African countries to lose out in new global minimum tax deal

 

The BEPS pillars will provide an opportunity for African governments to tackle various tax challenges.

By The Citizen Reporter

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Nairobi. African countries are set to open a dark chapter in the taxation of multinational corporations unless they reject the OECD/G20 proposal to introduce a 15 percent global minimum tax rate.

 
The continent is believed to have been losing $89 billion in what is considered  a systemic tax avoidance by multinational corporations, but a lower corporate tax rate of 15 percent, levied on companies that are make millions of dollars in profit.
This is said  will further reduce African governments' tax collections.
The tax deal has not taken into account the realities of developing countries' tax systems.
 
Approximately 123 countries, the majority of which are developed, recently endorsed the OECD/G20's two-pillar taxation proposal: Pillar One allocates taxing rights to "market countries" where multinationals operate, and Pillar Two establishes a global minimum corporate tax rate of 15 percent, which would be applied where multinationals are headquartered.

Over 100 civil society organisations from across Africa have criticised the OECD/G20 proposal and are calling on the G20 heads of state summit to stop the deal.

 As organisations advocating for social, economic, and environmental justice in Africa, they echo the widespread critique of the OECD/G20 tax deal.
 
According to the executive director of Tax Justice Network Africa, Alvin Musioma, states the proposal is inequitable.

 "Developing countries who are still recovering from the effects of COVID-19, not to mention that many multinationals commit corporate tax abuse by not only avoiding tax payment but also ignoring environmental, wage, and community development agreements, hindering Africa from fully benefiting from its natural resources," said Mr Musioma.
 
He added: We, therefore, call on all developing nations in the Global South to reject the OECD/G20 proposal and instead support the call for a genuinely inclusive, just, and democratic process of international tax reform wherein the interests of developing nations and the African continent are taken into account.