Stakeholders’ Capacity Enhanced On Emerging Issues in Domestic Revenue Mobilisation in the EAC Region

SEATINI Uganda, East African Tax and Governance Network, Tax Justice Network Africa with support from Diakonia jointly organized a series of interactive capacity building sessions on ‘Emerging Issues in Domestic Revenue Mobilization (DRM) in the East African Community (EAC) region’ for key and relevant stakeholders to enhance their knowledge and capacity on Taxation of the Digital Economy as well as Public Private Partnerships (PPPs) and their linkages with DRM.
The 1-hour and 30 minutes expert-led sessions that were conducted from 13th – 17th September 2021 brought together representatives from Civil Society Organizations (CSOs) working on taxation, debt, budget and other governance issues, media, academia among others.
Participants were taken through a range of topics that included;
• Understanding the Digital Economy;
• Digitalization and Trade: Key issues and Contestations;
• Understanding Financial Technology in Africa;
• Comparing the Tax Systems in the EAC region: Is Value Added Tax the solution to taxing the digital economy?
• Understanding Public Private Partnerships: Exploring the link between PPPs and DRM.

In her opening remarks, Jane Nalunga, the Executive Director at SEATINI Uganda reiterated that the capacity building sessions on Emerging Issues in DRM in the EAC region are happening at the right time because the FY 2022/23 Budget process in Uganda has already started and there is need to put on table alternative tax proposals for consideration by the Ministry of Finance, Planning and Economic Development.

Lyla Latif, a Public Finance Law Specialist stressed that the digital economy is not specific to a particular country. It is a horizontal, cross border and transnational economy thus need to contextualize our national laws within the broader framework of the Organization for Economic Co-operation and Development (OECD) and the United Nations as well.
‘‘There is need to think about the digital tax as it is construed by the OECD. The OECD suggests that countries should not unilaterally tax the digital economy but rather wait until 2023 when OECD will implement the global position on how the digital economy can be taxed,’’ Lyla said.
She noted that the OECD Base Erosion and Profit Shifting (BEPS) project has agreed to a two pillar solution to address tax challenges arising from the digitalization of the economy. Furthermore, OECD is proposing is a tax base and a nexus rule that requires all Multinational Companies that have a global turnover of about € 20 billion and a profitability above 10% to qualify for taxation purposes.

Francis Kairu, Policy Officer, Tax and the International Financial Architecture at the Tax Justice Network Africa (TJNA) emphasized in his presentation that currently, there is a financing gap of US $ 68 – US $ 108 billion in Africa which is actually required to build hospitals, roads and to improve on infrastructure that is critical for example the provision of clean water.
‘‘The proponents of Public Private Partnerships argue that the private sector increases liquidity and enhances efficiency within an economy. However, for countries to make PPPs work for development, there is need to put in place sufficient legal systems to protect countries’ interests; create more transparency by strengthening legal systems thus creating opportunities to attract PPPs in a safe way,’’ Kairu said.
He also drew attention to the fact that growing African economies through increased industrialization and increased exports can help to boost domestic resource mobilization and reduce on over reliance on consumption taxes and debt especially from multilateral institutions.

Africa Kiiza, Trade Policy Analyst at SEATINI Uganda in his presentation noted that Digitalization is increasingly the substratum of much of social, economic and political activities. He noted that although e-commerce has increased over the years, the rich countries purportedly want to use the World Trade Organization (WTO) and other Trade Agreements to consolidate a set of ecommerce rules that would benefit them and limit role of state in promoting development.

Kalungi Tonny, the Litigation Officer at Uganda Revenue Authority emphasized that the failure to tax the digital economy has led to the erosion of the tax base of many jurisdictions as global businesses are able to maintain a profile and sell to customers without the creation of a traditional physical presence in a country.

Silver Kayondo, Partner, Ortus Advocates reiterated that most African countries are technology consumers rather than developers. He further noted that FinTech sector is expected to keep growing and use of effective settlement system such as smart contracts will become market place.
The virtual sessions equipped participants with skills and knowledge that they can possibly use to advocate for fair Domestic Revenue Mobilization Policies in their respective countries.