ZAMBIA SHOULD PROBE BAT TAX FRAUD

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SIMON MUNTEMBA writes

GOVERNMENT should quickly investigate British American Tobacco (BAT) for alleged taxes avoidance, says Zambia Heart and Stroke Foundation (ZAHESFO) president Fastone Goma.

Professor Goma said there was need for the Zambian government to probe an exposure by Tax Justice Network (TJN) how BAT was taking advantage of accounting loopholes to avoid paying full corporate income taxes.

“On 30th April, 2019 Tax Justice Network (TJN) made public, a report exposing how tobacco giant the BAT is taking advantage of accounting loopholes to avoid paying full corporate income tax in low – and middle – income countries where it operates,” Prof. Goma said.

Prof Goma said the report titled “ashes to ashes: how BAT avoids taxes in low and middle income countries”, looked at some countries in which it had installations in Africa and Kenya, Uganda and Zambia where looked at.

He said the report noted that, for every Dollar BAT paid in tax in these developing countries it shifted more than half a Dollar that would have been taxed locally to a subsidiary in the United Kingdom or the Netherlands where BAT paid almost no tax.

“The report uncovered a range of tax reduction mechanisms employed by the British American Tobacco, including crossbred payments made within the multinational group of royalties, research, intra – group lending and as dividends, “he said.

He said in 2016, BAT sales volume dropped by 42 per cent, according to the annual report owing to a price increase of BAT, Zambia’s products of up to 100 per cent.

Prof Goma added,

“According to the ashes to ashes report, despite the odds BAT Zambia shifted some profits to the United Kingdom, it paid us $1.05 million to united kingdom companies in 2016 in related party payments together,

“These related party payments comprise 30 per cent of the 2016 profits, and in 2015 they totaled to us $0.83 million, which was 15 per cent of pre – tax profits,” he said

He said there were also many other related party payments to various companies in various countries.

He said by avoiding taxes in these low and middle income countries including Zambia, BAT was robbing them of vital resources to pay for public services like health care used to treat tobacco related illnesses.

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