Following the conclusion of the Tenth Plenary meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) meeting last week, the Yaounde Declaration was published as a call to action on illicit financial flows (IFFs) by governments across the continent. The communique which refracts off of the Addis Ababa Action Agenda and the High Level Panel report on Illicit Financial Flows, reaffirms the importance of international tax cooperation especially on transparency in tax matters, implementation of the standards of exchange of information in tax matters (EOI) and the use of the EOI instruments in their domestic resource mobilisation strategy.
Whereas Tax Justice Network Africa (TJNA) welcomes this renewed interest in combatting IFFs in Africa, a lot more needs to be done in line with the following considerations:
- There is a pressing need to address aggressive tax planning and tax avoidance which potentially causes more harm to African countries beyond tax revenue collection. Tax avoidance undermines laws, institutions, and policies of fragile African economies and further exacerbates inability to effectively collect tax revenue.
- IFFs are global problem whose facilitators (accountants, lawyers, auditors, banks, offshore jurisdictions) are located within the very countries (UK, Switzerland, and France) purporting to “help Africa”. This hypocrisy needs to stop as well as the paternalistic approach in addressing IFFs.
- TJNA remains committed to calling on African Governments to honour their commitments to implement the recommendations from the HLP report. The AU Heads of State meetings of 2015 and 2016 showed unequivocal commitment to implement these recommendations.
- TJNA further calls on the Ministries of Finance from African countries to consider their tax policy, legislation, and regimes to being more robust and punitive to those found guilty of aggressive tax planning and tax avoidance. In addition, we call on these ministries to engage actively in pushing for a broader global definition of IFFs that incorporates aggressive tax planning and aggressive tax avoidance.
Photo credit: MoFA- Italy