Tax Incentives In Nigeria, Other African Nations Cost $22 Billion Loss Annually – AU

Africa Steps Up: 3rd Sub-Committee Meeting on Tax and Illicit Financial Flows

Theme: Strengthening Africa’s Leadership in Continental and Global Tax Reforms

Dates: May 8-10, 2024  Location: Yaoundé, Cameroon

The African Union (AU) is taking a proactive stance on tax and illicit financial flows (IFFs) through the 3rd Meeting of the Sub-committee on Tax and IFFs. Held under the theme “Strengthening Africa’s Leadership in the Continental and Global Tax Reforms,” the meeting aims to solidify Africa’s position in shaping international tax policies and tackling financial loopholes.

Challenges and Lost Revenue:

• Africa faces significant challenges in mobilizing domestic resources for development.
• The continent loses an estimated $89 billion annually through IFFs, hindering economic progress.
• Outdated tax policies and a lack of participation in global tax rulemaking have disadvantaged Africa.

Taking Charge:

• The meeting emphasizes Africa’s leadership role, not just in implementing reforms but also in influencing global tax discussions.
• The AU, working with partners like the African Tax Administration Forum (ATAF) and Tax Justice Network-Africa (TJN-A), is equipping member states with tools and knowledge to combat IFFs and optimize domestic resource mobilization.

Key Discussion Points:

1. African Leadership on Continental Tax Reforms:
   • The meeting will review existing strategies and tools developed by the AU to address tax issues specific to Africa. This includes harmonizing tax policies and strengthening tax administration capacities.
   • Ongoing efforts to implement the OECD’s two-pillar solution on Base Erosion and Profit Shifting (BEPS) will also be discussed.
2. Enhancing Domestic Resource Mobilization:
   • The goal is to establish a comprehensive tax agenda for Africa. This agenda will focus on: 
     • Identifying and addressing key tax challenges like BEPS, digital economy taxation, and cross-border tax compliance.
     • Developing and implementing tax policies that support sustainable development and regional integration.
3. Renewed Continental Commitment Against IFFs:
   • The meeting will explore strategies to: 
     • Track and measure the impact of existing anti-IFF policies.
     • Encourage inter-agency cooperation within member states.
     • Educate member states on the implications and options of recent global tax policies.
4. Reviewing Progress and Emerging Issues:
   • The meeting will review the implementation of previous Sub-committee recommendations and identify new issues requiring attention.

Expected Outcomes:

• A refined African position on the UN resolution for a UN Framework Convention on International Tax Cooperation.
• An update on the implementation of new global tax rules.
• Tools and strategies for African countries to combat IFFs.
• An updated report on the AU’s work in combatting IFFs for presentation at the 7th Specialized Technical Committee meeting.

Participation:

The meeting will involve experts and officials from ministries of finance, tax administrations, central banks, diplomats, and regional economic communities. Observers and contributors, including international organizations, civil society groups, journalists, and academics, will also participate.

This meeting signifies Africa’s growing resolve to take ownership of its tax and financial landscape. By tackling domestic challenges and shaping global discussions, Africa can create a fairer and more equitable international tax system that benefits the continent’s development goals.