Why tax transparency plays a crucial role to stemming illicit financial flows
The Tax Transparency in Africa 2021 report, was launched under the auspices of the Africa Initiative, outlines the state of play for 34 African Union members and details their progress in implementing and benefiting from the tax transparency and exchange of information (EOI) standards. The report is a production of the Global Forum, AUC, OECD and the African Tax Administration Forum (ATAF).
Speaking at the launch, H.E Amb. Albert M. Muchanga, Commissioner for Economic Development, Trade, Industry and Mining from the African Union Commission, said “The devastating socio-economic impact of the COVID-19 pandemic on Africa and the challenges in mobilising financing to jump-start African economies clearly demonstrate that reliance on Official Development Assistance alone is no longer the solution,” H.E Amb. Muchanga added that Africa needs to take bold and intentional actions to consolidate its tax base.
Mr Githii Mburu, Chair of the Africa Initiative said, “The Tax Transparency in Africa 2021 report gives valuable insights into the strides that the continent has made in utilising exchange of information to address tax evasion and illicit financial flows. The report tells a story of commitment and determination in progressing the tax transparency agenda, which has led to enhanced EOI capacity in tax administrations in Africa and the collection of more tax revenues from utilization of the EOI tool. I am proud to be part of this exciting journey!”
The ATAF partnership with the Global Forum provides member countries with the opportunity to enhance their exchange of information capabilities in the fight against tax evasion, illicit financial flows and improves the capabilities of the revenue administrations. ATAF and the Global Forum have developed training materials, tools kits, and practical guides to strengthen these capabilities throughout the years.
The Global Forum’s peer reviewing training provides officers from member countries with skills development and allows them to play their part in the assessment, which we believe is further strengthened among Africans. The work on the exchange of information is enhanced through collaboration on ideas, developing more competent authority offices and establishing more EOI units within revenue authorities.
Improved EOI infrastructures helped tax administrations collect more revenue: in 2020, two African countries identified nearly EUR 35 million of additional taxes as a direct consequence of the requests sent; reported Ms Zayda Manatta Head of the Global Forum; who attributed this to the consistent support provided by the Global Forum and partners including ATAF.
The Commissioner of South African Revenue Service and Vice-Chair of the Africa Initiative, Mr Edward Kieswetter, noted that the exchange of information remains a priority for African countries.
“Among the respondents to the TTiA 2021 survey, the number of countries giving a high priority to EOI remains high and stable while the number of countries attaching a low priority has decreased. Not only is their participation to the survey a positive sign but the high level of priority granted to EOI is promising.” Mr Kieswetter said.
Political buy-in for the multilateral tax transparency efforts was markedly reinforced over the past 12 months: Mali joined the Global Forum in 2020, bringing to 32 the number of Africa Initiative members, and the African Union Commission and Eswatini added their weight to the Yaoundé Declaration. This call for action to enhance domestic resource mobilisation by tackling illicit financial flows (IFFs) through international tax co-operation now counts 31 signatories.
ATAF’s work has yielded successes in these areas, and we look forward to continuing this partnership and enhancing our members’ capabilities.
The Africa Initiative is supported financially by the European Union, France (Ministry of Europe and Foreign Affairs), Norway (Agency for Cooperation and Development), Senegal (Resource Mobilisation and Investment Attractiveness Institutional Support piloted by the Ministry of Finance of Senegal and supported by the African Development Bank), Switzerland (State Secretariat for Economic Affairs) and the United Kingdom (Foreign, Commonwealth and Development Office).
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