Before members of the Southern African Development Community (SADC) can achieve regional economic integration, they must achieve macroeconomic convergence and harmonize their tax policies. Nathan Associates shaped debate on these issues by helping SADC’s Directorate of Trade, Industry, Finance and Investment (TIFI) draft and advocate adoption of memoranda of understanding.
Once both MOUs were signed in August 2002, our macroeconomic and tax policy experts assisted SADC in implementing them. The result: a road map that will guide SADC members as they move toward macroeconomic convergence and tax policy harmonization and ultimately regional integration.
The MOU on convergence established a framework for coordinating macroeconomic policies by identifying sound monetary and fiscal policies, convergence measurements, and a procedure for monitoring progress.
The MOU on tax policy lays the foundation for members to improve tax cooperation, reduce tax competition, and harmonize tax systems to improve revenue collection, safeguard tax bases, and reduce obstacles to trade and investment. Members agreed to
- Develop a tax database.
- Build tax officials expertise.
- Develop a policy for tax treaties among members and for treaties outside of SADC.
- Coordinate administration of indirect taxes.
- Consider mechanisms and procedures for settling tax disputes and
- Devise an approach to providing tax incentives and avoiding tax competition.
Because taxes and policies are highly controversial, achieving consensus required intense analytical support and diplomacy, as well as extensive training of SADC officials.
We conducted workshops and studies on convergence, value added taxes, revenue estimation, double taxation, excise taxes, and tax incentives.