After all, stopping harmful tax incentives can be much easier compared to IFFs. There is need to disclose the cost of tax incentives as part of fiscal transparency. Countries such as Burkina Faso have started doing that.
Double Taxation Agreements (DTAs) were also pinpointed as another avenue where tax rights are easily given away through badly negotiated deals. However, DTA are not necessarily the problem, if negotiated well, they can translate to better flow of FDIs and trigger automatic exchange of information which can be valuable to curb double non taxation.
On governance issues, transparency was deemed a vital cog in the fight against corruption and IFFs. No wonder why the extractive sector with its well-known opaqueness is hit hardest when it comes to IFFs. More transparency leads to accountability and better management of the sector. This is what drives the Extractive Industry Transparency Initiative.
The issue of unraveling Beneficial Ownership (BO), that is the unmasking the natural beneficiaries normally hidden in the faceless web of shell companies is part of ammunition to fight corruption and IFFs. BO ownership is not an entirely new concept as the banks are already implementing the “know your client” principle.
Hence the Companies Act should be reformed to stop the practice where nominees or shell companies are identified as owners without paying attention to identities of natural persons benefiting. Transparency measures such as Country by Country (CBC) reporting have potential to curb tax evasion and promote greater transparency in the financial sector.
To wrap up this blog, citizens must drive the agenda of policy and practice reforms to curb the illicit flows. CSOs have a duty to galvanise aggregate citizens’ demand for accountability from Government and companies on actions against IFFs.
Government has interest in curbing IFFs as it can recoup much needed revenue to fund social and infrastructure programmes. Companies stand to gain from stemming IFFs as the cost of doing business is lowered and long term investments are made possible due to a stable investment climate.
By Mukasiri Sibanda for The Source
(269 VIEWS)
This post was last modified on August 29, 2016 7:40 pm
The Zimbabwe International Trade Fair (ZITF) has announced an ambitious long-term plan to turn the…
Zimbabwe’s new currency today fell against the United States for the first time since its…
Zimbabwe’s new currency has wiped out a more than 330% gain on the stock market…
One bane of recent public discourse in Zimbabwe is not only that it is never…
Zimbabwe’s new currency kicked off its third week on a stronger note raising questions as…
Zimbabwe Finance Minister Mthuli Ncube is asking the US government to tell banks that they…