KAMPALA – Civil society organizations want govt to mount pressure on BAT to pay taxes.
The Tobacco Control advocates led by the national coordinator of Uganda Health Communication Alliance, Mr Richard Baguma, made the call during a press conference on Monday, May 27 at Minister’s village hotel, Ntinda, a Kampala suburb.
“By failing to pay it’s a fair share of corporate tax, British American Tobacco (BAT) is robbing poorest countries of millions of dollars in public funds that could be used to treat health harms of tobacco use,” Baguma said.
He noted that their concerns stem from a new report released a few weeks ago entitled Ashes to Ashes: How BAT Avoids Taxes in poor countries by the international NGO Tax Justice Network.
The report provides alarming details about BATU shifts profits between entities within it is multinational corporate structure to reduce its corporate tax payments in the countries where the profits are earned stealing them of vital resources to pay for public services like healthcare.
While reacting to the report, the team observed that the industry uses complex schemes to shift tobacco profits from world’s poorest countries to other parts of its empire like shifting g profits internally by wholly owned subsidiaries to make royalty payments, through intracompany loans that are given between subsidiaries of the same company and also through dividend payments (corporate profits paid to investors often in the multinational’s home county).
Evidence of corporate tax avoidance by BAT has been documented by the NGO in eight countries of Bangladesh, Brazil, Guyana, Indonesia, Kenya, Trinidad and Tobago, Uganda and Zambia. However, the industry disclosed to its shareholders that it is the subject of govt investigation s into corporate to tax avoidance in countries of Brazil, South Africa, South Korea, Egypt and Netherlands.
Baguma urged govt to institute an investigation on all multinational tobacco companies in order to reduce these practices, adding that countries should maximise revenue from tobacco companies in a bid to meet the need for essential services.
The report further uncovered a range of tax reduction mechanism by BAT, like cross-border payments made within the multinational group for royalties, research, intragroup lending and as dividends. If the implied forgone tax revenues are taken as business as usual then from now 2030, the year in which the world aspires to reach the UN sustainable development goals, the report estimates that countries in question would suffer a total loss of approximately US$700m from the avoidance tax of single tobacco company, BAT.
According to the findings, BAT Uganda is 70percent owned by BAT investments ltd, the UK registered subsidiaries of British American Tobacco.
In 2016, Uganda’s net profit was 12 percent low in comparison to other bat companies, although still a sizeable profile margin.
According to Ashes to Ashes report, BAT Uganda makes related party payments to the UK and other countries. A representative from CSBAG, Moses Talibitah the industry is well known for lobbying government to keep excise taxes low and tobacco products affordable. “The report unveils opaque and unethical practice with BAT to siphon huge money from developing countries. It doesn’t prevent them from proclaiming that it conducts business with high standards of behaviour and integrity,” Talibitah added.
Patience Mutesi from Ministry of Health explained that countries need to increase the excise duty on tobacco products to 70 percent or more to protect young generation from diverse effects of Tobacco.
Andrew Kwizera from the campaign for tobacco-free kids added that BAT is resorting to these tax avoidance act at a time when these states lack resources to cope with galloping tobacco health and economic challenges. The research was sponsored by the campaign for tobacco-free kids
