Africa scores United Nations win against tax avoidance

On 22 November a resolution from the Africa Group at the UN passed overwhelmingly, marking a step towards a United Nations framework convention on international tax cooperation. This would shift control of international tax rules from the Organisation for Economic Cooperation and Development (OECD) – formed of 38 richer countries – to the UN, where the 193 member states are on a more equal footing.

Governments in Africa rely more than those elsewhere on tax yields from multinational corporations – not least because of the difficulties they face in collecting domestic tax. But these corporations can – at the moment quite legally – avoid tax by booking their profits in low-tax jurisdictions.

In 2021 economists Javier Garcia-Bernardo and Petr Jansky estimated that this profit-shifting costs African countries about 7% of their total tax revenues. The OECD framework has been described as “pretty much a colonial tax system”.

Reacting to the vote, Kenya’s permanent representative to the UN Martin Kimani observed that the “voting record on an Africa-sponsored resolution on international tax cooperation is the clearest Global North vs Global South vote I have seen in recent times”.

Lobby group the Tax Justice expanded this: the 48 countries that voted against the motion “are responsible for 75% of all countries’ losses to tax havens”. The 125 in favour included 51 of the 54 member states in Africa.