Malawi loses $43m to Paladin – Action Aid study

A study conducted by Action Aid Malawi has revealed that Malawi government has lost out on more than US$43 million in tax to the Australian mining multinational Paladin who started operating in the country six years ago to mine uranium for sale in North America.

Paladin's Kayelekera mine in Karonga, Malawi's northern boarder district

Paladin’s Kayelekera mine in Karonga, Malawi’s northern boarder district

In a report findings disseminated in Lilongwe this week and made available to Nyasa Times, the study reveals that through using complex corporate structures to exploit loopholes in international tax rules and through negotiating a huge tax break from the Malawi government, the company managed to cut millions off its tax contributions.

“To put that sum in context, in one year that US$43 million could have paid for 431,000 HIV/AIDS treatments; or39,000 teachers; or17,000 nurses, or 8,500 doctors. In a country where an estimated 910,000 people are living with HIV, mostly women, this lost revenue could have had a huge impact on these people’s lives,” reads the report.

The report indicates that more than half of this loss was down to the company’s use of international tax rules. And it was able to do this, in short, because the international tax system let them.

“It’s no surprise that Malawi lost out to the international tax system – our government never got a say in shaping global tax rules. Instead the system has been created by the richest and most powerful countries, and as a result it represents their interests and the interests of the multinational companies that are headquartered there,” the report further reads.

Paladin has since rejected the basis of Action Aid’s argument concerning tax loss as fundamentally unsound, as it assumes that the miner’s US$620M investment, including the initial US$300M development of the Kayelekera Project, further capital expenditure and working capital funding, would have proceeded if a 5% royalty had been in place.

In July, the world’s governments are meeting to agree on how to finance the fight against poverty and developing countries are pushing hard for them to be given a say in writing global tax rule and according to Action Aid Malawi this summit is a rare and crucial opportunity to reshape the international tax system.

“The summit is a rare and crucial opportunity to reshape the international tax system. To make this happen we need to put pressure on our governments to show that we want every country to be part of shaping the international tax system, and that we want a tax system that isn’t rigged against the poorest countries in the world.

“We’re working with campaigners around the world to push governments to act, and we need you to join us”, argued Chisomo Manthalu and Tissie Msonkho, Programmes Officers at Action Aid Malawi.

  • Join the campaign now and ask our government to support the creation of a new global body to tackle tax dodging – visit taxpower.orgJoin the campaign nowtaxpower.org
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Winston Msowoya
Guest
The only thing Mugabe can help you is to advise how to open bank accounts in foreign countries while back home millions of people face starvation,unspeakable state of unemployment,endemic shortage of food,medicines in hospitals and clinics,how to change Kwacha into Dollars for a national currency,how to remain in power indefinitely and above all ,how to corrupt and muzzle democratic norms.These are the things that Mugabe is highly qualified for.If Malawians want credible and readily advise,you can request that advice from our brothers and sisters in Botswana the most successful story in Africa.Whether economically or politically.My comments here refer to someone… Read more »
box13 bilila NU
Guest

Pleease our government if u are honest ask Mugabe to help us in this matter he is the only one leader in Africa who well understands the value and the methods of handling our God given Mineral under our African land. This is a daylight robbery.

Pulizi
Guest

Another article wrote that these guys were given payment holiday and also the money was being deposited in a joint account in Portugal. If the Rich countries really care about Malawi, do the right thing. Investigate and and give the money back to Malawians.Swiss, Jersey, Portugal Australia etc please do something. Pole are suffering in Malawi and yet the monies are in off shore accounts. #bringbackourstolenmoney#

Hitler
Guest

Stupid Africans. All what you know is to complain for everything. God has given you this uranium resource but what have you been doing with it to uplift your well being? You have waters from lake Malawi, what are you doing with it? I don’t blame the entreprenuers like Paladin because they use their own resources and effort to do mining business while you sit phwii. Africans are not intelligent enough to cease opportunities at their disposal. Even God has given up on us. Think about it.

mphini za mutchafu
Guest

There is nothing wrong here tax holidays are normal in huge investments like paradin after all the govt and paradin anakambirana and agreed stop this careless senseless stupid and thoughtless studies simed at confusing people

Xeenoph
Guest

Shaa!!!!! this is no gud

Mabattery a mlakho
Guest

It is Bingu and Chimunthu who delibarately did this.These two guys got kickbacks.

joe gomora moyo
Guest

where were they for these sixyears? they are milking small cows and leaving the fat ones palinzeru?

Mvula J. Mvula
Guest
Bravo Action Aid for bringing your research findings out. Research Based findings can not be disputed. Once upon a time, there were Empires that ruled. These camouflaged themselves to Colonialists. The post-colonial era shows that neo-colonialism is a reality where some of the citizens enslave their own folks. The struggle for nationalism was an outcry of self expression and self determination which ushered and gave us the freedoms we wanted. We are now in our Independent dispensation but are we economically independent and free? The multinationals and the rich nations of the world are enslaving Africa not by taking them… Read more »
Mwana Mulanje
Guest

These Australian swindlers had an accomplice in the highest office. Yes, the late Daniel Phiri. That one with three different death dates. Wake up Nyasas!

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