African countries to push back against G7 proposed tax deal

The recent proposal put forward by the G7 countries regarding new tax talks has faced heavy criticism for not being favorable to developing nations, particularly those in Africa. The proposal, broken down into Pillar one and Pillar two, has raised concerns among civil society in Africa. Pillar one, which addresses tax challenges arising from the digitalization of the economy, has a limited scope and is expected to generate minimal revenue for African countries. In exchange for signing onto this proposal, countries are required to give up existing digital service taxes and commit to binding arbitration processes, which has been a point of contention for many African nations. Pillar two, which involves a global minimum tax rate, also presents challenges as the allocated revenues are likely to benefit countries in the global north where multinational corporations are headquartered, rather than African countries where the profits are generated. This disparity in benefit distribution has fueled opposition from African nations, with Kenya notably refusing to sign onto the deal citing concerns over sovereignty and uncertain revenue gains. As African countries continue to navigate the economic challenges brought on by the COVID-19 pandemic, the need for equitable tax policies that support their recovery efforts becomes even more critical. Advocates have proposed the establishment of a new United Nations inter-governmental tax body as a more inclusive and democratic alternative to the current proposals put forth by the G7, G20, and OECD platforms. This call has gained support from various stakeholders, including both African and international civil society organizations, as well as the G77 and China. The push for a more equitable global tax system also involves discussions around a minimum effective tax rate, which has the potential to address concerns of fairness and balance in tax policies. However, the path towards implementing such reforms faces challenges, particularly within the G20 where developing nations like Brazil and South Africa play a significant role. Despite criticisms from technical experts and civil society groups, policymakers have shown limited response to calls for a better alternative to the current proposals. South Africa's finance minister, for instance, expressed support for the G20 proposal despite the raised concerns. The role of Brazil and other African members in the G20 remains crucial in advocating for more balanced and beneficial tax policies for developing nations. Mobilizing public support and pressuring policymakers to consider the interests of African countries are key strategies in ensuring that any new tax proposals are inclusive and beneficial for all parties involved. The disparities in the current G7 proposal need to be addressed through meaningful dialogue and collaboration between developed and developing nations to create a more equitable and supportive tax framework for Africa and other regions in need of fair tax policies.