British food company in new tax dodge revelations
Associated British Foods, one of Britain's biggest multinationals, whose brands include Silver Spoon sugar, Primark, Twinings Tea and Kingsmill bread, is avoiding paying millions of pounds of tax in Zambia.
New research from campaign group ActionAid released yesterday shows that a subsidiary of ABF contributed virtually no corporation tax to the state's exchequer between 2007 and 2012, and none at all for two of those years.
The firm, Zambia Sugar, posted record pre-tax profits and its huge plantation is increasing its capacity to produce more sugar for markets in Europe and Africa. Yet it paid less than 0.5% of its $123m pre-tax profits in corporation tax between 2007 and 2012.
According to an article in the Guardian newspaper, the company benefits from generous capital allowance and tax-relief schemes in Zambia, but the investigation also found that it funnels around a third of its pre-tax profits to sister companies in tax havens, including Ireland, Mauritius and the Netherlands. Tax treaties between Zambia and some of those countries mean the state's revenue authorities are unable to charge their normal tax on money leaving their shores.
ActionAid estimate that the tax haven transactions of this British-headquartered multinational deprived Zambia of a sum 14 times larger than the UK aid provided to the country to combat hunger and food insecurity.
Chris Jordan, a tax specialist at ActionAid and co-author of the report, said: "This is a really shocking case where the Associated British Foods group has gone to great lengths to ensure it pays virtually no corporation tax in a very poor country. Tax avoidance is not victimless financial engineering. In Zambia 45% of children are malnourished and two-thirds of the population live on less than $2 a day."
Brands of Associated British Foods, appear in the following buyers' guides on this site: bread, tea, clothing, sugar
You can read more about food companies and the problems in world food supply in the forthcoming special food issue of Ethical Consumer magazine.
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