A new investigation released here Sunday by ActionAid has revealed that the Associated British Foods group (ABF), owner of Silver Spoon sugar and other household brands, is avoiding its tax bill in Zambia, one of the world’s poorest countries.
ActionAid’s report “Sweet Nothings”, which focuses on the multinational’s sugar operations in Zambia, has discovered that since 2007, the company has generated profits of US$123 million, but admits to paying “virtually no corporate tax” in Zambia.
According to the report, the company has exploited legal loopholes 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.
The report also claims that Zambian public services have lost an estimated US$27 million as a result of the company’s tax avoidance schemes and special tax breaks.
In a country where tax-funded education, health and nutrition services are suffering from a crippling lack of revenue, the losses from this single company could put an extra 48,000 Zambian children in school every year, ActionAid said, adding that the revenues lost to tax havens are 10 times bigger than the amount the UK gives Zambia in aid for education each year.
“Taxes pay teachers, train nurses, provide healthcare and clean water. This is as true in poor countries as it is in rich ones,” ActionAid’s Country Director in Zambia, Pamela Chisanga, said Sunday.
“If Zambia is ever going to end its dependence on foreign aid, it must first be able to raise the money needed to provide for its own citizens,” she said.
In Zambia, 45 percent of children are malnourished and two thirds of the population live on less than US$2 a day.
Yet ordinary people pay their taxes. In some years, small traders who sell the company’s products on road side stalls and shops and the company’s own sugar cane cutters have paid more tax, in absolute terms, than the giant multinational, says ActionAid.
ActionAid, an international development agency working with poor and marginalised people to eradicate poverty by overcoming the injustice and inequity, is calling for urgent national and international action to end tax dodging.
It said the Zambian government and other governments must close the loopholes in national tax codes and treaties and stop giving away vital funds through unnecessary corporate tax breaks.