End of Double Taxation Treaty renegotiation window in Burkina-Faso: What next?

While a government may safely be able to say no to a treaty offered to it on bad terms, the calculation is different when such a treaty is already in effect, perhaps signed many decades ago. When terminating, overriding, or renegotiating an international agreement designed to offer stability to investors, there may be diplomatic and economic repercussions.” (Hearson, 2021)[1].

Colonial-era agreements between higher-income and lower-income countries tended to restrict the latter’s right to tax quite considerably, in a manner that was inconsistent with the newly founded countries’ desire to finance themselves, a state of affairs that provoked many lower-income countries to cancel or renegotiate those treaties.[2]

The example of Zambia cited by Hearson (2021) is really illustrative. As he posited, “Not every one of Zambia’s treaty partners agreed to reopen its existing treaty with Zambia: an attempt to renegotiate with France in particular was unsuccessful. Some independent countries, such as Kenya, Uganda, and later Nigeria, chose to abrogate their treaties in such circumstances to force countries to the table and secure a better deal.” This is the pathway adopted by Burkina-Faso to renegotiate its Double Taxation Treaty (DTT) with France[3], which is one of the most reluctant countries in the world to renegotiate tax treaties.

Countless times, it has been marketed that tax treaties bring inward investment from high-income countries to low-income countries without any positivist approach. The claimed positive correlation between DTT and {foreign direct investment} FDI is often based on the subjective assertions of non-specialists who echo the lucubration of the esoteric club of erudite promoters that advocate for tax treaties at all costs. Yet it is known from Joseph Goebbels, the Second World War Nazi Germany’s Minister of Propaganda’s famous postulation, that “if you repeat a lie often enough, people will believe it, and you will even come to believe it yourself.”[4] More recently, scientists gave credence to Goebbels’ statement as “the Illusion of Truth Effect.” The phenomenon, which is the tendency to believe in false information after hearing it repeatedly, is referred as “the illusory truth effect (also known as the illusion of truth, the truth effect, or the reiteration effect)”[5].

From century, sinusoidally at high or low frequency, policy communities such as the League of Nations used strong semantics in its reports in these terms: “Double taxation . . . imposes on such taxpayers’ burdens, which, in many cases, seem truly excessive, if not intolerable. It tends to paralyze their activity and discourage initiative, and thus constitutes a serious obstacle to the development of international relations and world production.”[6] In its contemporaneous alter-ego, the Organisation for Economic Co-operation and Development (OECD) amplified in its report on the model tax treaty, that “it is scarcely necessary to stress the importance of removing the obstacles that double taxation presents to the development of economic relations between countries.”[7] Furthermore, as if that weren’t enough for developing countries, which are just trying to keep their heads out of water, a report from a consultancy firm, PricewaterhouseCoopers (PwC), on international taxation in lower-income countries asserts, with no support, that “overall, double taxation is detrimental to economic development.”[8] In their statements, they often circumspectly elude the fiscal costs of DTT for developing countries.

Cambodia is the latest country of the Association of Southeast Asian Nations (ASEAN)[9] member states, which resisted for decades to jump into tax treaties net. It was not until 2014 that Cambodia opened talks for tax treaties. Yet before starting rounds of negotiations with Vietnam in 2015, a complete study conducted by the Cambodian General Department of Taxation two years earlier, in 2013, estimated the impact of reduced withholding tax rates, if Cambodia were to sign a treaty with Vietnam, at between US$5 million and US$6 million per year[10]. If correct, this would have been a cost of around 2 percent of Cambodia’s total tax revenue from businesses from just one part of one treaty, according to Hearson (2021). Nevertheless, is it not the wisest approach to dealing with tax treaties? Assess the pros and cons before negotiating?

Usually, there is a bewilderment between DTT, which carries not only immediate, but also long run Brobdingnagian fiscal costs that are scarcely scrutinized, and bilateral investment treaties (BITs) that are circumscribed to a specific context within a specific timeframe. The BITs are easier to renegotiate without clamors or indignations, and significantly preserve taxing rights if well negotiated.

Senegal, a West African Tax Administration Forum (WATAF) member state, cancelled its DTT with Mauritius, which was used for treaty shopping by multinationals, yet that has not slowed down investment in the Teranga (Senegal).

Burkina-Faso reacted after getting no response to the verbal note N°0002/ MAEC/SG/DGAJC/DAJC/STAI/iv of 05 January 2020 sent to France, requesting for the DTT renegotiation signed on 11 August 1965, which entered into force on 15 February 1967, with its amendment of 03 June 1971, entered into force on 01October 1974, through its Ministry of Foreign Affairs. The reminding letter was sent in 2021, and the denunciation letter N°2023- 609/MAECRBE/CAB on 07 August 2023. Then, the communiqué N° 2023-0023 /MEFP/SG/DGI/DLC/srfi, issued on 07 November 2023 enacted the abrogation of the DTT between Burkina-Faso and France, exactly three months after the denunciation.

Time will tell if this step has any effect on the mobilization of FDIs in the country!


[1] Hearson, M. (2021). Imposing standards: the north-south dimension to global tax politics. New York: Cornell University Press.

[2] Irish, “International Double Taxation Agreements and Income Taxation at Source”. Culled from (Hearson, 2021)

[3] https://www.youtube.com/watch?v=hekNYFofgqo&t=422s

[4] TOP 25 QUOTES BY JOSEPH GOEBBELS (of 105) | A-Z Quotes (azquotes.com) TOP 25 QUOTES BY JOSEPH GOEBBELS (of 105) | A-Z Quotes (azquotes.com)TOP 25 QUOTES BY JOSEPH GOEBBELS (of 105) | A-Z Quotes (azquotes.com)TOP 25 QUOTES BY JOSEPH GOEBBELS (of 105) | A-Z Quotes (azquotes.com)

[5] Illusory truth effect – Wikipedia

[6] League of Nations, Report of the Committee of Technical Experts on Double Taxation

and Tax Evasion, 8. Culled from (Hearson, 2021)

[7] OECD, Model Tax Convention on Income and on Capital, 2010 ed. (Paris: OECD

Publishing, 2014), 9, http://www.keepeek.com/Digital-Asset-Management/oecd/taxation /model-tax-convention-on-income-and-on-capital-condensed-version-2010_mtc_cond -2010-en. Culled from (Hearson, 2021)

[8] PwC, Transfer Pricing and Developing Countries: Final Report (Brussels: European Commission, 2011), 11. Culled from (Hearson, 2021)

[9] https://en.wikipedia.org/wiki/ASEAN

[10] Interview 67. Culled from (Hearson, 2021)

Nyatefe Wolali DOTSEVI: Tax Research Manager, WATAF Secretariat.

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