Africa tax authorities unite against illicit financial flows

The African Union Commission and the African Tax Administration Forum have moved to strengthen cooperation among tax authorities across the continent to tackle illicit financial flows, cross-border tax evasion and aggressive tax practices.

The institutions also agreed to deepen collaboration on domestic revenue mobilisation, taxation of extractive industries and other hard-to-tax sectors.

This followed a meeting between an ATAF delegation led by its Council Chair, Dr Johnston Makhubu, and the AUC Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, Francisca Belobe, at the African Union headquarters in Addis Ababa, Ethiopia.

ATAF disclosed this in a statement issued on Friday. According to the statement, the discussions focused on African-led measures to help countries raise more revenue, improve tax compliance and finance sustainable development.

A major focus was the implementation of the Agreement on Mutual Assistance in Tax Matters, which is expected to strengthen cooperation among African tax administrations.

The statement said, “The Agreement on Mutual Assistance in Tax Matters was highlighted as an important mechanism for strengthening cooperation among African tax administrations through exchange of information, assistance in tax collection, joint tax examinations and other forms of administrative cooperation.”

It added that such cooperation had become increasingly important in addressing “cross-border tax evasion, illicit financial flows and aggressive tax practices.”

The AUC and ATAF also identified the strengthening of Africa’s tax treaty networks as a priority.

According to the statement, the ATAF Model Double Taxation Agreement provides a policy tool to help countries negotiate treaties that better protect their taxing rights and reflect their development priorities.

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Belobe also urged ATAF to strengthen engagement with the private sector as part of efforts to improve tax compliance and expand the tax base.

The statement said the commissioner encouraged ATAF “to intensify coordination and meaningful engagement with the private sector,” noting that involving businesses in tax policy and compliance discussions could improve voluntary compliance and broaden the tax base.

The organisations also agreed to sustain cooperation on revenue challenges in extractive industries and other hard-to-tax sectors.

ATAF said valuation issues, cross-border transactions, specialised contractual arrangements and limited access to relevant information could complicate effective taxation in those sectors.

Belobe welcomed progress made through cooperation around the Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration and called for further efforts to improve tax revenue collection and strengthen national fiscal systems.

The statement said, “For both institutions, the emphasis is increasingly on translating fiscal instruments into practical benefits for countries.”

The AUC and ATAF will also work towards renewing their Memorandum of Understanding and developing a detailed work plan for the coming years.

According to the statement, the renewed framework will strengthen coordinated action across tax policy and administration, treaty matters, mutual assistance, private-sector engagement and taxation of strategic and hard-to-tax sectors.