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 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-by- country 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