Southern African countries have committed to increase their cooperation to stem the tide of VAT fraud, which adversely impacts the region’s economic development.
The Commissioners General of the revenue authorities of Southern African countries, including South Africa, met on Thursday in Pretoria to discuss matters of mutual interest.
Countries present at the meeting included Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe.
In a joint outcomes statement by the newly established Commissioners General Forum for Southern Africa, leaders agreed that the impact of VAT fraud manifested itself across borders.
The commissioners general also discussed the integrity in revenue administrations and the negative impact of the illicit economy on revenue collection and VAT fraud, which is a domestic and cross-border challenge. The forum had previously hosted a session in July.
South African Revenue Service (Sars) commissioner, Tom Moyane, said the session would also formalise the establishment of the Forum of Commissioners General in the region, with the explicit aim of tackling the development of economies. Special focus will be placed on revenue collection, the strengthening of customs activities and curbing illicit trading.
The commissioners also said they recognised that aggressive tax planning schemes were harmful and needed to be addressed in order to stem the negative impact of Illicit Financial Flows (IFFs).
Moyane said the team led by former President Thabo Mbeki in the Economic Commission for Africa (ECA) estimated that around US$60 billion in IFF left Africa on an annual basis.
“We recognise that our enforcement capabilities are central to combating such harmful activities within our domain that contribute to illicit financial flow. We agree to work together closely to enhance these capabilities and where possible, undertake joint action to uproot illicit activities,” said the commissioners general.
They also noted the proposal on the establishment of a sub-regional revenue academy and agreed to fast track its establishment.
The commissioners general said the dependence of developing countries on foreign direct investment and the disparate offering of incentives often fuelled tax avoidance.
“We note the negative impact that the abuse of tax incentives has on revenue and we advocate that they should be better targeted and their impact measured.”
The commissioners also committed to use the appropriate international legal frameworks to fast-track IT Interconnectivity within the region.
“We are in favour of bilateral engagements that are currently under way being expedited. We agree that within two years this process must be completed,” they said at the end of their meeting.
