African finance ministers must agree tax action plan to ensure development

(24 March 2015, Addis Ababa) Africa’s finance ministers meet in Ethiopia 25-31 March to agree on the implementation of the recommendations from the African Union High Level Panel report on illicit financial flows. The report which was adopted by Heads of State in January showed the staggering loss of more than US$50billion from African economies every year through illegal flight of capital, most of which involves multinational companies evading or avoiding tax.

The adoption of the report sent a clear signal that African leaders want to clamp down on tax avoidance. The report led by ex-South African president Thabo Mbeki outlined the need for national, regional and international action to address the problem. It is now up to the African finance ministers to create a clear plan to implement the recommendations promptly and to set up mechanisms to ensure that the money generated is spent on essential public services such as schools and hospitals.

ActionAid says that the plans must include four crucial elements to be effective:

  • Legislation against harmful tax incentives  must be adopted and implemented
  • Harmful tax treaties must be renegotiated
  • Clear and public country-by-country reporting by multinational companies enforced
  • And an international tax body must be established to monitor and hold countries to account on their commitments

Henry Malumo, Regional Advocacy Coordinator for ActionAid International said;

 “We recognise the great strides taken to adopt the report and the recommendations to stop tax dodging. Ministers must now agree and implement a plan to stop the continent from haemorrhaging money and to invest in essential public services to reduce poverty and inequality.

“The evidence is clear that African countries will not be able to provide the investment needed to end poverty and promote sustainable development until illicit financial flows, particularly the tax avoidance and evasion of multinational companies, are stopped.”

The African Union High Level Panel report concludes that while the issues are complex, ending illicit financial flows is a political issue that can be solved. But Africa cannot do this alone so  international support for new policies and treaties is essential to  fully implement the recommendations and to ensure development for Africa.

 

ENDS

For more information or interviews with Henry Malumo in Addis Ababa contact:

Charlotte Armstrong on +44 (0) 7738 884014 or Charlotte.Armstrong@actionaid.org

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Editors' notes

ActionAid is a global movement of people working together to achieve greater human rights for all and defeat poverty. We believe people in poverty have the power within them to create change for themselves, their families and communities. ActionAid is a catalyst for that change.