Africa’s $88 Billion Solutions: How ATAF Fights Illicit Financial Flows

Africa loses an estimated $88.6 billion annually due to illicit financial flows (IFFs), according to a 2020 UN report. These cross-border financial transfers, illegal in origin, movement, or purpose, drain resources needed for development.

The African Tax Administration Forum (ATAF), a coalition of 44 African countries, is bolstering efforts to fight IFFs and reclaim resources.

“Illicit financial flows weaken Africa’s ability to fund its development priorities and undermine the financial foundation needed for long-term growth,” said Logan Wort, ATAF’s executive secretary.

 

So far, ATAF has successfully assisted members to recover over $1.8 billion in tax revenue through various strategies, marking a significant step in combating these illegal flows.

A comprehensive approach

 

Recognising the complexity of these financial crimes, ATAF is working to improve tax systems across Africa. It helps countries identify and tackle the main causes of lost revenue  by providing advice and expertise. This includes a variety of issues such as tax investigations and risk management.

 

 

A significant milestone in ATAF’s efforts is the development of the Double Tax Agreement Treaty Model, which guides African nations in negotiating fairer agreements with other nations. This model is designed to reduce the exploitation of Africa’s human and natural resources while promoting tax transparency and equity. In addition, ATAF has also developed policy briefs and suggested approaches that are vital resources for members in addressing tax-related IFFs.

“Strengthening tax policy and administration is crucial for Africa’s development,” Wort said. “Through joint initiatives, we are making significant strides toward reducing illicit financial flows and enhancing domestic resource mobilisation.”

Collaborative efforts

ATAF’s work extends beyond its member states through partnerships with global and regional organisations, such as the African Union Commission, Tax Justice Network Africa, and the United Nations Economic Commission for Africa. Together, they have created a strategy that links tax policy with administration to ensure reforms are effectively put into action.

A pivotal achievement from these collaborations is the endorsement of the African Agreement on Mutual Assistance in Tax Matters (AAMATM) by African Finance Ministers.

Developed by ATAF, this agreement establishes a system for African countries to share information, assess taxes together, and recover taxes across borders. These mechanisms are critical for improving transparency and fighting illicit financial flows.

“The signing and ratification of the AAMATM by Member States will be a game-changer in our fight against illicit financial flows,” Wort said. “It will facilitate cooperation among African nations, making it harder for illicit activities to go unnoticed and unpunished.”

Global partnerships

ATAF also collaborates with Tax Inspectors Without Borders (TIWB), an initiative by the Organisation for Economic Cooperation and Development (OECD) and the United Nations Development Programme (UNDP).

As TIWB’s strategic partner in Africa, ATAF provides tailored technical support to improve tax administration efficiency and transparency.

Through these partnerships, ATAF strengthens the capacity of tax administrations to assess and collect taxes from multinational enterprises. This helps prevent tax evasion and ensures a fairer and more equitable economic landscape.

A vision for a prosperous Africa

ATAF’s efforts demonstrate the power of strategic action in tackling the challenges posed by illicit financial flows. By recovering resources lost to illicit flows, African countries can reinvest in vital areas such as education, healthcare, and infrastructure, boosting growth and improving the quality of life for millions of people.

As the fight against illicist financial flows continues, ATAF’s work proves that collaborative efforts and innovative strategies can drive meaningful change.

Source: norvanreports.com