The global landscape for fighting tax evasion and avoidance has changed substantially over the last few years. International co-operation and exchange of information (EOI) have emerged as vital tools in tackling illicit financial flows (IFFs). Countries that are destinations for these flows, including financial centres in Europe, Asia, America, the Caribbean and Pacific, now participate in the global effort to improve tax transparency and EOI for tax purposes thus helping developing countries to prevent the outflows and identify the people involved.
The recent report from the African Union and United Nations Economic Commission for Africa’s High Level Panel on Illicit Financial Flows from Africa has focused attention on the scale of IFFs from Africa. It estimated that Africa loses $50 to $60 billion each year through IFFs. This includes money from tax evasion and other criminal activities (corruption, money laundering, etc.) which undermine Africa’s development and governance agenda. The report also identifies ways to tackle IFFs, including through EOI and improved international tax co-operation.
Progress in enhancing international tax co-operation in Africa has been made through the framework of the Global Forum’s Africa Initiative, led by a number of African members. But African countries are still not fully exploiting recent advances in international tax co-operation and EOI:
What is needed is to address these obstacles by mobilising political backing for this agenda in Africa with the support from the global tax community. The Yaoundé Declaration marks the beginning of the next stage in the effort to improve international tax co-operation to fight IFFs in Africa.
Following the Yaoundé Declaration, African Ministers of Finance, Economy and Integration have called upon the African Union “to lead in the tax transparency and information exchange agenda for Africa, and foster stronger collaboration among countries and regions to stem illicit flows and enhance domestic resource mobilization on the continent”. This was a key message of the Declaration released at the Ministerial segment of the 2nd AU Specialized Technical Committee (STC) on Finance, Monetary Affairs, Economic Planning and Integration held in Addis-Ababa on 16-17 April 2018.
29 African Ministers of Finance are supporting the Yaoundé Declaration and the African Union Commission contributes actively o the Africa Initiative. During the launch of the Tax Transparency in Africa 2020 report, H.E. Prof Victor Harison, Commissioner for Economic Affairs of the African Union Commission, called on “all Member States to participate in the international tax cooperation by implementing fiscal transparency strategies that fight against illicit financial flows, and mitigate tax evasion on the continent". He noted that “Domestic resource mobilisation is essential for the transformation, self-reliance and sovereignty of the continent in order to build an endogenous economy and achieve Agenda 2063”.
More African countries are expected to join the Declaration and all are encouraged to do so. The ultimate goal of is to ensure that African countries and organisations take ownership of the tax transparency agenda promoting it to serve African interests in fighting against tax evasion and IFFs.
» Yaoundé Declaration