Africa moves towards tax transparency

The Tax Transparency in Africa 2020 Report provides comparable tax transparency statistics to aid decision makers to address illicit fund flows. PHOTO: ImageCollab

African countries have been strengthening commitments and capacity to achieve tax transparency and the exchange of information on illicit fund flows in 2019, according to the Tax Transparency in Africa Report launched on 25 June. The annual publication of the report is part of various efforts of the continent to advance global tax transparency and the exchange of information in Africa to combat corruption, tax evasion, money laundering, fraud, base erosion, profit shifting and illicit enrichment. Victor Harrison, commissioner for economic affairs at the African Union Commission, says illicit financial flows in Africa are estimated at between $50 billion and $80 billion annually. He says the Tax Transparency in Africa 2020 Report provides comparable tax transparency statistics to aid decision-makers to address illicit fund flows and notes the need for African countries to engage further in revenue mobilization, a concern sharpened by the backdrop of the COVID-19 pandemic.

“The Tax Transparency in Africa Report published during a virtual launch is produced by the Global Forum for Transparency and Exchange of Information for Tax Purposes, the African Union, African Tax Administration Forum, in partnership with the African Development Bank. The 2020 report covers 32 Global Forum member countries and three non-members of Angola, Guinea Bissau and Malawi,” says Harrison.

There is a need for African countries to engage further in revenue mobilisation, a concern sharpened by the backdrop of the COVID-19 pandemic. PHOTO: ImageCollab

According to the commissioner, 44% of Africa’s financial wealth is thought to be held offshore, which corresponds to tax revenue losses of €17 billion. He says participating countries show significant advances on the two core pillars of the African Initiative, a partnership of the Global Forum, its African members and regional and international organization, which is raising political awareness and commitment and developing capacities in tax transparency and exchange of information. Marie Jose Garde, chair of the Global Forum, chaired the live event with participants including Zayda Manatta, head of the Global Forum Secretariat and Logan Wort, executive secretary of the African Tax Administration. Further participants included Marcello Estevao, global director of macroeconomics, trade and investment of the World Bank and Abdoulaye Coulibaly, director of governance and public financial management at the African Development Bank.

Manatta praised African countries’ growing proactive role in tax transparency and noted the benefits of existing exchange-sharing tools. She says requests for information directly translate into additional tax revenue and that’s what counts and five African countries identified nearly $12 million in additional revenue, while eight African countries secured $189 million in additional revenue between 2014 and 2019.

“The African Development Bank says collaboration with regional and international partners are key in moving the tax transparency agenda forward which has a significant impact on domestic resource mobilization, achievement of the Sustainable Development Goals (SDGs), the African Union’s Agenda 2063 and the African Development Bank High Fives. The ongoing COVID-19 pandemic highlights the importance of domestic resource mobilization in Africa, particularly relating to tax transparency and the fight against illicit flows to further protect populations against threats to their livelihoods,” says Coulibaly.