At the time When the Uganda Revenue Authority is struggling to tax some multinational companies, an innovative international co-operation initiative that deploys qualified experts in developing countries to strengthen their ability to effectively tax multinational enterprises has achieved significant milestones over the past year, according to a newannual report.

Tax Inspectors Without Borders (TIWB), a joint initiative of the Organisation for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP), is boosting domestic revenue mobilisation by improving tax auditing and tightening compliance efforts across Africa, Asia, Europe, Latin America and the Caribbean.

Increased tax revenues directly attributable to TIWB programmes and TIWB-style support as of April 2018 are estimated at US $ 414 million, according to the report, which documents activities over the second full year of operations under the OECD/UNDP partnership arrangements.

Revenues raised have been about 100 times programme costs, meaning every US dollar spent on TIWB brings in US $100 in additional tax revenues.
TIWB has fully completed 10 programmes, while 34 programmes are ongoing and a further 20 are in the pipeline. TIWB is on track to meet its goal of delivering 100 deployments of tax auditor experts to developing countries by 2020.
Eleven countries have deployed their serving tax officials to provide hands-on, learning-by-doing assistance to auditors in developing countries. New South-South opportunites are being identified, with India, Kenya, Nigeria and South Africa among those now offering expertise.

TIWB programmes are driven by the needs of host administrations and cover a range of technical issues and industry sectors.Current programmes specialise in risk-based audit case selection, audit processes and negotiation of advance pricing arrangements. Audits under TIWB programmes mainly deal with different issues of transfer pricing and international taxation, including permanent establishment, validation of management and service fees and the valuation of intellectual property.

Audits cover a cross-section of industry sectors including agriculture, construction, financial services, information technology and communications, hospitality, manufacturing and mining.

“Tax Inspectors Without Borders is delivering excellent value for money, and while the immediate impact on revenues is important, we are even more excited about the long-term positive outcomes,” said TIWB Head of Secretariat James Karanja.

“The transfer of skills now underway is driving organisational change in tax authorities worldwide, which will prompt much great taxpayer compliance in the future. We are developing a model for systemic change that puts developing countries in the driver’s seat for better using taxation to raise the revenues so badly needed for economic and social development.”

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Ugandan importers still prefer to import their goods via Mombasa Port despite the media campaign by Dar es Salaam, urging the Ugandans to use it, a CEO of a Kampala logistics firm has said.

For example, the cost of transporting one container from Dar es Salaam Port to Kampala is around US $4,800 (Sh10.6 million) compared to US $2,700 (Shs6 million) from Mombasa.
“Tanzania Ports Authority still needs to do much more in order to win our market, according to Jennifer Mwijukye, CEO and managing director of UniFreight.

According to Ms Mwijukye, Tanzanian ports are also disadvantaged by the distance to Uganda. For instance, while Dar es Salaam Port is about 1,600 kilometres from Kampala, where most of the Ugandan imports are destined, Mombasa is 1,200 kilometres away.

She said imports through Tanzanian ports would pick up once major improvements are done in clearing goods at the shortest time possible at Dar es Salaam Port.
“The cost of transporting goods from Dar es Salaam remains high,” she said, adding that it would take time for Ugandan imports passing through Tanzania to surpass those passing through Kenya.

The CEO Mwijukye said that despite the recent efforts made by TPA to win over Ugandan importers, including the opening of an office in Kampala, more needs to be done, for example, lowering transportation costs and reduction of the time it takes to clear imports.

The pendulum may nevertheless swing in Dar es Salaam’s favour upon the completion of the standard gauge railway between Dar es Salaam and Mwanza, which is expected to slash the cost of transporting goods between the two destinations.
Also, two inland ports in Uganda are in the process of being upgraded through the support of the European Union and Germany.

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Sub-Saharan African economies are still recovering from the slowdown in 2015-16, but growth is slower than expected, according to the October 2018 issue of Africa’s Pulse, the bi-annual analysis of the state of African economies by the World Bank.

The report puts the average growth rate in the region at 2.7 percent in 2018, which represents a slight increase from 2.3 percent in 2017.

“The region’s economic recovery is in progress but at a slower pace than expected,” said Albert Zeufack, World Bank Chief Economist for Africa. “To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource missallocation and boost productivity. Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt.”

Slow growth is partially a reflection of a less favorable external environment for the region. Global trade and industrial activity lost momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects. While oil prices are likely to be on an upward trend into 2019, metals prices may remain subdued amid muted demand, particularly in China. Financial market pressures intensified in some emerging markets and concern about their dollar-denominated debt has risen amid a stronger US dollar.

The slower pace of the recovery in Sub-Saharan Africa (0.4 percentage points lower than the April forecast) is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa. Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture. Growth in the region – excluding Angola, Nigeria and South Africa – was steady. Several oil exporters in Central Africa were helped by higher oil prices and an increase in oil production. Economic activity remained solid in the fast-growing non-resource-rich countries, such as Côte d’Ivoire, Kenya, and Rwanda, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side.

Public debt remained high and continues to rise in some countries. Vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt may put the region’s public debt sustainability further at risk. Other domestic risks include fiscal slippage, conflicts, and weather shocks. Consequently, policies and reforms are needed that can strengthen resilience to risks and raise medium-term potential growth.

This issue of Africa’s Pulse highlights sub-Saharan Africa’s lower labor productivity and potentials for improvement “Reforms should include policies which encourage investments in non-resource sectors, generate jobs and improve the efficiency of firms and workers,” said Cesar Calderon, Lead Economist and Lead author of the report.

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