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Focusing on how African countries boost their local revenue in today’s digital economy, experts from across the globe gathered in Nairobi, Kenya for the 7th Pan African Conference on Illicit Financial Flows and Taxation.
Organized by the Tax Justice Network Africa (TJNA) and its partners the conference opens this morning will be focusing on taxing the intangibles and financial technology and digital economy. The conference is expected to look in-depth into the trends, challenges and opportunities for domestic revenue mobilization for Africa in today’s age of digital economy.
“You cannot tax a digital economy if you are not digital yourself,” said Alvin Mosioma, Executive Director of TJNA, in his opening speech. The Pan African Conference on Illicit Financial Flows and Taxation has started ten years ago, according to Alvin, who indicated that with all its natural resources living the continent illegally, Africa is net creditor to the world even though its people are living in poverty.
The organizers indicated that the Conference aims to discuss policy issues and preparedness of Africa countries to cope with the taxation of new business models and involving ethological changes in the financial sector. The conference also aims to develop the policy options for the continent, in the ongoing international negotiations to reform the outdated international tax system.
It is indicated that as external resources are drying out…Africa needs to focus on local resource mobilization In order to meet sustainable development goals and Agenda 2063 of Africa local focusing on improving the tax policy are critical in digital age.
The changing global context has both challenges and opportunities and the participants will have conversation about these context changes during the three days conference.
Reports show that as a result of illicit financial outflows from Africa, which is estimated to surpass $50 billion annually, the people of the continent remain in poverty trap.
Most of the money is stolen from Africa, mainly by multinational companies and traders, which use several techniques from profit shifting to over-invoicing and under invoicing.
Following the double taxation agreements Africa countries are signing with Tax Haven jurisdictions such as Mauritius, companies are stealing taxable money by setting up subsidiaries in tax havens.
Recently TJNA has brought Kenyan government to the high court opposing the double taxation agreement, which nullified the agreement on March 15, 2019.
Reports show that Mauritius has signed double tax agreements with over a dozen Africa countries.
“The high court ruling is a win not only for Kenya …It is a win for the continent. We hope that other Africa countries, who signed such double taxation agreements with tax haven countries, will revisit their agreements,” according to Alvin.
Indicating that currently over 50% of global trade is trade I services, Africa needs to have its tax policies revised in order to tax high tech companies engaged in trade in services using high technologies.