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ActionAid exposes tax dodging by SABMiller

African countries loose out on beer taxes

In a recent report and campaign UK charity ActionAid asks brewing gigant SABMiller to stop dodging tax in Africa. The report reveals how the world’s second biggest brewer uses a complex system of tax havens to siphon profits out of subsidiaries in developing countries, depriving those governments of significant amounts of tax.

2010-12-06

Marta, a small scale shop-keeper in Accra, Ghana, paid more tax last year than the multinational brewery next door which deliver the beer to her shop. All together an estimated £20m of taxes from SABMiller are missed in Africa and India every year - enough money to educate a quarter-of-a-million African children, according to ActionAid's new report, released last week.

The report, Calling time: why SABMiller should stop dodging taxes in Africa reveals for the first time how the company, the world’s second biggest brewer, uses a complex system of  tax havens to siphon profits out of subsidiaries in developing countries, depriving those governments of significant amounts of tax.

Martin Hearson, a tax specialist at ActionAid and the co-author of the report, said:

“SABMiller conducts its tax affairs behind a veil of secrecy. The company and its subsidiaries siphon money away from African countries and into tax havens in Europe, where the tax rates are far lower. SABMiller is playing the system to avoid paying its fair share of tax in developing countries.”

One way in which SABMiller avoids tax is by holding valuable trademarks for African beers in Europe rather than in their country of origin. African breweries like the one in Ghana, which are subsidiaries of SABMiller, actually pay to another of the company's subsidiaries - in Holland - for the use of trademarks like Castle Beer. This is one of the company's flagship brands in Africa. The cost of using the trademarks helps eat into the profits in the African subsidiary, so less tax is paid there. Other ways of avoiding tax include paying “management fees”, mostly to Switzerland, and routing its procurement services via a subsidiary based in Mauritius.

SABMiller in a press statement "strongly rejects the allegations made by ActionAid in its recent report on the group's tax affairs. SABMiller does not engage in aggressive tax planning in any part of its operations, and the report includes a number of flawed and inaccurate assumptions."

The company often argues that the economic benefit of their business is valuable to the countries where they operate. A study published in the journal Addiction of SABMiller's involvement in drafting National Alcohol Policy documents in four African countries point out how the resulting policy drafts maintain a narrow focus on the economic benefits from the trade in alcohol. Another country where SABMiller has actively tried to influence the alcohol policy is Ghana. This is the same country where the SABMIller subsidiary Accra Brewery has paid corporation tax in only one of the four years from 2007-10.

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