Tax experts have called on governments to strengthen Africa’s revenue collection capacity for sustainable economic development. The capacity to collect revenues on the continent is still low despite the potential, according to Aida Opoku-Mensah, the United Nations Economic Commission for Africa (ECA) special adviser.
“This is affecting Africa’s capacity to mobilise resources domestically and invest in long-term projects,” the official added in a statement.
Opoku-Mensah said there is need for revenue bodies across the continent to invest in human capital and technologies that will help prevent tax leakages.
She noted that it was crucial for African countries to get the necessary support to strengthen their capacity to mobilise the “highly needed resources to support long term investments.”
“We must, therefore, support African countries to strengthen tax administration and governance and hence boost domestic resource mobilisation and hence be able fund the continent’s development goals,” said Opoku-Mensah.
Tackling illicit financial flows challenge
Meanwhile, Elene Belleti, from the United Nations Department of Economic and Social Affairs, said tax bodies across the continent should enhance their capacities to be able to detect and deter illicit financial flows.
Belleti said illicit financial flows pose huge challenges to Africa and require strong interventions, including plugging loopholes in revenue administration policies, to “stop these resource leakages”.
The expert, however, noted that there is also need to tackle vices like tax evasion and tax avoidance and creation of more transparent tax systems and put in place measures to guard against “tax erosion” and profit shifting”.
The experts were speaking during a training workshop on how to protect Africa’s tax base in Africa’s emerging economies including Rwanda in Addis Ababa last week.
Tax experts recently called on African governments to build capacities of tax bodies and other implementing agencies to understand the complex structures some multinational enterprises use to support illicit financial flows. They said there is need for strong legislations and systems that will enable revenue authorities and other implementing agencies to detect and deter entities involved in tax avoidance.