Feb 11 2013

AlJazeera: Tax avoidance: Legality vs morality

A British company is the latest major multinational that stands accused of massive tax avoidance and depriving one of the world’s poorest countries of billions of dollars.

The Zambian subsidiary of Associated British Foods has confirmed it paid virtually no tax in the past five years.

A report by ActionAid states the company’s revenue from its Zambian operation is being funneled into tax havens including Ireland, Mauritius and the Netherlands.

The report says that Zambia Sugar generated profits of $123m since 2007, but paid less than half a percent in corporate tax. It estimates that Zambian public services lost $27m as a result of the tax avoidance – enough to put 48,000 children through school.

The report also said revenue lost to tax havens was 14 times the amount the UK gives Zambia in aid to combat hunger and food insecurity.

Associated British Foods’ subsidiary company in Zambia issued this statement:

“We deny emphatically that Illovo is engaged in anything illegal, immoral or in any way designed to reduce the tax rightly payable to the Zambian government.”

Meanwhile, UK-based charity Christian Aid is also fighting what it calls a global culture of financial secrecy, through its Trace the Tax campaign.

The group says it calculates that tax avoidance is costing poor countries $160bn a year. And for every $10 given in aid to the developing world, $15 is lost through tax dodging.

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