Workshop tightens noose on tax evaders

BAME PIET
Staff Writer | Wednesday November 10, 2010 00:00

The workshop aims to establish greater levels of networking between revenue officials in Africa.

It was organised by Botswana Unified Revenue Services (BURS), the secretariat of the Southern Africa Development Community (SADC), the Organisation for Economic Cooperation and Development (OECD) and the African Tax Administration Forum (ATAF).

The workshop aims to contribute meaningfully to the establishment of an ATAF working group, which will play a pivotal role in the implementation of the envisaged exchange of information project. ATAF was established in Kampala, Uganda last year, to create a forum for African tax officials to exchange information on tax matters affecting their countries. It has over 20 member states.

There are plans to engage the services of experts in the next three years to train tax officers through international institutions and exchange of information through the Internet.

Participants at the workshop said yesterday that multinationals and their subsidiaries, headquartered outside their countries of operation, are very difficult to assess because they sometimes hide crucial information from the taxman.

The Commissioner General of BURS, Freddy Modise, said the recent economic meltdown had its roots in economic abuses perpetrated across many jurisdictions by a number of multinational corporations. Modise said the crisis could have been averted or minimised if countries had efficient systems for exchange of information.

'The lack of such systems inadvertently provided the cover for these abuses to thrive for long periods, such that they reached the point where these abuses began to compromise the very foundations of many of the major economies of the world,' he said.

He hailed developed countries, such as Switzerland, that recently relaxed their banking secrecy provisions to cater for the exchange of tax information with administrations of foreign jurisdictions.

'The chain of events in the last two years has dramatically threatened the offshore banking secrecy provisions of some countries,' Modise said.

'Countries like Germany and the United States have decided to provide information in respect of persons who were so far hiding behind the Swiss Banking Secrecy Law.

'For a country like Botswana, which has no foreign exchange controls, complying with the international benchmarks is all the more important.'

A participant from Canada said it is easy for expatriates to evade tax because they use their status of living in two or three countries. Heather Hemphill of OECD said in some instances, foreign companies operating in a particular country keep two sets of books in which they alter figures to give the wrong information to tax auditors.

She said it is crucial for countries in the African continent to enter into bilateral or multilateral agreements to curb these incidences. With the agreements, it would be possible for tax officials to share information on a particular tax evader and recover unpaid tax.

She cautioned that as things stand today, it is often difficult to deal with tax evaders who have relocated to another country. This is because in many cases, tax laws between two countries clash and do not complement each other.