Lobby wants Africa's tax loopholes sealed

A continental lobby now wants Kenya and other African nations to address loopholes used to evade taxes and conceal sources of income.

In Summary

• The records, which covered nearly 40 years of operation (from 1977- 2015), indicated that there are 214,000 offshore holdings managed by little-known but powerful Panama law firm, Mossack Fonseca.
• Global Financial Integrity (GFI) further estimates that Sub-Saharan Africa lost over $675 billion between 2004 and 2 a decision-making role for African nations and push the international community to provide the resources necessary for the body to operate effectively.013 in illicit financial flows.

By BRIAN NGUGI
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A continental lobby now wants Kenya and other African nations to address loopholes used to evade taxes and conceal sources of income.

The Tax Justice Network- Africa says the recently unveiled investigation by the International Consortium of Investigative Journalists (ICIJ) which revealed a systematic and complicit scheme of tax evasion involving major world leaders (past and present), wealthy individuals and a host of multinational corporations, calls for more stringent and punitive measures to restrict and discourage individuals and multinationals from exploiting weaknesses in African countries’ tax and legal frameworks.

The call comes in the wake of a revelation of an elaborate tax scam dubbed Panama Papers.

“The Panama Papers reveal the complex and murky nature of the global financial architecture where a multitude of forces are complicit in the systematic undermining of laws and regulations resulting in billions of dollars lost from poor countries in Africa,” said Jason Braganza, TJN-A’s Deputy Executive Director.

“The global financial crises of 2008 and the Panama Papers of 2016 only serve to reinvigorate our call to action against illicit financial flows to tax havens and for greater policing and transparency of the global financial architecture.”

The Panama Papers followed a year of sifting through 11.5 million documents that uncovered systematic exploitation of weak financial, political and legal systems across the globe by unscrupulous individuals and multinational corporations in over 200 countries and territories to dodge taxes and conceal sources of income.

The records, which covered nearly 40 years of operation (from 1977- 2015), indicated that there are 214,000 offshore holdings managed by little-known but powerful Panama law firm, Mossack Fonseca.

“The Panama Papers serve to corroborate TJN-A’s views on the depth of corruption and impunity through which the global financial, political, and legal frameworks are operating to further impoverish and reinforce inequality in Africa,” said the lobby.

Complex network
The revelation showed a complex network stretching from Senegal to South Africa implicating 18 high-powered individuals in the process.

According to the High Level Panel Report on Illicit Financial Flows, it is estimated that Africa loses approximately $50 billion annually in illicit financial flows resulting from illegal activities enacted by individuals and multinational corporations.

Global Financial Integrity (GFI) further estimates that Sub-Saharan Africa lost over $675 billion between 2004 and 2 a decision-making role for African nations and push the international community to provide the resources necessary for the body to operate effectively.013 in illicit financial flows

Consequently the lobby wants African governments to call for the establishment of an intergovernmental tax body with a decision-making role for African nations and push the international community to provide the resources necessary for the body to operate effectively.

“States should also commit to national implementation and push for global commitment to making publicly available beneficial ownership registries for all legal persons and arrangements, carry out annual country-by-country reporting by multinational companies operating in their territory and make the information publicly available and establish a common standard of multilateral automatic information exchange, with differentiated responsibilities for developing countries which have less capacity to provide information over a specified time period,” it said.

The lobby noted that the illicit financial flows have a damaging impact on the affected countries, starving them of the much-needed resources to finance development and social projects such as agriculture, education, health and infrastructure.

“The Panama Papers are an indictment of the failure of the international financial architecture to protect poor countries from greedy individuals and multinational corporations who exploit and extract resources from these countries,” the lobby added.