Tax dodging back in the headlines

Friday, February 15, 2013 - 14:46

Wow, what a week! The launch of our new report ‘sweet nothings’, exposing tax dodging by the Associated British Food Group, has created a media frenzy. Here’s a round-up of what’s been going on this last week (now I’ve had a minute to pause and take a breath!)

Following reports in November of last year of tax dodging in the UK by Starbucks, Amazon and Google, tax dodging was back in the headlines this week.  Revelations in a new ActionAid report published on Sunday, revealed massive tax avoidance by one of Britain’s biggest multinationals, Associated British Foods.

The front page of Sunday’s UK Observer carried the headline ‘British sugar giant caught in global tax scandal’, noting how the owners of popular UK brands Silver Spoon sugar, Twinings Tea and Kingsmill bread had “deprived Zambia of a sum 14 times larger than the UK aid provided to the country to combat hunger and food security”.

Pamela Chisanga, ActionAid’s Country Director in Zambia joined BBC World Service Radio to discuss the report, revealing that tax avoidance and special tax breaks by a company called Zambia Sugar – owned by Associated British Foods – has cost Zambian public services an estimated US$27 million.

She revealed how the losses from this single company could have put an extra 48,000 Zambian children in school every year.

This, in a country where tax-funded education, health and nutrition services are suffering from a crippling lack of revenue.

In an interview with Al Jazeera television, ActionAid tax expert and co-author of the report, Chris Jordan, explained that what Zambia Sugar is doing “is not illegal”. He explained how the company is “taking advantage of legal loopholes in Zambian and international laws”, using immoral behaviour to dodge corporate taxes.

Campaigning in Zambia

Zambia Sugar’s tax avoidance was also the centre of attention in Zambia, with national broadcasters and community radio covering the story.

In an article in leading daily newspaper, The Zambia Post, former Finance Minister Ng'andu Magande – Zambia’s longest serving Finance Minister – responded to the report saying that “tax avoidance by foreign multinationals operating in the country was widespread”.

In heavy criticism of the company, he went on to say how “local people needed to benefit from the incomes made from their resources”, which was clearly not the case in the way that Zambia Sugar had carried out its activities.

Further coverage in Ireland by the Irish Times and in the Netherlands by De Volkskrant newspaper showed how the company had shuffled the ownership of Zambia Sugar between the tax havens of Ireland, the Netherlands and Mauritius to reduce the withholding tax its pays on dividends in Zambian by an estimated $7.4 million since 2007.

What can you do?

But it doesn’t stop there. In the UK, the British public are e-mailing the Chief Executive of Associated British Foods to tell the company to stop dodging taxes in Zambia.

While the Zambian public are texting in to tell Zambia Sugar to pay their fair taxes.

We’re not against big business. We want to see the Zambian government and the international community to review the tax codes and tax treaties that allow multinational companies to avoid paying their fair share of taxes in Zambia and other countries.

That’s why we’re calling on governments around the world to put an end to the tax dodging by multinational companies, which costs developing countries more than they receive in aid each year.

ActionAid’s campaign to stop companies tax dodging has created ripples of influence. Today, G20 Finance Ministers are in Moscow for a two day meeting, ahead of a leader’s summit later in the year.  Whilst most of the attention in this morning’s press sees them set for a lively debate on ‘currency wars’, pressure is building for them to take action to end corporate tax dodging that’s happening on a massive scale.

In the run up to the G8 and G20 summits later in the year, where leaders from the major economies will meet, public pressure on governments to close tax loopholes continues to grow.