Scrap colonial-era tax in Malawi, UK urged by ActionAid
A colonial-era tax treaty between Malawi and the UK is costing the southern African country significant amounts of lost tax revenue and must be reformed, the charity ActionAid has said.
The group said that the 60-year-old tax deal, which allows British multinationals firms operating in Malawi to move out revenue untaxed, was hindering investment in chronically underfunded public services like schools and hospitals.
Malawi is the world’s poorest country, with a gross domestic product per person of just $255 per year, less than a dollar a day. The whole country has only around 300 doctors for 16 million people, ActionAid highlighted.
The tax treaty, signed in 1955, enables UK multinationals to move money out of Malawi untaxed using methods such as interest or management fee payments, dividends or royalties.
UK companies had investments worth US$157m in Malawi in 2010, the latest year for which United Nations data is available, which means the country likely misses out on significant amounts of revenue from UK companies. Overall, the International Monetary Fund estimates that developing countries may lose $200bn a year to corporate tax avoidance.
Bubbily Silungwe, 22, a student of Nutrition & Livelihoods Security in Lilongwe, expressed anger with the tax injustice.
“I am angry, really really angry that there are big companies coming to Malawi and not paying tax here. I don’t know how they sleep at night. I don’t know their conscience,” said Silungwe.
She is furious that big UK companies are able to work in her country, yet could be paying barely any tax because of a 60 year old tax treaty.
“We can’t do without tax. The situation is unimaginable; I don’t know what to say. The hospitals are suffering. We need companies to pay taxes.”
ActionAid’s tax policy adviser Anders Dahlbeck highlighted that the treaty, which has been little altered, had tied the hands of Malawian governments in subsequent years.
The treaty was signed in 1955 by the British governor of Malawi on behalf of the governments of the then British colonies of Southern Rhodesia, Northern Rhodesia and Nyasaland.
“This is part of a global problem that hits the poorest hardest. Developing countries estimated to lose $200bn a year to tax avoidance by multinational companies, with women and girls living in poverty paying the price as schools and hospitals are starved of cash,” he said.
“It’s time for the UK government to make tax fair and put the fight against poverty at the heart of its tax policy. Ministers must work with Malawi to renegotiate the tax treaty to ensure that UK companies pay their fair share in the world’s poorest country.”
Dahlbeck said the UK now has an opportunity to put the fight against poverty at the heart of its tax policy and negotiate a new treaty that ensures UK companies pay their fair share in Malawi.
It’s time to Make Tax Fair in Malawi.
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SUPPORT THE IDEA TO REFORM THE TREATY SO THAT MALAWI CAN BENEFIT FROM THE TAXES COLLECTED FROM THOSE COMPANIES
stupid briton,,with shame at allll
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It is not only UK companies. Paladin Africa Limited has stolen from us in like manner and now it does not bother whether or not the Uranium prices go up on the world market.
The problem is really not about Malawi or about Africa or about Britain. It is the problem of the agreements that are made at WTO. One of the agreements at WTO for which Malawi and other countries are signatories to is the agreement on “double taxation” and “the deduction of tax at source”. What this means is that if, for example, a Malawian company is operating in Zambia, WTO clauses provide that to avoid taxing such a Malawian company twice in Zambia and then in Malawi (double taxation) that Malawian company will be taxed at source (in this case Malawi)… Read more »
Bubbily, tingakumane bwanji? Wandidolola!
This is a problem we experience every day in our lives, from no where Malawi and Tanzania are fighting for Lake Malawi. Malawi advice to devalue the kwacha, Britain being the chief architect and partly owns Malawi, ruled it and still Malawi at this stage of poverty outlook. Its a shame if you look in the history of Malawi, the Queen was the president of Malawi before Kamuzu – just google this it will tell you, but we are suffering while Britain is alive. I was watching news few days ago, I heard the IMF advising Nigeria to devalue its… Read more »
If its a 60 year old deal and it started in 1955, then it ended in 2015. Dzuka Malawi Dzuka, its time to take action. Azunguwa asamangotibera.
azikawona mwana wa school ma mp mulipo zoona? koma malawi ayayayaya kuteloko mwina samaziwanso nawo akudabwa ngati ine ndemwe apa kaya Gogo APM nawo akuziwa kaya?
Dont blame the tax treaty. This is just a side show. Just look at the paltry british investment. How many multinationals in Malawi are British? Lets hope the rich Professor will develop the country beyond recognition.