Feb 10 2013

British sugar company in African tax scandal

Posted by: Nick Shaxson in: Thoughts

Pasted from the Tax Justice blog, an important story

From The Observer, reporting on an important new investigation by ActionAid:

“One of Britain’s biggest multinationals, whose brands include Silver Spoon sugar, Twinings Tea and Kingsmill bread, is avoiding paying millions of pounds of tax in an African state blighted by malnutrition, a year-long investigation revealed on Sunday.

. . .

It is estimated that the tax haven transactions of this one British headquartered multinational deprived Zambia of a sum 14 times larger than the UK aid provided to the country to combat hunger and food insecurity.”

The company, Associated British Foods, is absolutely not alone in this  global scandal. But its activities reveal very clearly how broken the international tax system is. Richard Brooks, a top UK tax expert and investigative journalist who will be releasing a book on the subject soon, has a hard-hitting article in The Guardian examining Zambia’s problems in the context of the recent widely publicised difficulties that the United Kingdom, a rich country, has been having in enforcing its tax laws:

“If, as parliament’s public accounts committee has discovered, countries like Britain are struggling to counter such “transfer pricing” arrangements, those with even scarcer resources and less expertise have no chance. Or, as one of the Zambian tax authority’s advisers put it:

“On transfer pricing we are, pardon my language, getting fucked.”

That article is well worth reading in its entirety. The full ActionAid report is here, and please join ActionAid’s email action.

The accompanying video from ActionAid tells quite a tale.

Across the political spectrum, there has been justifiable outrage at this.

“Sir Malcolm Bruce, chair of the cross-party Commons select committee on international development, said: “I would like to think Associated British Foods’ board will now say, ‘Are we really being fair to the Zambians?’”

As we have long said, this system is very substantially the product of the distribution of political and economic power in the world. Richard Murphy adds:

“How come the allowances they legally enjoy mean that no tax is paid? It comes back to that question of who writes the rules. That comes back to Margaret Hodge asking the Big 4 why they have undue influence, an influence that means poor people lose out around the world.

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