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Multilateral Corporations evade tax through informal sector

By BUUMBA CHIMBULU in Dakar

THE Third African Conference on Debt and Development (AfCoDD III) taking place in Senegal has learnt that multilateral corporations in Africa are using the informal sector to evade tax, leading to loss of revenue by governments.

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This came to light on Yesterday during a panel discussion dubbed “An overview of emerging schools of thought and dynamics in debt discourse in recent time and significance of research” the side line of the AfCoDD III.

One of the panelists, Chenai Makumba, Tax Justice Network Africa Executive Director, said the multilateral companies were using the informal sector to evade tax, a situation she pointed out to be one of the reasons African countries were having challenges to raise domestic resources.

Ms Makumba regretted that this situation had hampered efforts by governments in Africa to raise domestic resources.

She, therefore, suggested the need for governments to put in place mechanisms that would prevent abuse of legislation by multilateral corporations.

“Need to look at the structure of our economies, many of them have informal services and governments are struggling how to capture these informal services sector.

“Certain companies usethe informal sector to evade taxes, these are corporates hiding behind the informal sector that we need to target. Africa is losing about US$90 billion on annual basis due to revenue loss,” Ms Makumba said.

She also emphasised on the need for governments to enhance efforts in taxing the informal sector in growing the tax base.

Ms Makumba pointed out the inability of African countries to raise domestic resources as one of the reasons the continent had found itself in debt situation.

During the same discussions, Briggs Bomba from Trust Africa said the moment had come for African to think about big ideas that would transform the continent.

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