CAN TAX AVOIDANCE IN AFRICA BE AVOIDED?

Abstract

The term “tax avoidance” refers to avoiding paying the right amount of taxes and in many countries, it is not a criminal offence. On the other hand, “tax evasion” is committed when a person uses forged or falsified documents such as falsified financial statements, salary certificates, and formal declarations on ownership of assets or other certificates that are generally accepted as valid proof of a certain fact to hoodwink tax authorities and as a result gain unfair advantage.” Tax avoidance, unlike tax evasion, is legally committed when corporations or individuals take advantage of legal grey areas through the use of aggressive schemes to increase “tax efficiency.” Tax avoidance is often committed by the rich or Multinational Corporations (MNCs) using tax experts such as lawyers and Accountants to avoid paying the right amount of taxes. The irony of it is that those who cannot afford to hire tax experts pay all their tax dues to tax authorities while the rich cheat the system by dodging taxes. Ironically also this means that the poor subsidize the rich instead of it being the other way round. The Asset recovery process is not only tedious and expensive for victim countries, there is also unwillingness of countries where assets have been secreted to release them. Also, Mutual Legal Assistance Treaties (MLAT) are not easy to use where evidence on stolen Assets has been destroyed, assets dissipated, or law enforcement agencies deficient in requisite capacity to initiate and execute the Asset recovery process