COVID-19: ‘How Africa’s tax authorities can address revenue shortfall’

By Ibrahim Apekhade Yusuf

 

WORRIED that economic activities within the continent may be negatively impacted by the coronavirus scourge, the African Tax Administration Forum (ATAF) has suggested measures aimed at addressing tax-related issues and revenue shortfall in their responses to the COVID-19 global pandemic.

In a statement issued by ATAF in the aftermath of the coronavirus pandemic, its Executive Secretary, Mr. Logan Wort impressed on tax authorities within the continent, the need to set machinery in motion to mitigate the rippled effects of COVID-19, especially as it affects revenue projections and tax receipts.

Although the impact of the COVID-19 has been, thus far, most damaging in Asia, Europe and America, many African countries, including South Africa, Algeria, Morocco and Egypt, have crossed the 1000 mark in terms of their number of confirmed cases.

ATAF’s suggested COVID-19 measures for revenue authorities therefore provides guidelines to respond to the tax-related challenges, current and anticipated, posed by the pandemic. It takes into account the peculiarities of African tax jurisdictions and systems, as well as the uniqueness of the African socio-political and economic landscapes. The measures are a combination of short-term actions that can be immediately implemented by tax administrations and medium to long term interventions which may require legislative or policy changes for their effective implementation.

While noting that the infection rates are still relatively low on the continent, Wort raised the need to act swiftly and efficiently.

“African countries are fortunate as the pandemic has not affected the continent to the extent that it has devastated other parts of the world. This gives us a window of opportunity to learn from the lessons of countries who are further along the curve in their battle against COVID 19,” he said.

ATAF urges African revenue authorities to expedite the turnaround time for the payment of refunds. Compliant taxpayers and taxpayers in essential sectors should be prioritised for expedited refunds.

The Forum says it is probably a good idea to consider the suspension of the payment of interest on outstanding Vat refunds.

“The priority should be to pay out as much refunds as quickly as possible and not to prioritise refunds based on interest that may be accumulating.”

ATAF’s suggested COVID-19 measures for revenue authorities form part of the organisation’s efforts to help Members limit the damaging impact of the virus on domestic resource mobilisation.

Since the first outbreak of coronavirus in Wuhan, Hubei, China, last December 2019, it has been spreading rapidly like wild fire in the harmattan in the rest of the globe leaving in its wake sorrows, tears and blood. Globally as at Friday, April 10, 2020, there have been 1,436,198 confirmed cases of COVID-19, including 85,522 deaths, among them 8, 337 confirmed cases and 23 deaths across African region as reported by the World Health Organisation (WHO).

ATAF’s suggestions are in line with those suggested and implemented by the Organisation for Economic Cooperation and Development (OECD) member countries.

ATAF, an international body consisting of 38 African member states, is the premier pan-African organisation with a specific focus on the improvement of tax systems, freeing African countries from aid dependency and enabling the provision of better services for their citizens.

In a related development, the Federal Inland Revenue Service (FIRS), in its response to the impact of the coronavirus on its operations, has launched business continuity plan and measures to ensure the safety and well-being of taxpayers and other stakeholders.

Experts have argued that Nigeria with a low tax base will most likely face an unprecedented revenue challenge due to the coronavirus pandemic. In order to cushion the effects, the tax agency introduced some measures, which are designed to relieve taxpayers of the burden of tax compliance at this time while also ensuring the safety of its staff, taxpayers and the general public.

Specifically, the FIRS has given extension of time for filing VAT and withholding tax from the 21st of every month to the last working day of the month, preceding the month of deduction just as the due date for filing company income tax returns has been extended by one month.

Besides, taxpayers will be allowed to file returns using unaudited accounts but must subsequently submit audited account within two months after the revised due date of filing.

The FIRS has also outlined some measures to reduce physical visits to the various tax offices and enhance operational efficiency.

Chief among these measures is the extension of the filing deadline of some taxes. Taxpayers were encouraged to use available electronic platforms for filing tax returns, including withholding tax, transfer pricing, company income tax returns and so on electronically.

The FIRS planned to publish information requests for desk reviews and tax audits on its website and create a portal where such information can be uploaded by taxpayers for online review by the service.

 

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