Tax Avoidance

Developing countries are currently disadvantaged in the international tax regime. The control of the developed countries in the tax regime is evidenced in their influence in the creation of the major model tax treaties that are used as the starting point for nearly all bilateral tax treaties today. With the rise of multilateral tax instruments and an awareness of the dubious flow of tax revenue out of already disadvantaged countries, developing countries should consider renegotiating their bilateral tax treaties to ensure a more balanced international tax system that is designed for their benefit.

The AfCFTA, as presently negotiated, fails to address the potential tax avoidance likely to arise from the proposed single market. The tax-related non-tariff barriers mentioned in the AfCFTA are limited to subsidies and tax benefits granted by governments to countries. In the absence of any express provision on the allocation of taxable income among countries in the AfCFTA, it may be argued that the AfCFTA has adopted the global tax system, which treats companies in a group as separate from each other.