Strengthening Tax Cooperation with Africa for Sustainable Revenue Mobilisation

This policy briefing 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, and highlights how developing countries, particularly in Africa, suffer disproportionate revenue losses. The document criticizes the Inclusive Framework for the underrepresentation of African nations and the potential for the agreement to favor wealthy nations, recommending a shift toward more inclusive, transparent, and equitable negotiations, possibly under the UN.

• Developing countries experience significantly higher tax revenue losses from corporate tax avoidance as a share of GDP compared to wealthier nations. While some countries like Guyana, Chad, Guinea, Zambia, and Pakistan see losses between 5% and 8% of GDP, larger economies such as Germany, France, and China experience negligible losses between 0.61% and 1.06% of GDP.
• African countries generally have higher average corporate tax rates than European countries, which increases the impact of global tax agreements. 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 is criticized for the poor representation of African nations; only 23 of the 55 African Union members participated in the project, meaning more than half of the continent was excluded from negotiations.
• The agreement's scope is viewed as biased toward the US, as the minimum tax rate applies only to companies with annual sales of at least €750 million ($872 million), a threshold that primarily covers a small number of US-based tech companies.
• Certain countries, including the US, UK, France, Italy, Spain, and Austria, 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.
• Specific African nations have resisted the agreement due to domestic revenue concerns: Nigeria declined because its 30% corporate tax rate is more beneficial, and Kenya was reluctant to repeal its digital services tax (DST).
• The document recommends that the G20 promote greater African participation in the Inclusive Framework, advocate for a multilateral convention within the UN to ensure equal footing, and provide sufficient funding and technical capacity for implementation.

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} }