African TP and OECD updates: August / September 2023

Source:  reports issued by organizations, government documents and legislation (where available) or other tax news platforms, such as Orbitax, MNETax, etc.

ATAF: policy brief on considerations in adopting a domestic minimum top-up tax released

The African Tax Administration Forum (ATAF) has released a policy brief “Responding to the Implementation of The Global Minimum Taxation: Policy Considerations”. The policy brief covers key benefits of adopting the Domestic Minimum Top-Up Tax (DMTT) for ATAF members and other considerations.

Members of the ATAF include Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Comoros Islands, Egypt, Eritrea, Gabon, Gambia, Ghana, Ivory Coast, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Eswatini (Swaziland), Tanzania, Togo, Uganda, Zambia, and Zimbabwe.

ATAF considers three key benefits for ATAF members to consider in respect of a DMTT.

• First, it is an additional source of revenue. As African countries continue to wrestle with the challenges of domestic resource mobilisation, all additional revenue is critical. The OECD Inclusive Framework has agreed to the 15% minimum effective tax rate as the minimum. While it is less than what ATAF and African countries called for, it nevertheless represents a step in the right direction putting a limit on tax competition. Introducing a DMTT is not tantamount to agreeing that 15% is now the maximum rate of tax; it is only the bare minimum that MNEs must pay. A DMTT ensures that the African country collects the top-up tax instead of giving it away to a residence country under its Income Inclusion Rule (IIR).
• Second, it is a critical opportunity for African countries to show leadership. The DMTT gives priority taxing rights to the source jurisdiction. This is symbolically, politically important and in line with the long-held ATAF view that source jurisdictions should have primary taxing rights. Having secured the agreement that the DMTT ranks ahead of the IIR, there is now a crucial opportunity for African countries to lead by example and prove that they can and will take hold of their rights as source jurisdictions. Where they do not do so, the same 15% will generally be collected by the residence jurisdictions.
• Third, it offers a realistic path to redress the most excessive tax incentives that undermine tax collection without undermining the ability to attract investment. This is because residence jurisdictions are implementing the equivalent rule under the IIR and will collect the top-up tax if the source jurisdiction does not, meaning that MNEs will face the same rules, compliance requirements and tax payments around the world. This means that when African countries collect the minimum tax, they are not uncompetitive compared to others – they are simply in line with the outcomes of the new global regime. Importantly, this also reduces the power of MNEs to seek excessive tax incentives from African countries. They will know an incentive that results in a rate below the 15% minimum effective tax rate will no longer give the MNE additional benefits, given the new global 15% minimum. This means that ATAF members can have more confidence in reappraising the tax incentives and other tax rule designs that have led to revenue loss because a floor has been set.

Burkina Faso: tax treaty with France terminated

Burkina Faso’s Ministry of Foreign Affairs reportedly notified France of the termination of the 1965 tax treaty between the two countries on 7 August 2023. As per the terms of the treaty, a notice of termination must be provided by 30 June for termination to apply from 1 January of the following year. However, Burkina Faso’s notice to France states that the termination will be effective within three months from receipt. Further details of the termination will be published once available.

Egypt: Income Tax Law includes new related parties definition, permanent establishment provisions, and interest deduction restriction

The Egyptian Tax Authority has published a copy of Law No. 30 of 2023, which was originally published in the Official Gazette on 15 June 2023. The law contains several amendments to Egypt’s Income Tax Law. Law No. 30 of 2023 entered into force on 16 June 2023. The main measures relating to international tax and transfer pricing are summarised as follows:

Related Parties

The definition of related parties is revised, although the conditions are generally the same, including where one party directly or indirectly holds 50% of the other party’s capital or voting rights. However, an additional provision is added in regard to cases where two parties are not related. This includes that two parties (persons) shall not be considered related simply because one of them is considered an employee or agent of the other, or that both of them are considered an employee or agent of a third person, unless such association affects the determination of the tax base directly or indirectly.

Permanent Establishment

The provisions regarding what constitutes a permanent establishment are replaced. The new provisions provide that a permanent establishment means any fixed place of business through which all or some of the business of a non-resident enterprise is carried out, including, in particular:

• A place of management;
• A branch;
• An office;
• A factory;
• A workshop;
• A mine, an oil or gas well, a quarry, or any other place of extraction of natural resources;
• A farm or plantation,
• Buildings, facilities, and warehouses used as sales outlets; and
• A building or construction site, an installation or assembly project, or associated supervisory activities in the event that the site, project, or activities continue for a period or period exceeding 90 days within any 12-month period.
• Further, it is provided that the following will be deemed to constitute a permanent establishment:
• Any activities carried out in Egypt in connection with the exploration, extraction, or exploitation of natural resources, including the use or installation of essential equipment, for a period or periods exceeding 90 days within any 12-month period;
• The furnishing of services, including consultancy services, through employees or other engaged personnel if the services continue to be furnished for the same or connected project in Egypt for a period or periods exceeding 90 days within any 12-month period;
• An insurance enterprise, except in terms of re-insurance, if it collects premiums or insures risks in Egypt, through a person other than an independent agent;
• A person working on behalf of a non-resident enterprise carrying on business in Egypt if such person works exclusively or semi-exclusively on behalf of one or more non-residents to which they are closely related; and
• A person working on behalf of a non-resident enterprise carrying on business in Egypt if such person has the authority to conclude contracts in the name of the non-resident, unless their activities are limited to the purchase of goods or merchandise for the non-resident, or such person habitually performs the main role in concluding contracts in the name of the non-resident without substantial modification by the non-resident.

Provisions are also added regarding the standard activities that are not considered a permanent establishment as long as the overall activity of the fixed place of business is of a preparatory or auxiliary character. However, it is also provided that such activities may constitute a permanent establishment in respect of a fixed place of business that is used or maintained by a non-resident enterprise if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in Egypt and:

• such place or other place constitutes a permanent establishment for the enterprise or the closely related enterprise; or
• the overall activity resulting from the activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, is not of a preparatory or auxiliary character, provided that the business activities carried on by the two enterprises at the same place, or by the same enterprise or closely related enterprises at the two places, are complementary functions that are part of a coherent business process.

Interest Deduction Restriction

The 4:1 debt-to-equity ratio of the thin capitalization rule is changed to a 2:1 debt-to-equity ratio. Further, a transitional provision is included, providing that change will be phased in as follows:

• 4:1 for the 2023 tax year;
• 3:1 for tax years 2024 to 2017; and
• 2:1 for (from) tax year 2028.

Gabon: tax treaty between Gabon and the UAE in force

According to an update from the UAE Ministry of Finance, the income tax treaty with Gabon entered into force on 16 February 2023. The treaty, signed 1 March 2019, is the first of its kind between the two countries. The treaty applies from 1 January of the year in which it was signed, i.e., 1 January 2019.

Kenya: deemed interest rates for non-resident loans set

The Kenya Revenue Authority has issued a notice on the deemed interest rate for certain non-resident loans. The deemed interest rate is deemed to be payable by a resident person in respect of any outstanding loan provided or secured by a non-resident, where the loan is provided free of interest and the resident person is controlled by a non-resident person alone or together with not more than four other persons. Deemed interest is subject to withholding tax and is not an allowable deduction.
For purposes of section 16(2)(ja) of the Income Tax Act , the prescribed rate of interest is 11%. This rate is applicable for the months of July, August and September 2023.
Withholding tax rate of 15% on the deemed interest shall be deducted and paid to the Commissioner by the 20th day of the month following the month of computation.

Kenya: company tax return for declaration of related party transactions enhanced

In June 2023, the Kenya Revenue Authority (KRA) announced that company tax return on the iTax platform has been enhanced for the declaration of related party transactions.

As per the statement from KRA, it notified that the Income Tax – Company Return on the iTax platform has been enhanced to provide for declaration of related party transactions by persons with related parties and whose ascertainment of gains or profits from business is subject to the provisions of Sections 18 or 18A of the Income Tax Act, Cap 470.

When filing their returns, all taxpayers with related party transactions are required to answer, “Yes”, to the question, under the basic information sheet of the Income Tax Company return, on whether or not they have related parties outside Kenya or controlled transactions. The relevant details of the related party transactions should then be captured under sheet “B2_Related_party_transaction”.

Nigeria: update on the 2023 FIRS guidelines on Mutual Agreement Procedure

In February 2019, the FIRS issued the Guidelines on Mutual Administrative Procedure (the 2019 MAP Guidelines) that set out instructions on how to request a MAP in Nigeria. In May 2023, the FIRS issued revised Guidelines on Mutual Agreement Procedure 2023 (the 2023 MAP Guidelines). The 2023 MAP Guidelines designate the Director of the Tax Policy and Advisory Department of the FIRS as the Authorised Competent Authority in Nigeria for MAP purposes and set out provisions for the electronic submission of MAP requests.
The following are some of the notable changes introduced by the 2023 MAP Guidelines:

1. Protective MAP: This is a MAP request submitted by the taxpayer within the specified timeframe stated in the applicable DTA, but the taxpayer has expressly indicated or mutually agreed with the competent authority that the request should not be assessed until further notification is received from the taxpayer to do so.
2. Incidences Requiring Competent Authority Assistance The 2023 MAP Guidelines broaden the scope of instances where a taxpayer may request MAP. These are (i) Where there is a recurring tax issue across several financial years with substantially similar facts and circumstances; (ii) Where MAP involving one treaty partner (bilateral MAP) may affect the taxable income of another state with whom Nigeria is in a DTA; (iii) Where a Nigerian taxpayer or a taxpayer resident in Nigeria is in disagreement with a competent authority on the application of an anti-abuse provision of a treaty or domestic law; (iv) Where a Nigerian taxpayer or a taxpayer resident in Nigeria is in a disagreement with a competent authority on audit adjustment or settlement; and (v) Where double taxation arises in the case where a taxpayer initiated foreign adjustments.
3. Important Timelines: The time limit for Initiating MAP Request, in cases where the applicable DTA does not specify a timeline, is 3 (three) years commencing from the date a taxpayer receives the initial notice of assessment. Failure to observe the time limit may result in the rejection of the MAP request. Where a taxpayer is requested to furnish additional information, the Guidelines stipulate a specific timeframe of 30 (thirty) days from the date of receiving the notification to comply with the request for additional information.
4. Deferral of Tax Collection During MAP: Unlike the 2019 MAP Guidelines, which did not impose any restrictions on the collection of the disputed amount of tax during a MAP request, the 2023 MAP Guidelines stipulate that tax collection will be suspended while a MAP case is pending. The suspension will only apply to the disputed portion of the tax liability. The taxpayer is still obligated to pay the portion of the tax liability that is not under dispute while the MAP process is ongoing.
5. Implementation of MAP Decision: Regarding the implementation timeframe for MAP decisions, the 2023 MAP Guidelines state that the application of timelines prescribed by domestic law is contingent upon the provisions within the relevant DTA. Where the applicable DTA does not include any timeline for the implementation of a MAP Agreement, the domestic timeline will apply.
6. OECD: comments received on draft toolkits to support developing countries in minerals transfer pricing published

The OECD has published the comments received on the public consultation on two draft toolkits to support developing countries in addressing base erosion and profit shifting risks when pricing minerals.

The first toolkit provides a framework that is designed to support developing countries in addressing the transfer pricing challenges faced when pricing minerals. The second toolkit applies this transfer pricing framework to a specific mineral (bauxite).
Download all comments relating to the toolkits via dropbox.com.

OECD: the OECD and Global Forum support ECOWAS in strengthening the fight against BEPS and improving tax transparency in West Africa

The OECD has issued a release on support in strengthening the fight against BEPS and improving tax transparency in West Africa, which is detailed below:
As part of the European Union’s Fiscal Transition Support Programme in West Africa (FTSP), the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) have collaborated with the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA) commissions in the development of three community legal tax instruments intended to strengthen the fight against base erosion and profit shifting (BEPS) and improve tax transparency in West Africa:

• a Directive on the harmonisation of transfer pricing rules which gives the means to the tax administrations of ECOWAS Member States to better control multinational enterprises present on their territory;
• a Directive on beneficial ownership which allows the identification of the beneficial owners of legal persons and arrangements, and ensures the availability of adequate, accurate and up-to-date information on these beneficial owners; and
• a Supplementary Act on mutual administrative assistance in tax matters which offers multiple forms of co-operation between the tax administrations of ECOWAS Member States and thus strengthens the exchange of information.

These three community instruments, which are aligned with the most recent international tax standards, were adopted by the ECOWAS Council of Ministers and the Conference of Heads of State and Government of ECOWAS at their respective meetings on 6-7 July 2023 and 9 July 2023 in Bissau.

They allow ECOWAS to offer its Member States a harmonised tax framework in terms of transfer pricing and exchange of information that will strengthen the fight against tax avoidance practices and improve tax transparency within the sub-region. In turn, these measures will promote domestic resource mobilisation towards the achievement of development objectives.

Mr. Wolfram Vetter, Ambassador of the European Union in Burkina Faso, welcomed the adoption of these community legal instruments, developed under the EU-funded FTSP, which will strengthen the fight against BEPS in West Africa and improve tax co-operation between ECOWAS Member States.

Mr. Salifou Tiemtoré, Director of Customs Union and Taxation at the ECOWAS Commission, stressed that “these three community tax instruments reflect our determination to strengthen transparency and tax integrity in West Africa. Together, in collaboration with the OECD and the Global Forum, we have taken a crucial step in the fight against BEPS. This harmonised tax framework, in line with the latest international standards, demonstrates our commitment to responsible and fair tax governance in the sub-region”.

Finally, Ms. Manal Corwin, Director of the OECD Centre for Tax Policy and Administration, welcomed the fruitful tax co-operation between the OECD and ECOWAS, noting “I am delighted these measures will give West African tax administrations the means to better fight against tax avoidance practices while strengthening legal certainty and the business climate within the sub-region”.

The FTSP, which is funded by the European Union, aims to support the implementation of fiscal transition programmes in West Africa following the application of regional trade liberalisation policies. Under this programme, the OECD and the Global Forum provide the ECOWAS Member States, Mauritania and the ECOWAS and UEMOA Commissions with technical assistance to enable them to more effectively fight against base erosion, profit shifting, and illicit financial flows.

OECD: OECD report highlights advances in tax transparency in Africa

The OECD has announced a report highlighting advances in tax transparency in Africa.

Launched on 6 July 2023 during the 13th Meeting of the Africa Initiative, Tax Transparency in Africa 2023 presents African countries’ latest advances in tackling the major issue of tax evasion and other illicit financial flows (IFFs) through transparency and exchange of information (EOI) for tax purposes.

Co-produced by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum), the African Union Commission and the African Tax Administration Forum, the report covers 38 African countries. It includes numerous figures and countries’ experiences showing the very positive impact of the Africa Initiative’s endeavours on the set up of tax administrations and their revenue collection. It also details capacity-building activities carried out by the Global Forum and its partners in Africa throughout 2022 and proposes practical strategies for further progress.

Notable achievements in recent years include:

• 4 African countries (Republic of the Congo, Angola, Zimbabwe and Sierra Leone) have joined the Global Forum as 165th, 166th, 167th and 168th members since June 2022, further demonstrating the acute political attention for the international tax transparency agenda.
• 23 African countries are now parties to the multilateral Convention on Mutual Administrative Assistance in Tax Matters, the most comprehensive instrument for all forms of co-operation to tackle tax evasion, thus substantially expanding their EOI relationships networks.
• 10 African countries have already committed to automatic exchange of financial account information (AEOI) by a specific date and more are expected to do so in the near future, with the assistance of the Global Forum and its partners.
• African countries collectively reported collecting over EUR 310 million as a direct result of exchange of information on request (EOIR) since 2014, and at least EUR 1.69 billion additional revenues (tax, interest and penalties) have been identified in the region since 2009, through voluntary disclosure programmes launched prior to the first automatic exchanges, EOI and offshore investigations. For the first time, one African country reported collecting additional taxes through the use of CRS data (EUR 10.6 million in 2022).
• 15 training events were organised in 2022 and delivered to 1 170 officials representing 37 African countries. Further, more than 1 800 additional officials were trained on EOI by local trainers who had participated in the Train the Trainer programme.

Tax Transparency in Africa 2023 also includes an update on the latest developments in cross-border assistance in the recovery of tax claims. Delivering on its current mandate from the Africa Initiative members, the Global Forum published a new toolkit today, to help tax administrations set up and benefit from this type of mutual assistance.

OECD: peer-to-peer support for developing countries on the implementation of the two-pillar solution launched

The OECD has announced the launch of a series of peer-to-peer knowledge-sharing events on the implementation of the Two-Pillar Solution to support developing countries.

On 13 June 2023, the OECD’s Forum on Tax Administration (FTA) Pillar Knowledge Sharing Network held its first virtual meeting of what will be a series of peer-to-peer knowledge-sharing events where experts from tax administrations in ‘early implementer’ jurisdictions will offer high-level practical advice and share lessons learned on administrative and implementation aspects of the Two-Pillar Solution.

The first meeting, gathering more than 250 delegates from over 70 countries and jurisdictions, looked at Pillar Two implementation from a change management perspective and how officials are working across policy, operations and technology to prepare for and implement the necessary changes. Further meetings will be held over the course of the year.

The network, which was launched at the recent FTA’s Capacity Building Network (CBN) meeting, aims at supporting developing countries in the implementation of the Two-Pillar Solution. The initiative, developed by the United Kingdom’s HM Revenue and Customs (HMRC), will leverage Canada Revenue Agency’s Knowledge Sharing Platform for Tax Administrations to provide an online channel for tax administrations globally to share knowledge, as well as to address specific questions around Pillar implementation. The new Pillar Knowledge Sharing Network will complement the OECD’s wider strategy for supporting developing countries in implementing Pillar One and Pillar Two through a multifaceted programme including training, guidance and hands-on country engagements.

Commenting on the launch of the Pillar Knowledge Sharing Network, Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said “With members of the OECD/G20 Inclusive Framework now taking steps towards the implementation of Pillar Two, HMRC, as Chair of the FTA CBN, is delighted to be launching the Pillar Knowledge Sharing Network to enable tax administrations to share their experiences of administrative implementation in real-time. The Knowledge Sharing Network is an important and timely tool to support the implementation of the Two-Pillar Solution, and an example of what we can achieve when the international tax community pulls together. Providing a peer-to-peer forum will help to ensure that the full benefits of the Pillars can be realised by developing countries.”

The FTA’s Capacity Building Network was established in 2016 to better connect the tax capacity-building efforts of the FTA and its members internally as well as to the work of other international and regional organisations to both mitigate the risks of gaps and overlaps and identify areas where a more co-ordinated approach could produce mutual and tangible benefits.

Rwanda: tax treaty between Rwanda and the UAE in force

According to an update from the UAE Ministry of Finance, the income tax treaty with Rwanda entered into force on 4 December 2019. The treaty, signed 1 November 2017, is the first of its kind between the two countries. The treaty applies from 1 January of the year in which it entered into force, i.e., 1 January 2019.

Rwanda: pending tax treaty with France ratified

Rwanda published Law No. 045/2023 in the Official Gazette on 11 August 2023, which provides for the ratification of the pending income tax treaty with France. The treaty, signed 22 June 2023, is the first of its kind between the two countries. It will enter into force the day after the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.

Rwanda: pending tax treaties with Benin and the Czech Republic ratified

Rwanda published Law No. 039/2023 and Law No. 040/2023 in the Official Gazette on 3 August 2023, which provide for the ratification of the pending income tax treaties with Benin and the Czech Republic. The treaty with Benin was signed on 15 April 2023 and the treaty with the Czech Republic was signed on 2 May 2023. Both treaties are the first of their kind between Rwanda and the respective countries and will enter into force after the ratification instruments are exchanged.

Senegal: Master and Local File documentation requirements defined

Senegal’s Minister of Finance and Budget has issued Order No. 162/MFB/DGID/DLCI/BCI of 27 July 2023 (Order No. 162), which defines (expands) the content of the transfer pricing documentation required in accordance with Article 638 of the General Tax Code. As per Article 638, a Senegal company meeting the following conditions must make available transfer pricing documentation in respect of transactions with foreign related parties:

• Has a turnover of XOF 5 billion or more;
• Holds at the end of the relevant fiscal year, whether directly or indirectly, 50% or more in the capital or voting rights of a resident or non-resident company with a turnover of XOF 5 billion or more; or
• More than 50% of its capital or voting rights is held at the end of the fiscal year, whether directly or indirectly, by a company with a turnover of XOF 5 billion or more.

Article 638 provides high-level requirements for group and entity-level documentation, which the tax authority has previously clarified should be in line with OECD guidelines.

Order No. 162 explicitly provides that the documentation should be in line with OECD guidelines for the Master file and Local file. The Order also defines the required content which is essentially taken verbatim from Annex I (Master file) and Annex II (Local file) to Chapter V of the OECD Transfer Pricing Guidelines.

Order No. 162 further provides that the documentation must be presented to the tax authorities on the date of commencement of an accounting (tax) audit, in paper and electronic formats. Further, the documentation must be presented in one of the languages used by the tax authorities. If the documentation is provided in another language, a translation must be presented by the audited company if requested by the tax authorities.

South Africa: Interpretation Note on place of effective management in determining tax residence of a company

The South African Revenue Service (SARS) has published Interpretation Note 6 (Issue 3), which provides guidance on the interpretation and application of the term “place of effective management” in determining the tax residence of a company as one of the considerations under the tie-breaker rule in a tax treaty. The interpretation note replaced the prior version issued in 2015 and takes into account relevant developments since that time, including the 2017 version of the OECD Model Tax Convention. The general approach to place of effective management is summarized in the conclusion to the interpretation note as follows:

“A “place of effective management”, in determining the tax residence of a company, is only one of the considerations under the tie-breaker rule in a tax treaty that adheres to Article 4 of the OECD Model Tax Convention and its accompanying Commentary.

A company’s place of effective management is the place where key management and commercial decisions that are necessary for the conduct of its business as a whole are in substance made. This approach is consistent with the OECD’s commentary on the term “place of effective management”.
A company may have only one place of effective management at any one time. There are normally multiple facts that need to be taken into account, often involving multiple locations, and from those facts and locations it is necessary to determine a single dominant place where effective management is located.

Definitive rules cannot be laid down in determining the place of effective management, and all relevant facts and circumstances must be examined on a case-by-case basis.

The place of effective management test is one of substance over form. It therefore requires a determination of those persons in a company who actually “call the shots” and exercise “realistic positive management”.”

Uganda: Parliament approves Digital Services Tax

The Ugandan Parliament has issued a release announcing the approval of amendments to the Income Tax Act on 11 July 2023, including a digital services tax.

Little detail is provided in the release, although the approved measure is reportedly similar to the original proposal. This includes a new section providing that tax will be imposed on every non-resident person deriving income from providing digital services in Uganda to a customer in Uganda at a prescribed rate of 5%. For this purpose, income is derived from providing a digital service in Uganda to a customer in Uganda, if the digital service is delivered over the internet, electronic network, or an online platform. Digital services include:

• Online advertising services;
• Data services;
• Services delivered through an online marketplace or intermediation platform, including an accommodation online marketplace, a vehicle hire online marketplace, and any other transport online marketplace;
• Digital content services, including accessing and downloading of digital content;
• Online gaming services;
• Cloud computing services;
• Data warehousing;
• Services, other than the above, delivered through a social media platform or an internet search engine; and
• Any other digital services as the Minister may prescribe by statutory instrument.

The digital services tax were to apply from 1 July 2023, although considering the timing of their approval, the implementation date is uncertain.

West African Tax Administration Forum: Pillar 1 and Pillar 2 outcome statement and considerations for Forum Members released

The West African Tax Administration Forum (WATAF) issued a release on 2 August 2023 concerning the recent Outcome Statement from the BEPS Inclusive Framework on the OECD’s Two‐Pillar Solution, as well as related considerations and recommendations for WATAF members. WATAF members include Benin, Burkina Faso, Cape Verde, Ghana, Guinea, Guinea Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, The Gambia, and Togo.

WATAF members are advised to:

1. Critically review the agreement with a view to weighing its economic implications for each member state.
2. Carry out revenue impact analysis to ensure that Amount A rules deliver positive revenue outcome before committing to its implementation.
3. Make any decision of signing or otherwise of any MLC only where the benefit of such MLC can be empirically confirmed to outweigh its cost, including the cost of administration and the cost of forgone Digital Service Taxes, which are to be withdrawn with respect to all companies in the case of Amount A.
4. In respect of Pillar 2, carry out a quick reform to weed out wasteful tax incentives and introduce countermeasures like alternative minimum taxes, domestic top-up taxes, and similar fiscal policy measures. WATAF members should prioritise having in their domestic law a domestic minimum top up tax and to revise their incentives’ policy.
5. Continue to build capacity in the area of international tax and the taxation of the digital economy so as to better understand the issues and how they impact member states. WATAF is readily available to assist members in this regard.
6. Note that the major benefit of the work for member states will be behavioural changes in members’ approach to fiscal policies, wherein members are expected to become more prudent with respect to tax incentives and measures to protect their domestic tax base.

 

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