The Hon Dr Vasant Bunwaree – the Minister of Finance and Economic Development of Mauritius
Mr Sudhamo Lal – the Director General of the Mauritius Revenue Authority
Heads and delegates of African Tax Administrations
Members of the ATAF Council Representatives of Development Partners
The ATAF Executive Secretary
Friends and colleagues
I want to welcome you all to the beautiful island nation of Mauritius, the host country of the first meeting of the African Tax Administrations Forum (ATAF) General Assembly. I am most grateful to the government of Mauritius, Mr Sudhamo Lal and the Mauritius Revenue Authority for hosting us over the next three days. We have been very well received from the moment we arrived and I am sure that our stay here in Balaclava will be memorable for us all.
We last met as a collective at the inaugural conference in Kampala in November 2009 and it is heartening to see so many familiar faces. It also gives me great pleasure to welcome the many new faces among us – for this is a positive sign of our growth, as more and more countries share in our vision of developing more efficient and effective tax administration to improve the living standards of people on our continent. We now boast a membership of 34 counties.
Nevertheless, while we have seen significant growth and success in our organisation in a short space of time, ATAF still has much to do before it becomes a formidable organisation that can serve our needs and help us build our individual administrations.
Ladies and gentlemen,
Besides the pomp and ceremony, we are gathering here to discuss and disseminate very important aspects of taxation – that of tax fraud, evasion and avoidance. The Conference theme goes to the heart of our daily work and the mandate of our respective administrations – that of ensuring tax payer compliance.
But there is another element to the theme which is more vexing and a great challenge to compliance drives and no matter how much international organisations, development partners, tax organisations or sovereign states do, any successes will be mitigated by the arbitrage opportunities inherent in countries vying for international investment.
The post economic crisis outlook internationally has been market by uneven growth, threats of double dip recessions in some countries, increasing inflation in China, a raging debt ceiling debate in the United States and an ever unfolding debt crisis in Europe. Africa has largely been spared but uncertainty continues to effect domestic and international markets.
The African continent have seen a strong rebound after the tumultuous global financial and economic crisis in late 2008 and 2009 as was evidenced by the continent’s average growth rate of 4.9% for 2010, up from 3.1% in the previous year. Moreover, positive and strong growth of around 5.8% is forecast for the continent for 2012. However, this is still short of the average annual growth of around 6% in the pre-crisis years.
Ladies and gentlemen,
The geo-political landscape continues to change and we are starting to see Afro- pessimism being replaced with Afro-optimism for a host of very good reasons - increasingly democratic and transparent political and economic systems are being developed on the continent whilst much good work is currently underway to ensure greater regional integration.
The recently signed agreement to launch negotiations on an expanded free trade agreement between the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) is just one example of these trends. This proposed tripartite free trade area (FTA), which it is also referred to, will become the continent’s biggest FTA comprising 26 countries spanning from Cape Town to Cairo with an estimated market potential of US one trillion dollar.
As an investment destination, Africa is now a recognised growth market and with a market of nearly one billion consumers and host to some of the fastest-growing economies in the world, Africa is the newest frontier for both the West and the East.
With the bounty of resources and opportunities on the continent, investment, trade and business ventures are bound to increase. However, with this increase in economic activity, the challenge that we as Heads and senior officials of revenue authorities face is to ensure that the profits generated thereby are fairly, effectively and efficiently taxed to ensure that our governments have sufficient revenues through which to implement their programmes aimed at the eradication of poverty in our respective countries.
Ladies and gentlemen,
As illustrated above, we are living in very interesting financial and economic times. And because globalisation has made us as interconnected as we are, these economic developments, in one way or another, greatly affect and determine what decisions tax administrators make and how we carry out our mandates.
A huge challenge for tax administrations, particularly for those requiring significant development as ours do, is stemming the revenue leakage from our economies. This leakage occurs as a result of the activities of tax havens, illegitimate shifting of profits to jurisdictions where lower rates apply through transfer pricing manipulation and by resorting to a host of sophisticated and advanced tax planning and avoidance measures.
Data on revenues lost to developing countries from tax fraud, evasion, avoidance and to tax havens is, for the most part, unreliable and estimates vary greatly. A fact sheet recently compiled by the European Network on Debt and Development puts the illicit capital flight from developing countries at anything between US$500 billion and US$800 billion per annum, with commercial tax structuring contributing about 64% thereof, criminal activity 35%, and corrupt money passing hands around 5%.
Additionally, figures provided by the 2010 Global Financial Integrity Report indicate that developing countries are losing US$98 billion to US$106 billion per annum due solely to re-invoicing. This represents an estimated 4.4% of the developing world’s total tax revenue. Most estimates on revenues lost also exceed, by some distance, the level of aid received by developing countries. Simply put, it is estimated that for each US Dollar that comes to the developing countries in terms of aid, more than seven US Dollars return to developed countries through illicit proceeds.
Therefore, it is in our interests that we do everything in our power to counter the practices of tax evasion, avoidance and fraud and discuss the impact of tax havens on tax revenues.
Ladies and gentlemen,
In order for us to work together to address tax fraud, evasion and avoidance, there has to be coordination of minds and resources, and the ATAF Work Plan is precisely geared towards providing the necessary space for our members. This can be seen, for example, in the establishment of our working groups on Transfer Pricing and the Exchange of Information and Tax Treaties, respectively, and our on-going Capacity Development Programme, through which our tax officials engage with their African peers and international experts on a range of issues relevant to their daily work.
I am confident that our discussions over the next few days will be of great help to us all to form a better understanding of the serious issues under discussion. To this end, and in order for us to engage in a dialogue that goes well beyond the parameters and views of only African tax administrations, we have also invited representatives of administrations outside our continent, international organisations, academia, development partners and business to provide us with the broadest range of perspectives and experiences on these matters.
Ladies and gentlemen,
I trust that our gathering here will be fruitful and strengthen the partnerships and relations we have already established.
I look forward to our discussions.
Thank you.
Opening speech by African Tax Administration Forum (ATAF) Chairperson and South African Revenue Service Commissioner Mr Oupa Magashula at the first ATAF General Assembly held in Balaclava, Mauritius
