Corporate Income Taxation in the Digital Age: Africa in the Corporate Tax Haven Index 2019

Abstract

African nations must adopt policies to counter corporate tax avoidance, especially in a digital economy. The Corporate Tax Haven Index of 2019, developed by the Tax Justice Network, is the first systematic, unpoliticised and verifiable measure of how jurisdictions facilitate abusive tax activity by multinational companies and their significance in cross-border activity. Drawing on the data set and results for 64 countries, this paper explores how the nine African jurisdictions that are included have responded to the challenge of tax avoidance and might be intentionally or unwittingly exacerbating profit-shifting activity and the race to the bottom in corporate taxation. The tax treatment of intellectual property and royalties, which are salient in a digital economy, are examined to inform initial recommendations on how African nations may best address the impact of digitalisation on taxation.

Keywords: tax havens, illicit financial flows, digital economy, intellectual property, taxation, Africa, multinational companies, corporate income tax

JEL Classification: F02, F23, F54, F63, K34, O55, P00