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.
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