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African Union in new initiative to boost revenue collections on continent

Logan Wort and Albert Muchanga

Data shows most African governments collect about 15% of their GDP in taxes compared  to the 40% that is being collected by European, Asian, and North American countries

Kampala, Uganda | RONALD MUSOKE | In a bid to boost revenue collection across Africa, the African Union Commission has signed a Memorandum of Understanding with the African Tax Administration Forum (ATAF), a non-profit that has been working with several African countries to build efficient and effective tax administrations.

Albert Muchanga, the Commissioner for Economic Development, Trade, Industry and Mining at the African Union Commission signed the MoU on behalf of the African Union while Logan Wort, the Executive Secretary of ATAF, signed on behalf of his organization during the second meeting of the Specialised Technical Committee (STC) on Finance, Monetary Affairs, Economic Planning & Integration Sub-committee on Tax at the AU headquarters in Addis Ababa on May 31.

The MoU signing marks a significant step in strengthening cooperation on tax policy and improving tax administration—all aimed at mobilizing domestic resources in Africa and achieving Agenda 2063. The two organisations also plan to work out new strategies to combat illicit financial flows (IFFs) and bring the African voice on tax matters to global discussions.

Africa loses approximately US$88.6 billion or 3.7% of its gross domestic product annually in illicit financial flows, according to the Economic Development in Africa Report which was published by the UN Conference on Trade and Development (UNCTAD) in 2020.

This deprives African countries of the much-needed revenue to boost their growth and development. African governments collect about 15% of their GDP in taxes compared to the 40% that is being collected by European, Asian, and North American countries.

The Addis Ababa meeting brought together dozens of experts from ministries of finance and tax administrations under the Specialised Technical Committee on Monetary Affairs, Finance, Planning and Integration of the African Union.

The meeting also provided experts from the continent the opportunity to input into issues such as domestic minimum top-up tax, cross-border VAT and e-commerce, and the United Nations Resolution on a Convention for International Tax Cooperation.

Amb. Muchanga noted that the objectives of revenue mobilization on the continent would be realized with a coordinated effort.

“I am delighted that we will be in a position to continue the work of combatting IFFs, increasing revenue collection for achieving Agenda 2063 and building effective revenue systems across the continent,” Wort said.

He added: “This is a momentous occasion in bringing tax issues to a political level while providing practical solutions tailored for African countries.”

Going forward, the ATAF and the African Union Commission will be convening a meeting to discuss the ongoing global tax discussions to inform and update member states on the evolution of the UN Tax Convention and the upcoming OECD Inclusive Framework Meeting in July 2023.

ATAF collaboration

Meanwhile, the ATAF in collaboration with Juta and Company Ltd on May 25, launched the latest journal of the African Multidisciplinary Tax Journal (AMTJ) in Pretoria, South Africa.  The annual, double-blind peer-reviewed journal showcases exceptional research papers spanning the entire spectrum of taxation research.

With a distinctive focus on Africa, the AMTJ aims at being the source of original, evidence-based and policy-relevant multidisciplinary research in all areas of taxation. The AMTJ also bridges the gap between academic researchers, policymakers, and tax practitioners across the continent. It serves as a reference point for researchers, government officials, policymakers and influencers working on taxation in Africa.

The AMTJ is the brainchild of the African Tax Research Network (ATRN) annual Congress. It accepts papers presented at the congress, as well as those that were not presented but focus on taxation. The network encourages submissions of research papers utilizing various research methods, including theoretical, analytical, empirical, experimental, and field studies in all areas of taxation.

Volume 3 of the AMTJ comprises 16 papers, including 12 in English and four in French. These papers explore diverse aspects of taxation, providing valuable insights and practical recommendations relevant to the African tax system.

The issues focus on; the impact of the AfCFTA on customs revenue, what drives tax compliance in sole traders, how aid granted during conflicts affects revenue mobilization; whether the increase in royalty tax rates reduces under-reporting in the mining sector, how effective technology is increasing tax compliance and whether a tax dispute court could help with timely resolution of commercial tax disputes in the AfCFTA.

“Volume 3 of the African Multidisciplinary Tax Journal represents an important milestone in our ongoing efforts to advance tax research and practice in Africa,” said Caroline Mutayabarwa, the Manager of ATAF Tax Academy at ATAF.

“These papers offer invaluable insights and recommendations that can contribute to the development and improvement of the African tax landscape. We invite researchers, policymakers, and tax practitioners to engage with this volume and contribute their research for future editions.”


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