A new report by Oxfam has revealed that international companies cheated Africa out of $11 billion in 2010.
The report titled “Africa: Rising for the Few” released yesterday revealed that the loss is equivalent to more than six times the amount needed to deliver universal primary healthcare in the Ebola-affected countries of Sierra Leone, Liberia, Guinea and Guinea Bissau.
“The companies achieved this through just one of the tricks used by multinational companies to reduce tax bills.”
Oxfam international executive director, Winnie Byanyim, said, “Africa is haemorrhaging billions of dollars because multinational companies are cheating African governments out of vital revenues by not paying their fair share in taxes. If this tax revenue were invested in education and healthcare, societies and economies would further flourish across the continent.”
“In 2010, the last year for which data is available, multinational companies avoided paying tax on $40 billion of income through a practice called trade mispricing – where a company artificially sets the prices for goods or services sold between its subsidiaries to avoid taxation – with corporate tax rates averaging out at 28 per cent in Africa which equates to $11 billion in lost tax revenues.”
The report revealed that “the findings come as African political and business leaders get set to attend the 25th World Economic Forum Africa in South Africa with the main theme being how to secure Africa’s economic rise and deliver sustainable development.”
Oxfam called for all governments to send their heads of state and ministers of finance to the Financing for Development Conference in Ethiopia in July. The text revealed that the conference “will set out how the world will finance development for the next two decades and is an opportunity for governments to start developing a more democratic and fairer global tax system.”
According to the UNCTAD, developing countries as a whole lose an estimated $100 billion a year through another set of tax avoidance schemes involving tax havens.
“Trade mispricing is just one of the ways multinational companies avoid paying their fair share of taxes”
It further revealed that “Companies also lobby hard for tax breaks as a reward for basing or retaining their business in African countries. Tax breaks provided to the six largest foreign mining companies in Sierra Leone add up to 59 per cent of the total budget of the country or eight times the country’s health budget.
Byanyima added, “African leaders must not sit by while international tax reforms are agreed which give multinational companies free reign to sidestep their tax obligations in Africa.
She urged that Political and business leaders must put their weight behind the ever louder calls for the reform of global tax rules. African nations must also introduce a more progressive and democratic approach to taxation – including calling a halt to tax exemptions for foreign companies.”
SOURCE: Leadership (Nigeria)
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