VALUE-ADDED TAX IN A BORDERLESS SA-BLNS REGION

Market integration and the abolition of border controls increase the mobility of consumers and cross‐border shopping. This makes it difficult to maintain a destination‐based VAT. Because of differences in the size of countries, governments of different sizes may engage in inefficient tax competition. Such externalities result in a call for tax coordination and a review of VAT regimes most suitable to a globalised world. One of the ultimate objectives of an African Union is a single market. This paper introduces the potential VAT policy implications of further economic integration within Southern Africa as a prelude to an African Economic Community, drawing on the experience of the EU in particular. When the critical factors that may impact on VAT policy are viewed together with SACU's long history of customs cooperation, a form of clearing‐house regime seems appropriate. However, this may not be politically appropriate, thus clearing the way for a more conventional approach, such as the transitional EU‐VAT regime.