Sep 3 2013
World leaders must take urgent action at this week's G20 summit to fix a "broken" tax system which is allowing companies to suck billions of pounds out of poor countries in Africa, development charity Oxfam has said.
African nations are losing nearly 2% of national income to tax-dodging by businesses, depriving them of vast sums which could otherwise be spent on tackling poverty and boosting their economies, said Oxfam.
The lost income amounts to more than half of the total spent on health by governments throughout the whole of sub-Saharan Africa.
Oxfam calculated that if the G20 countries meeting in St Petersburg on Thursday lost the same proportion of their GDP to corporate tax-dodging, it would cost them £770 billion (1.2 trillion US dollars) a year, blowing a £26.6 billion gap in the UK Government's budget.
The international agency called on the G20 leaders - including Prime Minister David Cameron - to take "urgent and concrete action" to end the practice of trade mispricing, which allows companies to move money around to avoid paying tax where a company is really doing business and deprives African countries of £24.4 billion a year.
It urged the leaders to endorse a plan drawn up by G20 finance ministers in July to clamp down on so-called base erosion and profit shifting (BEPS) by multinational corporations, and to bring a clear solution to the table for agreement at next year's summit in Australia.
Mr Cameron put tax transparency at the heart of Britain's agenda at the G8 summit in Northern Ireland earlier this year.
Oxfam head of development finance and public services Emma Seery said: "The G20 should be ashamed to be at the helm of an economic system that allows companies to rip off Africa to this extent.
"The G20 would never allow companies to fiddle them out of a trillion dollars. It is an outrage that the poorest countries not only suffer this, but are not even invited to the table to take part in tax talks."
Ms Seery added: "A responsible G20 would be doing much more to tear down the walls of secrecy that allow companies to dodge their tax obligations. If G20 leaders are serious about making sure companies pay their way, this summit will agree to a deadline to end tax secrecy for corporate giants and phantom firms."