The African Union Commission and the African Tax Administration Forum have stepped up efforts to strengthen cooperation among tax authorities across the continent as part of a broader strategy to combat illicit financial flows, cross-border tax evasion and aggressive tax practices.
The two institutions also agreed to intensify collaboration on domestic revenue mobilisation, taxation of extractive industries and other sectors where governments often face difficulties in enforcing tax compliance.
The agreement followed a meeting between a delegation from ATAF, led by its Council Chair, Dr Johnston Makhubu, and the African Union Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, Francisca Belobe, at the African Union headquarters in Addis Ababa, Ethiopia.
ATAF disclosed the development in a statement issued on Friday, saying the discussions centred on African-led approaches to strengthening tax systems, improving compliance and helping governments generate the revenue needed to finance sustainable development.
A key issue discussed at the meeting was the implementation of the Agreement on Mutual Assistance in Tax Matters, which is designed to provide African tax administrations with stronger mechanisms for working together and sharing information.
The agreement could allow tax authorities to improve the exchange of taxpayer information, assist one another in tax collection and conduct joint tax examinations, among other forms of administrative cooperation.
The statement said, “The Agreement on Mutual Assistance in Tax Matters was highlighted as an important mechanism for strengthening cooperation among African tax administrations through exchange of information, assistance in tax collection, joint tax examinations and other forms of administrative cooperation.”
ATAF said closer cooperation had become increasingly necessary as tax authorities confronted increasingly complex financial transactions and business activities spanning multiple jurisdictions.
It added that such cooperation was particularly important in addressing “cross-border tax evasion, illicit financial flows and aggressive tax practices.”
Focus on Tax Treaties
The AUC and ATAF also identified the strengthening of Africa’s tax treaty networks as a major priority.
The organisations said stronger treaty arrangements would help African countries safeguard their taxing rights and ensure that agreements with other jurisdictions reflect the continent’s economic and development interests.
ATAF’s Model Double Taxation Agreement was highlighted as an important policy instrument in this regard. The model provides countries with a framework for negotiating tax treaties while seeking to protect their ability to collect revenue from economic activities within their jurisdictions.
The issue is particularly significant for African economies seeking to expand domestic revenue at a time when governments face rising demands for public spending and development financing.
Belobe also called for stronger engagement between ATAF and the private sector, arguing that businesses should have a meaningful role in discussions surrounding tax policy and compliance.
The statement said the commissioner encouraged ATAF “to intensify coordination and meaningful engagement with the private sector,” adding that greater involvement of businesses could help improve voluntary compliance and broaden the tax base.
Extractive Sector Under Spotlight
The two institutions further agreed to maintain cooperation on taxation challenges in extractive industries and other hard-to-tax sectors.
ATAF noted that governments often encounter complex valuation issues, cross-border transactions, specialised contractual arrangements and limited access to relevant information when attempting to effectively tax activities in these sectors.
These challenges can make it difficult for tax authorities to accurately determine taxable income and ensure that governments receive an appropriate share of revenue from economic activities taking place within their jurisdictions.
Belobe welcomed the progress achieved through collaboration around the Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration, while urging further action to improve tax collection and strengthen national fiscal systems.
The statement said, “For both institutions, the emphasis is increasingly on translating fiscal instruments into practical benefits for countries.”
New Framework Planned
The AUC and ATAF are also expected to work towards renewing their existing Memorandum of Understanding and developing a detailed work plan to guide their cooperation in the coming years.
According to ATAF, the renewed framework will provide a stronger basis for coordinated action in areas including tax policy and administration, tax treaty matters, mutual assistance, private-sector engagement and the taxation of strategic and hard-to-tax sectors.
The initiative reflects a broader push by African institutions to strengthen domestic revenue mobilisation and reduce the continent’s vulnerability to revenue losses associated with illicit financial flows and ineffective cross-border tax cooperation.
For the AUC and ATAF, the objective is not only to improve the ability of individual countries to collect taxes, but also to build a more coordinated continental tax system capable of responding to increasingly complex and internationalised economic activities.