By Saio Marrah
As a way of preventing multinational Corporations like mining and telecommunications companies from dodging government’s taxation, Movement against Inequality-Sierra Leone (MAI-SL), with support from Oxfam, has embarked on training of civil societies that would enable them advocate to the government for the development of a regulation or act on Transfer Pricing (TP). The theme for the event was ‘building on government action to reduce inequality.’
Speaking at the event in Freetown, the Acting Chairman of MAI-SL, Abdul Karim Habib said mining companies coming to Sierra Leone to mine the country’s minerals, mostly try to avoid the payment of tax to the government by declaring that they are not making profits, yet they continue with the mining activities.
He also pointed out that TP is a key taxation that has not been taken into consideration by the government. “We have a virgin nation in terms of mining and mining companies are coming to our country but the taxations that they are supposed to pay to our country is not really something good to write home about,” he said.
He said if government takes transfer pricing into consideration, it will bring enormous benefits to the country’s economy.
“TP is something that if government has a regulation and also an act on, will actually enhance the country’s economy.”
He added that they decided to engage the civil societies so that those in the extractive industries can raise awareness on TP in their various communities and that subsequently they will constructively engage the government about it.
He said National Mineral Agency (NMA), being the government agency that is charged with the responsibility of regulating mining activities, has b engaged Oxfam on the same agenda.
The Country Director of Oxfam-Sierra Leone, John Makina, said Oxfam work globally and that they support financially different civil society organizations that follow the same objectives as theirs.
He said multinational companies globally have been trying to avoid paying tax in Africa while extracting their minerals, one of the reasons Africa is still poor.
During their power point presentation, a document indicated that recently 8 trillion dollars in financial wealth was hidden in tax secrecy (tax haven) at the end of 2013. It stated that 190 billion a year in tax revenues were lost to governments around the world. It continued that out of those, 15 billion dollars in tax revenues a year was ripped out of the African continent.
The report stated that stability clauses and tax exemptions/incentives include review of agreements only after five years. For this, it said most companies after the five years for the review will end up selling the same company to another subsidiary company. It also disclosed that figures obtained from the National Revenue Authority estimated that the government lost revenues from customs duty Goods and Services Tax exemptions alone of 224 Million Dollars in 2012, amounting to 8.3% of the Gross Domestic Product.
Transfer pricing is the method used to sell a product from one subsidiary to another within a company. This approach is used when the subsidiaries of a parent company are measured as separate profit centres.
Copyright © 2021 Politico Online (18/08/21)
