Unfavorable Tax Treaties Cause Revenue Loss in African Nations

Some countries in Africa are losing as much as 100% of withholding tax revenue on payments through the Netherlands, a Dutch government report says, leading critics to say tax treaties should be renegotiated.

Developing countries stand to lose tax revenues on dividend, interest, and royalty payments as multinational companies direct payment flows through third-party countries such as the Netherlands for tax avoidance, according to a new report by the Netherlands Bureau of Economic Policy Analysis.

Egypt and Uganda lose all withholding tax revenue on outgoing dividends because of unfavorable treaties, the report said. Ethiopia, Zambia, Bangladesh, and Indonesia—the other four ...