Agreement on Establishment of African Tax Administration Forum (ATAF): South African Revenue Service briefing; adoption by Finance Standing Committee

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Finance Standing Committee

07 June 2011
Chairperson: Mr T Mufamadi (ANC) [Finance Standing Committee] and Mr C de Beer (Northern Cape, ANC) [Finance Select Committee]
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Meeting Summary

The South African Revenue Service briefed a joint meeting of the Standing Committee and Select Committee on Finance on the Agreement on the Establishment of the African Tax Administration Forum.
The establishment of the Forum was, on the initiative of the present Minister of Finance, who was then the South African Revenue Service Commissioner, mooted at the International Conference on Taxation, State Building and Capacity Development in Africa held in Pretoria. The Forum's inaugural conference was held in 2009 in Kampala, Uganda. 31 countries had pledged membership. A Council of 10 Members was elected, namely, Botswana, Gabon, Ghana, Kenya, Morocco, Nigeria, Rwanda, Senegal, South Africa and Zimbabwe. Mr Oupa Magashula, the current Commissioner of the South African Revenue Service, was elected as the Council’s first Chairperson. The permanent seat of the Forum's Secretariat was in Pretoria. The Forum had been endorsed by the Group of 20, the Organisation for Economic Cooperation and Development, Tax World, and Donor Partners. On 15 November 2010 the Forum's Council had adopted the Agreement at the Council’s second meeting held in Tunis. The Agreement was now open for member states to proceed with the procedures for domestic ratification. The Cabinet Working Committee had adopted the African Tax Administration Forum Cabinet Memorandum No. 2 of 2011 dated 31 January 2011 on 16 February 2011. Reasons for establishing the Forum included laying a strong basis for a new approach to African taxation, state building and capacity development, and ensuring greater synergy and cooperation in capacity development among all relevant stakeholders in order to reduce duplication and give greater support to African tax administrations. The establishment of the Forum fell within South Africa’s foreign policy objectives and spoke directly to the African Agenda, since building effective, efficient and capable tax administrations to mobilise domestic resources was essential to provide governments with sustainable, domestic-generated revenue, while reducing the reliance on developmental aid. The South African Revenue Service was fulfilling the role of the Forum's Interim Secretariat until such time as the Forum became a legally established and an independent entity. Financial implications, the Forum's Interim Secretariat’s functions and responsibilities, the African Tax Administration Forum Agreement, the Forum’s objectives, membership fee structure, membership, benefits to Africa, and specific benefits to South Africa - including securing the supply chain for licit trade and prohibiting the entry of illicit goods while significantly increasing the South African Revenue Service's profile in the tax and development arena, were explained. The South African Revenue Service called on Members of Parliament to ratify the Agreement.

Members sought clarity on the financial implications for South Africa and on the terms of the Agreement. An African National Congress Member said that tax administration efficiency and revenue collection enhancement was the epicentre of our African agenda, and as an African was very proud of this initiative. He could understand why other countries were willing to commit resources, even before ratification, since this was a long overdue intervention. However, he asked why Swahili had not been chosen in preference to Portuguese. Other Members asked what would happen if the Forum became insolvent, why, if the organisation was going to be an independent, technical entity, the matter was put before the Committee, and what the problem would be if Members refused ratification. A Member of the Select Committee on Finance said that the document had been properly clarified and made sense, and saw no harm in giving the go ahead to participate in the Forum. The South African Revenue Service would be bound to report to the Standing Committee, which would have the opportunity to raise any issues it wished. The Democratic Alliance was disappointed that it was only now that the Standing Committee was involved; it would be exceptionally embarrassing for South Africa to refuse ratification: the Democratic Alliance supported ratification of the Agreement, and moved for adoption of the Agreement. The motion was seconded. The Chairperson agreed that the Standing Committee should have been involved much earlier. However, any effort to help revenue generation in the Continent should be supported by Parliament. On the other hand the Standing Committee might need to revisit the Agreement.  The Chairperson read the motion of desirability for record purposes and signed it:

‘The Standing Committee on Finance having considered the desirability of approval by Parliament of the Agreement on the Establishment of the African Tax Administration Forum recommends that the House, in terms of Section 231 (Subsection 2) of the Constitution of the Republic of South Africa, approve the said Agreement.’

Meeting report

Introductory Remarks
The Chairperson welcomed the delegation from the South African Revenue Service (SARS) and Members of both the Standing Committee on Finance and the Select Committee on Finance. The briefing and discussion would concern both Committees. However, consideration, deliberation and adoption at this stage of the process would concern only the Standing Committee.

Agreement on the Establishment of the African Tax Administration Forum (ATAF): South African Revenue Service briefing
The South African Revenue Service (SARS) briefed both Committees on the ratification of the South African Tax Administration Forum Agreement (ATAF). The briefing was given by Mr Logan Wort,
General Manager: Corporate Relations and Comunications, South African Revenue Service (SARS) and ATAF Executive Secretary, and Ms Varsha Singh, Senior Manager: International Relations, SARS.

Mr Wort was pleased to brief Members, since he knew that since 2009 they had been taking a keen interest in ATAF. He hoped that there would be an opportunity in future for a more detailed briefing. A strategic plan and a work plan had been sent to the Standing Committee.

Ms Singh said that the purpose of the briefing was to consider South Africa’s ratification of the African Tax Administration Forum (ATAF) agreement and South Africa’s hosting of the ATAF Secretariat.
•The Agreement had been adopted in November 2010 by the ATAF Council.
•It was open for signature by African states.
South Africa was in a position to be a founding member.
•The Agreement had not yet entered into force.
South Africa was one of the main drivers behind ATAF.

Background
Ms Singh said that African countries did not need to be convinced of the vital role of tax administrations, not only for funding vital services but for state-building, good governance and economic development.

On the initiative of the Hon Pravin Gordhan, now Minister of Finance, but then the SARS Commissioner, the establishment of ATAF was mooted at the International Conference on Taxation, State Building and Capacity Development in Africa held on 28-29 August 2008 in Pretoria.

The ATAF Inaugural Conference was held on 19 November 2009 in Kampala, Uganda.

31 countries had pledged membership to ATAF.

A Council of 10 Members was elected, namely, Botswana, Gabon, Ghana, Kenya, Morocco, Nigeria, Rwanda, Senegal, South Africa and Zimbabwe. Mr Oupa Magashula, the current Commissioner of SARS, was elected as the Council’s first Chairperson.

The permanent seat of the ATAF Secretariat was in Pretoria.

ATAF had been endorsed during its formative years by the Group of 20 (G20), the Group of 8 (G8), the African Union (AU) finance ministers, the Organisation for Economic Cooperation and Development, and the Tax World and Donor Partners.

Current status of the ATAF Agreement
On 15 November 2010 the ATAF Council had adopted the Agreement at the Council’s second meeting held in Tunis.

The Agreement was now open for member states to proceed with the procedures for domestic ratification.

The State Law Advisors of the Department of International Relations and Cooperation (DIRCO) and the Department of Justice and Constitutional Development (DoJ&CD) had given an opinion that the Agreement was consistent with South Africa’s domestic law.

The Cabinet Working Committee had adopted the ATAF Cabinet Memorandum No. 2 of 2011 dated 31 January 2011 on 16 February 2011.

Why it was important to establish an organisation such as ATAF
Ms Singh said that many countries, but not all African countries had low tax revenues. The Doha declaration confirmed the need to enhance tax collection and investment. Yet half of sub-Saharan African countries still mobilised less than 17% of their gross domestic product (GDP) in tax revenue, which was below the minimum level of 20% as considered by the United Nations (UN) as necessary for achieving the Millennium Development Goals.  Therefore the rationale for ATAF was:
•Laying a strong basis for a new approach to African taxation, state building and capacity development;
•Establishing and developing bilateral and continental networks regularly to exchange ideas on the lessons learned and good practice on all issues of taxation;
•Examining ways to improve systems and mechanisms in African tax administrations through the sharing of experiences and developing relevant best practices;
•Engaging in an ongoing dialogue with African tax administrations’ counterparts from member countries of the Organisation of Economic Cooperation and Development (OECD), other multilateral organisations and other relevant organisations on sustainable partnerships in support and development of African tax administrations, systems and institutional capacity; and
•Ensuring greater synergy and cooperation in capacity development among all relevant stakeholders in order to reduce duplication and give greater support to African tax administrations.

The establishment of ATAF fell within South Africa’s foreign policy objectives and spoke directly to the African Agenda, since building effective, efficient and capable tax administrations to mobilise domestic resources were essential to provide governments with sustainable, domestic-generated revenue.

Mobilising domestic resources would provide African states with the relevant fiscal space to determine their own spending priorities in line with their own national objectives and socio-economic needs and reduce the reliance on developmental aid.

South Africa’s role in ATAF: organisation and personnel
Mr Wort said that SARS was fulfilling the role of ATAF Interim Secretariat until such time as ATAF became a legally established and an independent entity. The SARS Commissioner had seconded seven SARS officials to the Secretariat office on a full-time basis. The aim of the Interim Secretariat was to establish an independent, legal entity of ATAF and also an independent Secretariat. Hopefully next year, SARS would hand over the functions of the Secretariat to an independently-run body for ATAF.

Financial implications for South Africa
•Potential long-term financial implications covering membership fees as well as costs associated in the participation in ATAF events and meetings.
•Membership fees for Category 1 members had been calculated at United States (US) $32 000 (approximately R256 000) per annum. (South Africa fell into this highest category together with about 10 other countries.)
•Development partners (donor agencies) had committed approximately R16.6 million to the development of ATAF over a period of three years. This went towards the funding of research and projects, while ATAF membership fees went towards the cost of the administration.

The ATAF Interim Secretariat’s functions and responsibilities
South Africa had undertaken a leading role in ensuring the establishment of ATAF and SARS had undertaken the role of ATAF’s Interim Secretariat, with the following functions and responsibilities:
•Providing logistical and human resource assistance;
•Preparing the ATAF Agreement, ATAF Rules and Procedures, ATAF Strategic Plan and Work Programme;
•Performing the administrative and technical functions of ATAF – implementing the Strategic Plan and Work Programme;
•Managing the relationships between ATAF and donors and other international organisations; and
•Acting as a depository of all ATAF’s records, of procedures adopted for ATAF, and of all instruments of ratification and accession. Mr Singh said that once the Interim Secretariat had received five instruments of ratification, ATAF would become a legal entity, and the process of handing over to an independently-run ATAF would commence. Part of that process was the negotiation of a host country agreement with the Department of International Relations and Cooperation (DIRCO), depending on the Standing Committee on Finance’s recommendation.

The ATAF Agreement
Mr Singh said that the Agreement had been drafted by international legal experts at the University of Stellenbosch. DIRCO and the Department of Justice and Constitutional Development (DoJ&CD) had given support. It was negotiated with the member states and finalised with the 10 Council members. Mr Singh gave a brief summary of what was contained in each Article.

ATAF’s objectives
Mr Singh said that although ATAF was not yet a legal entity, it had already arranged 22 training events in about 10 different countries on the continent. These programmes ranged from transfer pricing, the taxation of natural resources, the management and organisation of revenue authorities, risk management, tax treaties, to compliance and enforcement. At these events, ATAF brought in professionals from the OECD, the International Monetary Fund (IMF), and increasingly from African revenue authorities - where ATAF trained tax officials in best practice from African countries: this had been very successful.  Also as part of its objectives ATAF engaged in pioneering research. Mr Singh summarised the objectives: 
•Strengthen African tax administrations to improve domestic resource mobilisation for economic development;
•Enhance the professionalism of African tax administrations through capacity development, international dialogue and interaction;
•Innovate, develop, share and implement best practices in African revenue administration;
•Combat tax evasion and avoidance through mutual cooperation between African administrations and international institutions;
•Develop key relations with civil society, and improve good governance and accountability between state and citizens;
•Ensure greater synergy and cooperation in capacity development among all relevant stakeholders in order to reduce duplication and give greater support to African tax administrations; and
•Provide a mechanism for African perspectives on tax issues to inform and influence the global dialogue on tax issues.

Membership fee structure
ATAF had a four-tier annual membership fee structure which was aimed at acknowledging the differences between members in terms of their ability to pay.

The ATAF membership cost structure was as follows:
•Category 1: US$32 000 (countries with a gross domestic product (GDP) of more than US$12 billion;
•Category 2: US$18 000 (countries with a GDP of between US$5 billion and US$12 billion;
•Category 3: US$10 000 (countries with a GDP of between US$1 billion and US$05 billion; and
•Category 4: US$05 000 (countries with a GDP of less than US$1 billion.

Membership
31 African countries had joined: Morocco, Namibia, Niger, Niger, Rwanda, Senegal, the Seychelles, Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, the Gambia, Uganda, Zambia, Zimbabwe, Benin, Botswana, Chad, Côte d’Ivoire, Egypt, Eritrea, Gabon, Ghana, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mauritania, and Mauritius.

ATAF members were currently:
•Contributing membership fees;
•Seconding staff to the ATAF Secretariat (Nigeria and Botswana); and
•Participating in technical events and working groups.

Benefits to Africa
•Strengthening the continent’s tax administrations through capacity building and cooperation to mobilise its own revenues and outgrow aid;
•It was intrinsic to development, economic growth and poverty reduction – building strong and capable states and accountability to citizens;
•Enabling African tax administrations to deal better with tax collection challenges;
•Pooling resources, information and research, sharing best practices and assisting with the training of staff from African tax administrations; and
•Coordinating donor aid aimed at the development of tax and revenue administrations to the benefit of member countries.

Specific benefits to South Africa
•Strengthening the capacity of SARS and South African institutions involved in tax policy and development through influencing, leveraging, supporting and coordinating delivery on SARS’s mandate;
•Delivering on South Africa’s economic and political objectives;
•Building the capacity of revenue administrations in Africa: this contributed towards –
•Defending and extending South Africa’s tax base
•Enhancing the technical capacity and knowledge of SARS officials and that of African revenue administrations through South Africa’s capacity building activities
•Securing the supply chain for licit trade and prohibiting the entry of illicit goods; and
•SARS profile had significantly increased in the tax and development arena.

Mr Wort pointed out that SARS had attended all the capacity-building exercises and had hosted many of them; it had learned from the experience of other tax administrations in Africa, for example, on the taxation of informal and small businesses. SARS had also been able to share its experiences on transfer pricing, on tax treaties, and other matters. Moreover, developing the tax bases of other African countries contributed to defending South Africa’s own tax base.

Mr Wort pointed out that, through South Africa’s association with ATAF, Mr Oupa Magashula, the SARS Commissioner, was now the Co-Chairperson, together with the Netherlands, of the OECD Task Force on Tax Development.

Mr Wort called on Members of Parliament (MPs) to ratify the Agreement.

Discussion and consideration
Dr D George (DA) believed that ATAF could add considerable value for South Africa. However, it was not clear what the financial implications were for South Africa. One knew the problems that the United Nations (UN), for example, experienced in collecting fees from member states. From the presentation one could see that South Africa had seconded staff. However, who was paying for that? If SARS was paying, was it in the budget and how much did it cost? According to the Agreement, South Africa would host the Secretariat. That could cost a lot of money, even though there was a structure to collect fees. He wanted to know if there was a financial implication in that regard, and, if so, whether it was in SARS’s budget or in the national budget.

Mr Wort replied that the financial implications of running the Secretariat and the administration were being borne currently by SARS. Just as for any other cost centre within SARS at the moment, SARS made a bid in the SARS budget for an allocation. In the last financial year, because SARS became the secretariat in July 2010, the amount from the SARS budget was R2.5 million. For a full year for 2011 it would go up to R8.7 million, which would include the payment of salaries, travel, the cost of SARS people working there, the cost of printing, meetings, and the cost of running the organisation. In addition to that the contribution in 2011 from Nigeria and Botswana would amount to US$21 000, so they would also be giving an in-kind contribution. On the cost one needed to understand that when the organisation was formed it was clear that somebody had to take responsibility. The Commissioner of SARS decided to reprioritise and make available some of his staff and resources, because of the strategic importance. However, it was not envisaged that SARS would continue to subsidise this organisation. It was envisaged that when ATAF became an independent-running authority, the membership fees must support the costs of running the organisation. In November, the ATAF Secretariat would host a conference, at which it would be requesting two to three year administrative support from donors, whilst ATAF was working out its ability to sustain itself. The principle was that members paid their own way, including accommodation and travel when they attended meetings, whereas with multilateral institutions it was more often the case that all expenses of delegates were paid for. This often resulted in the wrong people attending. In ATAF the principle was ‘members pay’. When countries hosted meetings, they paid. Their contributions were limited – in francophone countries the revenue collecting authorities were not independent, but rather a sub-division of the division of finance, and so their budgets were small. In Anglophone countries the revenue departments were largely independent and had budgets that were nevertheless limited. The Commissioner of SARS had realised this and decided that in the interests of establishing the organisation he would agree to host the Secretariat. The cost of hosting the Secretariat would be borne by ATAF in terms of the infrastructure, the building, the rent, and other costs. ATAF would be located in South Africa and as an organisation would have to pay for the costs of having the infrastructure located here. The rights and privileges of the host country would be the subject of an agreement to be negotiated by the Department of International Cooperation and Development (DIRCO). Once the organisation was legal, the ATAF Secretariat would finalise that process, but it was not expected that SARS would carry the cost of hosting ATAF Secretariat. The Secretariat was to be independent.    

Mr B Mashile (ANC; Mpumalanga) did not want to repeat Dr George’s questions about the cost implications. He was worried about the Agreement itself. He asked what informed the decision to have 10 members of Council. Was this the total number of member states? Normally these agreements provided that member states should have only one representative in the council. He noted that the Agreement provided for member states to withdraw from the Council. What happened then? Did the number of member states on the Council become nine? He understood that each member state could have only one representative on the Council. Was there any limitation on the membership?  He was especially concerned about Article 12 (3a) and Article 14 (2) and (4), read together with Article 9 (5).  He saw serious contradictions in these provisions. There was no harmony among them.

Mr Wort replied that ATAF was a technical organisation. It was not the extension of a ministry of finance. Therefore it was not associated with the regional economic organisations or the African Union (AU). Revenue authority commissioners were very practical, technical people, and did not engage in tax policy but rather in administration. They found it to be far more functional just to have a body of revenue people to consider how best to run revenue administrations. The domestic tax laws remained sovereign.  This was the meaning of ‘independence’ in this context. However, ATAF did work with organisations such as the AU and the Southern African Development Community (SADC) in the training that it provided. ATAF had run four training programmes with SADC, for example, over the past year. So ‘independence’ was simply a reference to ATAF being a technical organisation and not an arm of a multi-lateral organisation in which one had to obtain the approval of the Minister concerned for every decision made. The organisation was therefore highly mobile but was non-political, so in that sense it was quite safe.

Mr Wort indicated that the representational Council was based on five regions that had been identified in Kampala. The organisation sought to be legal for the sake of functionality. It did not seek to incorporate so many aspects of representation and legality that hampered its mobility. Member states had agreed to the five regions. These regions helped in locating the member states linguistically. The 10 member Council sought to be broadly representative of the five regions, with another five member states which could be elected ‘loosely’.  This was the logic behind the membership of the Council.

Mr Wort explained that a member of the Council could withdraw their participation (Article 9). The heads of revenue authorities in Africa had a high turnover rate, and the replacement might decide that he or she did not want to serve on the Council. The general assembly of ATAF met every year, and it was at this meeting that a new member would be elected to the Council. It was mainly for functionality purposes. They were allowed to withdraw, and then a new member must be elected at the next council.

Mr D van Rooyen (ANC) welcomed the presentation. Tax administration efficiency and revenue collection enhancement was the epicentre of the country’s African agenda. As an African, he was very proud of this initiative. He could understand why other countries were willing to commit resources, even before ratification, since this was a long overdue intervention that took our beloved continent’s development agenda a step forward. He noted that the colonial masters’ languages had been given preference for reasons well-known; he agreed that English and French were widely spoken but noted that Swahili was the third dominant language in Africa, and asked why Swahili had not been chosen in preference to Portuguese (Article 7).

Mr Wort replied that ATAF had adopted the colonial languages for purposes of functionality (Article 7). He pointed out that there had been and continued to be a debate, which would probably be reopened at the Council’s next meeting in Mauritius; Arabic had been a contentious issue right from the beginning. One of the arguments concerning Arabic was that Swahili was spoken in more countries than Arabic, as Mr Van Rooyen had correctly pointed out.  The choice of languages was again for purposes of functionality, and had to do with the cost of translation. In most countries it was the case that either a colonial language was spoken or an indigenous language; this was the line that the organisation had taken until further review, because of cost. The only argument which the organisation was considering at the moment was that in some Arabic-speaking countries there was no other language. This was probably something that would be raised in Mauritius.

Mr Van Rooyen asked about the annual voting powers of member countries. Positions of authority would be highly contested. If this was not clarified at an early stage there might be problems.

Ms Z Dlamini-Dubazana (ANC) asked how effective an MPs’ role was in relation to an agreement that had already been signed, even though it still had to come back Parliament in order for South Africa to ratify it. She noted further that the Agreement had to be reviewed every five years. She had a problem with this.

Mr E Mthethwa (ANC) concurred with Ms Dlamini-Dubazana, and asked if this Agreement was still negotiable.

Mr Wort replied SARS did not have the authority to adopt the Agreement. This was the text as agreed to by the organisation and signed by the Council. This was also the text that ATAF was putting to the legislatures across Africa. It was the text that ATAF had finally negotiated amongst its members and on which it wanted the agreement of the legislatures. Over the next four years ATAF would be busy considering additional points which needed to be considered and turning them into resolutions each year. Then, after five years, the Agreement could be reviewed. Every time there was a change of wording, or a change of numbering, the Agreement would have to come back to Parliament. Therefore, as a new organisation, ATAF wanted to collect proposed changes and put them in the form of resolutions and then, at the completion of five years, make one set of changes that would then be put to the legislatures of the countries that had agreed to them. Again this was for practical reasons. The Agreement as it stood was what ATAF was putting in front of SARS and was what SARS was putting before the Standing Committee to accept or not to accept.

Ms Singh confirmed that SARS had received the opinions of the State Law Advisors from the Department of International Cooperation (DIRCO) and the Department of Justice and Constitutional Development (DoJ&CD) that the Agreement was in order to be taken forward for ratification. There was no conflict with South African domestic law. The Advisors had drawn attention to Section 231 of the Constitution with the intention of ensuring that SARS took the Agreement through the relevant parliamentary committees. The Agreement would enter into force when five states had ratified it. In accordance with Section 231 of the Constitution, South Africa would ratify it on the basis of resolutions of the National Assembly and the National Council of Provinces. It was for this purpose that SARS was before the Standing Committee that day.

A Member was worried about what would happen if this organisation became insolvent. He asked this with reference to Article 6.

Ms Singh replied that the rules and procedures were still being developed (insolvency, Article 6). There would be provision in the rules and procedures for the resolution of disputes as well as to examine ad hoc commissions that the Secretariat might find needed to be settled in future. Those areas would be addressed in the rules, and these rules would form the working procedure for the ATAF Secretariat and Council.

Mr Mashile said that Members were in a difficult situation. Already South Africa had spent a good deal of money and invested considerable effort into ATAF but had not yet even ratified the Agreement. Given the explanation of independence, he failed to understand why South Africa was involved and why MPs were considering the matter. Surely, if South Africa was to ratify, South Africa’s Parliament must have a say in the matter. However, it appeared that one was creating an animal to which one could say nothing. He was not convinced by the explanation of the membership of ATAF’s Council. There was talk of regions, but in the Agreement the wording was with reference to member states. Each and every member state would have one member representing it in the Council, unless he was not reading this colonial language properly. Each country could have only one member in that council. However, it was likely that the member states would be more than 10 in number. The clauses had been drafted independently from each other and not holistically. Moreover, if the organisation was going to be an independent, technical entity, why was the matter in front of the Committees?

Mr Wort clarified that ‘independence’ in the context of ATAF was not a political statement of independence. There were a number of practical issues. Firstly, not all African countries were members of the AU. Secondly, not all African countries were members of the UN. Some states were recognised by others but not by others. However, the revenue authorities said that they must work with all these organisations in the interests of domestic resource mobilisation in Africa. These administrations did not, in fact, want to enter that fray but wanted to lobby for the broader interest of domestic resource mobilisation. So there had not been discussion as to whether certain countries should be let in and others excluded. Mr Wort said that the guidance from legislatures and the guidance from presidents and the guidance from cabinets across Africa was through the annual general meetings held by ATAF and its other activities, because all its revenue authorities whether they were independent, semi-autonomous, like SARS, or governmental departments, did report back and did receive mandates from their governments in their deliberations. So the ‘independence’ of which SARS was talking was not political independence. Mr Wort hoped that he had further clarified that matter. However, if the Committees felt that SARS should consider something else, SARS could take up the matter ‘with the team’. This organisation could still be directed, because its members were revenue administrations that were part of states of Africa. This was the content of ATAF’s annual general meetings. It would be having such an annual general meeting in Mauritius in July 2011.

Mr Mashile asked what the problem would be if he were able to persuade all the Members present to refuse ratification.
 
Mr Wort replied that if Members refused ratification, then SARS could not be a member and would have to hand back the Secretariat and ask someone else to take it over.

Mr Mthethwa asked what SARS expected from Members. What must they do with the document? How would SARS want to engage Members in future?

Mr Wort replied that SARS was asking the Standing Committee to recommend ratification of South Africa’s membership in ATAF, and therefore ratifying the Agreement. If there were issues in the Agreement which Members would like SARS to take up, then SARS wished Members to instruct SARS what those issues were. SARS as part of its annual activities reported to the Standing Committee. This included its international activities. SARS asked Parliament to ratify South Africa’s membership of ATAF and therefore this Agreement and, if there were any concerns arising from this Agreement, still mandate SARS to deal with those concerns within ATAF. This was essentially what SARS was asking. 

Mr T Chaane (ANC; North West) said that the document had been properly clarified and it did make sense, and one supported the formation, as our own initiative on the part of South Africa, of the Forum and its objectives, and seeing no harm in giving the go ahead to participate in the Forum. As for the reporting, SARS would be bound to report to the Standing Committee, and the Standing Committee would have the opportunity to raise any issues that it wished to raise. Moreover, the Standing Committee could always demand a report on this Forum if required information were missing from the normal process of reporting. So he suggested that the Standing Committee move for adoption.

Adoption
Dr George said that it was disappointing that it was only now that the Standing Committee was involved; however, it was a good idea to have such a Forum and it would be exceptionally embarrassing for South Africa to refuse ratification. The Democratic Alliance supported ratification of the Agreement.

The Chairperson said that this document still had to go to the NCOP for ratification there, but the Standing Committee on Finance had received the presentation and request of SARS. The Standing Committee commended SARS for leading this effort for the continent of Africa. He took this as a working document on which work would continue and improved on. As the Standing Committee engaged with SARS on international aspects of its work, it would continue to make inputs on areas that it thought needed to be strengthened. Ideally, the Standing Committee should have been involved much earlier. However, he agreed with Dr George that South Africa could not at the same time be the initiator and the rejecter of its own noble ideas. Mr Van Rooyen had indicated the importance of the Agreement. It was important that the economies of the region were integrated with the South African economy. Therefore any effort to help revenue generation in the Continent should be supported by Parliament. On the other hand the Standing Committee might need to revisit the Agreement if it found issues that were not sufficiently covered by the Agreement in its present form.

The Chairperson noted that Dr George has moved for the ratification; Mr Mthethwa and Mr S Marais (DA) seconded.

The Chairperson read for record purposes and signed the motion of desirability:

‘The Standing Committee on Finance having considered the desirability of approval by Parliament of the Agreement on the Establishment of the African Tax Administration Forum recommends that the House, in terms of Section 231 (Subsection 2) of the Constitution of the Republic of South Africa, approve the said Agreement.’

The meeting was adjourned.

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