Multinationals ‘Stealing’ Billions of Dollars from Africans, Report
African countries have been deprived of at least Ksh 1 trillion in tax revenues by multinational companies operating in the continent.
A report by Oxfam International accuses foreign companies in Africa of shifting profits overseas to countries with lower tax thresholds in order to avoid paying taxes in the African countries where their revenues are generated.
According to the report dubbed Africa: Rising for the few, the continent was “cheated out of US$11 billion in 2010 through just one of the tricks used by multinational companies to reduce tax bills”.
“This is equivalent to six times the amount needed to plug the healthcare funding gap in Ebola affected countries of Sierra Leone, Liberia, Guinea and Guinea Bissau,” reads part of the report.
“Reforming global tax rules so that Africa can claim the money it is due – and which is needed to tackle extreme poverty and inequality – is critical if the continent is to continue its economic rise.”
The report further states that Africans are now at risk of losing to foreign companies, as multinationals take advantage of loopholes in international tax agreements.
Reforming global tax rules
Winnie Byanyima, Oxfam International’s Executive Director said: “Africa is haemorrhaging billions of dollars because multinational companies are cheating African governments out of vital revenues by not paying their fair share in taxes. If this tax revenue were invested in education and healthcare, societies and economies would further flourish across the continent.”
In 2010, multinational companies are said to have avoided paying tax on US40billion of income through a practice called trade mispricing – where a company artificially sets the prices for goods or services sold between its subsidiaries to avoid taxation.
Oxfam further called for the establishment of an inter-governmental tax body to reform global tax rules and put an end to tax cheating by multinationals.
Oxfam’s findings come as African political and business leaders get set to attend the 25th World Economic Forum Africa in South Africa.
The main theme of the meeting will be how to secure Africa’s economic rise and deliver sustainable development.
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