(4 minutes read)
· Illicit financial flows and tax evasion cause a loss of US $89bn a year for Africa, which is incidentally more than the Official Development Assistance (ODA) being received by the continent, if all countries are put together, according to a United Nations’ UNCTAD study
· Report says that this tendency is rampant among most of the developing countries, where under and over valuation of goods exported or imported are very common
· Activists believe so, but fiscal pundits say, the situation should be tackled through a combination of measures such as low range of taxes, which would motivate people to pay taxes rather than evading them and making rules transparent
Illicit financial flows and tax evasion cause a loss of US $89bn a year for Africa, which is incidentally more than the Official Development Assistance (ODA) being received by the continent, if all countries are put together, according to a United Nations’ UNCTAD study.
This is contained in a report released by the United Nations Conference on Trade and Development. The reports terms Africa as a net creditor to the world. Because of illicit trade, the export realization from commodities such as gold, diamond and platinum is suffering most. Almost half of the total value is lost every year, because of the undervaluation of goods exported to illegally gain on payments of taxes and royalties. Report says that this tendency is rampant among most of the developing countries, where under and over valuation of goods exported or imported are very common.
Ironically, this is happening at a time when almost all countries in the continent are depending on official assistance from multilateral sources. Does it mean Africa is a net exporter of capital? Going by the figures dished out by the UNCTAD report, there is much gainsay in that argument. The lost funds could have been used for development works to lift the standard of living of the people. Instead, those who indulge in nefarious trade are parking the ill-gotten money in tax havens. Will stringent loss help stemming the rot? Activists believe so, but fiscal pundits say the situation should be tackled through a combination of measures such as low range of taxes, which would motivate people to pay taxes rather than evading them and making rules transparent.
