It’s time to stop the rich from gaming the tax system and exploiting people in the world’s poorest nations, Christian Aid has said in response to revelations that wealthy investors are using the tax haven of Mauritius to rob African and Asian nations of revenues owed to them.
Dubbed the Mauritius Leaks
, today's findings from the International Consortium of Investigative Journalists reveal that multinational corporations have been investing into African and Asian countries while artificially shifting their profits to Mauritius, to avoid their fair share of tax.
Christian Aid’s International Advocacy Adviser, Abena Afari, said: “The Mauritius Leaks are yet another sign of a broken economic system that allows the richest and most powerful to game tax rules at the expense of some of the poorest people on the planet. It’s a classic case of legitimising the illegitimate.
“These revelations show that those seeking to profit from investing in Africa and Asia have purposefully taken advantage of an extensive set of harmful tax treaties between Mauritius and various African and Asian nations. They have exploited an abusive tax regime allowing low or zero tax rates on profits declared in Mauritius.
“All of this is backed by a network of private banking, legal, accounting and investment industries, many based out of the UK, enabling the elite to exploit the secrecy provided by tax havens such as Mauritius. That this shadowy financial system has been allowed to continue is nothing short of a scandal.”
“This is yet more sad evidence of what the African continent often mistakes for good investment. The miniscule tax rates given to some of these multinational corporations robs millions of a dignified life: what’s more, it actually costs lives. This is money that could have made a difference to millions – including the many, many children who walk barefoot to school, sit on stones for chairs and use their laps for a table, while sitting under trees as roofs in my home continent.”
Ms Afari continued: “Yes, African and Asian countries do need investment, but the actions uncovered today by the Mauritius Leaks rob countries of the tax income they so desperately need. Developing countries lose many billions of dollars every year in this way, increasing their dependency on aid. We know that mobilising tax will be key to meeting the development targets set by the UN.
“And it is not just private money that is using these loopholes. Funds provided from the UK’s own aid budget to the UK Government’s development finance institution (CDC Group) also uses the ‘profit filtering’ system provided by Mauritius and other tax havens. This happens without adequate policies and checks to identify risks to poor countries being targeted. That’s why Christian Aid will continue to call out the financial secrecy
that facilitates tax avoidance, tax evasion and corruption.”