Africa tax authorities unite against illicit financial flows

The African Union Commission (AUC) and the African Tax Administration Forum (ATAF) are strengthening cooperation among African tax authorities to combat illicit financial flows, cross-border tax evasion and aggressive tax practices.

The two institutions also agreed to deepen collaboration on domestic revenue mobilisation, taxation of extractive industries and other hard-to-tax sectors as African countries seek to strengthen their fiscal systems and generate more resources for sustainable development.

The agreement followed a meeting between an ATAF delegation led by its Council Chair, Dr Johnston Makhubu, and the AUC 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, noting that discussions focused on African-led approaches to improving tax compliance, increasing domestic revenue and addressing challenges that limit countries’ ability to finance development.

African tax authorities strengthen mutual assistance

A key area of discussion was the implementation of the Agreement on Mutual Assistance in Tax Matters, which is expected to strengthen cooperation and information sharing among African tax administrations.

ATAF said the agreement would provide a framework for tax authorities to cooperate through the exchange of information, assistance in tax collection, joint tax examinations and other forms of administrative support.

“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,” the statement said.

The forum said stronger administrative cooperation has become increasingly important as tax authorities confront cross-border tax evasion, illicit financial flows and aggressive tax planning practices.

Greater coordination among tax administrations could also improve the ability of countries to identify taxable activities across borders and strengthen enforcement where businesses or individuals operate across multiple jurisdictions.

AUC, ATAF target stronger tax treaty frameworks

The AUC and ATAF also identified the strengthening of Africa’s tax treaty networks as a priority.

According to ATAF, its Model Double Taxation Agreement provides African countries with a policy framework for negotiating tax treaties that better safeguard their taxing rights while reflecting their economic and development priorities.

The institutions also recognised the importance of stronger engagement between tax authorities and the private sector.

Belobe urged ATAF to intensify its engagement with businesses as part of efforts to improve tax compliance and broaden Africa’s tax base.

The commissioner encouraged ATAF “to intensify coordination and meaningful engagement with the private sector,” arguing that greater participation by businesses in tax policy and compliance discussions could support voluntary compliance and contribute to a wider tax base.

Extractive industries remain a tax challenge

The two organisations further agreed to maintain cooperation on revenue mobilisation challenges affecting extractive industries and other hard-to-tax sectors.

ATAF noted that taxation in these areas can be complicated by valuation disputes, cross-border transactions, specialised contractual arrangements and limited access to relevant information.

Addressing these challenges will require stronger technical capacity and closer cooperation among tax administrations to ensure that economic activities in strategic sectors generate appropriate revenues for host countries.

Belobe also welcomed progress achieved through cooperation around the Specialised Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration, while calling for continued efforts to improve tax collection and strengthen national fiscal systems.

“For both institutions, the emphasis is increasingly on translating fiscal instruments into practical benefits for countries,” the statement said.

AUC and ATAF plan renewed cooperation framework

The AUC and ATAF are expected to renew their Memorandum of Understanding and develop a detailed work plan to guide cooperation in the coming years.

According to ATAF, the renewed framework will support more coordinated action across tax policy and administration, tax treaty matters, mutual assistance, private-sector engagement and the taxation of strategic and hard-to-tax sectors.

The expanded partnership reflects a broader push for stronger tax administration across Africa, particularly as governments seek to reduce revenue leakages, strengthen compliance and mobilise domestic resources to support long-term economic development.