Tax Can End Africa’s Aid Dependency

Companies seek to maximize profits by reducing tax payments, relocating if necessary. Tax avoidance and illegal financial flows cost Africa $50 billion per year, suggests one report. “Legislation in Europe and North America is now in force requiring extractive sector firms to publish country-by-country reports of all payments they make to governments, a system that is gradually being expanded to other sectors of the economy,” reports Benjamin Fox for African Business Magazine. OECD “has drawn up plans on base erosion and profit shifting (BEPS) that would prevent firms from re-routing profits through shell companies, and require automatic exchange of information on tax payments between governments by 2016.” The EU, US and Japan rejected a move by African, Latin American and Asian countries to allow a UN tax committee set new standards on corruption, transparency, weak governance and tax-collection systems. Governments must balance fair taxation with attracting new businesses that add jobs. – YaleGlobal