Profit-shifting, capital flight and tax havens have emerged as major issues in recent years. Extractive industries have long been regarded by activists as among the worst offenders on this front, with African economies the biggest casualties. The International Monetary Fund has now dug into the issue and finds that the mining sector in Africa has indeed proven adept at tax avoidance, at a cost to the region of about $600m a year.
The title of the International Monetary Fund’s (IMF’s) recent paper on the issue gets straight to the point: “Tax Avoidance in sub-Saharan Africa’s Mining Sector”. Among the things unearthed is the fact that, yes indeed, the sector does avoid paying taxes in Africa in various ways.
“Tax avoidance” is, of course, not the same as “tax evasion”: the former involves using legal loopholes to reduce tax or royalty payments, while the latter typically involves outright fraud or corruption. The line between the two, it must be said, can sometimes be blurry.
“African countries are estimated to be losing about $450-$730-million in CIT revenue a year on average from mining MNE (multinational enterprise) tax avoidance. This baseline estimate suggests a loss of about $600-million per year, based on the…
