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The poorest country in the world lost US$43 million in six years to combination of tax avoidance and tax breaks by a single mining company – ActionAid Report

The poorest country in the world has lost US$43 million in revenue from a single company over the last six years to a combination of tax avoidance and harmful tax incentives.

Malawi lost the money from Paladin, an Australian uranium mining company, which operates the Kayelekera mine in the country, according ActionAid’s new report

According to figures from the World Bank, Malawi is the poorest country in the world. Average life expectancy is just 55 years and approximately 10 percent of people are living with HIV/AIDS.

The company’s actions are entirely legal.  The company negotiated a secret tax break with the Malawian government worth over US$15.635m.

It then avoided paying a further US$27.52 million in Malawi by routing interest and management fee payments to Australia via a subsidiary in the Netherlands which by its own accounts employs no staff.

Current global taxation rules continue to allow tax breaks and tax avoidance by routing money through tax havens.

ActionAid Country Director Martha Khonje said: “Malawi has very high levels of HIV/AIDS infection. Our health service is threadbare and there are three nurses for every ten thousand people. The idea that a company has not had to pay millions of US dollars in the country in tax is grotesque. ”

In one year this lost revenue could have paid for one of the following:

431,000 HIV/AIDS treatments; or

17,000 nurse salaries; or

8,500 doctors’ salaries; or

39,000 teachers’ salaries

ActionAid Tax Policy Adviser Anders Dahlbeck said:  “This money could have played a key role in tackling extreme poverty among women and children in the poorest country on earth.

“It is also shocking that global attempts at reforming international tax rules led by the G20 will still leave developing countries wide open to losing money this way through harmful tax incentives and tax avoidance.

 “Much more ambitious reforms including all countries, not just the richest, are essential to stop poorer countries losing out to multinationals.”

 

ActionAid warns that EU tax reforms announced in Brussels today will not stop European countries like the Netherlands enabling companies to exploit developing countries and deprive them of vital funds needed to pay for basic services like schools and hospitals.

Take action to end tax dodging and call for a global tax body.

 

Editors' notes

For more information and interviews please contact ActionAid Head of News Richard Grange on +44 (0)7716178114 or at richard.grange@actionaid.org

Note to editors

1.       Malawi had the lowest GDP per capita in the world in 2013 according to latest World Bank Report http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

2.     ActionAid report – Extractive Affair: How one Australian mining company’s tax dealings are costing the world’s poorest millions available here

3.       A Video News Release featuring the Paladin’s mine and a hospital in Malawi, photographs from Malawi and an interview with Anders Dahlbeck are available here http://stories.actionaid.org/?c=40828&k=648d971bda

 

4.     ActionAid is a global movement of people working together to achieve greater human rights for all and defeat poverty. We believe people in poverty have the power within them to create change for themselves, their families and communities. ActionAid is a catalyst for that change