RTFP

Tax Policy Harmonisation



A Tax Policy Adviser from the British Government has been seconded to SADC, with supporting finance from RTFP, to enhance regional harmonisation of tax regimes and to strengthen the administrative cooperation at regional level. To this end he is facilitating:

The SADC Tax coordination agenda is part of the wider economic integration aims outlined in the RISDP and the SADC Finance and Investment Protocol (FIP). SADC tax coordination is based on the commitment outlined in the SADC Memorandum of Understanding on Taxation and Related Matters (the Tax MOU) that was signed in August 2002 but which has now been subsumed into the FIP.

SADC Tax Coordination activities from April - June 2007  42.12 Kb


Regional Workshops:

In addition to capacity building, meetings also lead to adopted common good practice. SADC countries are facing challenges around their administrative capacity especially with regard auditing VAT repayment returns. It is this kind of administrative challenge that is placing additional burdens on business and the aim is to ease the burden whilst improving efficiency of the revenue authorities.

Several meetings have been financed by RTFP on VAT issues (with two of them having been facilitated by OECD). The UK has also done a lot of effective work on VAT tax gap and Her Majesty's Revenue and Customs conducted a useful workshop on the subject.

Other workshops have been conducted on transfer pricing; auditing of multinationals and bank security.

Short Term Technical Consultancies:

Several studies have been commissioned, including an Assessment of the Current State of VAT Implementation in SADC Member States: Towards VAT Revenue enhancement, Coordination and Cooperation by Professor Graham Glenday (in conjunction with Dave Hollinrake the SADC Tax adviser, 2005 updated 06). The study took note of the fact that indirect tax systems on consumption need to be harmonised but observed that SADC Member States are at different stages of development, face different fiscal pressures and have different capacities to raise tax revenues to meet their public sector revenue demands. These factors affect the pace of harmonisation and consequently the study was undertaken to contribute towards the assessment of how fast SADC VAT systems can be coordinated.

Building on the earlier work, a series of VAT Diagnostic Reviews are being undertaken with individual countries to assess and advise on possible improvements to the efficiency and effectiveness of the VAT administration services. The first study, which was of Malawi, was undertaken towards the end of 2006 and discussions are underway to agree on the next country to be visited.

Another major study commissioned was to Develop Draft Guidelines for the Application and Treatment of Tax Incentives and a Tax Expenditure Budgeting Template in SADC (Adrian Ogley, finalised 2006). The study acknowledged that although a government's ability to raise revenue through taxation has been regarded as a sovereign issue, globalization was changing this – although it may not be widely recognised. The author argues that governments need to cooperate with each other if they are to limit the continued erosion of their taxing rights.


SADC Tax sub committee:

The SADC Tax Subcommittee is responsible for implementation of the Tax MOU/FIP and receives its directions from the SADC Ministers of Finance (MOF) via the SADC Senior Treasury Officials.

In 2004 the Ministers provided a fresh mandate including raising the level of representation on the Tax Subcommittee to “heads of tax administration and policy” in order to improve the level of debate, facilitate political acceptance and enable more rapid progress.

The Tax Subcommittee held its first meeting with under its new mandate in April 2005. The meeting largely focused on the subsumation of the SADC Tax MOU into the FIP and in particular the political debate around tax incentives and harmful tax competition. The Subcommittee additionally created three new working groups to focus on implementation in the key technical areas of:


SADC Tax Database: SADC Secretariat has been tasked by the Ministers of Finance with establishing a Tax database. Work is ongoing.

 

 

 

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