profits from Africa
to low-tax jurisdictions are only partly responsible for the erosion of the
continent’s tax revenue bases. Business Day reports that the African Tax
Administration Forum (Ataf) believes some countries have signed away their tax
revenue because of weak domestic policies, and ill-conceived tax incentives and
mining contracts.
For two years the Organisation for Economic Co-operation and
Development (OECD) has been on a drive to address profit shifting and base
erosion and the report says, Ataf agrees with the need for an action plan and
has embarked on a drive to address problems that cause base erosion in Africa
but are not on the OECD’s agenda. Ataf executive secretary Logan Wort says
domestic policies and ofte, badly written mining contracts, erode tax bases in
Africa. Ataf will address the tax challenges of e-commerce, hybrid mismatch
arrangements, abuse of double tax treaties, the establishment of dummy
headquarters and the requirement to disclose aggressive tax-planning
arrangements.
Kenya is to impose capital gains and windfall taxes on oil,
gas and mining companies within months to ensure it maximised benefits from its
mineral resources. Business Report quotes President Uhuru Kenyatta as saying:
‘This is something that we are very clear about. We want to ensure that we as a
country also are able to benefit from both the windfall and capital gains tax.’
Tullow Oil and partner Africa Oil have found oil reserves in northern Kenya and
the government wants to avoid a similar situation to that in Uganda, where
Tullow is contesting in court the state revenue authority’s demand that it pay
capital gains tax following its sale of assets.
