Last month (18th May, 2021), the European Union Commission adopted what they called the “Business Taxation for the 21st Century”. It sets out both short-term and long-term vision to support Europe’s recovery from the COVID-19 pandemic and to ensure adequate public revenues over the coming years.
By 2023, the Commission will present a “new” framework for business taxation in the European Union (EU) to be called the “Business in Europe Framework for Income Taxation (BEFIT)”. Business taxation in Europe really!! What about the territories and jurisdictions where European Business Companies are raking in all the profits and or raw materials? It seems to me a business-as-usual model that perpetuates a perverse arrangement which does not “BEFIT” economic justice. No wonder that the communication from the EU about the “new” tax agenda prompted the illustrious Ghanaian Cardinal and Prefect (Minister) of the Vatican Dicastery (Ministry) for Promoting Integral Human Development, His Eminence Peter Appiah K. Turkson to react in his recent tweet. Cardinal Turkson suggested in his tweet “let the 15% (tax) be paid in countries where earnings are made not at the headquarters”.
The BEFIT is not a new tax agenda for European Businesses; especially with respect to Africa! European companies and banks made a fortune out of trading in Africa in human cargo (slaves), mineral resources and other raw materials since the 15th century (over 600 years!). The trade in slaves afforded free labour and enhanced capital accumulation for Europe. The European Companies saved and spent their wealth in their countries of origin. They also paid taxes to their home governments not to the territories where they made the wealth!
Well, no one can fault the EU Commission for policies tailored to their own interests. However, in the spirit of our common fraternity and international solidarity, we expect greater inclusiveness. The Thabo Mbeki Report of 2016 on Illicit Financial Flows (IFFs) in Africa, lamented at the financial hemorrhage that deny Africa of much needed resources. Other areas are not left out in this orchestrated agenda of the powerful to shortchange Africa. We have witnessed, in recent time, the hoarding of essential COVID-19 vaccines in Europe while less than 2% of the vaccines have been administered in Africa. We are shockingly learning about how the current disbursement formular for the USD650 Billion of Special Drawing Rights (SDRs) released by the International Monetary Fund (IMF) might favour richer nations than those in poorer economies; who need this facility the most. How long must these perverse policies continue? Pope Francis has cautioned in his recent social encyclical, Fratelli Tutti, On Fraternity and Social Friendship, “Others may continue to view politics or the economy as an arena for their own power plays. For our part, let us foster what is good and place ourselves at its service” (FT #77).
Let this be a wake-up call for the Africa Union (AU) and its Agency – the Africa Continental Free Trade Area Agreement (AfCFTA) to be more strategic and farsighted in forging Policies and Business Agreements that safeguard the interests of her people. In the immediate term, the AU can cease the opportunity of the ongoing Intergovernmental Negotiations (IGN) on the International Binding Treaty (BT) for Transnational Corporations. Our purpose should be to ensure that the BT has sufficient safety-valves for local communities and civic interests. In the long term, to use AfCFTA as our internal instrument not only for promoting and coordinating foreign business investments in Africa but also developing guidelines, policies and regulations that ensure mutual benefit.
Samuel Zan Akologo CEO, Caritas Ghana
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