The COVID-19 pandemic has forced the world’s economies to stall. While some individual companies have experienced unprecedented booms, the World Economic Forum predicts that global growth in 2020 will fall by 4.9%. Such a blow to the economy has presented a major challenge for governments and businesses alike when it comes to tax collection and compliance. Already the International Monetary Fund (IMF) forecasts that most countries around the world will experience a significant decline in tax revenue because only a portion of brick-and-mortar sales have transitioned online and others failed to materialize altogether. The pandemic-induced tax revenue loss will be especially challenging for African countries, where already almost 86 % of people work in the informal economy, including millions of small business owners and traders who are struggling with tax compliance, as well as now dealing with the pandemic. Despite seeing unprecedented economic growth and political maturity over the last few decades, tax revenue across the sub-Saharan region has been declining for the last 15 years. Due to illicit financial flows, which include tax avoidance, corruption, and theft, Africa loses almost $89bn a year—around 3.7% of the total continent’s GDP. Inefficient tax collection systems But tax avoidance is a two-sided problem. According to Mindaugas Glodas, CEO at NRD Companies, a global IT and consulting group of companies specializing in governance and economic digital infrastructure, such a level of under-declaration of sales in Africa comes as no surprise given the fact that the current tax collection systems and policies are ineffective,…
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