According to Action Aid, The Zambian sugar-producing subsidiary of Associated British Foods (Zambia Sugar Plc – Illovo), a FTSE100 company, contributed virtually no corporation tax to the state’s exchequer between 2007 and 2012, and none at all for two of those years.
The firm, Zambia Sugar, has recently posted record pre-tax profits and its huge plantation is increasing its capacity to produce more sugar for markets in Europe and Africa.
Yet it paid less than 0.5% of its $123m pre-tax profits in corporation tax between 2007 and 2012.
The company benefits from generous capital allowance and tax-relief schemes in Zambia, but the investigation also found that it funnels around a third of its pre-tax profits to sister companies in tax havens, including Ireland, Mauritius and the Netherlands.
Tax treaties between Zambia and some of those countries mean the state’s revenue authorities are unable to charge their normal tax on money leaving their shores.
The revelations are contained in a report published by ActionAid, which exposes how Zambia Sugar has kept its contribution to the state’s exchequer so low, although the company says that globally it actually pays a higher rate of tax on its profits than it otherwise would due to its corporate structure.
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 total loss to tax avoidance by multinationals in the developing world is estimated to be around £70bn a year, enough to save the lives of 85,000 children under the age of five in the world’s poorest countries every 12 months, campaigners say.
With this allegation we do ask Honourable MPs, Zambia Revenue Authority (ZRA), Securities and Exchange Commission to immediately investigate and give us a report just like the reports we have been given by other Government or Quasi-Government institutions such as Competition and Consumer Protection Commission (CCPC). Instead of denying and giving us a blanket statement, we ask Zambia Sugar Plc – Illovo to give us a comprehensive report of their side of the story and distribute it to both online and print media.
On behalf of concerned Zambians.
Dr. Francis Mubanga
Certified Fraud Examiner (CFE) and Securities and Investment Expert (Chartered MCSI – U.K.) l