Africa needs to review Double Taxation Agreements

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Executive director of Ghana Integrity Initiative (GII), Linda Ofori-Kwafo, has called on African countries to review and renegotiate existing Double Taxation Agreements (DTAs).

According to her, the increased signing of various tax treaties in Africa while some of the existing agreements are a subject of abuse is crippling economies in the continent.

She lamented that efforts by African countries to develop the continent had been very difficult as a result of challenges regarding tax evasion and tax avoidance by some countries.

Ofori Kwafo believes the continent could save huge sums of money if these issues were resolved.

Double Taxation Agreements (DTA) are treaties between two or more countries to avoid international double taxation of income and property.

The main purpose of DTA is to divide the right of taxation between the contracting countries, to avoid differences, to ensure taxpayers’ equal rights and security, and to prevent evasion of taxation.

Speaking at the launch of “Dangers of Double Tax Agreement in Financing Development: a case study in Ghana,” Ofori-Kwafo said the report emphasized the need to adopt a harmonized DTA model, which would take into consideration diversities in the African economies.

“Considering all the level of weaknesses and discrepancies that are embedded in most of the existing laws across the continent, there is, therefore, the need for thorough review and renegotiation,” she added.

Ofori-Kwafo said the study specifically sought to critically review DTAs Ghana had signed with South Africa and the United Kingdom (UK) and analyse the dangers towards financing development.

She stressed the need to make African countries dependent on financing developments through domestic resource mobilisation.