Irma Mosquera Valderrama speaks at Africa taxation webinar
On 15 February 2022, Irma Mosquera Valderrama, Professor of Tax Governance, holder of the EU Jean Monnet Chair on EU Tax Governance EUTAXGOV and Principal Investigator of the ERC funded project GLOBTAXGOV, participated in the High-Level Webinar Taxation and Business in Africa.
The webinar was an initiative of the European Commission DG International Partnerships and the Organisation of African, Caribbean and Pacific States (OACPS) and was held within the context of the EU-Africa Business Forum and the Africa Week ahead of the EU-AU Summit.
During the webinar, representatives of organisations such as the European Commission, the OECD, the African Development Bank, African Tax Administration Forum, African Business Council, African Union, OACPS, government officials from African countries, business representatives and academia discussed current international tax developments such as the Base Erosion and Profit Shifting Project, the Pandora papers leak and the international deal concerning corporate taxation of highly digitalised business models (Pillar 1) and introducing a global minimum tax rate (Pillar 2).
The webinar had three panel discussions:
- International tax reform: Implications for tax administrations and business
- Trade integration and taxation: challenges and opportunities
- Tax transparency: making reporting work for the public and the private sector
In Panel 3, Mosquera Valderrama stated that even though transparency in the form of exchange of information and country-by-country reporting (CbCr) are welcome, developing countries may not benefit as they should from all these developments. In order for developing countries to benefit, these countries will need (i) to have access to information; (ii) to have clear risk management strategies; and (iii) to develop a relationship of trust between the taxpayer and the tax administration.
Developing countries may not benefit from all the information provided in the CbCr, mainly because they do not have rules in place to implement CbCr or to facilitate the exchange, or protect the confidentiality, of the information exchanged. In some cases, such as the Pandora papers leak, or information received throughout automatic exchange of information, the amount of information received by a developing country can be excessive and these countries may not have all the resources to process this information. Therefore, clear risk management strategies should be put in place so that information is collected and processed in a way that allows the tax administration to identify ‘risky’ taxpayers.
The initiatives for transparency are also an opportunity for the developing country to establish a relationship of trust between taxpayer and tax administration. Right now, developing countries may have an adversarial or hierarchical relationship. Therefore, introducing cooperative compliance programmes may contribute to voluntary compliance by the taxpayer (see e.g. Quiñones, Mosquera Valderrama and Huiskers-Stoop, ‘Cooperative Compliance in the Manual for the Control of International Tax Planning’ CIAT, forthcoming 2022).
Our contribution also adds to the current (Feb-March) series of 5 workshops Navigating Global Tax Governance organised by Mosquera Valderrama and her GLOBTAXGOV Team in cooperation with the African Tax Administration Forum (ATAF). In these workshops aimed at tax administrations and policy makers in Africa, we discuss the content of the international tax standards (BEPS, exchange of information and Pillar 1 and Pillar 2) and we analyse the policy objectives and strategies pursued by different international supranational and regional organisations such as the United Nations, the OECD, and the EU, among others, in the process.