How can the G20 support Africa's tax agenda?

The policy brief examines how the G20 can better support Africa's tax agenda to finance Sustainable Development Goals. While progress was made under the Indian and Indonesian presidencies regarding the Two-Pillar Solution and BEPS, African countries still struggle with low tax-to-GDP ratios (16%) and high revenue losses from tax avoidance. The document recommends that the African Union use its new permanent G20 seat to advocate for a higher global minimum tax, increased digitalization of tax administrations, a global carbon taxation system, and progressive tax policies to fund social protection for the 85.8% of the African workforce in the informal sector.

• African countries have a tax-to-gross domestic product (GDP) ratio of 16%, which is significantly lower than in Asia-Pacific (20%), Latin America and the Caribbean (22%), and OECD countries (34%). Domestic Resource Mobilisation (DRM) is therefore a key priority for financing Sustainable Development Goals (SDGs), as international financing is insufficient and these countries are vulnerable to debt crises.
• Base erosion and profit shifting (BEPS) practices result in significant revenue losses for African governments, estimated between $100 billion and $240 billion annually, or 4% to 10% of global corporate tax revenue. The OECD estimates that tax avoidance losses in developing countries could be four times the value of foreign development aid to Africa.
• The Two-Pillar Solution aims to address the digitalisation of the economy, which could account for $180 billion (5.2% of Africa's GDP) by 2025. Pillar One focuses on reallocating residual profits of multinational enterprises (MNEs) to market jurisdictions regardless of physical presence, while Pillar Two establishes a 15% global minimum effective tax rate for MNEs with consolidated revenues exceeding €750 million.
• Despite progress, African countries face significant hurdles in implementing international tax rules due to complexity and a lack of internal capacity for interpretation, legislation drafting, and application. Specific challenges include calculating the effective tax rate, GLoBE income, and the Qualified Domestic Minimum Top-up Tax, as well as difficulties accessing Country-by-Country (CbC) reports of foreign-headquartered MNE groups.
• The African Union (AU) has recently become a permanent member of the G20, providing an opportunity to advocate for African tax priorities. Recommendations for the AU include pushing for a higher global minimum tax rate (such as the 20% rate proposed by the African Tax Administration Forum), increased digitalization of tax administrations, and more flexible international tax rules adapted to the African context.
• African countries advocate for a global carbon taxation system to mitigate climate change impacts, as Africa contributes only 4% of global greenhouse gas emissions but suffers the most from its effects. Proposed measures include a global carbon tax on aviation, maritime transport, and fossil fuel trade, as well as a global financial transaction tax, with revenues allocated based on climate vulnerability relative to emissions.
• Tax policies are identified as a tool for poverty reduction and social protection, particularly since the informal sector accounts for 85.8% of total jobs in Africa. The document suggests that enhancing DRM through the taxation of the wealthiest could finance social protection for the poorest, provided there is international consensus to prevent tax competition.

APA

South African Institute of International Affairs (2024). How can the G20 support Africa's tax agenda? https://saiia.org.za/research/how-can-the-g20-support-africas-tax-agenda/

Chicago

South African Institute of International Affairs. How can the G20 support Africa's tax agenda? 2024. https://saiia.org.za/research/how-can-the-g20-support-africas-tax-agenda/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=How can the G20 support Africa's tax agenda? |date=30 January 2024 |url=https://saiia.org.za/research/how-can-the-g20-support-africas-tax-agenda/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2024how, author = {{South African Institute of International Affairs}}, title = {{How can the G20 support Africa's tax agenda?}}, institution = {South African Institute of International Affairs}, year = {2024}, month = jan, url = {https://saiia.org.za/research/how-can-the-g20-support-africas-tax-agenda/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }