Africa is writing the global tax rules

Share current article via Email Share current article via Facebook Share current article via Twitter Share current article via LinkedIn The wheels of systemic change turn slowly, but the foundations are being laid for a more equitable global tax system. I am writing from New York, where the fifth round of UN tax talks closed recently with a full draft treaty on the table. For more than a century the rules on where profits are taxed were written by a handful of rich countries and handed down to everyone else. Now every country has a seat at the table and Africa stands to gain the most from the rewritten rules. That access came through no small effort by African nations. In 2023 Nigeria, acting for the African Group of 54 states, which includes South Africa, carried the vote to move rule-setting to the UN. It passed 125 to 48, over the objections of most wealthy countries. The things a global tax system that shares taxing rights fairly would do for Africa are the following: Allow governments to keep the tax on money earned on their own soil so they can fund their own development instead of relying on aid or borrowing on someone else's terms. Help local firms competing against multinationals that book their profits offshore. Make African economies more attractive to trade and investment. Africa needs the tax rules to change more than any other region. For every $100 their economies produce African governments collect about $16 in tax, according to Organisation for Economic Co-operation and Development (OECD) data. In most wealthy countries governments collect more than double that, about $34. In 20 of the 38 African countries surveyed by the OECD and the AU the tax take falls below 15% of GDP, the level the IMF treats as the minimum a state needs to function. Below that line a government cannot fund clinics, schools and power without borrowing. Yet, money that should be taxed in Africa is leaving. The UN Trade & Development Conference (Unctad) puts Africa's losses to illicit financial flows at about $89bn a year. The Tax Justice Network estimates that multinational profit shifting cost African countries $40bn in tax in 2016-21, including $10bn from South Africa. Its modelling suggests that recovering even $8bn a year would put more than 300,000 additional girls in school and avert about 2,000 maternal deaths by 2035. A more just tax system is a life-saving imperative. This is not the first attempt to level the global tax playing field. In July 2021 130 countries backed an OECD plan for a global minimum corporate tax rate of 15%, known as Pillar Two. It was a step in the right direction but was drawn up by the same group of mainly rich countries and never won the full consensus the OECD's own rules require. It has been weakened since. In June 2025 the G7 agreed to exempt US-headquartered multinationals from the rules that would have let other countries top up their tax bills, because the US applies minimum tax rules of its own. The world's largest group of multinationals now sits outside the main enforcement mechanism of a deal meant to apply to everyone. A UN convention is broader and carries more legitimacy. Every country negotiates as an equal, and the draft reaches past a single rate to the deeper question of where taxing rights belong. Today a company can earn its money in one country and, through a chain of loopholes, declare the profit in a tax haven. This UN draft would tax the profit where the value is created. In my book Financing Africa I argued that a company should be treated as a single entity and taxed on its global activity, monitored by the UN. The Extraordinary Committee of Independent Experts on Global Inequality, commissioned by President Cyril Ramaphosa for South Africa's G20 presidency, reached the same conclusion, calling this UN convention a historic opportunity to redesign international tax rules. None of this is settled. Wealthy states at the talks, including the EU and UK, want to narrow the definition of tax. But the direction has been set. Africa has spent recent years badly exposed to shocks it did not cause: Covid-19, geopolitical upheaval and donor aid drying up. Building a fairer tax system that brings in steady revenue is a form of independence. That is why African states must negotiate hard now, and the sooner they build tax systems that let them thrive, the better. • Waris, a professor of fiscal law at the University of Nairobi, is UN special rapporteur on foreign debt and human rights. Business Day