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‘Review tax laws to maximise revenue’

Mohalenyane Phakela

THE Lesotho Revenue Authority (LRA) Commissioner of Domestic Taxes, Thabo Moleko, has urged his fellow Forum for VAT Administrators in Africa (VADA) member states to review tax laws to accommodate evolving trade patterns.

Mr Moleko made the remarks at the recent opening of the two-day 19th annual VADA Conference held at Thaba Bosiu Cultural Village. In attendance were tax administrators from Malawi, Uganda, Tanzania and Lesotho.

VADA was established in 1998 to provide African economies and VAT administrations with world class technical services in support of efficient and effective VAT systems. The idea for the formation of the forum was born in Kenya by the then VAT Commissioner, Edward Odondo, with membership coming from only East and Central Africa.

The forum which started with four members; Kenya, Uganda, Tanzania and Rwanda, now has 10 participating countries namely are Kenya, Uganda, Tanzania, Nigeria, Ghana, Malawi, Togo, Ethiopia, Lesotho and Zimbabwe.

Mr Moleko said that the LRA was a step ahead in drafting a bill which would ensure the maximisation of Value Added Tax (VAT) collection in the changing times.

This year’s edition of the conference was themed “The challenges of VAT operations in the 21st century Africa”.

“As VADA we have committed to providing African economies and VAT administrations with world-class technical services in support of efficient and effective VAT systems as this year’s theme talks directly to the big problem that Africa is facing,” Mr Moleko said.

“The challenge at hand is a pertinent one which needs concerted efforts for us to succeed in collecting the much needed revenue for development of our economies. It is therefore critical for VADA member states to review VAT laws to address the ever changing trade patterns, in particular, the e-commerce.

“The LRA is finalising a bill that will address dealing with imported services, requirement for VAT representatives of vendors making supply of remote services, review supply rules to address services and electronic marketplaces, review financial services to efficiently tax fee or commission attracting services and broaden the definition of associates to minimise avoidance of tax.”

Mr Moleko said that the changes at LRA have been necessitated by the recognition and adoption of the international VAT guidelines which have become useful for addressing challenges related to cross-border trade in services and intangibles.

“It is extremely important for us member states to ensure that our officers are well capacitated to deal with VAT non-compliance. Member states should therefore take note of global and regional efforts made to make officials more effective.

“The Addis Tax Initiative which was launched in 2015 aims to strengthen the capacity of low-income and middle-income countries and facilitate the implementation of effective tax policies through dialogue and experience exchange,” he said.

For his part, the outgoing VADA chairperson, Henry Martin Saka, described VAT as a tool for evaluating compliance of other taxes and a powerful indicator of a countries economy.

“Our economies rely heavily on corporate income tax which is difficult to collect from people earning income from self-owned businesses. However, VAT is a tax of primary importance because it contributes immensely in all tax revenues. For instance, in Uganda it contributes between 30 and 40 percent of tax revenues.

“Since the dawn of VADA in 1998, the conferences have been held to achieve the broadest to exploit the power of VAT. We meet to discuss problems of the member states and are still moving forward.

“African countries need to come up with indigenous solutions to problems and VADA is the right platform as most of the challenges that the VADA members face are cross cutting,” Mr Saka said.

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