Abstract

Globalization and trade liberalization have created opportunities for investors to move capital to economies where they can create higher shareholder value and tap into new business markets. This has seen the advent of MNEs across the world mostly with offshore financial investments. Sadly, too, investors have taken advantage of weak tax administration in some economies, especially in Africa through treaty shopping. Some businesses also engage in tax evasion and avoidance schemes as well as other harmful tax practices. African economies are targeted due to their resource endowment and poor control measures in managing natural resources at national level. Operations in several jurisdictions protect such investments from the direct control of the tax authorities, hence the need for co-operation amongst affected jurisdictions and secrecy jurisdictions. This cooperation requires exchange of information on taxpayers through TIEAs. Challenges in information exchange have been noted where the required information is with third parties or is subject to legislated secrecy provisions in the taxpayers jurisdiction . It has also been noted that the structure of the current OECD developed Model TIEA template does not adequately cover the requirements, providing a loose arrangement, which leaves most weak economies unable to negotiate effectively, rendering the model itself ineffective.