Regional tax authorities want joint intelligence unit to tackle smuggling
Revenue authorities from the East African Community (EAC) member states are mulling for the formation of a single intelligence unit to tackle smuggling which contribute to revenue losses.
During the 52nd East African Revenue Authorities Commissioners General (EARACGs) meeting in Nairobi, the commissioners noted that establishment of a joint Intelligence and Surveillance Fusion Centre will help tackle smuggling which remains a challenge to revenue mobilization and societal safety.
“While regional economies grew by 5.8pc in real terms or 14.5pc in nominal terms in FY 2023/224, tax revenue increased only13.3pc indicating that tax collection was not keeping pace with the economic growth,” said EARACG.
According East Africa Revenue Authorities between October 2023 and April 2024 a total of Ksh 392 million ($3.04m) was realised in revenue from tax evasion investigations.
EARACG called for policy measures including tax harmonisation to be expedited and administrative strategies such as uniform valuation, enforcement strategies and information sharing on exports be enhanced as stipulated by law.
A the Tax Transparency in Africa 2022 report by the Global Forum, African countries lose an estimated $50-$80 billion from illicit financial inflows mostly through porous borders.
“It was noted that revenue performance in the region continued to be negatively impacted by smuggling, increase in tax exemptions, expansion of the informal sector, cash economy and inadequate visibility of taxpayer transactions from both Customs and domestic revenue fronts,” the commissioners added in its final communiqué.
The commissioners similarly agreed to advocate for rationalisation of tax expenditures for common benchmarking to address substantial revenue foregone through tax exemptions, explore and adopt Artificial Intelligence (AI) in revenue administration, continue to implement the digital service tax and consider the adaption of the significant economic presence taxation framework based on each country’s progress in taxation of the digital economy and operationalize the EAC Multilateral Double Taxation Agreement (DTA) by fast-tracking its ratification before submission to EAC for approval.
Additionally, the commissioners agreed to speed up development of a common domestic tax system using internal expertise and the costs involved.
The 52nd meeting was attended by revenue commissioner generals from Kenya, Tanzania, Uganda, Rwanda, Burundi, DRC, South Sudan, Somalia, Zanzibar and Malawi.
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