Africa Loses Billions Annually to Tax Evasion
By Patience Ikpeme
Africa is hemorrhaging billions of dollars annually due to rampant tax evasion, a concerning trend that is hindering economic growth and development across the continent.
Logan Wort, Executive Secretary of the African Tax Administration Forum (ATAF), revealed during the organization’s annual meeting in Kigali that Africa loses approximately $50 billion each year to tax evasion. This alarming figure underscores the significant impact of tax avoidance on the continent’s fiscal health.
Wort noted that corporate tax evasion is a major contributor to these losses, accounting for 60% of the total. Additionally, corruption and aggressive tax planning strategies are responsible for another 10-15% of the illicit outflow.
A common tactic employed by corporations, particularly in the extractive industries, involves exploiting tax holidays. Companies often delay declaring the commencement of profitable operations, thereby deferring tax payments for extended periods.
Wort emphasized the need for robust tax policies and legislation to combat these practices. He stressed the importance of investing in technology to enhance tax administration and facilitate information exchange between tax authorities and financial institutions.
Cross-border transactions pose another significant challenge in the fight against tax evasion. Multinational corporations often employ complex strategies to minimize their tax liabilities. However, advancements in technology and international cooperation can help countries track these transactions and ensure that appropriate taxes are paid.
By strengthening domestic tax laws and fostering international collaboration, African countries can reclaim lost revenue and channel it towards critical development projects. The ATAF’s annual meeting serves as a platform to address these issues and develop strategies to combat tax evasion and promote fiscal transparency.
