African Countries Generate €1.7 Billion Additional Revenues from Tackling Tax Evasion and Illicit Financial Flows

By African Development Bank African Countries Generate €1.7 Billion Additional Revenues from Tackling Tax Evasion and Illicit Financial Flows
Published July 8, 2023

African countries have realised additional €1.69 billion thanks to voluntary disclosures, the implementation of information exchange mechanisms, and rigorous offshore investigations.

This is according to the 2023 Tax Transparency in Africa progress report that has just been unveiled during the 13th Meeting of the Africa Initiative in Cape Town, South Africa.

The report that is co-produced by Global Forum on Transparency and Exchange of Information for Tax Purposes, African Union Commission and African Tax Administration Forum with the support of African Development Bank, presents the progress of 38 African countries in tackling tax evasion and other illicit financial flows (IFFs) through transparency and exchange of information. Five non-member countries participated in the study.

The release of the report comes as African governments continue to step up efforts to bolster domestic resource mobilisation in the face of economic headwinds that include global inflation and mounting debt levels. The Organisation for Economic Co-operation and Development (OECD) estimates that Africa loses as much as US$60 billion annually in illicit financial flows.

Among the key highlights of the report:

For the first time, one African country reported collecting additional taxes—worth €10.6 million— through the use of common reporting standard data
Twenty-three African countries are now parties to the multilateral Convention on Mutual Administrative Assistance in Tax Matters , the most comprehensive instrument for all forms of co-operation to tackle tax evasion, thus substantially expanding their Exchange of information networks
Ten African countries have committed to automatic exchange of financial account information (AEOI) by a specific date and more are expected to do so in the near future, with the assistance of the Global Forum and its partners
1170 officials from 37 African countries received training in the effective use of EOI instruments in 2022. A further 1 800 officials were trained by local trainers who had participated in the Train the Trainer programme
Participation in exchange of information mechanisms could increase African countries’ tax revenues from 5% to 19% of GDP.

Launched in 2014, the Africa Initiative is a partnership of the Global Forum, 33 African countries and 16 partners, including African Development Bank, African Union Commission, European Union and governments of Switzerland and United Kingdom. The Africa Initiative seeks to ensure that African countries are equipped to participate in advances on global transparency, to better fight tax evasion and other illicit financial flows and ultimately improve domestic resource mobilisation.

The 13th Meeting of the Africa Initiative, held on 6 and 7 July 2023, gathered tax commissioners, high-ranking representatives, experts, as well as regional and international organisations and the civil society.