Why tax auditors play crucial role to tax administrations

PRETORIA – Tax auditors comprised an average of 9.9% of the total tax workforce in Africa in 2019. On average, there are 3,675 taxpayers per auditor in Africa. These numbers show that the audit capacities in the ATO are very low. This is according to the African Tax Outlook (ATO). 

During a joint African Tax Administration (ATAF) and the Tax Administration Research Centre (TARC) webinar called Tax Audits in Africa: Policy and Administration Reflections, administrations and academics shared good practices in tax administrations and the overview of tax audits on the continent. 

Giving opening remarks on behalf of ATAF’s Executive Secretary, Ms Varsha Singh informed participants of ATAF’s three technical guides on audits. 

“ATAF has been working with our members for the past 12 years and has been helping them build their tax audit skills and capabilities. In terms of revenue there was an additional $1 billion that has been collected over 6 years in 10 countries.”

Following her remarks, TARC’s Christos Kotsogiannis highlighted the role of the organisation in enhancing the capability of tax audits among membership in Africa through high-quality research. 

The webinar comprised of three sessions:

In session one, participants discussed the fact that there’s a sizeable pro-deterrence effect of tax audits in Africa. Audits were found lacking in creating deterrence even when large tax evasion exists. The presentations in session two highlighted the importance of properly planning and executing an audit and conducting audit quality assurance processes. Session three lamented the shortfall of the audit capacities in Africa. 

Lessons drawn from the discussions showed tax audits will be more effective and impact taxpayer behaviour when the cost of noncompliance is known to weigh more than its benefits. 

There’s a need for tax audit quality assurance frameworks that are strategically integrated into the audit process. Hence, revenue administrations need to demonstrate to taxpayers that noncompliance will be discovered, and enforcement implemented. 

The webinar was held virtually on 23 March 2022 where 774 people from across the world attended.