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HomeAfricaKofi Annan says Africa must take the G20 seriously on tax reform

Kofi Annan says Africa must take the G20 seriously on tax reform

African governments must take the G20 seriously on its word, to build on the Group’s declaration in St. Petersburg last weeks to analyse how their laws contribute to base erosion and profit shifting, former UN Secretary-General Kofi Annan has suggested.

He urged African governments to seize the opportunity of G20 tax reform and sign up to the multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Commenting on the G20 summit, Annan, who chairs the 10-member Africa Progress Panel (APP), also called on African governments to identify any needs for technical assistance and capacity building, with support from the Global Forum on Transparency and Exchange of Information, the OECD Task Force on Tax and Development, the OECD’s Tax Inspectors Without Borders initiative, the World Bank Group, and other international organisations.  

“For any multinational businesses wishing to be more transparent about their tax,” Annan said, “we urge them to: work with African governments to disclose contracts, beneficial ownership, and the nature and amounts of tax payments; clarify intra-company transactions, including payments made for goods and services traded between affiliates and subsidiaries; and help build in-country capacity to negotiate stable, mutually beneficial deals including on tax.”

With tax avoidance and evasion representing such gross injustice, the APP chair said the issue is expected to stay high on the international political agenda.

Observing that implementation of major change does not happen overnight, Annan emphasized that African governments and multinational companies must keep this process moving forward.

“Tackling tax avoidance and evasion has become an urgent issue,” he said.

Meanwhile, APP Executive Director Caroline Kende-Robb has said that effective taxation lies at the heart of the social contract between citizens and the state.

“It is a powerful instrument to reduce inequality, stimulate growth, and enhance human development – for all countries,” Kende-Robb wrote in the APP Bulletin released Wednesday.

But, noting that the global tax system is broken, she said: “International tax rules enable companies to artificially shift profits away from countries within which they are generated thereby reducing their tax liabilities. Trust between citizens, governments, and the business sector is being eroded.”

In her opinion, public scrutiny by citizens across the globe should continue to be a crucial force for change.

“As interests align, and the context shifts, everyone has a role to play in stewarding Africa’s nature resource wealth to transform the lives of many in Africa and across the globe,” said Kende-Robb, recalling the Netherlands’ announcement this week that it intends to renegotiate tax treaties with nearly two dozen developing countries – most of them in Africa – in order to close loopholes and make sure that the developing countries get a better deal.

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