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Guinea-Bissau: Tax, Licensing, and Regulatory Obligations Overhauled

In an effort to strengthen governance and curb corruption in Guinea-Bissau, the government has announced a raft of reforms aimed at improving transparency and accountability in tax collection, licensing, and regulatory obligations.

Fiscal Challenges

Guinea-Bissau’s fiscal position is increasingly strained, with domestic revenue accounting for just 12.5% of GDP - one of the lowest rates in the region. To address this, the government plans to reform both legislative and institutional frameworks on asset declarations, with a view to full implementation and online publication within the next six months.

Strengthening Governance

The Ministry of Finance, CENTIF, Banking Commission of the BCEAO, and other relevant authorities will strengthen supervision of preventive anti-money laundering and combating the financing of terrorism (AML/CFT) measures related to politically exposed persons. This is expected to be completed within a short term timeframe.

In addition, all relevant authorities have been tasked with safeguarding the operational independence of investigative, prosecutorial bodies, and courts from political interference and undue influence in the investigation, prosecution, and imposition of sanctions, including confiscation of corruption proceeds.

Law Enforcement Support

Law enforcement agencies will receive necessary resources, including a sufficient budget for operations, and appropriate budgetary autonomy. The government has also pledged to address gaps in Bissau-Guinean criminal legislation in line with recommendations from the United Nations Convention against Corruption review, particularly with regards to criminalizing corruption offenses.

Reform Objectives

The reforms aim to improve domestic revenue and expenditure management, as well as ensure transparency and accountability in the use of public funds. To achieve this, critical reforms will cover areas including:

  • Public financial management (PFM)
  • Tax administration and policy
  • Legal and institutional frameworks

According to a recent report by the International Monetary Fund (IMF), Guinea-Bissau’s domestic revenue was flat in nominal terms up until August 2019, compared to the same period in 2018. Current expenditures, on the other hand, were more than 20% higher than in 2018, driven by significant increases in the wage bill and transfers to Electricidade e Aguas da Guine-Bissau (EAGB) to cover previously incurred liabilities.

Implementation Timeline

The implementation timeline for these reforms is as follows:

  • Short Term (less than six months):
    • Reform legislative and institutional frameworks on asset declarations
    • Strengthen supervision of preventive AML/CFT measures related to politically exposed persons
  • Medium Term (six months to two years):
    • Grant necessary resources, including a sufficient budget for operations, and appropriate budgetary autonomy to law enforcement agencies
    • Address gaps in Bissau-Guinean criminal legislation in line with recommendations from the United Nations Convention against Corruption review

Conclusion

The reforms announced by the government aim to improve governance, transparency, and accountability in Guinea-Bissau’s tax collection, licensing, and regulatory obligations. With careful prioritization and implementation, these reforms have the potential to strengthen the country’s fiscal position and lay a foundation for stronger economic growth and development objectives.

Key Recommendations

  1. Reform both legislative and institutional frameworks on asset declarations, with a view to full implementation and online publication within six months.
  2. Strengthen supervision of preventive AML/CFT measures related to politically exposed persons within a short term timeframe.
  3. Safeguard the operational independence of investigative, prosecutorial bodies, and courts from political interference and undue influence in the investigation, prosecution, and imposition of sanctions, including confiscation of corruption proceeds.
  4. Grant necessary resources, including a sufficient budget for operations, and appropriate budgetary autonomy to law enforcement agencies.
  5. Address gaps in Bissau-Guinean criminal legislation in line with recommendations from the United Nations Convention against Corruption review, particularly with regards to criminalizing corruption offenses.