3rd High Level Seminar on Regional Tax Cooperation

Cooperation in tax matters is increasingly important to the SADC

Member States as they seek to sustain their fiscal independence whilst and encouraging investment in the face of increasingly globalised economies.

Cooperation in tax matters is also an important component of economic cooperation in the region that supports the SADC Customs Union by facilitating the shift from reliance on trade taxes (customs duties) to domes-tic consumption taxes such as Value Added Tax (VAT) and excise taxes.

The SADC Protocol on Finance and Investment Annex 3 “cooperation in taxation and related matters”, provides the mandate for regional tax cooperation including: a common approach to tax incentives for investment; promoting the use of tax agreements and the coordination of VAT and excise taxes.

A SADC Subcommittee of senior tax officials is mandated to oversee the progress towards implementation of the Annex 3, supported by three technical working groups that focus on each of the specific areas.

Senior tax officials from the region have participated in three biennial high level tax seminars to monitor and report prog-ress in regional tax cooperation. The first was held in July 2010 in Livingstone Zambia; the second in May 2012 in Gaborone Botswana; and the third was held between 29-30 April 2014 also in Gaborone that incorporated a workshop on regional tax agreements. (DTAAs) in the region and endorsed the SADC Model DTAA as a state-of the art re-source to facilitate negotiations of DTAAs. The SADC Model DTAA was also referred for approval by the SADC Ministers of Finance at their next meeting. The Seminar commended the accelerat-ed progress made by the three technical working groups in developing regional frameworks for tax cooperation including SADC Guidelines for the coordination of VAT, Excise and Tax Incentives that will all be finalised during 2014.

The 3rd Seminar focussed on the progress being made with regard to the network of Double Taxation Avoidance Agreements In addition to its function in support of re-gional cooperation, the High Level Semi-nars also provide a forum for discussion of current topics in the international tax are-na. A guest speaker from the International Finance Corporation (IFC) based in Nairobi Kenya made a presentation 3rd Seminar on the parallel process of tax harmonisation being undertaken in the East African Community (EAC) in support of the recently launched EAC Common Market. This presentation highlighted the similarity of aims with SADC, but the difference in the approach being taken by the EAC.

The Seminar was also updated by South Africa on a recent international initiative targeted at tackling tax avoidance and evasion “Base Erosion and Profit Shifting (BEPS). The BEPS initiative arose out of concerns raised in the G20 meeting of Ministers of Finance and Central Bank Governors in 2013 and aims to reduce tax avoidance and evasion globally through an international collaborative approach. BEPS is being hosted by the Organisation for Economic Cooperation and Development (OECD) but is a global initiative. http://www.oecd.org/tax/beps.htm.

The Chair of the tax Agreements working Group, Zimbabwe, also updated the meeting on the latest developments on the Foreign Account Compliance Act “FATCA”. This is being imposed by the United States to force international financial institutions to provide the US Treasury with information on assets held by US citizens world – wide, or face an arbitrary 30% withholding tax on the holdings of the financial institution in the USA. FATCA is aimed at improving compliance with US tax laws by its citizens but clearly has far reaching implications for regional financial institutions. http://www.treasury.gov/resource-center/taxpolicy/treaties/Pages/FATCA.aspx

The Seminar was arranged and facilitated by the Trade, Industry, Finance and Investment Directorate as one of its Regional Economic Integration Support (REIS) programme activities and all Member States were represented. The feedback on the technical content of the event was positive and the good progress being made in regional tax cooperation will be reported for the consideration of the SADC Ministers of Finance at their meeting scheduled for June 2014.

Published On: March 29, 2014|