Page 185 - Volume 2_CHANGES_merged_with links

Obstacles to progress

Realities

as manufacturing. Neither is such investment the result of corporate tax incentives but rather

the existence of natural resources, namely oil and gas.
***
The use of corporate tax incentives is causing a competitive race to the bottom among
countries in West Africa which is detrimental to national revenue bases and regional

integration. “
"The West African Giveaway: Use & Abuse of Corporate Tax Incentives in ECOWAS." 208
Tax Justice Network & Action Aid
***** ***** *****
Tax Havens
“ In 2013, the Africa Progress Panel, chaired by Kofi Annan, and Global Witness examined five

major sales of mining rights in DRC. Each deal involved firms registered in the British Virgin
Islands. We estimated the gap between the market value of the concessions and the price paid
was at least $1.36 billion – almost double what the DRC spends each year on health and

education combined. “
"Africa Is Rich in Resources – but Tax Havens Are Keeping Its People Poor." 209
World Economic Forum.
***** ***** *****
Tax Treaties
“ Tax treaties are agreements through which two countries agree to assign and restrict taxing

rights on economic activities that span both countries. They were traditionally concluded
mainly to avoid double taxation and create a favourable investment climate.

However, in recent years, tax treaties concluded by sub-Saharan African countries – with OECD
countries in particular – have often resulted in them slowly ceding their taxing rights over

income earned within their jurisdiction. “
"Review of Tax Treaty Practices and Policy Framework in Africa" 210
ICTD Working Paper 102 by Catherine Ngina Mutava

*****
“ There are almost 300 tax treaties in force in Sub-Saharan Africa countries. About half of them are

with Western European countries, chiefly with former colonial powers and Nordic countries.
Tax treaties reflect the political, legal and economic environments of the time at which they were
concluded. This includes colonial relations, the fashion for 'tax sparing credits', and the era before

recent developments in tax information exchange.
Over time, treaties signed by African countries have capped the rates of withholding taxes (WHTs)
that they can apply at lower and lower rates. Although this partly reflects a fall in statutory WHT

rates in some countries, Zambia is an example of a country where the revenue that can be raised by
from recent increases in statutory WHTs will be limited by the limits imposed in its treaties.