Strengthening tax cooperation with Africa for sustainable revenue mobilisation

This policy brief by the South African Institute of International Affairs examines the G20/OECD Inclusive Framework's 'Two-Pillar Solution' to address tax avoidance and the digitalisation of the economy. It argues that the current global taxation framework is fragmented, allowing multinational corporations to avoid taxes through profit shifting and the lack of physical presence. The document highlights that developing countries, particularly in Africa, suffer disproportionate revenue losses as a share of GDP and are underrepresented in the negotiations of the global tax deal. It calls for greater transparency, fairer thresholds for profit reallocation, and the potential move of negotiations to a neutral body like the United Nations to ensure equitable outcomes for poorer nations.

• Developing countries experience significantly higher tax revenue losses as a share of GDP compared to wealthier nations. In countries such as Zambia, Guinea, Chad, Pakistan, and Guyana, these losses can range between 5% and 8% of GDP, whereas larger economies like France, Germany, and China see negligible proportions between 0.61% and 1.06% of GDP.
• African countries are significantly underrepresented in the G20/OECD Inclusive Framework. Out of 55 African Union members, only 23 have participated in the project, meaning more than half of the continent was excluded from the negotiations.
• The proposed global minimum corporate tax rate of 15% is viewed as too low by some developing countries. For example, Nigeria refused to sign the agreement because its own corporate tax rate of 30% is more beneficial to the country.
• The scope of the agreement is criticized for being biased toward the US, as the minimum tax rate only applies to companies with annual sales of at least €750 million ($872 million), which primarily covers a small number of US-based tech companies.
• Certain developed nations—specifically Austria, France, Italy, Spain, the UK, and the US—negotiated a side deal allowing them to keep their digital services taxes (DSTs) for two years until the global deal is implemented, while other countries are expected to repeal theirs.
• The G24 advocates for global tax reform negotiations to take place within the United Nations to ensure a neutral ground where all countries have an equal say, rather than through the G20/OECD-led process.
• African countries generally maintain higher average corporate tax rates than European countries. Africa's regional average rate is 28.5% (28.16% weighted by GDP), while Europe's regional average is 19.99% (24.61% weighted by GDP).

APA

South African Institute of International Affairs (2021). Strengthening tax cooperation with Africa for sustainable revenue mobilisation. https://saiia.org.za/research/strengthening-tax-cooperation-with-africa-for-sustainable-revenue-mobilisation/

Chicago

South African Institute of International Affairs. Strengthening tax cooperation with Africa for sustainable revenue mobilisation. 2021. https://saiia.org.za/research/strengthening-tax-cooperation-with-africa-for-sustainable-revenue-mobilisation/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Strengthening tax cooperation with Africa for sustainable revenue mobilisation |date=15 December 2021 |url=https://saiia.org.za/research/strengthening-tax-cooperation-with-africa-for-sustainable-revenue-mobilisation/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2021strengthening, author = {{South African Institute of International Affairs}}, title = {{Strengthening tax cooperation with Africa for sustainable revenue mobilisation}}, institution = {South African Institute of International Affairs}, year = {2021}, month = dec, url = {https://saiia.org.za/research/strengthening-tax-cooperation-with-africa-for-sustainable-revenue-mobilisation/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }