African countries making good strides on tax transparency

The OECD published, on 14 June, a new report titled ‘Tax Transparency in Africa 2022’, which documents the region’s latest progress in tackling tax evasion and other illicit financial flows (IFFs) through transparency and exchange of information (EOI) for tax purposes.

The report covers 38 African countries and was a co-production of the Global Forum on Transparency & Exchange of Information for Tax Purposes, the African Union Commission and the African Tax Administration Forum.

Launched in 2014, the OECD’s Africa Initiative seeks to ensure that African countries are equipped to exploit the latest advances in global transparency, to better fight tax evasion and other IFFs and ultimately improve resource mobilisation to sustain their development.

The report measures the impact of the Africa Initiative’s work and details capacity-building activities carried out by the Global Forum and its partners in 2021. It highlighted a number of significant achievements in recent years, including:

  • 22 African countries are now parties to the multilateral Convention on Mutual Administrative Assistance in Tax Matters, the most comprehensive instrument for all forms of co-operation to tackle tax evasion, which has expanded the number of bilateral EOI relationships from 913 in 2014 to 4,135 in 2021.
  • Effective infrastructures for information exchange are being set up, with most countries establishing well-functioning competent authority units within their tax administrations. As a result, the number of countries sending requests for information increased from 6 in 2014 to 15 in 2021, while the total number of requests sent increased by 26% from 2020 to 2021.
  • 10 African countries have committed to automatic exchange of financial account information (AEOI) by a specific date.
  • Nine African countries collectively reported collecting over €233 million as a direct result of exchange of information on requests (EOIR) since 2014. In total, at least €1.2 billion additional revenue – including tax, interest and penalties – had been identified in the region since 2009, through voluntary disclosure programmes launched prior to the first automatic exchanges, EOI and offshore investigations.
  • A record of 1,500 African tax officials have been trained to build capacity on the use of EOI instruments in 2021.

The report said that new political engagements had further reinforced the multilateral efforts to advance tax transparency in 2021. In particular, Algeria had joined the Global Forum, while Algeria and Rwanda had also both signed the Yaoundé Declaration.

Originally signed by four countries in November 2017, the Yaoundé Declaration encouraged the African Union to begin a high-level discussion on tax co-operation, the fight against IFFs and their link to domestic resource mobilisation. Less than five years later, 33 African ministers of finance and the African Union Commission now back the Declaration.

“I wish to applaud the members of the Africa Initiative for their commitment and resilience in implementing tax transparency standards during the difficult times occasioned by the COVID-19 pandemic,” said Githii Mburu, Commissioner General of the Kenya Revenue Authority and Chair of the Africa Initiative. “The Tax Transparency in Africa 2022 report is an enlightening testament to the valuable gains made in the fight against tax evasion and illicit financial flows through consistent utilisation of EOI networks and tools.”

However, the report also noted uneven progress across the region. Four countries alone had accounted for 92% of all requests sent by African countries in 2021; and four from the six countries assessed in the second round of EOIR peer reviews so far were rated only partially compliant, showing common difficulties in the implementation of the EOIR standard, which includes advanced beneficial ownership requirements.

“The Global Forum will pursue and intensify its efforts to actively promote the transparency agenda in Africa,” said Zayda Manatta, Head of the Global Forum Secretariat. “We look forward to helping further develop local capacities, for example through our ‘Train the Trainer’ programme, to achieve more transparent tax systems for the benefit of all African countries and their citizens.”

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