Deprecated: str_replace(): Passing null to parameter #3 ($subject) of type array|string is deprecated in /home/iins1980india/public_html/wp-content/plugins/jetpack new/modules/photon-cdn.php on line 80

Deprecated: str_replace(): Passing null to parameter #3 ($subject) of type array|string is deprecated in /home/iins1980india/public_html/wp-content/plugins/jetpack new/modules/photon-cdn.php on line 80

Africa makes substantial progress in combating illicit financing

In the international development community, the concept of illicit financial flows is emerging as a powerful and constructive umbrella to bring together previously disconnected issues. The term emerged in the 1990s and was initially associated with capital flight. It now generally refers to cross-border movement of capital associated with illegal activity or more explicitly, money that is illegally earned, transferred or used that crosses borders.

According to the World Bank, illicit financial flows pose a huge challenge to political and economic security around the world, particularly to developing countries. Corruption, organized crime, illegal exploitation of natural resources, fraud in international trade and tax evasion are as harmful as the diversion of money from public priorities. Illegal logging, fishing and mineral extraction are strongly connected with deforestation, the depletion of fishing stocks and environmental degradation as well as the impoverishment of individuals and communities who rely on those resources to sustain their existence.

Non-Aligned Movement has expressed concern over illicit financial flows and related thereto tax avoidance and evasion, corruption and money laundering, by using certain jurisdictions and practices, with negative impacts for the world economy and, in particular for developing countries.
In accordance with this, the African Union Agenda 2063, The Africa We Want – the long-term vision for Africa’s transformation for 50 years – recognises that strengthening domestic resource mobilisation and reversing all forms of illicit financial flows from the continent are indispensable for realising the aspirations of the African populations of achieving an integrated, prosperous and peaceful Africa.

On 25 June 2020, the Africa Initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes launched its Tax Transparency in Africa 2020 report. The report, a joint publication with the African Union Commission and the African Tax Administration Forum, updates for the year 2019 the inaugural report published a year earlier. The report, which covers 32 members of the Africa Initiative as well as three non-members, finds that Africa has made significant strides in the fight against tax evasion and illicit financial flows, but will need to do more to support domestic revenue mobilization.

The report shows the progress achieved on the two cornerstones of the Initiative: 1) raising political awareness and commitment, and 2) developing capacities in tax transparency and exchange of information (EOI). Tax transparency and EOI have a crucial role to play in helping African governments stem illicit financial flows (IFFs) and increase domestic revenue mobilisation.

The report mentions that the setting up of the key elements of a functional infrastructure for exchange of information, such as the establishment of an exchange of information unit, continues to improve in the continent. The exchange of information networks of African countries has further expanded to reach now 3 262 bilateral relationships compared to 2 523 in 2018. This is mainly due to the growing number of African countries joining the Convention on Mutual Administrative Assistance in Tax Matters.

Further, the increase in the number of exchanges of information (EOI) requests made by African countries has translated into additional tax revenue. In 2019, 5 African countries identified nearly USD 12 million additional tax as a direct consequence of the requests sent. In total, between 2014 and 2019, a group of 8 African countries identified USD 189 million of additional taxes.

Encouraging evolutions were also observed in the implementation of automatic exchange of information (AEOI): Ghana started exchanging in 2019, joining Mauritius, Seychelles and South Africa.

Nigeria is expected to start in 2020 and Morocco in 2021. Assistance is ongoing with five countries to help them move towards the implementation of this standard. Interest in AEOI had been awakened by the remarkable outcomes of voluntary disclosure programmes launched prior to the first exchanges, with EUR 102 billion recovered globally, including USD 82 million in Nigeria and USD 296 million in South Africa.

Photo Credit : https://www.flickr.com/photos/160866001@N07/48722106932


Posted

in

by

Tags:

Comments

Leave a Reply


Deprecated: str_replace(): Passing null to parameter #3 ($subject) of type array|string is deprecated in /home/iins1980india/public_html/wp-content/plugins/jetpack new/modules/photon-cdn.php on line 80