The West African Economic and Monetary Union (WAEMU) is frequently cited as one of the most advanced regions in the world when it comes to tax coordination. Since its creation in 1994, WAEMU has pursued a core strategy of bringing member states’ tax systems closer together. This ambition is commendable, but the real question remains: after more than thirty years, has WAEMU’s tax harmonisation strategy truly lived up to its promise?
Why harmonise tax systems?
First, what does tax harmonisation actually entail? It requires member states to adopt common rules in specific areas such as VAT, corporate income tax, and petroleum product taxation.
This harmonisation serves several well-established objectives:
- prevent harmful tax competition,
- attract investment,
- strengthen domestic revenue mobilisation,
- build a coherent common market.
How WAEMU became a model for regional tax reform
WAEMU’s reputation as a success story of regional integration rests on three important facts:
- a common currency,
- shared historical and administrative legacies – notably a tax model inspired by France,
- genuine political will.
The outcomes of WAEMU’s tax harmonisation efforts clearly reflect a level of regional integration that deserves recognition. Three major achievements stand out:
- The adoption of nearly twenty community-level legal instruments that form the foundation of a regional tax law framework. These include the directive harmonising VAT legislation, and the directive on corporate income tax all of which define the Union’s main tax pillars.
- The establishment of frameworks for VAT rates, corporate income tax, and exemptions for certain business categories.
- The introduction of several mechanisms such as broadening the tax base, harmonising VAT, and gradually phasing out customs duties in favour of domestic taxation. As a result, many member states have seen improvements in tax revenues, though significant room for growth remains.
While WAEMU’s tax harmonisation policy has led to some undeniable progress, key challenges persist.
Yet, limits to tax uniformity remain
(1) Broad discretion granted to member states
Despite community norms setting tax rate ranges, member states retain too much leeway, often applying varying rates within those ranges. This flexibility also allows for exemptions that contradict community rules. This excessive margin of discretion granted to member states has led to the incomplete implementation of community tax norms. According to the 2021 Rapport général de la revue annuelle on domestic taxation, no member state achieved full compliance. The regional average compliance rate stood at 76.75%, with scores ranging from just 33% in Guinea to a high of 95% in Benin.
(2) The paradox of tax exemptions
Tax exemptions remain a deeply rooted expression of national tax sovereignty. Member states continue to grant numerous tax exemptions for political or social reasons, often bypassing community provisions. This undermines the effectiveness of WAEMU’s harmonisation policy. More concerning is the fact that these exemptions are often presented as incentives for private investment, even though they result in significant revenue losses. For example, in 2021, tax expenditures in Senegal represented 35.4% of total tax revenue. This figure underscores the significant impact of tax incentives on public revenue mobilisation. In response, WAEMU developed a framework to evaluate tax expenditures across member states and promote greater transparency in public finances, but progress remains mixed.
The path towards stronger regional tax governance
Several solutions are under consideration to address these ongoing challenges. For instance, strengthening monitoring and enforcement mechanisms could ensure greater compliance with community rules. This might include revising tax rate ranges to limit abuse. Another proposal is to establish a community-level tax oversight body, equipped with the authority and resources to monitor the implementation of directives. The WAEMU Commission would also need to take a more assertive role in monitoring, evaluating, and sanctioning national deviations from community standards.
WAEMU’s tax harmonisation: a work in progress
WAEMU has made significant progress toward tax harmonisation, yet, taxation alone cannot achieve the desired level of regional integration without consolidating past achievements —such as adopting community texts and improving revenue performance. The priority must now be to ensure consistency in tax rules across member states so as to minimise distortions that hinder the emergence of a truly unified common market. This calls for renewed political commitment, effective sanctions, clear limits on flexibility, and updated community tax norms.
This endeavour also implies greater transparency in national tax policies, closer coordination with other regional blocks such as the Economic Community of West African States (ECOWAS), and alignment with international standards for fair and effective tax practices. ECOWAS is also developing its own tax harmonisation strategy, with a common customs code and directives on indirect taxation. This paves the way for greater synergy between the two regional bodies.
Between internal challenges, divergent interests, and global pressures, regional tax integration can only succeed through a collective, patient, and strategic effort.
The debate remains open, and the choices made today will shape West Africa’s economic future tomorrow.
And you – do you believe countries should relinquish more tax sovereignty to build a shared tax future?
Download the paper on tax harmonisation policy within the West African Economic and Monetary Union
