(PHOTO CREDITS: Courtesy FINANCIAL FORTUNE)
Government tax bases are shrinking as digital services and global businesses continue to expand, but there’s little global consensus on how to protect public revenues.
That challenge, according to experts could continue into the foreseeable future due to the absence of a unified approach geared towards aggressive tax plans.
Thulani Shongwe the head of African Tax Administration Forum (ATAF) and a member of the Illicit Financial Flows Working Group believes more needs to be done with regard to the effective enforcement of such tax rules against companies that do not have a physical presence within the country.
“This is an important debate that has been going on for a very long time now, and the United Nations needs to play a leadership role on this front” he said.
Many African countries continue to express concerns over the tax challenges they face as their economies become increasingly digitalized while tax agencies designed for brick-and-mortar activities still oblivious to new disruptive business models.
That digitalization enables multinational enterprises (MNEs) to carry out business in African countries with no or very limited physical presence in those countries. This makes it difficult for African countries to establish taxing rights over the profits the MNE is making from the business activities it carried out in the specific African country.
