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Brewer in five-nation tax probe

Discussion in 'Jukwaa la Siasa' started by BAK, Jun 1, 2011.

  1. BAK

    BAK JF-Expert Member

    Jun 1, 2011
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    By ALVAR MWAKYUSA, 31st May 2011 @ 20:00,

    TANZANIA Revenue Authority (TRA) has teamed up with tax authorities in four other African countries to investigate allegations of tax evasion facing multinational brewing giant, SABMiller PLC, the parent company of Tanzania Breweries Limited (TBL).

    SABMiller PLC through SABMiller Africa BV is the majority shareholder of TBL with 52.8 per cent stake. The remaining shares are held by the government of Tanzania, pension funds, the general public as well as other foreign investors.

    Confirmed reports indicate that the TRA will collaborate with tax bodies from South Africa, Ghana, Zambia and Mauritius to examine the brewer's tax affairs.

    The TRA Commissioner General, Mr Harry Kitilya, confirmed to 'Daily News' of the investigation, saying it will assist the tax collector to establish whether there is such avoidance and its impact on TBL tax obligation.

    "ActionAid published a report on possibilities of tax avoidance by SABMiller which we are working on," Mr Kitilya said through a text message.

    The investigation follows a report in November, last year, by an international charity organization ActionAid International, which accused the London-based beer maker of avoiding taxes in its subsidiaries in Africa and India.

    The five nations met at an African tax administrative forum in South Africa to assess the group's tax payments after a critical report into the brewer's tax affairs last November.

    However, reports indicate that while the tax authorities from the five nations would work together on the tax issue, any resultant action would have to be taken by the individual countries.

    SABMiller has repeatedly denied any wrongdoing and said it is a major direct investor, employer and taxpayer in Africa and in its financial year that ended in March 2010, it had invested more than US $500 million in Africa on new breweries and acquisitions.

    "We entirely refute ActionAid's allegations that we do not pay our fair share of tax in Africa and would add that the report contains a number of flawed and inaccurate assumptions," said a SABMiller spokesman.

    Reached for comment, the TBL External Affairs and Special Projects Director, Mr Phocus Lasway, said the beer firm will co-operate with the investigating team.

    "Let them come, we will co-operate with them in their investigation," he told the 'Daily News' in a telephone interview recently.

    In its financial year ending March 31, this year, TBL reported to have recorded a profit of 121.7bn/-, up from 92.4bn/- recorded in the previous year.

    The beer firm also reported to have paid to the government income taxes amounting to 51.5bn/- from 41.4bn/- paid in the previous year.

    The investigation will focus on the brewer's transfer pricing strategies which, the charity said, led to the avoidance of millions of pounds of taxes in Africa every year.

    "We worked closely with former tax inspector from the UK, Richard Brooks and all our work is based on the company's accounts. We believe that the transfer pricing payments are a form of tax avoidance," said ActionAid's tax expert Martin Hearson.

    According to the ActionAid report titled; "Calling Time: Why SABMiller should stop dodging taxes in Africa," Tanzania could be losing up to 1.44 million Pounds (approximately 3.6bn/-) per annum from the said malpractice.

    In the report, the charity organization accuses the world's second-largest beer company of avoiding millions of pounds of tax in India and Africa where it makes and sells beer by routing profits through a web of tax-haven subsidiaries and parking them offshore.

    "Tax authorities in developing countries are fighting hard to stop tax dodging, but the reality is they are locked in a David and Goliath-style battle with multinational companies.

    International standards governing the taxation of big business are stacked against them," said Mr Hearson, who is also the co-author of the report.

    Techniques used to avoid corporation tax onshore have become normal business practice among multinationals in the last decade. They depend on the secrecy of tax havens and on employing highly paid accountants and lawyers to exploit loopholes in the law or to play one country's tax system off against another's.

    ActionAid acknowledges that these techniques are legal and commonplace, but is launching a campaign to condemn them as unethical. The Organization for Economic Co-operation and Development (OECD) estimates that tax havens cost Africa several times what it receives in aid in lost tax revenue.

    The international NGO looked at the accounts of a sample of eight SABMiller subsidiaries across five African countries namely Tanzania, Ghana, Mozambique, South Africa and Zambia.