Osinbajo challenges Africa’s Tax Administrators to tackle evasion

Nigeria's Vice President, Yemi Osinbajo, recently issued a challenge to tax administrators across Africa to find innovative solutions for collecting taxes from the continent's vast informal economies. Speaking at the third annual African Tax Administrators Conference on Tax in Abuja, Vice President Osinbajo highlighted the persistent tax problems facing African nations, including domestic resource mobilization, tax evasion, tax avoidance, and opaque rent-sharing arrangements in the extractive sector. He emphasized the urgent need to bridge the tax gap, which represents the disparity between actual tax collections and potential revenues that could be generated. Osinbajo also raised concerns about illicit financial flows facilitated by multinational companies and urged for greater transparency and cooperation in global tax matters. One of the key challenges identified by Vice President Osinbajo is the significant presence of informal sectors in African economies, coupled with aggressive tax planning strategies employed by multinational corporations to minimize tax payments. The Thapun Becky report on illicit financial flows revealed alarming details of revenue losses suffered by African countries due to these practices. Osinbajo pointed out that the amount lost to tax evasion and profit shifting far exceeds the foreign aid received by developing nations annually. Furthermore, Osinbajo highlighted two critical agendas on the global tax landscape - increasing transparency and information exchange, and addressing base erosion and profit shifting. These initiatives, backed by G8 and G20 countries, aim to enhance international cooperation in combating tax evasion and ensuring fair tax practices. While acknowledging that the immediate benefits may favor OECD and European countries, Osinbajo encouraged African tax administrators to leverage these developments to strengthen their tax policies and regulations. In response to these challenges, Osinbajo cited Nigeria's voluntary assets and income declaration scheme (VAIDS) as a proactive measure to tackle tax evasion within the country. The scheme offers taxpayers the opportunity to voluntarily declare their assets and income within a specified period, with incentives such as forgiveness of interest and penalties. Osinbajo emphasized the importance of targeting both local tax evaders and Nigerians with overseas assets who have not been fulfilling their tax obligations. Moreover, Vice President Osinbajo commended tax administrators across Africa for their ongoing efforts in implementing reforms and overcoming resource constraints. He noted the critical role of technology, skills development, and institutional reforms in building efficient and transparent tax administrations on the continent. Osinbajo stressed the need for innovative enforcement strategies to improve tax compliance and revenue collection. In his closing remarks, Vice President Osinbajo urged the conference participants to focus on finding solutions for effectively collecting taxes from informal economies in Africa. Emphasizing the urgency of addressing this issue, Osinbajo likened it to repairing a car while it is still running, rather than waiting for informal sectors to transition into formal systems through economic growth. Overall, Vice President Osinbajo's call to action signifies a coordinated effort to combat tax evasion and enhance revenue mobilization across Africa. By fostering collaboration among tax administrators and leveraging global initiatives, African nations can pave the way for a more equitable and sustainable tax system.