The global crackdown on tax havens will see more doors close when African finance ministers sign a mutual assistance tax treaty.
The 26 member states of the African Tax Administration Forum (ATAF) are meeting in Pretoria, South Africa, to sign the treaty.
The aim is to allow an exchange of information among African tax administrations to combat fraud and tax evasion.
The treaty will give the nations a framework for the exchanging tax information, enable cross-border tax investigations, and assist in the collecting taxes.
ATAF executive secretary and South African Revenue Service group executive Logan Wort says the meeting is in line with international moves to curb tax fraud and evasion through the exchange of information among revenue authorities.
“Africa needs to close the gaps that allow for illicit capital outflows and tax evasion and avoidance. This treaty will be the biggest tax treaty ratification of its kind undertaken anywhere in the world and will for the first time allow for cooperation and assistance between African revenue authorities,” said Wort.
The treaty comes as several African governments look at setting up ‘offshore’ financial centres.
“We need pan-African action,” says Alvin Mosioma, coordinator of the Tax Justice Network Africa, an organisation that advocates fair tax regimes to promote economic and social development.
“The African Union has established a special panel on illicit financial flows, and the African Tax Administrators Forum meeting held in 2008 was also a promising start, but Africans have been too silent too long on the issue of financial transparency.
“With the current preoccupations with terrorism and political instability on the continent, adding financial instability and sheltering corruption in local tax havens would be catastrophic.
“There is an emerging trend in Africa towards establishing our own offshore centres. One argument we hear is that it would modernise the African financial sector, and streamline the red tape in many countries.”
