Tax for Development
The Role of European Policy Makers
Henry Malumo
Regional Advocacy Coordinator – Africa
CORPORATE TAX DODGING, THE ZAMBIAN
STORY?
• Zambia, largest producer of copper in the
developing world, third largest in the world
• Nearly 15-20 yrs, IMF and WB advised Zambia to
privatise the copper mines, price was low
• IMF and WB helped sale the mines for nearly nothing
and added a layer of tax holidays for the investors
• 3-4 years later, copper prices boomed, highest price
ever, govt wanted to re-negotiate the tax break but
investor threatened to sue the state and lay off
workers
What is the cost of the British sugar giant for
avoiding to pay tax in Zambia?
• ABF’s pre-tax profits – over US$13.8 million a
year, paid out of Zambia, into sister companies
in Ireland, Mauritius and the Netherlands.
• Estimate that Zambia lost tax revenues of
some US$3 million a year since 2007
• Over 14 times larger than the UK aid provided
to Zambia to combat hunger and food
• Enough to put an extra child in primary school
every 12 minutes
CORPORATE TAX DODGING, WHY
DEVELOPING COUNTRIES ARE CONCERNED?
• Current tax system is retrogressive, too many
leaks, loopholes accompanied by corruption.
• Taxation has widened and increased the levels
of inequality in developing countries
• Africa Rising is a commercial slogan that has
changed the lives of many MNCs
• Unjust agreements, have overburdened the
poor and given MNCs 25 years tax breaks
Visit to Mauritius – fact finding!
Mauritius as a tax haven
• Visited Port louis - sidelines of the Mbeki visit
• Visited Vodafone, Glencore, Rio Tinto, ABF
• Glencore threatened to take legal action
against Zambia, had workers in Mauritius, Rio
Tinto did the same in Mozambique,
• Found less 15 workers in a complex with over
200 offices, visited over 8 similar offices
• UK's tax havens, Ireland, Luxemburg,
Netherlands and more on EU territory
Corporate Tax Dodging, why should developing
countries be concerned?
• Tax avoidance via tax havens is about US$120 – US$160 billion a year from
developing countries .
• This is nearly three times the estimated cost of ending global hunger, the
amount is twelve times the cost of ending global malnutrition – current
deaths stand at 2,3 million children a year
• Developing countries loose US$138 billion dollars due to tax incentives
granted to multinationals
• The Africa Union Finance Ministers conference reported that Africa looses
over US$50 billion a year due to Illicit financial flows
• An Oxfam report by Duncan Green estimates the loss by developing
countries at 1 trillion US$ a year (From Poverty to Power)
• The current tax system does not allow for a win – win scenario (investor and
state)
What can EU policy makers do?
• Crack down on the tax havens and tax regimes in Europe that are
also used for tax dodging purposes in Africa (UK's tax havens,
Ireland, Luxemburg, The Netherlands and more
• Unleash the power of transparency, including making country-bycountry reporting publicly available - People have the right to
know and this is important in developing countries
• Commit to review unfair double tax agreements, Support the (UN)
Committee on Tax Experts to reform international tax norms and
principle, Support revenue
collection
capacity exchange
programmes,
TAK
MERCI
THANK YOU