A report by ActionAid has revealed that Zambia Sugar Plc has siphoned KR374 million from Zambia through exploitation of legal loopholes from 2007 to 2012.
The report entitled ‘Sweet Nothings’ was released globally yesterday by ActionAid, an international movement working to achieve greater human rights for all and to defeat poverty.According to the report, the Zambian public service has also lost an estimated KR116 million as a result of the company’s tax avoidance schemes and special tax breaks.
Dr. Francis Mubanga a Certified Fraud Examiner (CFE) and Securities & Investment Expert has called on MPs, Zambia Revenue Authority (ZRA), Securities and
Exchange Commission to immediately investigate these allegations and give Zambians a report just like the reports that have been given by other Government or Quasi-Government institutions such as Competition and Consumer Protection Commission (CCPC).
‘Instead of denying and giving us a blanket statement, we ask Zambia Sugar Plc – Illovo to give us a comprehensive report of their side of the story and distribute it to both online and print media,’Dr.Mubanga said.
‘Zambia Sugar Plc has within 30 days to give us a comprehensive report from the date of the first publication of this Press Release,’he said.
Meanwhile Zambia Sugar spokesperson Lovemore Sievu said last evening that the ActionAid report was full of inaccuracies.Mr Sievu said Zambia Sugar did not and would not evade paying tax to the Zambian Government.
[pullquote]Zambia Sugar, a subsidiary of Associated British Foods, admitted generating KR550 million in profits and virtually paying nothing in corporate taxes and only 0.5 per cent of that was paid to the Zambian Government[/pullquote]
“We categorically deny the report by ActionAid. The report is absolutely full of inaccuracies. Zambia Sugar meets all its legal obligations including tax,” he said.
Mr Sievu said the firm was one of the largest foreign exchange earners and employer in Zambia and that it was the single largest tax payer in the agricultural sector.
The report said Zambia Sugar, a subsidiary of Associated British Foods, admitted generating KR550 million in profits and virtually paying nothing in corporate taxes and only 0.5 per cent of that was paid to the Zambian Government.
ActionAid Zambia country director Pamela Chisanga said yesterday when she explained the report to journalists that the revenues lost by the Zambian Government were 10 times bigger than the amount of British aid to Zambia’s education sector each year.
She said Zambia Sugar’s case is a common trend in some multi-national companies operating in the country.Ms Chisanga said when Zambia’s tax-funded education, health and nutrition services were suffering from crippling lack of revenue, the siphoned money from Zambia Sugar could put extra 48,000 children in schools.
She said since 2007 when Associated British Foods bought Zambia Sugar it has paid an Irish firm US$47.6 million for management services despite that company’s accounts stating that it had no employees.Although the company said it was an error, Zambia lost an estimated US7.4 million in corporate and withholding taxes as a result of the action.
Since 2011, Zambia Sugar had also paid KR15.2 million annually as an export agency commission to its sister company registered in Mauritius
where companies were taxed at three per cent.
In November 2007, she said, Zambia Sugar took a KR280.5 million loan and this was routed through Ireland to avoid Zambian tax on the interest
charges and the country lost an estimated K13.5 million in withholding taxes.
She said that company shuffled its ownership between the tax havens of Ireland, Netherlands and Mauritius in which it reduced withholding tax it pays on dividends in Zambia by an estimated KR32 million since 2007.
The report will be launched in Zambia at a public forum tomorrow.
And in a media statement Illovo denied that it was 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,” the statement read.
The statement said that despite Illovo’s attempts to persuade ActionAid to improve its report by correcting errors and introducing more balance into its analysis, the international organisation had decided to publish a highly inflammatory account of the company’s tax position.
[Times of Zambia,Media Release]
The trouble is that BOZ is fully at fault for sleeping and not doing their duty but all they do is deny and plead otherwise. Zambia is the only country in Africa that allows externalization of millions of dollars at a mere instruction. Wake up BOZ and recue the country from these blood thirsty sharks.
And when did BOZ start dealing with fiscal matters? BOZ has nothing to do with this issue, ZRA is the one to blame. This case can be unscaled from a civil case to criminal issue as it involves serious issues of TAX EVASION.
Taxpayer, I think what bantistan is referring to is the externalisation of forex which is monetary rather than fiscal and BOZ is responsible for that don’t you think?
We need proper market regulations. Ba BOZ come to our rescue. Make us proud investors on the local market.
its ZRA duty, boz doesn’t deal with fiscal issues.
Does zambia has pipo that are learned????? i dont think so, we have a bunch of stiopets in the highest offices doing nothing. ActionAid, yoy the voice of zambia
We are normally used to hear threat of suing each other when we are injured. i havent heard anything like that from Zambia Sugar and it makes me believe the story esp knowing how sievu loves to get things done. We blame the regulators. We should be ashmed of receiving our own money through grants when if we do things properly, we would not be paying back the grants throug proper tax monitoring. Let me see some Zra official cominh to my office to trouble me over 3 %. ndekuswakisha imbwa.
Cobra get this money and build roads and a stadium in Namushekende.. Give the councils a share so that they can clean up Cities and build public facilities. Zambia has money yet our Country is so dirty cause we have nowhere to dump garbage let alone money to pay cleaners..
Zambia Sugar if you steal so much why can’t you blind Mazabuka residents by tarring the road (less than 5Km) from your factory into town? I can’t believe so much money comes from that dirty place called Zambia Sugar Plc. This really sucksssss..!!!!
Which money has been stolen? Zambia Sugar is owned by local shareholders and of course foreign ones. How can you steal money that belongs to shareholders after meeting all legal tax obligations? I dont like demonising companies that keep the economy afloat.
The fact that every nation has a set of rules that govern the establishment of companies, one of which is ensuring that they fulfill tax obligations is a reason why we should have ‘watchdogs’ to provide checks and balances and see to it that allegations of tax fraud/ evasion are proven or disprove with proof in a timely manner…<—- that's a run on sentence but you get the point, yes? The sad thing is that we have the same thing occurring in the mining industry and other areas I am sure. As mentioned, these taxes provide funds for social programs, services, education and so on, so we are all affected, especially those that are of little means and depend heavily on these services (education, hospitals).
Dr. Francis Mubanga, why now? Why not asking about Tax EVASION (Not AVOIDANCE) as clearly stated in the Commissin Report in Dec. 2011? Personal interest?
When terminologies are misused, it gives an idea of the direction the matter is going. Evasion is a crime while avoidance or lack of compliance will be technically taken as an omission thereby the corporations are fined rather than sending top managers to jail. .This is especially so when large sums are involved. E.g. Barclays Bank, Black and Anser in the recent past.More often than not, jounior staff find themselves as sacrificial lambs. Watch and see.
Well done Pamela and team at Action aid. This is the most embarrassing moment for Zambian Sugar PLC. I am sure they will summon a multitude of tax consultants to come and discredit this report. Stand your grounds as the case is with them not you as you an International agency.
where is the Zambian government? slumbering as usual. Let them do what it takes to equally explain these facts if these people have not already oiled the hands of the fat cats in the government already
Be prepared to fight battles with the government and the Zambia Sugar PLC. I know they would love to sweep this under the carpet, but try hard to protect the interest f the Zambians and other humanities you stand for. Bravo again Pamela and team
Iwe Sievu, if your cheat company only paid 0.5% tax on profits to ZRA, then you have nothing to deny even if your were employed just to deny such things
Why comment on things you do not understand? Read the company’s annual reports on the website!
Perfect imperfections by Zambia Sugar. The hind side is many times dirty. If the benefited from paying less or no tax that is great to them. Whilst we closed our eyes in prayer for for more resources, they kept stealing! It is a weird world. Many companies make more profits by trickery. We head it recently with Mopani, now Sugar Sugar, who is next. If you trace many of these characters you will ever see traces of perfect imperfections in their profit making operations. The most obvious one is to deliberately inflate the cost of capital machinery, or often buying puroted capital this capital that and their goes the profits.
It was Mopani Copper Mines, now it’s Zambia Sugar PLC… I even saw this on Aljazeera in the morning as I was preparing for work. And yet pipo say that I’m too radical wen i suggest we nationalise and take back some of these companies! I wud be in full support if MCS embarked on a nationalisation policy.
Ba Critico, the Government can not even deliver a letter and you want them to manage our entire economy? Even there where you’re, the Postal system has even stopped Saturday mail delivery, this is USPS in the US. The solution in Zambia is lower taxes and private investment not government interference.
I feel your frustrations, but am sorry that the solution is in private sector management. Think about it Critico, ever since the government got involved in health care, the health care cost have sky rocketed in America to the point that this white man from Kenya has even given Americans socialised health care system which will eventually fail. Focus on the facts Critico not rhetoric.
Forget Action Aid, lets apply logic here.
Firstly, avoiding tax is a good thing, we all must try by all means to avoid paying tax whenever we can. We must also educate our beloved ones to avoid paying tax because it is irresponsible and immoral to pay a kwacha more than you have to. Having said this NEVER try to evade any tax obligation because you may end up being sent to jail.
Secondly, Corporation tax is too high in Zambia for any company big and medium, hence, companies resort to paying their tax obligations in lower tax regions. Lets not kid ourselves, You and I would do the same as it is legal. Think like this, you make ZR100m in profits then you’re told to pay 35% if you’re based in Zambia or 10% if you’re based in Ireland, what would you do? If you’re sane you’ll pay…
I think that your common sense is utter nonsense. You did not make those profits in Ireland in the first place. Simply put, mr common sense, errosion of the zambian tax base, that is the issue at hand!
Bane, slow your roll, there are what we called tax avoidance methods (not tax evation) these are allowed in the tax system, the issue here are the big figures chapwa