Currents

Corporations’ tax avoidance cost African nations billions of dollars each year

African nations such as Zambia are often seen as grossly corrupt. Yet it is corporate tax “avoidance” on the part of mining companies that costs the nation hundreds of millions annually, while lining the pockets of middle-men in countries such as Switzerland. And the much-lauded Extractive Industry Transparency Initiative (EITI) may help – rather than hinder, this reality. Zambia recently became the 26th country to publish the EITI report, disclosing payments from mining companies for the year 2008. The EITI standard is meant to “facilitate transparency” by assessing net discrepencies between resource rents, for example: royalties and taxes, remitted by multinationals and received by governments. The primary intention of the EITI report, backed by many of the world’s major extractive or resource-seeking multinationals including Shell, Chevron, Vale, BHP Billiton, Anglo-American and others, is to eliminate corruption by shining a light on the flow of revenue. Describing companies as “complicit” in corruption limited to the criminogenic environments in which they are required to operate, the EITI system claims that reduced reputational risk is a tremendous upside for foreign investors and corporate entities. [Source]


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