Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study

Brooklyn Law Review, Dec 2006

By Allison D. Christians, Published on 01/01/06

A PDF file should load here. If you do not see its contents the file may be temporarily unavailable at the journal website or you do not have a PDF plug-in installed and enabled in your browser.

Alternatively, you can download the file locally and open with any standalone PDF reader:

https://brooklynworks.brooklaw.edu/cgi/viewcontent.cgi?article=1385&context=blr

Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study

Thi s Article is brought to you for free and open access by the Law Journals at BrooklynWorks. It has been accepted for inclusion in Brooklyn Law Review by an authorized editor of BrooklynWorks. 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 - 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)


This is a preview of a remote PDF: https://brooklynworks.brooklaw.edu/cgi/viewcontent.cgi?article=1385&context=blr

Allison D. Christians. Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study, Brooklyn Law Review, 2006, Volume 71, Issue 2,