Multinationals must honour tax obligations, transfer technology

By Isaac AIDOO, Accra

Economist and Special Advisor on South-South Cooperation and Development Finance, South Centre in Geneva, Yuefen Li has advised resource-rich African countries to insist that multinational companies especially firms operating in the extractive industries honour their tax obligations without fail.

Taxes from minerals and cocoa, according to Madam Li were a major source of revenue which would enable African governments service their debts and raise new debts.

Madam Li who was speaking at the maiden international conference on African debt crisis and the reform of the international financial architecture in Accra observed that some multinational companies had the perchant for not paying taxes at all.

“Many multinationals avoid paying taxes and they are getting a lot from African countries, especially from the extractive industries and even from cocoa because this is very much related to the level of revenue of African countries to enable them service their debt and raise debt, “she stated.

While advising African countries to work together, share experiences related to the collection of taxes and formulate the necessary regulations that will enhance the revenue mobilisation, Madam Li further highlighted the importance of ensuring the transfer of technology by multinational companies.

“We need international cooperation on taxation issues because for transnationals, there are problems like transfer pricing and there are also problems of not being taxed at all so I think developing countries should cooperate and work together on tax collection and formulate necessary and important regulation for revenue mobilisation efforts can materialise. ,” she stated.

Madam Li’s position on taxes from the extractive sector is shared by some economists and think tanks in Ghana.

The Institute for Fiscal Studies has been calling on government to rake in more revenue by way of taxes from the extractive industry

 According to the IFS, a number of researchers and commentators have argued that the various extractive sector agreements signed between the government of Ghana and the multinational corporations are skewed in favour of the multinational corporations, a development which has

negatively affected government’s revenue generating capacity from the sector.