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FDIs should translate into revenue – tax expert

A MOTORIST pays toll fees at Kafulafuta on Ndola-Kapiri Road. Government recently introduced Road Toll Gates on Great North Road. PICTURE: MATHEWS KABAMBA.

KALONDE NYATI, Capetown
ATTRACTING foreign direct investment (FDI) should not compromise the payment of taxes to governments as corporate revenue collection makes a huge contribution to sustained national growth.  
Tax Justice Network Africa executive director Alvin Mosioma said it would be pointless to attract FDIs if governments fail to collect taxes and other levies from investors or lose revenue through illicit financial flows.
Mr Mosioma said for a long time now, economic policies by states especially developing nations have been around attracting investors but have overlooked the aspect of curbing illicit financial flows perpetrated by some investors.
“There has been poor co-ordination at national levels on how best illicit financial flows can be curbed. Policies have been around attracting investors and developing countries have overlooked the negative impact of some of the investments,” Mr Mosioma told journalists recently during an Africa media training workshop on tax and illicit financial flows organised by Tax Justice Network Africa, University of Cape Town and Finance Uncovered.
He observed that tax avoidance and evasion remain a global epidemic causing havoc on nations especially developing countries whose economies are extractive industry-based, hence the need to strengthen policies that will curb the vices both at national and regional levels.
“There is need to also strengthen institutional capacity of revenue authorities and other line institutions to track illicit financial flows. Units to tackle transfer pricing should be established,” Mr Mosioma said.
Mr Mosioma also said limited in-depth data on transactions and lack of consistency in tracking the vices remain a challenge for many developing countries.
He said it has been a challenge for most countries to establish the magnitude of illicit financial flows because the vices happen in secrecy.
“While we may estimate the magnitude of the vices, there is no accurate information because the transactions are done in secrecy…countries need to review the existing double taxation agreements,” he said.


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