Malawi urges United Nations Economic Commission on financial controls inclusivity

By Mike Van Kamande

Government of Malawi says promotion of inclusive and effective international tax cooperation at the United Nations could help block illicit financial leakages that cost African economies hugely.

Speaking on Saturday in Victoria Falls, Zimbabwe, Secretary to the Treasury Professor Betchani Tchereni said digitalization which enables multinational enterprises carry out business in Africa with little or no physical presence makes countries lose revenue.

He was speaking on behalf of Finance and Economic Affairs minister Simplex Chithyola-Banda during the 56th session of the United Nations Economic Commission for African Commission (Uneca) 2024 Conference of African Ministers of Finance, Planning and Economic Development  held under the theme ‘Financing the transition to inclusive Green Economies in Africa’.

Speaking on Saturday in Victoria Falls, Zimbabwe, Secretary to the Treasury Professor Betchani Tchereni said digitalization which enables multinational enterprises carry out business in Africa with little or no physical presence makes countries lose revenue.
Malawi Delegation

“African countries have met challenges taxing this new trend of e-commerce losing revenue and potential source of financing for development. Although e-commerce is now the order of the day in business transactions it is a new emerging area of taxation.

“We should consider it as one of the non-traditional areas of taxation which can be used to broaden tax base. In that regard this will require a strategic approach that recognises the unique challenges and opportunities within the digital economy,” Tchereni said.

He said the key challenge to implementing the digital taxation is the issue of defining boarders to address Cross-Border Transactions given the borderless nature of e-commerce and that African countries need to address cross-border transactions to prevent revenue leakage.

African Tax Administration Forum (Ataf) Deputy Executive Secretary Mary Baine said multinationals should start paying a fair share of tax in the countries they make their money hence the need for equitable allocation of taxing rights when moving funds across the globe.

“Exchange of knowledge and experience on tax issues are very crucial hence strong fiscal rules to protect consumers’ needs should be enhanced. Agreement on a way forward to support the effective engagement of Africa and the Global South in shaping and implementing the UN framework convention on international tax cooperation should be hastened, “ she said.

Uneca Deputy Executive Secretary and Chief Economist Hanan Morsy said the aim of the event is to raise awareness of and advocate the recent General Assembly resolution on inclusive and effective international tax cooperation.

“We ought to strengthen the effective participation and representation of countries in Africa and the Global South in the process of establishing new inclusive intergovernmental tax body and reshaping the global tax architecture in a manner that better serves Africa needs,” she said.

Morsy said Africa needs to broaden the scope of international tax cooperation to ensure that tax avoidance,  division of taxing rights,  illicit financial flows, wealth taxation and assets registries are covered.

The meeting is a follow up to the historic General Assembly resolution 78/230 of December 22, 2023 on promotion of inclusive and effective international tax cooperation at the UN with focus on raising awareness among development partners and encourage engagement in the process of strengthening inclusiveness and effectiveness of international tax cooperation.