By Richard Johnstone | 4 November 2013

Plans for developed nations to create registers of beneficial company ownership will not be enough to tackle tax evasion in African countries, the chair of Tanzania’s public accounts committee has warned.

Zitto Kabwe welcomed Prime Minister David Cameron’s pledge to publish a register of the beneficial owners of UK companies as part of moves to clamp down on tax evasion, but said it must be extended to cover other corporate entities.

Cameron has called on other developed countries to match Britain’s ‘world first’ in publishing the register, after G8 member nations agreed to develop national action plans in June.

However, speaking at the Open Government Partnership’s annual summit in London last week, the prime minister stopped short of extending the provision to cover trusts and other legal entities. He said companies were public institutions, while trusts were more like private bodies, but added the government would ‘listen to the arguments’ over extending the register.

Speaking after Cameron’s announcement, Kabwe insisted that inclusion of trusts was vital, as these were often used to take money out of African countries without being taxed.

‘Tax evasion is a global issue, and lots of countries are suffering from the same challenge, but for us in Africa, we cannot survive,’ he told delegates of the OGP summit.

‘We cannot teach our kids, we cannot provide health services, we cannot build our infrastructure, we cannot finance our own development, because of all the money hasn’t been paid.’

He said that all developed countries should take part in transparency initiatives, ‘so that we can indentify that multinationals from developed countries are paying their fair share of taxes in our countries’. 

But Cameron’s announcement was ‘not enough’ to reveal information about tax evasion, he added. 

‘If we have the public registry of companies, still Africa will not benefit because most of the money is actually in trusts. So trusts must be included as well, that’s what transparency requires – a public register on beneficial ownership that covers trusts.’

Also speaking at the session, Caroline Kende-Robb, executive director of the Africa Progress Panel, said there was a need for global standards on tax transparency, in light of the pledge made at the G8 meeting earlier this year.

‘[We need] a critical mass of G8 and G20 countries willing to legislate for full public disclosure on beneficial ownership,’ she said. 

‘We’ve seen the UK do that, so it’s an extremely good start.’