PHOTO CREDITS: Courtesy The East African
By
Njiraini Muchira
East African tax agencies are working on measures to deter tax evasion and avoidance even as economies struggle to remain afloat.
The regional economies are bogged down by loss of jobs, low production and growing external debts over the past nine months and face a difficult challenge of collecting revenues.
Regional tax commissioners general attending the 48th East African revenue authorities general meeting last week on Wednesday, said they are implementing a raft of measures to contain tax evasion and avoidance in the midst of substantial underperformance of revenue collections and ballooning expenditure.
East African Community partner states have recorded massive decline in revenues with the quarter from July to September being the worst with revenue growth ranging from -44.9 percent to 2.1 percent.
“This was unprecedented bearing in mind that the revenues have on average been growing at double digits,” said James Githii Mburu, Kenya Revenue Authority (KRA) Commissioner-General who was hosting a virtual meeting with revenue authority commissioner generals.
He said the greatest decline was registered in May, when countries put in health restrictions that shut down economic activities.
To seal revenue loopholes, the tax agencies have resolved to adopt a common approach to address base erosion and profit shifting, and illicit financial flows within the EAC.
The authorities intend to counter tax evasion through invoice mispricing and tax avoidance through profit shifting by introducing transfer pricing rules to ensure fairness and accuracy of transaction pricing.
Eliminating base erosion and profit shifting could boost tax revenue by an estimated 2.7 per cent of GDP.
“The Rwandan Cabinet has approved guidelines on transfer pricing and we intend to publish them soon,” said Pascal Ruganintwali Bizimana, Commissioner-General of the Rwanda Revenue Authority
“In Tanzania we have developed transfer pricing regulations and guidelines that we are using to monitor abuse. We want taxpayers to abide by the rules,” said Alfred Mregi, commissioner for large taxpayers at the Tanzania Revenue Authority.
