Associated British Foods, the company that owns Illovo, Zambia Sugar, says the ActionAid’s report revealing that Zambia Sugar has been avoiding tax payments is baseless.
The London based parent company said on its website on Monday that ActionAid was seeking to gain publicity using Zambia Sugar tax affairs at the expense of accuracy.
“Illovo denies emphatically that it is engaged in anything illegal, immoral or in any way designed to reduce the tax rightly payable to the Zambian government,” the Group stated in a statement posted on its website.
“We are very proud of Zambia Sugar and the major contribution that it makes to the Zambian economy.” The group stated that despite Illovo’s attempts to persuade ActionAid to improve its report by correcting errors and introducing more balance into its analysis, ActionAid decided to publish a “highly inflammatory account of the company’s tax position that is incomplete at best and factually wrong in places.”
“ActionAid’s report alleges that Zambia Sugar pays fees to other parts of the Illovo group in order to reduce tax. This is absolutely not true. These payments are made in return for the services of real people, doing real jobs, adding real value in Zambia and have nothing to do with tax planning. There are no royalty payments, no franchise agreements. The payments are for export services, third party contractors, and expatriate personnel in Zambia. The payments are charged at cost, and there is no artificial reduction in profit in Zambia sugar as a result. The payments simply reflect the reality of the group’s operations.”
“ActionAid assertions are clearly illogical. There is no tax advantage in moving profits from Zambia where the tax rate is 10 per cent, to other group companies where the income would ultimately be taxed in South Africa at 28 per cent due to specific South African tax rules,” ABF stated, adding that “ActionAid has clearly decided that its campaign should take priority over the facts,” the group stated.
In its report, ActionAid stated that Zambia Sugar shifts its profits overseas to Ireland, Mauritius, and the Netherlands.