Fiscal Transition Support Programme in West Africa

Strong tax administrations are crucial for West African countries to carry out ambitious tax policies and boost domestic resource mobilisation. This requires training tax officials from the 16 West African states in the areas of transfer pricing and information exchange, with the goal of creating a regional network of tax officials in the sub-region.

Better-trained tax officials, equipped with expertise in transfer pricing and information exchange, will be better positioned to detect tax avoidance practices that erode their country’s tax base. They will also be able to train future generations of tax officials in West Africa.

Developing countries do not always have the expertise and experience necessary to negotiate tax treaties effectively, which results in some tax treaties being used for tax evasion purposes, leading to significant revenue losses for the states that signed them. As a result, the misuse of tax treaties, and particularly treaty shopping, is one of the main practices driving base erosion and profit shifting in developing countries.

Most West African states also have a small number of tax treaties, several of which contain various shortcomings. As such, capacity-building initiatives became necessary to enhance the skills of officials from West African member states in negotiating tax treaties. Moreover, an in-depth analysis of the tax treaties concluded by the aforementioned states should also be conducted by OECD experts to identify weaknesses and provide negotiators with recommendations for overcoming them.

One of the primary challenges in fighting illicit financial flows and money laundering in West Africa is the need for stronger coordination among key actors, including tax fraud enforcement services, anti-corruption units, and money laundering agencies, as well as non-governmental organisations that advocate for transparency and accountability. Effective collaboration between these key actors is imperative for managing these issues on a regional scale.

Moreover, it is essential to address civil society's concerns regarding tax transparency and create platforms that allow its input to shape ongoing transparency initiatives in the sub-region.

From 2020 to 2024, the OECD conducted a transfer pricing training programme consisting of six workshops aimed at developing the expertise of approximately 30 tax auditors from 16 West African states, as well as from the ECOWAS and UEMOA Commissions, in auditing multinational enterprises. This training programme led to the creation of a regional network of transfer pricing specialists in the sub-region, thereby supporting sustainable capacity building in the sub-region as well as the sharing of experiences and best practices.

Additionally, the Global Forum, in collaboration with the ECOWAS and UEMOA Commissions, organised workshops for the 16 states of West Africa to train them in the use of tax information exchange instruments, which are designed to combat tax evasion and improve domestic resource mobilisation.

As part of its support, the OECD conducted a study of all the tax treaties in force on 31 December 2020 in the 16 West African States, including Regulation No. 08/2008/CM/UEMOA, adopting rules to avoid double taxation within UEMOA and rules on assistance in tax matters. This analysis was intended to identify gaps or other shortcomings in these treaties, in particular with respect to provisions to combat tax treaty abuse and protect the tax bases of the 16 West African States against the improper use of treaties. The study resulted in the development of 16 unique reports—one for each country—featuring specific recommendations for negotiators from these states on each tax treaty. These reports also highlighted key considerations that negotiators could take into account when formulating their strategies and priorities for tax treaty negotiations.

Additionally, experts from the OECD, the UN, and other countries with demonstrated expertise conducted practical training workshops on the negotiation of tax treaties to equip tax treaty negotiators from West African states with the skills to better protect their tax bases against treaty shopping practices.

In order to discuss the progress made under the FTSP in the area of tax transparency and to initiate a dialogue among various stakeholders in the fight against illicit financial flows, the Global Forum, on 18 July 2023 in Accra (Ghana), organised a dedicated seminar attended by 27 representatives of tax authorities, anti-money laundering and counter-terrorist financing units from 12 West African States, together with civil society organisations.

The seminar provided an opportunity for tax and anti-money laundering experts to discuss their activities and the obstacles encountered in the fight against illicit financial flows, as well as to build connections in terms of domestic exchange of information and share best practices. Civil society organisations shed light on the social and economic impact of illicit financial flows in West Africa.