Commissioners General of South Africa’s bordering countries are to formally establish a forum that will take forward the development of economies as well as to stop the illicit trade among others, says South African Revenue Service (SARS) Commissioner Tom Moyane.

“Today’s session is to formalise the establishment of the forum of Commissioners General in the region in which we take the agenda of development of our economies especially in revenue collection, strengthen our customs activities, stop illicit trade coming in and deal with drug trafficking, money laundering and all those nefarious activities but equally put a task team that is going to formalise the establishment of a forum of Commissioners General in the region,” Commissioner Moyane told SAnews on Thursday.

This as SARS convened a second forum of commissioners from 11 countries including Angola, Swaziland, Lesotho, Zambia and South Africa to unpack core tax and customs issues especially linked to illicit financial flows (IFF).

“We hope by end of this financial year in December, semblance of the establishment of this forum should have resonance with us and find expression to the point where we can say that the Commissioners General have in principle achieved this objective,” he said.

The Commissioner said the team led by former President Thabo Mbeki in the Economic Commission for Africa said that approximately $60 billion (in IFF) leave Africa on an annual basis.

“If you look into that amount of money, it could have changed the face of our continent. It could also change the plight of our people to a better dispensation but at the same time we need to address the factors of unemployment, these illicit financial flows affect productivity but the poorer much heavily,” he explained.

The Commissioner said today’s gathering – which follows from an earlier session held in July – is about the coming together of Commissioners General with one common view that there’s a need to work together and collaborate on issues like collection of revenue.

“Underpinning that we are aware of illicit financial flows that affect our continent, our region and the world. Therefore it is our duty as Commissioners General that we stamp the tide of financial outflows out of our countries,” he said.

Commissioner Moyane said while Commissioners General are tasked with revenue collection, this is in order to support the initiatives of their respective countries.

“But we see there is excessive bleeding and outflows of cash from our region that could have been used profitably to maximise and make the lives of our people much better,” he explained.

Among the harm done by IFFs is that it reduces much needed finances to fund social development programmes and economic infrastructure that is imperative to raising the standards of living  of vulnerable people in society.

In addition, by depriving the fiscus of much needed resources, IFFs force developing countries to go with empty bowls in hand to ask for aid grants that if granted has many strings attached.

“Africa has so much resources, we are a resource based continent. We cannot allow ourselves to be beggars and going into international financial institutions begging for money when we have the resources that could make our country much richer,” said Moyane.

The forum, which was held at the Sheraton Hotel in Pretoria, seeks to chart a road map and maximise the respective participating countries’ statutory mandates of revenue collection.

Joint Outcomes Statement by the Commissioners General Forum for Southern Africa (South Africa, Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe)

Tshwane – South Africa, 8 October 2015

We the Commissioners General and Heads of Delegations of the Revenue Authorities of Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe gathered at the Sheraton Hotel in Pretoria, South Africa, on 8 October 2015 and deliberated on the following matters:

1. Integrity in Revenue Administrations

2. The negative impact of the illicit economy on revenue collection

3. VAT fraud: a domestic and cross border challenge

4. Customs Data interconnectivity

5. Domestic aggressive tax planning schemes

6. Data as a tool to counter trade mispricing

7. Establishment of a sub-regional Revenue Academy

8. Practical steps to Automatic Exchange of Information (AEOI)

We, having deliberated on the aforesaid matters and with a view to strengthening sub-regional cooperation as well as the integrity of our respective tax and customs systems:

• Agree to establish a Commissioners General Forum for Southern Africa and such other structures as may be required.

• Agree that the impact of VAT fraud manifests itself across borders and that closer cooperation and collective action is key to curb this scourge.

• Commit to utilise appropriate international legal frameworks to fast-track IT Interconnectivity within our region. We encourage that bilateral engagements that are currently underway be expedited. We agree that within two years this process must be completed.

• Recognise that aggressive tax planning schemes are harmful and need to be addressed expeditiously, in order to stem the negative impact of Illicit Financial Flows.

• Recognise that our enforcement capabilities are central to combating such harmful activities within our domain that contribute to illicit financial flow. We agree to work together closely to enhance these capabilities, and where possible undertake joint action to uproot illicit activities.

• Note the proposal on the establishment of a sub-regional Revenue Academy and agree to fast track its establishment.

• Recognise that developing countries are dependent on foreign-direct investment, and that the disparate offering of incentives provides the basis to leverage tax avoidance. We note the negative impact that the abuse of tax incentives has on revenue and we advocate that they should be better targeted and their impact measured.

• Agree to share experience in improving administrative functionalities through treaty networking, as well as the implementation thereof.

• Agree to assist one another in developing and applying rules related to thin capitalisation, transfer pricing, withholding taxes and other international tax principles.

• Recognise the importance of Exchange of Information in order to deal with illicit activities in the sub-region and agree to expedite such exchanges.

Commissioners General and Heads of Delegation: