The Tax Transparency in Africa 2023 report indicates that African countries are not fully utilizing the exchange of information between tax authorities to tackle tax evasion and illicit financial flows.
- The exchange of information assists in determining taxes for cross-border activities, disclosing beneficial ownership, and accessing taxpayers’ information held in other countries.
- Illicit financial flows in Africa are estimated to surpass aid flows and investment, with estimates ranging from $50 billion to $86.6 billion annually.
- The report emphasizes that enhancing tax transparency and the exchange of information will generate more revenue for economic development and public services in African countries.
- Despite progress, there is still much work to be done to improve transparency and combat illicit financial flows in Africa.
- Increased transparency helps track individuals and companies involved in illegal activities and strengthens the enforcement of laws.
- A survey of African countries in 2022 revealed that several countries identified additional taxes and revenues through the exchange of information, with a total of €76.6 million raised by five countries.
- The report highlights the need for African tax authorities to establish a culture of exchange of information to promote tax compliance and calls for new strategies in utilizing available infrastructure.
- The limited exchange-of-information relationships between African jurisdictions may pose challenges to the African Continental Free Trade Area (AfCFTA) in combating cross-border tax evasion as intra-Africa trade increases.
By addressing the gaps in exchange of tax information and promoting transparency, African countries can effectively combat tax evasion, reduce illicit financial flows, and support economic growth and development. Read the full Tax Transparency in Africa 2023: Africa Initiative Progress Report here.