Giant UK-based brewer SABMiller , the company that owns Grolsch, is avoiding an estimated £20m of taxes in Africa and India every year - enough money to educate a quarter-of-a-million African children, according to ActionAid's new report, released today.
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.”
In Ghana, ActionAid found that SABMiller’s brewery has paid no corporation tax at all for the last two years.
“The most shocking part of this story is not the huge amounts of tax avoided, but the fact that one woman selling beer outside SABMiller’s brewery in Ghana paid more income tax last year than the multi-million pound brewery,” continued Hearson.
“SABMiller should stop using tax havens to drain money out of Africa. Instead it should aim to become a market leader for tax justice.”
Ghana, along with other developing countries, is trying to develop its tax system to fund essential services including schools and hospitals. The more money it can raise in tax, the less it needs to do to rely on aid to pay for public services.. But while small businesses and traders are being brought into the tax system, big companies like SABMiller use their superior resources and multinational structures to find ways of avoiding tax.
One way in which SABMiller avoids tax is by holding valuable trademarks for African beers in Europe rather than in their country of origin. 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.
ActionAid has launched a campaign demanding that SABMiller stop using tax havens and that tackling tax avoidance should be a top priority for the company’s corporate responsibility programme.
ActionAid also wants SABMiller to make its tax affairs more transparent by publishing a basic set of accounts in every country in which it operates. This would act as a deterrent to tax dodging as companies currently use tax havens in secrecy and with impunity.
Hearson concluded: “SABMiller sells billions of pounds worth of beer in Africa alone. Its CEO has even said paying tax is one of the biggest contributions companies can make to developing countries.
“Yet the truth is that SABMiller has avoided paying millions of pounds in tax to some of the poorest countries in the world. This has to change in order to avoid the charge of hypocrisy. Grolsch drinkers are entitled to expect better from a company that claims to be committed to sustainable development.”