Economy

Africa Needs Stronger Tax, Trade Laws—Experts

Published

7 years ago

15/10/2017

By Modupe Gbadeyanka

Experts have advised African leaders to come up with stronger tax laws and trade treaties in order to block huge amount of money lost to weak tax laws and unfair trade treaties.

At the Pan-African Conference on Illicit Financial Flows (IFFs) from Africa organised by Tax Justice Network Africa (TJNA) in Nairobi, Kenya, speakers agreed that a lot of funds have been lost to weak tax laws and trade treaties and that African countries must begin a holistic review of all trade and tax laws to address this.

According to the News Agency of Nigeria (NAN), over $50 billion has been lost to multinationals who take advantage of weak tax laws and unfair trade treaties.

In an interview with NAN on the sidelines of the conference, Mr Jason Braganza, Deputy Executive Director, TJNA said Africa was yet to ascertain the real amount being lost to IFFs as the quoted $50 billion was just a fraction of the entire sum.

He said that the conference was part of efforts to broaden Africa’s approach at defining and calculating illicit financial flows with a view to stopping them.

Mr Braganza said that there were a number of ways through which multinational companies cheated African countries, taking advantage of weak laws and policies without breaking them.

“When we talk about broadening the definition, what we mean is the need to come up with an approach that includes aggressive tax planning by high net worth individuals as well as big multinational corporations who engage in harmful tax practices in order to maximise their profits.

“They take advantage of weak tax policies and tax laws in many African countries, which make the countries vulnerable to these multinationals who are able to manipulate the laws without breaking them.

“Therefore taking away the profits from where they are generated and moved to other tax jurisdictions like offshore tax havens where there is high level of secrecy and tax laws are in favour of multinationals.

“The way businesses conduct their activities, the international financial architecture is very fractured, fractured in the sense that the complexity of operating tools and models for business transactions means that one single business can have over 100 subsidiaries or special purpose vehicles.

“This sort of arrangement provides them with the platform to hide or not fully reveal the kind of activities they have been undertaking, the kind of incomes they are making.

“They are able to hide what they are supposed to be paying to government, this is a big problem,” he said.

Mr Braganza said the illicit ways high net worth individuals and corporations were exploiting weak existing laws, policies and legislation was having a detrimental impact on government ability to collect revenue.

He said also that it significantly impacted on government’s ability to implement development projects.

He therefore advised African countries to review their laws to check such excesses by multinationals.

Mr Braganza said also that there were weak laws that allowed multinationals to trade within themselves and either charge lower or higher rates to evade tax liability.

He said that the law review should also include transparency in transactions and audit reports adding that African countries must collaborate to check the activities of these companies.

He also called for review of all trade treaties especially those entered into for decades and were not beneficial to Africa but to the western nations.

“There are a number of laws, policies and strategies that need to be strengthened in order to avoid and close these loops.

“In Uganda for instance, the government has taken the decision to suspend the negotiation of new treaties pending a review of all existing treaties to understand what exactly is contained in these treaties.

“You can go even in the case of Kenya, there are treaties that dates back to the 70s that have never been analysed for people to understand what the country has signed itself up for.

“The first step is to really appreciate that some of the treaties that were signed several decades ago are harmful and detrimental to the economies.

“The second point is for members of parliament to get involved in this conversation and be part of the negotiation process that governments enter into and not leave it only to technocrats or bureaucrats.

“This is because the lawmakers are the ones who pass laws that have significant impact on how a government or an economy can run,” he said.

Mr Braganza also called on African government to show more political commitments to implement recommendations that had already been made on these issues.

“The high level panel is a good example, they have made very good set of recommendations that can actually help African governments to try and stop IFFs, to better improve the way they negotiate treaties.

“The African Tax Administrative Forum (ATAF) is another platform where governments should sign on, because ATAF is responsible and involved in developing legislation and policy guidelines for Africa perspective.

“So we advise that African countries review all trade treaties but most importantly, implement the recommendations that they have signed up to.

“There is a charter that all heads of state of AU have signed up to, committing themselves to working with their members of parliament to try and curb IFFs,” he said.

Mr Braganza said that TJNA had also been engaging parliaments from different African countries to build their skills to understand the technicality of some of these issues so as to inform their law making process.

He added that TJNA had a specific programme, African Parliamentary Network on Illicit Financial Flows and Tax which was dedicated to working with lawmakers across the continent.

Economy

FAAC Disburses 1.727trn to FG, States Local Councils in December 2024

Published

10 hours ago

14/12/2024

Modupe Gbadeyanka

By Modupe Gbadeyanka

The federal government, the 36 states of the federation and the 774 local government areas have received N1.727 trillion from the Federal Accounts Allocation Committee (FAAC) for December 2024.

The funds were disbursed to the three tiers of government from the revenue generated by the nation in November 2024.

At the December meeting of FAAC held in Abuja, it was stated that the amount distributed comprised distributable statutory revenue of N455.354 billion, distributable Value Added Tax (VAT) revenue of N585.700 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.046 billion and Exchange Difference revenue of N671.392 billion.

According to a statement signed on Friday by the Director of Press and Public Relations for FAAC, Mr Bawa Mokwa, the money generated last month was about N3.143 trillion, with N103.307 billion used for cost of collection and N1.312 trillion for transfers, interventions and refunds.

It was disclosed that gross statutory revenue of N1.827 trillion was received compared with the N1.336 trillion recorded a month earlier.

The statement said gross revenue of N628.972 billion was available from VAT versus N668.291 billion in the preceding month.

The organisation stated that last month, oil and gas royalty and CET levies recorded significant increases, while excise duty, VAT, import duty, Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and EMTL decreased considerably.

As for the sharing, FAAC disclosed that from the N1.727 trillion, the central government got N581.856 billion, the states received N549.792 billion, the councils took N402.553 billion, while the benefiting states got N193.291 billion as 13 per cent derivation revenue.

From the N585.700 billion VAT earnings, the national government got N87.855 billion, the states received N292.850 billion and the local councils were given N204.995 billion.

Also, from the N455.354 billion distributable statutory revenue, the federal government was given N175.690 billion, the states got N89.113 billion, the local governments had N68.702 billion, and the benefiting states received N121.849 billion as 13 per cent derivation revenue.

In addition, from the N15.046 billion EMTL revenue, FAAC shared N2.257 billion to the federal government, disbursed N7.523 billion to the states and transferred N5.266 billion to the local councils.

Further, from the N671.392 billion Exchange Difference earnings, it gave central government N316.054 billion, the states N160.306 billion, the local government areas N123.590 billion, and the oil-producing states N71.442 billion as 13 per cent derivation revenue.

Economy

Okitipupa Plc, Two Others Lift Unlisted Securities Market by 0.65%

Published

16 hours ago

14/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.65 per cent gain on Friday, December 13, boosted by three equities admitted on the trading platform.

On the last trading session of the week, Okitipupa Plc appreciated by N2.70 to settle at N29.74 per share versus Thursday’s closing price of N27.04 per share, FrieslandCampina Wamco Nigeria Plc added N2.49 to end the session at N42.85 per unit compared with the previous day’s N40.36 per unit, and Afriland Properties Plc gained 50 Kobo to close at N16.30 per share, in contrast to the preceding session’s N15.80 per share.

Consequently, the market capitalisation added N6.89 billion to settle at N1.062 trillion compared with the preceding day’s N1.055 trillion and the NASD Unlisted Security Index (NSI) gained 19.66 points to wrap the session at 3,032.16 points compared with 3,012.50 points recorded in the previous session.

Yesterday, the volume of securities traded by investors increased by 171.6 per cent to 1.2 million units from the 447,905 units recorded a day earlier, but the value of shares traded by the market participants declined by 19.3 per cent to N2.4 million from the N3.02 million achieved a day earlier, and the number of deals went down by 14.3 per cent to 18 deals from 21 deals.

At the close of business, Geo-Fluids Plc was the most active stock by volume on a year-to-date basis with a turnover of 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.

In the same vein, Aradel Holdings Plc remained the most active stock by value on a year-to-date basis with the sale of 108.7 million units for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with a turnover of 297.3 million units worth N5.3 billion.

Economy

Naira Trades N1,533/$1 at Official Market, N1,650/$1 at Parallel Market

Published

17 hours ago

14/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1 on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.

The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.

The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.

The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.

Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.

In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.

At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.

Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).

Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.