Oliver Kazunga Senior Business Reporter
THE African Tax Administration Forum (ATAF) has come up with a draft document on avoidance of double taxation and prevention of fiscal evasion within the continent. The Zimbabwe Revenue Authority (Zimra), a member of ATAF, has said avoidance of taxation and prevention of fiscal evasion was with respect to taxes on income for Africa.
“ATAF convened representatives of 22 of its member countries from November 30 to December 4 in Pretoria, South Africa to participate in a multilateral meeting to collectively negotiate and develop the draft text of an “ATAF Model Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income” for the African continent,” it said in a statement.
“One of the areas identified by African States as a priority for the mobilisation of domestic resources is that of agreements for the Avoidance of Double Taxation (DTAs).”
Zimra said DTAs were important tools in removing barriers to cross-border trade and investment.
“A number of factors necessitate the development and implementation of DTAs by African tax administrations. These include the existence of outdated DTAs in Africa which do not provide for an equitable share of taxation to be allocated to the developing State; no real regional programme to address these issues; and lack of experience in developing treaty policy by many member states, particularly lesser developed States in Africa,” it said.
ATAF member countries include Zimbabwe, South Africa, Angola, Benin, Botswana, Burundi, Chad, Gabon, Ghana, Kenya, Lesotho, Mauritius, Uganda, Swaziland, Zambia and Namibia.
It is hoped that the ATAF model will assist member states by providing a basis for either negotiating or renegotiating DTAs with developed countries as well as within the ATAF membership to remove barriers to cross-border trade.
“The DTA is an important tool that can be used to combat tax evasion and, by extension, capital flight through effective exchange of information and assistance in revenue collection. Information flows that detail tax evasion schemes enable States to take proactive steps to combat these schemes,” said Zimra.
It said the draft ATAF DTA provides an agreed basis for approximately 75 – 80 percent of a DTA for any African country thus requiring only the negotiation of domestically driven specific areas such as withholding rates and definition of permanent establishments.
It is also hoped that the ATAF model will address a larger membership of African states while maintaining relative consistency with other models existing on the continent.
“The model will be updated continually to take account of international trends. The significance of this model is that it will carry more weight than a single country position; provides a clear indication of the policy stance of African countries; and, in the case of stated reservations by a member, indicates important positions in negotiation,” said Zimra.