Enabling and Benefitting from Tax Avoidance: The Case of Canada in Africa’s Extractive Sector
By Alexander Ezenagu, PhD
The treatment of multinational entities as separate entities for tax purposes is incompatible with economic reality. As such, multinational entities are able to erode tax bases and shift profits to low tax jurisdictions. Due to the base erosion and profit shifting activities of multinational entities, African countries struggle to achieve the Sustainable Development Goals (SDGs) – to eradicate poverty, invest adequately in infrastructure and its industries, significantly reduce illicit financial flows and strengthen domestic resource mobilization – as they rely heavily on corporate taxation for a large part of their public revenue.
If African countries are to achieve their SDGs, there is an urgent need for a new international tax system that aligns where economic activities occur with where profits are taxed. A practical alternative is the unitary taxation of multinational entities. Unitary taxation treats multinational companies as a single entity, allocating the global profit to the jurisdictions where economic activities occur and value is created.
This article calls for the purposeful study of the unitary taxation approach to income allocation and serious consideration of its merits by the relevant supranational bodies. (more…)
Last week’s action by President Donald Trump has ended the United States’ leadership on liberal trade and may trigger a global trade war with major damaging consequences. On 8 March, Trump signed a proclamation to raise tariffs of steel by 25% and aluminium by 10%. It sent shockwaves across the world not only because of the losses to metal exporters, but due to what it could well signify: the start of a global trade war causing economic disruption in many countries, and that may also damage if not destroy the multilateral trade system. (more…)
The planned US border tax would most likely violate WTO rules
By Martin Khor
As the US Congress and President consider whether to introduce a border adjustment tax, a major question is whether such a measure will violate the rules of the World Trade Organization. Experts have good reason to believe the tax in several ways go counter to the WTO. But there are also shortcomings in the WTO system that could limit its usefulness in stopping the US if it is determined enough. A shorter version of this article was published by the IPS. This is the second of a two part series on the US border tax plan. (more…)
Beware of the new US protectionist plan, the border adjustment tax
By Martin Khor
A new protectionist device is being planned in the United States that could devastate the exports of developing countries and cause American and other foreign companies to relocate. The complexities and implications of the proposed border adjustment tax are explained in this article. A version of this article was published by IPS. A second article on this issue will be published soon. (more…)
