Tax forum conference kicks off in Cape Town

Tax and customs bosses from 40 countries are meeting in Cape Town to discuss ways of plugging the tax loopholes and inequities created by increasingly complex global financial flows.

The International Forum on Tax Administration is a body created by the Organisation for Economic Co-operation and Development (OECD) to improve the working relationship between tax administrations in different countries.

In opening the two-day conference, Finance Minister Trevor Manuel called for greater international co-operation among tax authorities. He said more complex financial flows have increased the burden on tax collectors.

Globalisation also means that shifts in tax policy by individual countries can have negative effects on others. One example, says Manuel, is the cutting of corporate tax rates as countries compete for investment. This shifts the tax burden to the less powerful and more vulnerable.

One of the issues to be discussed at the forum is how to prevent tax evasion by multinational companies operating in many different countries. Manuel has praised the OECD's efforts to improve international co-operation. But he says those efforts must be extended to help poor countries protect themselves against tax raiders.

Another theme of the conference is building the capacity of African tax administrations. The OECD's Deputy Secretary General, Pierre Carlo Padoan, says capital flight to tax havens is harming the continent's development.

He says while Africa is beginning to fulfill its economic potential, better tax revenues are needed to finance the infrastructure and the skills needed for a vibrant economy.