THE INTERPLAY BETWEEN TAX AND THE AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA): LESSONS FROM THE WORLD TRADE ORGANISATION (WTO): The interplay between tax and the African continental free trade area (AfCFTA): lessons from the world trade organization (WTO)

Despite having similar underlying principles, that is the elimination or reduction of barriers to trade, international tax and trade law have traditionally evolved separately Even so, these disciplines are intrinsically linked. First, while multinationals consider an array of factors when selecting an investment location, tax benefits and incentives, all factors remaining constant, influence the attractiveness of a location. Therefore, offering more attractive tax incentives based on the location or origin of investors would have a distortive effect on international trade. In addition, double taxation of investment income would impede the free movement capital. In this way, tax would constitute a barrier to trade. Though tax measures may in some instances contradict fundamental trade principles, the interaction between trade and tax law is often difficult as it requires balancing the sovereign right to tax and trade liberalisation obligations. However, in the recent years, it has become increasingly clear that tax measures can be used to further protectionist policies. Unsurprisingly, this has led to an increase in tax related cases at the World Trade Organisation (WTO) dispute settlement body, which confirms that despite protests from tax policymakers and exemptions under trade laws, tax laws may be subject to WTO rules. In respect to the AfCFTA, the question arises on how African countries should react to the inevitable interaction between the two disciplines. In this regard, this chapter aims to evaluate the potential tax implications of the AfCFTA, considers the treatment of tax under WTO and specifically analyses the arguments raised in the tax-related cases at the WTO dispute settlement body. It considers the lessons from the WTO cases and proposes a regional response to the interaction between tax and trade.