By Mustapha Kamara Junior
South African based global charity, ActionAid International, has called on Sierra Leone and other low income countries review their tax treaties as a way of maximizing their revenue bases.
The organization said that revenue generation from taxes levied on multinational companies in lower income countries could ensure a lasting change on the socio-economic development of their people.
These calls were made as part of the launch of a report by the NGO titled: “Mistreated.” It details more than 500 binding tax treaties lower-middle income countries in sub Saharan Africa and eastern and southern Asia signed with other countries between 1970 and 2014, which restricted the right or power to levy tax.
The report reveals that many tax treaties made it possible for these multinational companies to significantly reduce corporate tax by moving money out of these countries through dividend, royalty or interest payment which were subject to low tax rates capped in tax treaties.
ActionAid is an international non-governmental organization working against poverty and injustice worldwide. It is headquartered in Johannesburg, South Africa.
The latest report, officially launched in the UK on February 23, examined international tax treaties in developing countries including Sierra Leone, Gambia, Guinea, Ghana, Nigeria, Bangladesh, Mongolia, and Vietnam, to ascertain the extent to which restrictions of tax on multilateral companies were affecting vital revenue generation.
It found out that developing countries around the world were losing billions of dollars in revenue as a result of these tax treaties which exempted foreign corporate institutions from paying taxies.
“The communities living in poverty that we work with are demanding adequate funds for essential public service,” said Mohamed Sillah, Interim Regional Director of ActionAid International.
“All national resources that can be mobilized behind the fight for development should be explored. Outdated and unfair treaties make it possible for multinational companies to potentially and significantly reduce the tax they pay in lower income countries,” he added.
Sillah said it was time the Sierra Leone government made tax fair by reviewing urgently any treaty it had signed. He also called on companies operating in the country to increase transparency and publish details of activities relating to tax treaties.
This report did not specifically mention any tax treaty signed by the Sierra Leone government. And Zynab Binta Senesie, ActionAid Sierra Leone’s head of programs, said, however, that records showed that previous governments had signed tax treaties with Denmark, India, Norway and the United Kingdom prior to independence.
She said that they would want to know whether the status of those treaties was still in force, and how much public scrutiny there had been on them and how willing and ready the government was to assess and amend them.
“Treaties often ensure that corporate cash flows, untaxed from poorer countries to richer countries, worsen global inequality and poverty,” she said at the press conference.
The nonpayment of tax by big companies was responsible for the lack of key public facilities like schools and hospitals, she said.
“In our country, it is the women and children who pay the biggest price when key public services like hospitals and schools are starved of possible funding.”
Aminata Kelly Lamin, Governance Advisor, ActionAid, said Sierra Leone could for a start go into its colonial archives, retrieve and amend tax treaties and work for fairer tax deals which were a right in itself of a sovereign nation.
(C) Politico 01/03/16
