Malawi can raise more revenue from corporate tax if it introduced measures to address tax avoidance and made changes to global and national tax rules which allow companies to get away with paying little or no tax, Action Aid Malawi country director, Martha Khonje has said.
Speaking on Wednesday during the launch of the Mistreated Research Report, Khonje said the problem of corporate tax avoidance has been high on the political agenda in Malawi, at the African Union and at global level.
“Corporate tax avoidance is a major challenge for developing and least developed countries which rely heavily on tax revenue. The IMF estimates that developing countries lose $200 billion every year to tax avoidance,” she said.
She also said funds are desperately needed to pay for schools, hospitals and rural and urban infrastructure, to sustainably and democratically fund the long-term fight against poverty and inequality agenda.
Khonje added: “When these services do not exist, women and girls suffer the most. Furthermore, corporations demand governments to provide good road and communications infrastructure, reliable energy, among others, all of which require revenue.”
According to Khonje, the report reveals opaque and outdated tax treaties, analysing 500 treaties with low and lower middle income countries in Africa and Asia.
The research calculates which treaties are most restricting the poorer country’s power to tax multinational companies.
She said tax treaties are hurting developing countries revenue and the rights of the world’s most vulnerable people and are unfit for the 21st Century.
She called upon governments to ensure multinationals pay their fair share of tax, is to urgently reconsider the treaties which restrict the taxing rights of Malawi the most, and subject the treaties to far greater public scrutiny.
“We are, therefore, calling upon the public and the media to support the government as they ensure that the recommendations in the report are implemented in order to end tax avoidance that deprives Malawians the much needed revenue for essential services,” she said.