PHOTO CREDITS: Daily Monitor

By

Ismail Musa Ladu

Ms Rita Kabwoho’s dream of building a successful business may not be fulfilled, unless some tax regimes and policies are changed for the better.

The cross border trader spends between 60 to 70 per cent of her proceeds on paying taxes and numerous related charges.

Many of the taxes Ms Kabwoho is complaining about emanate from erratic valuation determined by tax officials or people purported to be working for tax authorities.

This explains why each time she exports or imports any product/produce across the border she is subjected to different charges.   

According to Ms Kabwoho, such unexplained taxes and related charges deprive budding women entrepreneurs of the opportunity to grow their business beyond small scale.

 This explains why even after years of doing cross border trading between Uganda and Democratic Republic of Congo (DRC), Ms Kabwoho, like many cross border women traders, still lives from hand to mouth.

“It is about orders to pay for revenue and charges I don’t comprehend,” Ms Kabwoho narrates to Daily Monitor hours before the recent ground-breaking ceremony for the construction Border Export Zone (Market) and One Stop Border Post (OSBP) at Mpondwe in Kasese district.

She continued: “All we are asking for is some help in terms of tax harmonisation if not reduction.”

Ms Kabwoho predicament cuts across the Micro, Small and Medium Enterprise (MSMEs) sector.

 For example, the fate of Ms Sofia Nantongo, a city salonist rests on the hands of the taxman.  With Covid-19 depleting her capital and accumulated savings, the last thing she wants to hear is a knock on the door by the taxman.

PHOTO CREDITS: EABW NEWS

By

Godfrey Ivudria

East Africa—a key security partner in the war on terror and a principal engine of economic development on the African continent—is being critically undermined by illicit trade, according to the new report An Unholy Alliance: Links Between Extremism and Illicit Trade in East Africa from the Counter Extremism Project (CEP). 

Terror groups such as al-Shabaab and ISIS-linked affiliates in Somalia and Mozambique, as well as Central African militias, urban gangs, and international crime groups, are increasingly targeting East Africa as a destination market for illicit trade, as well as a transport hub for the mass import and export of illegal goods.

PHOTO CREDITS: The New York Times

By

Alan Rapperport

Treasury Secretary Janet L. Yellen made the case on Monday for a global minimum tax, kicking off the Biden administration’s effort to help raise revenue in the United States and prevent companies from shifting profits overseas to evade taxes.

Ms. Yellen, in a speech to the Chicago Council on Global Affairs, called for global coordination on an international tax rate that would apply to multinational corporations regardless of where they locate their headquarters. Such a global tax could help prevent the type of “race to the bottom” that has been underway, Ms. Yellen said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.

Her remarks came as the White House and Democrats in Congress begin looking for ways to pay for President Biden’s sweeping infrastructure plan to rebuild America’s roads, bridges, water systems and electric grid.

“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Ms. Yellen said. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

Senator Ron Wyden, the Oregon Democrat in charge of writing tax legislation, will release a new plan on Monday to overhaul the way the United States taxes multinational corporations. In addition to raising revenue, the proposal, which is co-authored by Senator Sherrod Brown of Ohio and Senator Mark Warner of Virginia, seeks to discourage companies from shifting profits and jobs to low-tax countries to avoid paying taxes in America. It also creates new incentives through the tax code for companies to invest in research and manufacturing in the United States.

The speech represented Ms. Yellen’s most extensive comments since taking over as Treasury secretary, and she underscored the scope of the challenge ahead.

PHOTO CREDITS: People Daily

By

Lewis Njoka

Kenya lost an estimated Sh62.2 billion ($565.8 million) in tax revenue loss annually due to illicit financial flows, East Africa Tax and Governance Network (EATGN) has said.

The tax network equates the loss to 36.02 per cent of the country’s entire public health expenditure, or the annual salary of 240,781 nurses.

International financial flows refers to all cross-border financial transfers which contravene national and international laws including proceeds of corruption, extortion, tax evasion, tax avoidance, money laundering and hiding wealth offshore among others.

PHOTO CREDITS: The Standard

By

DR.TERRA TAIDIMU

The economic stability of a country is heavily reliant on resources mobilised through taxation. Tax revenues keep the economic wheel on the move.

However, tax crimes and related malpractices dent tax collection efforts thereby occasioning substantial loss of government revenue. Tax malpractices are a global and regional pain.

A report by The Africa Initiative dubbed “Tax Transparency in Africa 2020”, for instance, estimates that Africa suffers revenue loss of around $40 to $80 billion every year to tax evasion. This amount can comfortably fund key projects.

Such statistics are the reason authorities are working round the clock to clip tentacles of tax malpractices. The approach adopted by the Kenya Revenue Authority (KRA) is multifaceted and ranges from automation of processes to leverage on intelligence gathering and management. Although automation of processes is key in reducing human intervention, a major breeding ground for malpractices, intelligence gathering and management is a major boost.

A major setback to this process is unwillingness by various stakeholders such as the public to volunteer information to relevant authorities. The failure by members of the public to report tax evasion, corruption and other malpractices has been a concern. According to a survey conducted in 2019 and published in 2020 by Transparency International Kenya, majority of Kenyans do not report corruption cases.

PHOTO CREDITS: The East African

By

JAMES ANYANZWA

East Africa’s grand plan of harmonising domestic taxes to eliminate harmful tax competition and promote the region as a single investment destination faces headwinds as partner states develop cold feet in agreeing on the uniform tax rules and rates for the six-member economic bloc.

A source close to the negotiations told The EastAfrican that the technical experts from member countries tasked with harmonising the varying tax rules and rates in the region have not held sessions for over a year after some member countries raised concerns over the plan to harmonise value added tax (VAT), Income tax and Excise tax which are considered critical sources of revenues for the regional economies.

The project that was conceived nine years ago in Kampala (Uganda) is yet to take root over differences by member countries on how the various tax rates — their main source of livelihoods — are going to be matched.

“The partner states have various tax levels, which means their tax rates are different, and so to agree on a common threshold was not easy. There was divergence of views for various reasons and of course revenues is one of them because the purpose of taxation is to raise revenue. There is a divergence at the partner states level on the tax rates,” the source said.

PHOTO CREDITS: The East African

By

Anthony Kitimo

Africa has been selected to pilot a United Nations-funded project to reduce illicit financial flows. The pilot by the United Nation Conference on Trade and Development (UNCTAD) and the United Nations Office on Drugs and Crime (UNODC) support the project, which is aimed at helping the region achieve the Sustainable Development Goals (SDGs) in the next decade.

UNCTAD and UNODC said the framework, adopted this week, was arrived at through collaborations with international organisations and national tax, Customs and statistics experts.

The framework identifies four main types of activities that can generate IFFs — illicit tax and commercial activities, illegal markets, corruption and financing of crime and terrorism.

The measures will also be extended to Asia and the Pacific from next year, as part of a global war against IFFs to promote peace, justice and strong institutions, as reflected in target 16.4 of the SDGs. According to UNCTAD’s Economic Development in Africa Report 2020, stopping illicit capital flight would cut in half the annual financing gap of $200 billion with an estimated $88.6 billion reported to leave the continent illegally.

PHOTO CREDITS: Nairobi Law Monthly

By

Everlyn Muendo and Leonard Wanyama

The recent nullification of Double Taxation Agreements (DTAs) by several African governments has been a ground-breaking moment in tax justice advocacy, revenue debates and pursuits of economic justice in general.

DTAs are pacts which divide taxing rights between two or more states on cross border income and are sometimes interchangeably referred to as Double Taxation Treaties (DTTs).

Kenya, Senegal and Zambia each cancelled their respective DTAs with Mauritius. This was based on the realization that in one way or another their state interests were infringed upon by how their respective agreements took away their taxing rights.

By

Gerald Byarugaba

What is Oxfam and what does it do in the Horn and East African region? Why is it important to highlight the impact of the organisation’s focus on the extractive industry.

Oxfam is a global movement of people, working together to end the injustice of poverty. Through our work and with our
partners, we aim to find practical, innovative ways which would help end poverty in the communities we work in.

Our over 50 years’ experience working in the Horn, East, and Central Africa (HECA) region has enabled us build strong partnerships and relationships with local and national organisations and earn the trust of governments and the people we work with. We currently work in Burundi, DR Congo, Ethiopia, Kenya, Rwanda, South Sudan, Somalia, Sudan, Tanzania, and Uganda.

In the extractives industry, we work to promote Natural Resource Justice, by ensuring that citizens and governments in countries rich in oil, gas and minerals get a fair share of revenues from their resources and invest in areas that have greater capacity to reduce poverty and inequality such as health and education. That includes promoting meaningful participation of citizens in decision making and ensuring the respect for rights of communities affected by extractive projects and protection of the environment.

PHOTO CREDITS: Reuters

By

Tom Bergin and Ron Bousso

(Reuters) – Bermuda and the Bahamas aren’t exactly big players in the oil-and-gas world. They don’t produce any of the fuels at all. Yet the islands are deep wells of profit for European oil giant Royal Dutch Shell Plc.

In 2018 and 2019, Shell earned more than $2.7 billion – about 7% of its total income in those years – tax-free by reporting profits in companies located in Bermuda and the Bahamas that employed just 39 people and generated the bulk of their revenue from other Shell entities, company filings show.

If the oil-and-gas major had booked the profits through its headquarters in the Netherlands, it could have faced a tax bill of about $700 million based on the Dutch corporate tax rate of 25%. The bill would have been much steeper if the income were reported in oil-producing countries – some of which levy rates exceeding 80%.ADVERTISEMENT

Shell and other oil majors are avoiding hundreds of millions of dollars in taxes in countries where they drill by shifting profits to thinly staffed insurance and finance affiliates based in tax havens, according to a Reuters review of corporate filings and rating agency reports. Shell, BP Plc, Chevron and Total use subsidiaries in the Bahamas, Switzerland, Bermuda, the UK Channel Islands and Ireland to provide their global operations with banking, insurance and oil-trading services, the documents show. These subsidiaries, in turn, book profits that go lightly taxed or entirely tax-free.

Such arrangements are not illegal. But they highlight the ability of international oil corporations to game global tax systems and avoid handing over revenue to nations where they conduct their core business, according to academics who study corporate taxation.

The profits generated by those offshore units are enormous, despite their tiny operations. BP’s so-called captive insurer – meaning it serves only other BP entities – had $6.5 billion in cash on hand at the end of 2018 after years of robust annual profits, according to insurance rating agency AM Best Co. The insurer, Jupiter Insurance Ltd, has accounted for as much as 14% of BP’s global annual profits in recent years, according to AM Best figures and BP’s financial statements. Jupiter has six directors but no employees; BP outsources insurance administration to a brokerage located in Guernsey, a tax haven in the UK Channel Islands.

Located about 75 miles south of the British coastline, Guernsey is not part of the UK but is a British crown dependency and sets its own tax rates. It charges no tax on corporate profits derived from revenues generated outside the island.