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Tax for Development
The Role of European Policy Makers
Henry Malumo
Regional Advocacy Coordinator – Africa
• 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
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
• 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
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
capacity exchange