The United Arab Emirates (UAE) and Mauritius are among the most corrosive corporate tax havens against African countries, according to the Corporate Tax Haven Index (CTHI) recently published by the Tax Justice Network (TJN).

Trade-based financial crimes or illicit practices, including transfer pricing by transnational corporations (TNCs) and lax beneficial ownership requirements are key concerns of TJN, which says TNCs hold trillions of dollars of untaxed or hardly taxed profits.

Transfer pricing

Firms in Africa’s mining sector, including oil and gas companies, are considered particularly focused on ways to reduce their tax bills through transfer pricing.

The CTHI shows an aggressive dispossession of low-income countries’ tax rights spearheaded by the UAE, the UK and France who take advantage of minimal if not non-existent transparency, systemic loopholes and non-implementation of anti-avoidance mechanisms.

Of the 64 countries examined from around the world,  nine African countries – Botswana, Gambia, Ghana, Kenya, Liberia, Mauritius, Seychelles, South Africa and Tanzania – revealed weak tax systems that are constantly exploited resulting in illicit financial flows.

Exploitation increasing

The UAE and Mauritius, are Africa’s most aggressive countries in terms of driving down the withholding tax rates of countries’ through treaties.

Many African countries are increasingly opening themselves to such exploitation TJN says.

Details of the Corporate Tax Haven Index can be found here.