African countries’ requests for information for tax collection purposes rose by 26% in 2021 over the previous year, signaling continued progress toward tax transparency in spite of a challenging environment.
The Tax Transparency in Africa 2022 report by The Africa Initiative launched on Tuesday in Nairobi, Kenya covered 38 countries and documented Africa’s progress in tackling tax evasion and other illicit financial flows (IFFs) through transparency and exchange of information (EOI) for tax purposes.
The Africa Initiative is a partnership of the Global Forum on Transparency and Exchange of Information for Tax Purposes (The Global Forum), 33 African countries and 16 partners, including the African Development Bank (AfDB), the African Union Commission (AU Commission), the European Union (EU) and the governments of Switzerland and the UK. Five non-member countries participated in the study for the report.
In his remarks during the report launch, Commissioner General of the Kenya Revenue Authority and Chair of the Africa Initiative, Githii Mburu, said: “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.”
Among other key findings of the 2022 report are that African countries had 4,135 bilateral exchange of information relationships in 2021, up from 913 in 2014; and 15 countries sent requests for tax information in 2021, up from 6 in 2014.
The report also showed that 9 African countries collectively reported having collected €233 million since 2014 as a direct result of exchange of information requests.
It also indicated that since 2009, at least €1.2 billion in additional revenue has been identified in the region through voluntary disclosure programs, exchange of information and offshore investigations; and in 2021, 1500 African tax officials received training on the use of exchange of information instruments.
While presenting an analysis of the report’s findings, Head of the Global Forum Secretariat, Zayda Manatta, noted that African countries continued to suffer significant losses from illicit financial flows, estimated at $50 billion to $80 billion every year.
According to her, the Covid-19 pandemic has complicated Africa’s achievement of the UN sustainable development Goals.
She said: “Covid-19 has pushed an additional 29 million people into extreme poverty, so effectively curbing illicit financial flows, would unlock much needed resources in Africa.”
Manatta said that in spite of the report’s positive findings, there was room for African countries to increase their use of tax transparency tools,
For instance, although 15 countries sent requests for tax information in 2021, four countries—Kenya, Tunisia, Algeria, Nigeria—accounted for 92% of those requests.
She urged other countries to use requests for information and also advocated for a system for automatic exchange of information to be put in place.
In addition, Manatta stressed that “more needs to be done in Africa to increase women’s participation in capacity building activities”, pointing out that around the world an average of 50% of attendees in capacity building training whereas in Africa it was 40%.
