Strengthening Tax Cooperation with Africa for Sustainable Revenue Mobilisation

The document examines the G20/OECD Inclusive Framework's Two-Pillar Solution to tax challenges from the digitalisation of the economy. It highlights that developing countries, particularly in Africa, suffer disproportionate revenue losses from tax avoidance—up to 5%–8% of GDP in some cases—compared to developed nations. The author argues that the current framework lacks adequate representation of African nations (only 23 of 55 AU members participated) and contains provisions, such as a 15% minimum corporate tax rate and high turnover thresholds for profit reallocation, that may marginalise poorer economies. The brief recommends shifting negotiations to a neutral body like the UN and increasing technical and financial support for developing countries to implement new standards.

• Developing countries experience significantly higher tax revenue losses as a share of GDP due to tax avoidance than developed nations. While some larger economies like Germany and France see losses between 0.61% and 1.06% of GDP, countries such as Chad, Guinea, Zambia, Guyana, and Pakistan experience losses as high as 5%–8% of GDP.
• African countries generally maintain higher average corporate tax rates than European countries, making a low global minimum tax rate potentially detrimental to their revenue. Africa's regional average rate is 28.5% (28.16% weighted by GDP), whereas Europe's is 19.99% (24.61% weighted by GDP).
• The G20/OECD Inclusive Framework suffers from a lack of representativeness, with more than half of the African Union (AU) member states excluded from negotiations; only 23 of the 55 AU members participated in the project.
• The agreement's scope for profit reallocation is viewed as biased toward the US, as it applies only 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, including the US, UK, France, Italy, Spain, and Austria, secured a side deal allowing them to retain their digital services taxes (DSTs) for two years, while other countries are expected to repeal theirs.
• Specific African nations have resisted the agreement due to concerns over revenue loss: Nigeria cited its 30% corporate tax rate as more beneficial than the deal, and Kenya was reluctant to repeal its digital services tax.

APA

Resha, G. (2021). Strengthening Tax Cooperation with Africa for Sustainable Revenue Mobilisation. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/12/Policy-Briefing-256-resha.pdf

Chicago

Resha, Gugulethu. Strengthening Tax Cooperation with Africa for Sustainable Revenue Mobilisation. South African Institute of International Affairs, 2021. https://saiia.org.za/wp-content/uploads/2021/12/Policy-Briefing-256-resha.pdf.

Wikipedia

{{cite report |last1=Resha |first1=Gugulethu |title=Strengthening Tax Cooperation with Africa for Sustainable Revenue Mobilisation |publisher=South African Institute of International Affairs |date=December 2021 |url=https://saiia.org.za/wp-content/uploads/2021/12/Policy-Briefing-256-resha.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{resha2021strengthening, author = {Resha, Gugulethu}, 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/wp-content/uploads/2021/12/Policy-Briefing-256-resha.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }