Sierra Leone pledges to tackle tax evasion in the Marine SectorJanuary 7, 2021
By Abu Bakarr Kargbo
A foreign fishing vessel in the Sierra Leone waters
Faced with an estimated 15 percent shortfall in domestic revenue due to Covid-19 lockdown restrictions, which battered the economy, Sierra Leone is stepping up efforts to tackle tax evasion in the maritime sector to boost the country’s focus.
According to the updated IMF forecasts from 14 April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -2.3% in 2020. Sierra Leone GDP for 2019 was $3.94 billion.
The revised lower projected growth rate will compromise the country’s ability to meet its debt and developmental obligations.
On the other hand, the country’s National Revenue Authority (NRA) in its economic update report of July 2020 estimated a 15% fall in domestic revenue. The tax authority also warned that the government would take several actions such as business closure, court action, or
withholding port clearance certificates against companies found to have evaded and/or avoided paying tax.
Meanwhile, it appears that authorities are targeting Illegal, Unreported, and Unregulated (IUU) fishing, a Sector in which, according to The Africa Agenda 2063, annual revenue loss to Sierra Leone is estimated at US$29 million, and to the West African region, the loss is US$1.3 billion.
The above-quoted money is needed to finance social services, such as health and education.
The fishing sector employs an estimated 36,000 people, according to a 2018 World Bank report titled Sierra Leone Overview, which states that the fish resources of the country have an estimated capitalized economic value of US$735 million, contributing 9% of the economy.
Sierra Leone’s president Julius Maada Bio in his 28 May 2020 State Opening of Parliament address, that, “Sierra Leone remains fully committed to its national and international obligations to interdict illicit financial flows in all sectors and will continue to support the work of Audit Service Sierra Leone in verifying and attesting reports submitted by Government agencies on the Extractive Industries Transparency Initiative (EITI) process…”
The president’s statement follows his earlier commitment made in 2018 that, his administration “will focus on improving marine resource governance and sustainable management of fisheries, reducing illegal fishing, improving the quality of marine products, and developing fishing infrastructure.”
According to a 2019 World Maritime University Dissertation, titled Socioeconomic impacts of illegal unreported and unregulated (IUU) fishing on Sierra Leone, while Illegal fishing contributes to overfishing, the loss of revenues in terms of taxes, licenses fees, export revenues, port revenues, stock reduction, unemployment, food insecurity, and expenditures for monitoring, control and surveillance operations are some economic and social impacts of IUU fishing at both national and community/household levels.
Samuel Sesay, Senior Instructor at the Naval Wing in an interview stated that several fishing vessels have been arrested and made to face the consequences, “these vessels are illegally fishing in our waters without paying a dime to the government.”
Sesay added that the Naval Wing arrested three foreign fishing vessels in early April 2020.
“Three vessels had escaped from our custody in July this year without paying their fines. Although we cannot locate them since July 27, 2020, we have however alerted authorities in neighbouring countries to help us locate them and bring them back to Sierra Leone to face justice,” Sesay noted.
The Senior Instructor also alleged that despite measures implemented to stop the illegal activities at sea there were still some Asian fishing vessels taking chances thereby depriving the country of its much-needed revenue of the fishing industry.
Although he could not give the exact statistics, he said the problem has escalated because there had been less monitoring by the naval wing due to lack of equipment like speed boats to go after violators.
The Maritime Administration has few speedboats, which is why the Naval Wing is partnering to conduct joint sea patrol to address the illegal acts, Sesay said.
Gibrilla Bangura of the Marine Resources Assessment Group (MRAG) said his agency had received reports from their team of experts on how some Chinese and Korean vessels, in particular, are using illegal methods in Sierra Leone waters such as pair trawling.
“This is when two boats string a net between them and trawl in parallel,” he alleged and added that these vessels are evading taxes that should have been used by the government of Sierra Leone to fund development programmes,” he said.
According to a web-based Anti-Corruption Resource Centre U4 operated by Transparency International September 2013 article, IUU fishing is a low risk, high reward activity. Demand for and prices of overexploited and protected species are high, and the actual chance of getting
caught or being punished is low, particularly because IUU fishing often takes place in countries where enforcement is weak.
The U4 article also states that illicit financial flows constitute, among others, undocumented commercial transactions and criminal activities including tax evasion and corruption, and may relate to other criminal activities such as drug and human trafficking. IFFs are facilitated by tax havens and secrecy jurisdictions and a wide range of money laundering techniques.
“Studies have shown that countries endowed with natural resources are
among the most affected by illicit financial flows. However, very little is known about illicit flows specifically related to corruption in fisheries,” U4 states.
Most common schemes used by IUU fishing that to a great extent allow them to operate illegally, including the use of flags of convenience, transhipping at sea, the use of ports of convenience, and tax havens, according to the article.
The use of “flags of convenience” means that operators register and flag their vessels in a country that is not the country where they come from. These operators usually choose countries that will not regulate their activities and will be unlikely to enforce domestic or international fishing rules, U4 stated.
This story was produced by Standard Times Newspaper. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.