Research in Brief 54

Tax treaties are agreements through which two countries agree to assign and restrict taxing rights on economic activities that span both countries. They were traditionally concluded mainly to avoid double taxation and create a favourable investment climate. However, in recent years, tax treaties concluded by sub-Saharan African countries – with OECD countries in particular – have often resulted in them slowly ceding their taxing rights over income earned within their jurisdiction. This revenue loss is not comparable to the expected benefits from foreign investment. Increased awareness of the impact of unfavourable tax treaties on state revenue has seen some sub-Saharan African countries cancel, suspend and or renegotiate some treaties. This paper proposes that sub-Saharan African countries develop and implement a tax treaty policy framework to ensure that they safeguard their interests when concluding tax treaties. It considers the role of tax treaty policy, what factors should inform such a policy, and how to develop an effective negotiating strategy. The study reviewed literature on the history of tax treaties and their impact on developing countries in Africa and interviewed key stakeholders in seven countries.


Catherine Ngina Mutava

Catherine Ngina Mutava is the Associate Director of the Strathmore Tax Research Centre in Kenya. She holds a Master of Laws degree in International Taxation from New York University and a Bachelor of Laws degree from the University of Nairobi. She is as an author and editor for the IBFD in charge of research and publications covering various countries in Africa. She was previously an ICTD Researcher in International Tax (Tax Treaties).
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