Tax Treaty Aggressiveness: Who is Undermining Taxing Rights in Africa?
Tax avoidance strategies by multinational companies rely heavily on tax treaties. Multinational companies can relocate financial activities across countries to ensure the applicability of the most beneficial tax treaties. This ‘treaty shopping’ can be particularly harmful to African countries, impairing their efforts to mobilise domestic revenues.
This research project will analyse the extent to which signing tax treaties reduces the taxing rights of African governments by investigating two questions, one focusing on a substantive issue, and the other focusing on methodological issues. First, what countries are most aggressive in curtailing taxing rights through tax treaties in Africa? Second, how sensitive are the findings to different measure of treaty content and aggressiveness?
In the context of efforts to mobilise domestic resources with a view to achieve the sustainable development goals, the findings of this research can support policy makers in Africa to identify the most aggressive treaties posing the greatest risk for tax revenue losses.