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An Extractive Affair: The world’s poorest country loses millions to tax dodging

ActionAid has released a new investigative report that reveals that cash-strapped Malawi lost over $43 million to one company in tax in the last six years.

Extractive AffairBy Chisomo Manthalu and Tissie Msonkho

A new investigation we have released today, An Extractive Affair, has found that our government has lost out on more than US$43 million in tax to just one company over the last six years.

The Australian mining multinational, Paladin, started operating in the country six years ago to mine uranium for sale in North America. However through using complex corporate structures to exploit loopholes in international tax rules and through negotiating a huge tax break from the Malawian government, the company managed to cut millions off its tax contributions.

In a country where an estimated 910,000 people are living with HIV, mostly women, this lost revenue could have had a huge impact on these people’s lives. More than half of this loss was down to the company’s use of international tax rules. And it was able to do this, in short, because the international tax system let them.

To put that sum in context, in one year that US$43 million could have paid for:

  • 431,000 HIV/AIDS treatments; or
  • 39,000 teachers; or
  • 17,000 nurses, or
  • 8,500 doctors.

Changing the system

It’s no surprise that Malawi lost out to the international tax system – our government never got a say in shaping global tax rules. Instead the system has been created by the richest and most powerful countries, and as a result it represents their interests and the interests of the multinational companies that are headquartered there.

But the international tax system doesn’t have to be this way. In July, the world’s governments are meeting to agree on how to finance the fight against poverty and developing countries are pushing hard for them to be given a say in writing global tax rules. This summit is a rare and crucial opportunity to reshape the international tax system.

To make this happen we need to put pressure on our governments to show that we want every country to be part of shaping the international tax system, and that we want a tax system that isn’t rigged against the poorest countries in the world. We’re working with campaigners around the world to push governments to act, and we need you to join us.

Chisomo Manthalu and Tissie Msonkho work with ActionAid in Malawi.

editor@oilinuganda.org