Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study
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Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study
Allison D. Christians
Follow this and additional works at: https://brooklynworks.brooklaw.edu/blr Recommended Citation Allison D. Christians, Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study, 71 Brook. L. Rev. (2005). Available at: https://brooklynworks.brooklaw.edu/blr/vol71/iss2/1
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Article 1
Tax Treaties for Investment and Aid
to Sub-Saharan Africa
A CASE STUDY
Allison D. Christians†
I.
INTRODUCTION
The U.S. is committed to increasing trade and
investment to less developed countries (LDCs),1 particularly
† Assistant Professor of Law, University of Wisconsin. I thank Professors
Reuven Avi-Yonah, Yariv Brauner, David Cameron, Charlotte Crane, Steven Dean,
Kwame Gyan, Michael McIntyre, Robert Peroni, and Miranda Stewart, as well as
Justice Margaret Insaidoo and Kweku Ackaah-Boafo, Esq., for their many helpful
comments and suggestions. This Article benefited from a presentation at the
International Economic Law Forum at Brooklyn Law School. I am grateful for the
generous financial support for this research, provided under a grant by The
Educational Partnership Programs Bureau of Educational and Cultural Affairs, U.S.
Department of State, Education for Development and Democracy Initiative, as well as
financial and academic support from the University of Ghana, Faculty of Law and the
Northwestern University School of Law.
1 There is no uniform convention for the designation of a country as “less
developed.” The term is generally used to reflect a country’s economic status or growth
potential. In the context of taxation, these labels may be used to distinguish “in a
general way between countries with highly developed, sophisticated tax systems and
those whose tax systems are at an earlier stage of development.” VICTOR THURONYI,
TAX LAW DESIGN AND DRAFTING, at xxvii n.1 (1996). In the United States, the Central
Intelligence Agency (CIA) delineates three categories in a hierarchy, consisting of 34
“developed countries,” 27 “former USSR/Eastern Europe,” and 172 “less developed
countries” (all other recognized countries, including all of Sub-Saharan Africa except
South Africa). See CENTRAL INTELLIGENCE AGENCY, OFFICE OF PUBLIC AFFAIRS, THE
WORLD FACTBOOK 2005 (GPO 2005) [hereinafter WORLD FACTBOOK] (defining LDCs in
Appendix B) (An internet version of the WORLD FACTBOOK is available at
http://www.cia.gov/cia/publications/factbook. The internet version varies in format and
content from the print version and is updated frequently; this article references the
data found in the print version except where otherwise noted.) As a rough guide to
U.S. foreign policy, this article incorporates the CIA terms. For a discussion of the
arbitrary and often unyielding nature of these designations despite changes in a
those in Sub-Saharan Africa, where poverty-related conditions
are extreme and foreign trade and investment minimal.2 This
commitment is demonstrated in U.S. efforts to negotiate
agreements to eliminate trade barriers such as tariffs and
quotas with many of these countries.3 U.S. officials also
consistently proclaim a commitment to enter into tax treaties
with LDCs,4 on the theory that tax treaties can eliminate
excessive taxation and therefore help to increase trade and
investment between the partner countries.5 As such, tax
treaties appear to be a perfect complement to trade agreements
in furthering U.S. efforts to increase trade and investment in
LDCs. Yet there are currently no tax treaties in force between
the U.S. and any of the LDCs in Sub-Saharan Africa.6
The lack of tax treaties between the U.S. and the LDCs
of Sub-Saharan Africa cannot be explained by disinterest or
lack of support on the part of academics, practitioners, or
lawmakers: representatives from all of these sectors have
urged the importance of entering into these agreements.7
Neither can the omission be attributed to disinterest on the
part of the LDCs in Sub-Saharan Africa themselves.8 Many of
these nations have long pursued tax treaties with the U.S.,9
and a few have gone so far as to formally and publicly express
their interest in commencing negotiations with the U.S.10
income from shipping and aircraft activity. Agreement to Exempt from Income Tax, on
a Reciprocal Basis, Income Derived from the International Operation of Aircraft and
Ships, U.S.-Eth., Oct. 30-Nov. 12, 1998, STATE DEP’T. NO. 98-183; Agreement to
Exempt from Income Tax, on a Reciprocal Basis, Certain Income Derived from the
International Operation of a Ship or Ships and Aircraft, U.S.-Ghana, Nov. 12, 2001,
STATE DEP’T. NO. 02-01; Agreement for Reciprocal Relief from Double Taxation on
Earnings from Operation of Ships and Aircraft, U.S.-Liber., July 1-Aug. 11, 1982 34
U.S.T. 1553. How (...truncated)