Book lifts veil of offshore tax havens secrecy

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TANZANIA has been urged to join hands with other African countries and development partners to strengthen the United Nations (UN) tax office to enable it deal with illegal stashing of financial wealth to offshore tax havens.

Speaking on Thursday during the official launch of a book, ‘Lifting the Veil of Secrecy’ - The Perspective on International Taxation and Capital Flight from Africa, one of the authors, Prof Odd Helge Fjeldstad, said there is need for international measures in curbing the problem.

Other authors of the book include Tanzanian senior economist, Prof Honest Ngowi, Sigrid Jacobsen and Peter Ringstad. Prof Fjeldstad said the fight against tax evasion and capital flight from Africa to tax havens needs vibrant media, civil societies and international community to raise alarm. He said studies show that at least 30 per cent of all financial wealth held by Africans is illegally stashed in offshore tax havens across the world.

“Individual countries have the role to play in this matter, however, this issue need to be addressed internationally, therefore, I urge both African countries and development partners to strengthen the UN tax office so that it could be able to address the problem,” he noted.

Prof Fjeldstad who has researched on tax related matters in Tanzania for more than 30 years, said there must be a campaign for fairness and reasonable taxpaying. He added that itis in record that various big companies have been evading tax in Africa and depositing cash in foreign accounts.

“It is obvious now that many rich people escape from paying tax or they pay little contrary to the set principles and legal frameworks, they also stash financial wealth offshore,” he said. He added, “Some big companies pay little tax because they shift profit from the country.”

Last year, the Bank of Tanzania (BoT) welcomed investigations on business tycoons and government officials alleged to have stashed away billions of shillings in offshore accounts, calling for cautious inquiries.

A report by the Swiss Central Bank released in June 2012 and the International Consortium of Investigative Journalists (ICIJ)’s investigation on leaked files published in February 2015 exposed some corrupt Tanzanians, including prominent tycoons and some top government officials, who had secretly stashed away a whopping 315.5bn/- (196 million US dollars) and 205bn/- (114 million US dollars) in the Swiss banks, respectively.

Commenting on the book, one of the authors Prof Ngowi said African countries including Tanzania lose huge amount of money in tax evasion. He said most countries where tax evaders open accounts have been benefitting from the business and thus posing a big challenge for resolving the problem.

“It is very challenging because some of the countries benefit from this illegal business. Therefore, there is need for countries to come together for a lasting solution,” he noted.

He said the book which comprises 167 pages gives an overview on how tax evasion undermines the domestic tax bases in most African countries. He said the book project started in 2014 and it has been developed as a part of research project Taxation, Institution and Participation (TIP) led by Chr. Michelsen Institute, Norway in collaboration with Mzumbe University Dar es Salaam campus college, Institute for Finance and Economics, Zambia and Tax Justice Network of Norway.

Prof Ngowi said the book aims at exposing issues related to tax evasion and importance of paying tax. He said all crucial information need to be accessible and utilised by ordinary people in the country. The Norwegian Ambassador to Tanzania, Ms Hanne-Marie Kaarstad, said the book has been released on time.

“The book has been released on the right time, I hope, decision makers will make good use of it,” said the envoy.She said the book brings awareness to the citizen on tax related matters.” This was an expensive project, but it has unearthed the truth that people need to know. The people will also understand that paying tax is an issue of each and every citizen,” she said.

Estimates of the magnitude of wealth held in tax havens remain imprecise, as most of it is hidden and scattered across a vast network of secrecy jurisdictions. In 2014, it was estimated that 8trl US dollar of personal financial wealth is in offshore accounts.

The figure captured only financial wealth with exclusion of tangible assets. In 2015, it was estimated that Africans hold 500bn/- US dollar in financial wealth offshore, which amounted to 30 per cent of all financial wealth held by Africans. Also it was put clear that African governments lose roughly 15bn/-US dollars annually.

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