ActionAid, an international anti-poverty non-governmental organisation, claims that this has cost Zambia an estimated US$27m since 2007. A statement said: ‘That’s enough to put an extra 48,000 children in school, or help end hunger in the country. Zambia needs this money to tackle poverty and free itself from a dependence on aid.’
The report is aimed at ABF’s subsidiary company, Illovo, the immediate owner of Zambia Sugar.
ABF, owners of household brands such as Silver Spoon and Kingsmill has responded to the accusations with its own official response:
We deny emphatically that Illovo is engaged in anything illegal, immoral or in any way designed to reduce the tax rightly payable to the Zambian government. We are very proud of Zambia Sugar and the major contribution that it makes to the Zambian economy.
Since 2008 Illovo has invested £150 million to double the production capacity in Zambia and so create the largest sugar mill in Africa. This mill and related activities provide employment for more than 5,000 people.
Capital allowances on this investment have resulted in no corporate tax being payable since the investment was made. The availability of these allowances, used by governments all over the world, has nothing to do with tax avoidance. African governments should be as free as any other to attract investors.
Payments made by Zambia Sugar for the services of third party contractors, expatriate personnel in Zambia and export services provided by Illovo, are made at cost. As a result there is no artificial reduction in profit in Zambia Sugar. These payments are made to overseas companies, largely for historical reasons, and are not driven by tax considerations. ActionAid could not be more mistaken.
We have responded in a transparent and detailed manner to ActionAid and despite this they have produced a report written in inflammatory language that is designed to mislead.
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