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Wednesday, 20 February 2013

Tax Avoidance in Zambia

ActionAid recently exposed tax avoidance by Associated British Food Group in Zambia. Full press release below.

ActionAid Press Release

A new investigation released today by ActionAid has revealed that the Associated British Foods group (ABF), owner of Silver Spoon sugar, Ryvita and Primark, is dodging its tax bill in Zambia, one of the world’s poorest countries.

The report, Sweet Nothings, which is the result of 12 months of research focusing on the multinational’s sugar operations in Zambia, has discovered that since 2007:

>>Zambia Sugar has generated profits of $123 million, but admits to paying “virtually no corporate tax” in Zambia.

>>It has found legal ways to siphon over US$83.7 million (US$13 million a year) – a third of pre-tax profits – out of Zambia into tax havens including Ireland, Mauritius and the Netherlands.

>>Zambian public services have lost an estimated US$27 million as a result of the company’s tax avoidance schemes and special tax breaks which is enough money to put 48,000 children in school.
The revenues lost to tax havens is 10 times bigger than the amount the UK gives Zambia in aid for education each year.

Chris Jordan, a tax specialist at ActionAid and co-author of the report, said:

“International corporate tax avoidance is like a cancer eating away at both rich and poor countries. As we’ve seen with Starbucks and Amazon, many multinationals are not paying their fair share of tax and this hurts ordinary people in the UK and in the developing world. Tax avoidance by Associated British Foods in Zambia is helping to keep people locked in hunger. We know that business can be a force for good in Africa, but this is massively undermined when a company doesn’t pay its fair share of tax.”

In Zambia 45% of children are malnourished and two thirds of the population live on less than $2 a day. Yet ordinary people pay their taxes. Shockingly, Caroline Muchanga, a market trader who lives next to the sugar plantation, has paid more corporation tax in some years than the giant company, while her children go to bed hungry at night.

Zambia is currently dependent on foreign aid and if this is ever going to end, it must first be able to raise the money needed to provide for its own citizens. George Sumatama, headmaster of Nakambala School in Mazabuka, where Zambia Sugar is based, told ActionAid: “Our school has no windows, doors or floors. Over a thousand children have to fit into just 12 classrooms, sitting in shifts and taught by 20 teachers. I think companies operating in Zambia should be paying more (tax) than they currently pay.”

Chris Jordan added: “This situation has got to change. Associated British Foods must pay its fair share of tax in Zambia. But this case also demonstrates that international tax rules are simply not fit for purpose. David Cameron must deliver on his commitment to secure a deal to stop rampant tax avoidance when he chairs the G8 this year. He has an amazing opportunity and he must seize it.”

ActionAid is part of the Enough Food For Everyone IF campaign which aims to tackle global hunger by calling on governments to close tax loopholes which enable corporates to avoid paying their fair share of tax.

>>Take action. Email the CEO of Associated British Foods.

>>Download the full report

>>Download the company response:

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