tax evasion - Afrikan Heroes

Tax Evasion Costs Morocco Over $521 Million Annually

November 30, 2020

Tax evasion has robbed African countries of billions of dollars that could have been deployed to tackle infrastructural decay and poverty across the continent. This was made known by a new report from a nongovernmental organization, Global Alliance for Tax Justice. According to the Report, the African country with the highest losses from corporate tax evasion is Nigeria, losing $10.57 billion per year. Following are South Africa ($2.71 billion), Egypt ($2.12 billion), and Angola ($2.05 billion). Sudan loses $644 million, Kenya $502.4 million, Mozambique $452 million, Morocco $451 million, Algeria $434.75 million, and Ethiopia $362.66 million.

Of all the countries in Africa that has been experiencing heavy losses through tax evasions, Morocco is on number eight with a cumulative loss value of $521,534,833 annually. The group in their 2020 report on global tax evasion notes that of this sum, Morocco loses $69,923,248 to offshore tax evasion.

With offshore wealth amounting to only $3.7 billion, Morocco accounts for 0.0% of global offshore wealth. Its offshore wealth represents 3.1% of GDP. Revenue loss from untaxed offshore wealth, however, amounts to $69.9 million. Morocco also loses $451,611,585 per year to corporate tax evasion, giving the country the eighth-highest corporate tax loss in Africa.

While Morocco loses more to corporate tax evasion than Algeria, it does not inflict any loss on other countries by enabling corporate tax abuse, according to the report. In contrast, Algeria inflicts $550,339,691 in tax loss on other countries by enabling corporate tax abuse, even greater than Nigeria, which is responsible for $112,521,003 in lost corporate taxes.

Given the global COVID-19 pandemic, the NGO emphasized where these lost corporate tax resources could have been spent. The report calculates Morocco’s corporate tax loss as adding up to 20.24% of its public health budget. The loss could alternatively cover the average salaries of 130,186 nurses.

The report ranks Morocco as the 72nd biggest enabler of tax evasion and financial secrecy in the world. In the top spots are the Cayman Islands, the United States, Switzerland, and Hong Kong. Morocco’s most vulnerable trading channel — the channel through which the country is most vulnerable to illicit financial flows — is outward foreign direct investments. The report considers vulnerability as the “average financial secrecy level of all partners with which the country trades with or invests in for that channel, weighted by the volume of trade or investment each partner is responsible for.”

Morocco’s trading partners with the most responsibility for this vulnerability are France (44%), Mauritius (8.9%), and Luxembourg (8.7%).

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Tax evasion, theft, costs Africa $89 billion annually–Report

September 29, 2020

Africa is losing nearly $89bn a year in illicit financial flows such as tax evasion and theft, amounting to more than it receives in development aid, a new UN study shows. The estimate, published on Monday in the United Nations Conference on Trade and Development’s (UNCTAD) 248-page report, is the UN’s most comprehensive to date for Africa. It shows an increasing trend over time and is higher than most previous estimates. According to the report, nearly half of the total annual figure of $88.6bn is accounted for by the export of commodities such as gold, diamonds and platinum, the report said. For example, gold accounted for 77 percent of total under-invoiced exports worth $40bn in 2015, it showed.

Understating a commodity’s true value helps conceal trade profits abroad and deprives developing countries of foreign exchange and erodes their tax base, UNCTAD said. The report calls Africa a “net creditor to the world”, echoing economists’ observations that the aid-reliant continent is actually a net exporter of capital because of these trends. “Illicit financial flows rob Africa and its people of their prospects, undermining transparency and accountability and eroding trust in African institutions,” said UNCTAD Secretary-General Mukhisa Kituyi.

Junior Davis, head of policy and research at UNCTAD’s Africa division, told the Reuters news agency the figure was likely an underestimate, citing data limitations. Tackling illicit flows is a priority for the UN, whose General Assembly adopted a resolution on this in 2018, and the report urges African countries to draw on the report to present “renewed arguments” in international forums.