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.

Children campaign for tax justice in Malawi

Children campaign for tax justice in Malawi

Bubbily Silungwe wants UK companies to pay their fair share of tax

Bubbily Silungwe wants UK companies to pay their fair share of tax

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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27 thoughts on “Scrap colonial-era tax in Malawi, UK urged by ActionAid”

  1. Mtoloboy says:

    SUPPORT THE IDEA TO REFORM THE TREATY SO THAT MALAWI CAN BENEFIT FROM THE TAXES COLLECTED FROM THOSE COMPANIES

  2. makape uk says:

    stupid briton,,with shame at allll

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  4. Harry says:

    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.

  5. Mutuwawira says:

    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) and not in Zambia. These are the rules of WTO. The problem that we have is that practically all companies in Malawi are foreign. There are practically fewer Malawian companies operating outside Malawi for which we could have gained taxes. The other problem is also with Malawi in that even if there are Malawian companies operating outside Malawi, those companies would not be registered as Malawian because of heavy taxation here in Malawi. This is one way in which the country is loosing on forex. Just imagine all the British, Indian, South African companies that are in Malawi. Tilimba??? The way out is that Malawians should start companies in foreign countries, or re-look at our tax regimes, or that government should look at how to empower some Malawians so that we can have shares in these companies. This is what is happening in Zimbabwe (though politically extreme) and what South Africa calls black economic empowerment. Ndatukwana ngati? Ndangolongosolatu apa chimene chavuta.

  6. Eritrea Bound says:

    Bubbily, tingakumane bwanji? Wandidolola!

  7. issa Kabudula says:

    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 Naira, the question mark is why? They was to buy, do business, own property at zero pound – shame to us all.

  8. Mwana wa Analiyera says:

    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.

  9. chemuyaya says:

    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?

  10. kkilembe says:

    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.

  11. Sapitwa says:

    Yea! Lazy minds have contributed to all this. Look at our laws of which many are archaic and no one seems to look into this seriously. Aren’t these issues Serious enough to have been debated in Parliament? No; because we have many shallow minded MPs who don’t know what is good and bad for their country. They waste our tax payers money discussing on trivial issues like chassis numbers of vehicles, motor homes etc. You can even see the average level of education and lack of corporate and public management experience for most of our MPs. It’s sad to have such people representing the nation and no wonder nothing is moving. Sorry sister Silungwe for the hurt feelings which we all share. Hope you have made the note and someone will do something about this.

  12. Machecheta says:

    Revisit and scrap the colonial era tax treaty immediately. It seems you enjoy when you see Malawi stuck in abject poverty. You contribute to the root causes of our poverty, and now the country is geared to go through deep reforms, not sparing radical approaches to poverty eradication.

  13. International Observer says:

    Are our learned legal experts in a slumber that they didn’t realise that we are given a raw deal? Should we wait for a 22 year girl to unveil very serious malpractice by a country labelled developed and yet they are the loudest when it comes to condemning Malawi on poor fiscal discipline? Achakulungwa think properly and make these people pay back our dues, they indeed owe us quire a lot when you come to think of the many tricks they bring about in the name of foreign trade or partnership.

  14. freedom says:

    I strongly agree that the treaty should be revised and basically the companies that have dodged tax in the past years should make up for the wasted years as well.

    Big up Actionaid. Moto kuti buuu.

  15. eluby chikopa says:

    First and foremost Action Aid is also another blood sucker in Malawi. Money comes in from donors and does not trickle to the beneficiaries. This is therefore another log in the eye. Going to the treaties of 1955, it would be more appropriate for the Action Aid to pinpoint which taxes have been lost? How much in the last five years? Which industry is doing that?

    Yep yep yep will not assist us inu Bambo Achizungu. Nanga inu mwabapo zingati?

  16. concerned citizen says:

    federation OF Rhodesia and Nyasaland came to an end some fifty years ago . I wonder why uk government has continued to exploit a poor country like ours . Where is their conscious? The Malawi Government must take the UK government to task on this issue . This is untold selfishness on the part of the UK gov. We must demand an end to this. Not negotiate. They were busy building in Harare as the capital for the then federation and doing little in the then Nyasaland. Enough is enough. they cant be left to continue taking advantage of our country.

    1. John says:

      On a minor technical point: the capital of the Federation of Northern Rhodesia, Southern Rhodesia and Nyasaland was Salisbury – not Harare- named after British colonialist Lord Salisbury. The city was renamed Harare in the 1980s after Zimbabwe gained independence.
      A large number of the main city roads – such as Jameson Avenue – were also renamed then.

  17. John says:

    British companies generating revenues and profits inside Malawi should pay a fair amount of tax to the government of Malawi.

    In Britain, there is currently considerable controversy over the paltry amounts of corporation tax being paid by US corporations like Google, Amazon and Starbucks.

    If it is right that US corporations should pay tax in the UK then it is equally only fair that UK corporations should do the same in Malawi.

    The Malawian government should tear up the agreement dating back to 1955. They never signed it – it was signed by the former colony of Nyasaland, not by them.

  18. Achimidizimidzi says:

    Where can I get info about this treaty ??

    If there is an enforceable agreement then it’s fair because thus what a stupid Malawian agreed. Don’t be emotional today, Chamba eti!!

    But let us review this law immediately and I am surprised public reform program missed it.

  19. william says:

    I really dont know what to say about this but its an extremely despicable news.I dont humanely understand what these people think about Africans to be precise.How can we eradicate poverty when the very people who can effectively help to ensure proper development in a country remain unscrupulous traders?Should we just fold our hands and cry foul? no its high time we divert from rhetoric into praxis of our own ideas.Let our president be precise and pertinent on issues of national interest

  20. Zabweka says:

    Aka ka Silungwe kalibwino mushe bwanji. Usiye kudanda za tax, ife tikupatsa iwe chilembwe

  21. Anonymous says:

    Where was MRA? He was just sleeping.

  22. Dellings says:

    …and we have the whole ministry of justice watching from the sidelines. Zachisoni. What are you doing guys? You mean you cant do anything about this? Kusaukaku kochita kufuna basi. Nonse zitsiru mwamva?

  23. Aubrey Chembezi says:

    That’s why Mugabe will always be my hero. If we had 5 like him in Africa this nonsense would have stopped already but unfortunately most of the African presidents are busy dining and wining with these blood suckers!!

  24. Alfonso Mugabe says:

    Thank you for exposing this long term injustice. Exploiting our resources for nothing, after the colonial abuses? May they pay tax from 1955 please. I know cumulatively the sum can be as double our national budget of this year. They are abusive indeed these people ashhhhhh!

  25. jk says:

    Dont blame uk but Our leaders who are sitting and eating like Peter.this is a crowner and foolish.Malawians should choose better people who are active not one who’s sleeping on the job.l did not know about this.

  26. master says:

    This is terribel thinking u mean such stupid treaty is still binding? Malawi and Africa have so many years to cry in this world of azungu

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