• World Bank report – the impact of the AfCFTA

    B.M.R. On

    Recently published – a World Bank report (pdf) on the economic and distributional impacts of the Africa Continental Free Trade Area.

    Full implementation of the AfCFTA will have the following impacts:

    • real income gains (across the continent) will increase by 7% by 2035. These will result mainly from reduction in non-tariff barriers (NTBs) and the implementation of a trade facilitation agreement.
    • there will be a significant boost in African trade, in particular, an increase in intra-regional trade in manufacturing;
    • the short-term impact on tax revenues is likely to be small, for most countries.

    The report also sees AfCFTA as the path to recovery (for Africa) from the economic ravages of covid-19.

    A few notes of caution, though. The report signals the risk that, by not capturing certain factors, it may actually be underestimating the impacts of AfCFTA. The omitted factors include informal trade flows, dynamic gains from trade, and foreign direct investment. By the same token, the omission of several other factors might indicate that the report may be overestimating the impacts of AfCFTA. These include the costs of lowering NTBs and of the trade facilitation agreement, plus certain transitional costs.

    Also included in the report – a handy section comparing the AfCFTA provisions to those of the main regional agreements on the continent.

    The main message from the report: the promise of the AfCFTA may, by and large, be quantified. It will bring benefits in the form of significant trade, economic prosperity, increased employment, and poverty alleviation. The report recognizes the challenge ahead in implementing the AfCFTA , but sees the expected gains as worth the effort.

  • Covid-19 lockdowns – OECD issues guidance on tax treaty issues

    B.M.R. On

    The OECD has published a brief analysis of some of the main tax treaty issues arising from the Covid-19 lockdowns imposed by Governments.

    The analysis centres on the following points:

    • the creation of a permanent establishment;
    • the residence status of an individual or company; and
    • issues concerning cross-border workers. 

  • OECD Forum on Tax Administration – possible Covid-19 relief measures

    B.M.R. On


    The OECD Forum on Tax Administration has produced a list (pdf) of possible Covid-19 measures for tax administrations to consider.

    These are not recommendations; they are more in the way of helpful suggestions. The OECD is, of course, aware that not all of these measures would be possible in every country. 

    So here’s the list:

    • Extension of deadlines – for submitting returns and paying taxes;
    • Deferral of payments of tax;
    • Suspension and / or refund of interest and penalties (e.g. for late payments and returns);
    • Provision of debt payment plans;
    • Suspension of debt recovery;
    • Expediting tax refunds;
    • Provision of early tax certainty;
    • Relaxation of audit policies;
    • Provision of enhanced taxpayer services;
    • Clear communication strategies. 

    All good ideas, and nothing controversial. Selection of any of these measures would largely come down to policy choice. Obviously these measures are specifically to do with the practice of tax administration, and do not affect the actual tax liability. Other more substantial measures, for example, enhanced loss reliefs, are indeed a matter for the legislature. Even so, the above suggestions would offer a measure of relief in these beleaguered times.