Tax evasion: East Africa’s growing concern
What you need to know:
- The focus of the meeting was to share successful strategies implemented by various countries within the East African Community (EAC) to combat challenges, including efforts to reduce illicit trade
Unguja. The acting commissioner general of the Zanzibar Revenue Authority (ZRA), Saidi Ali Mohammed, has raised alarm over the persistent challenges African countries face with electronic receipts, revealing that many businesspeople remain unaware of the importance of issuing and requesting receipts from consumers.
Speaking at the 98th East African tax stakeholders meeting held in Zanzibar yesterday, Mr Mohammed explained that the lack of awareness is contributing to the failure in collecting government revenue effectively.
As a result, the gathering of tax experts from across the region aimed to exchange ideas and solutions to address this widespread issue.
"Electronic receipts continue to be a major challenge for both businesses and the public, with many failing to issue or demand them. This lack of awareness is hindering effective tax collection, and we plan to launch educational campaigns to address this issue," Mr Mohammed said.
The focus of the meeting was to share successful strategies implemented by various countries within the East African Community (EAC) to combat these challenges, including efforts to reduce illicit trade, which continues to be a significant problem.
However, Mohammed cautioned that while achieving revenue collection goals should be a priority, it should not become an excuse for others to evade taxes, especially since the government still faces major fiscal challenges.
He urged both the public and businesspeople to be more diligent in issuing and requesting electronic receipts to improve tax compliance. In a related development, the chairman of the East African Community’s Technical Committees, Mr Beatus Nchota, highlighted the growing concern of tax evasion, particularly within domestic customs products.
He emphasised that identifying which products are most likely to evade taxes and understanding the reasons behind this evasion would help in creating strategies to ensure proper taxation.
"We have a common customs law across the region to prevent tax evasion, which sets uniform tax rates. However, the problem arises when individual countries set different tax rates, or some products are taxed while others are not. This inconsistency fuels the problem," Mr Nchota explained.
He pointed to Kenya, which has introduced tax on spirits, while other EAC countries have yet to follow suit, creating an imbalance and opening the door for evasion.
The meeting aimed to establish uniform tax rates across the region and also discussed creating a collective framework for tax payments to close these loopholes.
The director of research and planning at ZRA, Mr Ahmed Haji Saadat, also weighed in, stressing that the gathering would provide an opportunity for countries to learn from one another and develop strategies to overcome common tax challenges.
"Each country will present its revenue collection performance over the past six months, from July to December, sharing both the challenges they’ve faced and the solutions they’ve implemented," Mr Saadat said.
He also highlighted the ongoing issue of insufficient accountability in business registration, revealing that many registered businesses continue to evade taxes despite their official status.
"Businesspeople are required to submit monthly returns and make payments, but some fail to comply with these obligations," Mr Saadat added.
The discussions held at this crucial meeting are expected to pave the way for a more unified approach to tackling tax evasion in the region.
