ATAF boosts African corporate tax revenue by Over USD 2 Billion Annually
In recent years, ATAF has closely worked with African members of the OECD/G20 Inclusive Framework on the Pillar Two negotiations.
Johannesburg, South Africa– The African Tax Administration Forum (ATAF) has been making significant strides in its technical assistance efforts, potentially resulting in an annual additional collection of over USD 2 billion in corporate income tax (CIT) for African countries, writes Winston Mwale.
The impact of ATAF's collaboration with African nations is becoming evident, contributing to the advancement of Domestic Resource Mobilisation (DRM) and the fight against Illicit Financial Flows (IFF) across the continent.
In recent years, ATAF has closely worked with African members of the OECD/G20 Inclusive Framework on the Pillar Two negotiations.
This collaboration includes the design of the Amount A Multilateral Convention (MLC), which seeks to reallocate a portion of global profits from major multinational enterprises to market jurisdictions.
ATAF Deputy Executive Secretary Mary Baine acknowledged concerns about the complexity of the Amount A MLC rules but highlighted successful negotiations that would benefit lower-income jurisdictions.
Baine stated, "ATAF and African countries working together have successfully negotiated changes to the design of Amount A MLC."
According to OECD estimates on the impact of Amount A rules, certain design features negotiated by ATAF and African countries are expected to result in an average 1% increase in CIT for lower-income jurisdictions.
ATAF's African Tax Outlook research suggests that implementing these rules could generate over USD 1 billion annually for African Inclusive Framework members.
Ms Baine emphasized another critical aspect of ATAF's work in international tax—the long-term transfer pricing technical assistance programs in various African countries.
These ongoing programs have shown promising results for several years as additional revenues assessed and collected by African tax administrations have risen exponentially.
Between 2015 and 2018, ATAF's technical assistance programs helped African countries assess over USD 1.27 billion in taxes and collect USD 355 million.
In the subsequent four years (2019-2022), these figures increased to assessing over USD 3 billion and collecting USD 1.37 billion—an almost 400% growth in collection.
"This year alone, we have assisted African countries in assessing additional taxes of over USD 966 million and collecting additional taxes of over USD 380 million," stated Ms Baine.
While celebrating these gains, Ms Baine acknowledged that there is much more to be done. She emphasized the need for Africa to move from influencing global tax standards to actively setting the agenda to meet the specific needs of African and other developing countries.
Furthermore, she highlighted that ATAF's technical assistance work is only the beginning of addressing corporate tax avoidance by multinational firms.
In the coming year, ATAF plans to significantly expand its technical assistance efforts to support its members in setting the global tax agenda and combating corporate tax avoidance in Africa.