Tax Transparency in Africa 2020, launched last week by the Global Forum on Transparency and Exchange of information for Tax Purposes, the African Union Commission and the African Tax Administration Forum, depicts the state of play for 32 African Union Member States.
It shows the progress achieved on the two cornerstones of the African Initiative: (i) raising political awareness and commitment, and (ii) developing capacities in tax transparency and exchange of information (EOI). Tax transparency and EOI have a crucial role to play in helping African governments stem illicit financial flows (IFFs) and increase domestic revenue mobilisation.
Main findings
African countries’ EOI network has been expanding rapidly. It reached 3,262 bilateral relationships in 2019, compared to 685 in 2013. This is mainly due to the growing number of countries joining the Convention on Mutual Administrative Assistance in Tax Matters. The amount of EOI requests sent by African countries increased more than eightfold since the start of the Initiative in 2014. These impressive developments directly translated into additional tax revenue, allowing a group of eight African countries to secure USD 189 million extra revenue between 2014 and 2019.
Encouraging evolutions were also observed in the implementation of automatic exchange of information (AEOI): Ghana started exchanging in 2019, joining Mauritius, Seychelles and South Africa. Nigeria is expected to start in 2020 and Morocco in 2021. Assistance is ongoing with five countries to help them move towards the implementation of this standard. Interest in AEOI had been awakened by the remarkable outcomes of voluntary disclosure programmes launched prior to the first exchanges, with EUR 102 billion recovered globally, including USD 82 million in Nigeria and USD 296 million in South Africa.
Remaining challenges
Despite the progress, important challenges remain ahead, among which the expansion of staff’s knowledge, the availability of beneficial ownership information and the effective implementation of AEOI. Thirty training events have been organised since 2015 and more than a thousand officials from 44 African countries have been trained.
Prof Victor Harison, Commissioner for Economic Affairs of the African Union Commission, called on “all Member States to participate in the international tax cooperation by implementing fiscal transparency strategies that fight against illicit financial flows (IFFs), and mitigate tax evasion on the continent”.
He further noted that domestic resource mobilisation is essential for the transformation, self-reliance and sovereignty of the continent in order to build an endogenous economy and achieve Agenda 2063.
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