L’actualité du jour, c’est comment Google a réussi en 2019 une évasion fiscale de 75 milliards $ (!) taking advantage of Ireland’s very flexible tax jurisdiction to export its taxable profit to the tax haven of Bermuda…
This case is a reminder of the growing responsibility of the digital sector in the erosion of fiscal resources that countries need to finance public spending.
Like Africa, the number of Internet users reached 600 million people according to undisputed statistics, and a significant share of them contribute to Google’s turnover. The tax evasion widely practised by digital multinationals is currently being fought by several countries, but this legitimate crusade must not obscure Africa’s main tax challenge.
For Chafik Ben Rouine, the president of the Tunisian observatory of the economy, The internationalization of the debate on illicit financial flows obscures the fact that the biggest erosion of the tax base in Africa is taking place in the international trade of goods and services. A position shared by Jean Mballa, the executive director of the NGO CRADEC, in Cameroon, whose recent study highlighted the fact that his country has lost in 10 years the equivalent of 31,$5 billion in foreign trade.
One of the ways of tax evasion in Africa is through the transactions that multinationals carry out with other subsidiaries of their groups. In its report on development in Africa, the black continent loses $88.6 billion a year due to false billing in international trade.
Management fees, trademark fees, financial services, transportation, etc. Because these services are invoiced by subsidiaries located outside African countries, several tax administrations in the region tax them at a minimum and sometimes even deduct the resulting expenses from the tax base. Thus, according to data from the Centre for International Trade, between 2015 and 2019, African countries bought international services for a total of $781 billion.
A stock of capital that enjoys a tax that is more than tolerant, but a strong desire for change is expressed all over the world in this regard. The FACTI Panel, a body set up by the United Nations Economic and Social Council, has made innovative proposals. It suggests, for example, that any action by individuals or companies that reduces the resources that can finance development in the world should be sanctioned.
Even the USA has put an end to the tax dumping race by announcing its adherence to the principle of a minimum tax rate for multinationals. Certainly, African and international NGOs are waiting to see whether these good intentions will be confirmed in political acts.
For Tax Justice Network, a London-based NGO, people in poor countries will begin to experience a beginning of tax justice, when the principles of automatic exchange of financial and tax information are applied worldwide, country-by-country financial performance reporting, real property ownership transparency, and an international asset management register.
Source: Ecofin Agency/ By Idriss Linge