AU Sub-Committee on Tax and IFFs calls for Africa to be more vocal in the global tax rules debate

The 1^st Sub-Committee on Tax and Illicit Finical Flows of the African Union’s Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration began by highlighting the need for African countries to continue striving for improved Domestic Resource Mobilisation.

PRETORIA - The 1st Sub-Committee on Tax and Illicit Finical Flows (IFFs) of the African Union’s Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration commenced on 6th April 2022. The meeting began by highlighting the need for African countries to continue striving for improved Domestic Resource Mobilisation (DRM). This is through tax policy that protects national revenue sources, and pushing for the allocation of more taxing rights and making the African voice heard in the global tax rules debate.

This inaugural meeting of the Sub-Committee on Tax and IFFs of the STC was graced by the Hon. Clemence Chiduwa (MP), the Deputy Minister of Finance and Economic Development, of the Republic of Zimbabwe, as the Guest of Honour. He expressed that his honour to be hosting this historic meeting as Africa forges strategies to flag Africa on its journey to self-sustainability by effective resource mobilisation through taxation. He indicated that tax forms the central relationship between the state and it’s citizenry, and thanked the African Union Commission for advancing this initiative.

In his opening remarks, His Excellency Ambassador Albert Muchanga, the African Union Commission’s Commissioner of Economic Development, Trade, Tourism, Industry & Minerals; underscored that IFFs continue to hamper Africa’s development and ability to finance its own development, and that going forward the AU will co-ordinate all efforts against IFFs. Amb. Muchanga said, “To be strong in global tax debates, Africa must be strong in Domestic Resource Mobilisation, and the AUC seeks to intensify its effort with technical support from the African Tax Administration (ATAF) and looked forward to building strong collaborations between the two institutions.”

Ms Mary Baine, the African Tax Administration Forum (ATAF)’s Acting Executive Secretary, expressed ATAF’s concerns, stating that the global tax reform is not taking sufficient concerns of African countries onboard, such as the pace of the negotiations that don’t allow for African countries to fully apply their minds to these already complex discussions, thus putting the developing world, Africa inclusive, at a disadvantage. 

Ms Baine, further stated that, “Through the leadership of the AUC, let us discuss these critical matters and develop solutions fit for African economies because, as we have seen, the extent to which the Pillar Two rules impact a country’s tax incentives is a complex question that could hugely impact tax revenues in countries as they could possibly sign away their taxing rights.” In this regard, ATAF remains committed to assisting African countries in navigating the new rules irrespective of whether they have signed the Inclusive Framework Agreement. ATAF’s efforts to combat illicit financial flows continue, and its work over the last five years has seen assessments of up to US$3.1 billion and revenue collected amounts to US$1.1 billion in 9 countries. With its continued collaboration with the African Union Commission, ATAF’s IFF Strategy will align with the AUC’s IFF Strategy.

The meeting is held over three days in Harare, Zimbabwe, with African experts on tax, finance, monetary affairs, planning and integration, debating the AU’s Strategies in Tax and combatting IFFs. The meeting will consider two continental strategies : (i) The AU strategy on Tax; and (ii) The AU strategy on fighting illicit financial flows (IFFs). 

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