Is Africa getting its fair share of the tax?
Logan Wort, Executive Secretary of ATAF explained to a meeting of the South Centre on “Designing a Developing Country Agenda on International Tax Cooperation” that many ATAF members were concerned that their countries are not getting their fair share of tax from cross-border transactions. This was primarily due to country’s taxing rights under their domestic rules being restricted by the Double Tax Agreement they have signed with other countries.
In understanding the core issues, the ATAF Executive Secretary explained Africa’s positon in the context of the global economy. Firstly, most African countries are capital importers as in their growing economies they are often bringing in foreign capital to build new businesses. That capital could appear in tow forms, namely debt on which interest is paid or equity on which dividends are paid. African countries often use intellectual property owned by a non-resident on which they pay royalties or import services for which they pay service or management fees. It is therefore important that they are able to tax such payments at source or where the income is earned.