New procedures for the handling of audit and disputes arising came into effect 1 July 2017. Certain categories of taxpayer can now obtain a “preliminary” tax audit ahead of the finalized audit act and have the right to object in writing to the findings of such “preliminary” audit. Additionally, appeals and complaints arising will now be considered by a new “authorized body” established in the Ministry of Finance (rather than the next higher level of authority in the State Revenue Committee). This new Appeals Commission will be chaired by the relevant Deputy Finance Minister and include representatives of State agencies and the National Chamber of Entrepreneurs.
ITIC Participates in Kazakh Parliamentary Tax Roundtable
The Finance and Budget Committee of the Majilis (Kazakh Parliament) convened a roundtable discussion last week to examine the latest Draft Package of the New Tax Code. The roundtable was moderated by Gulzhana Karagusova, Chair of the Finance and Budget Committee.
I was pleased to represent ITIC in the discussion, as there are numerous issues under discussion that pertain to investors in all sectors of the economy.
Mozambique Revenue Authority Launches Excise Stamps
On 17 March 2017, the Mozambique Revenue Authority (MRA) introduced a requirement for excise stamps on alcohol beverages and tobacco products pursuant to laws and regulations adopted to establish procedures for sealing alcohol beverages and tobacco manufactured products subject to excise duties. The revised law and regulations mandate the process of sealing beverages and manufactured tobacco for every producer, importer, supplier, and user, including enforcement agents.
IMF Releases Regional Economic Outlook for Sub-Saharan Africa
On 10 May, the IMF released its Sub-Saharan Africa economic outlook, Restarting the Growth Engine. The report is available (in English and French) on the IMF’s website. The report features a comprehensive examination of the informal sector in Sub-Saharan Africa, with the IMF estimating that the informal sector contributes 25%-65% of GDP and 30%-90% of nonagricultural employment. From a domestic revenue mobilization perspective, this significant portion of Sub-Saharan African economies represents potential budget revenues. Institutional challenges remain, however, when it comes to encouraging the conversion of the informal sector into the formal sector. A large tax burden and overly cumbersome compliance requirements are likely to have the paradoxical effect of encouraging economic activity to remain in the informal sector. The transformation of digital technologies and services in many Sub-Saharan Africa economies presents opportunities for converting the informal sector, while not creating onerous tax or administrative compliance burdens.
These topics will be further explored as technical sessions in ITIC’s Africa Tax Dialogue later this year, including examination of successful country case studies.
Dan Witt is President of the International Tax and Investment Center (ITIC).
ITIC Participates at 83rd API Federal Tax Forum
The 83rd Annual American Petroleum Institute Federal Tax Forum was held in Houston on 24-25 April. Congratulations to Stephen Comstock, API’s Director of Tax and Accounting Policy, his staff, and the entire organization on this terrific accomplishment. The conference covered a wide range of taxation issues relevant to the industry, including updates on prospects for tax reform in the US, as well as updates on tax litigation, rules and regulations, and the current status of the Internal Revenue Service.
ITIC Senior Advisor Karl Schmalz presented an update on the work of the UN Extractives Tax Subcommittee, summarizing the nine guidance notes that have been approved by the Committee of Experts on Cooperation in International Tax Matters for publication later this year. Mr. Schmalz also discussed work underway at other international finance organizations relevant to the oil and gas industry, and recommended enhanced engagement by the industry with these, and other organizations, to ensure work done and reports/recommendations are fact-based, misconceptions are corrected, and inaccuracies do not go unchallenged.
Karl Schmalz is a Senior Advisor to the International Tax and Investment Center (ITIC) and Former Assistant General Tax Counsel, Exxon Mobil Corporation.