Hukumonline Global Developments in Civil Society Update - Tax Evasion in Zambia

Press release from Sherpa – Centre for Trade Policy & Development – Berne Declaration – l’Entraide Missionaire – Mining Watch Canada (see links to document below)

Developing nations are affected more severely by tax evasion, which often involve acts of corruption and bribery perpetrated by actors in the business sector and by public officials.

Such practices are often compounded by a lack of tax regulations and/or enforcement, sometimes to the point of state capture.

The European Commission has stated that:

“[The] financial and economic crisis has increased the need to raise more tax revenues in developing countries, which have been hit severely by shrinking commodity prices and the contraction of international trade. Developing countries often suffer high tax losses due to the structure of their economy, weak administrations, and inadequate tax policies. In addition the global system of financial transactions and the abundance of non-cooperative jurisdictions have made feasible tax evasion and tax avoidance at low risk. This affects both developing and developed countries.”

According to US-based think thank Global Financial Integrity, tax avoidance affects developing countries more severely:

“The world’s poorest countries lose $900bn each year – nearly 10 times greater than the global aid budget – through illicit flows of capital, new research shows. Illicit capital is defined as money extracted from bribery and corruption, the illegal pricing of goods to avoid taxes, and outright tax evasion by individuals and companies… [the] volume of capital flight from developing countries is increasing by 18 per cent each year… ‘Illicit financial flows siphon revenues out of poor countries, robbing them of much needed assets and stunting economic development.’”

In Indonesia, major tax evasion cases are still under investigation. The Indonesian civil society can learn much from international developments of civil society involvement in raising awareness on the massive impact of certain tax evasion activities, especially involving corrupt practices by politically connected businessmen, as well as ultimately concretely addressing the issue.

The Press Release organized by Sherpa and four other NGOs highlights an alleged tax evasion situation Zambia involving Swiss-based Glencore International AG and Canada-based First Quantum Minerals through their Zambian subsidiary Mopani Copper Mines Plc.

SHERPA is a Paris-based non-profit organization dedicated to protecting and defending victims of economic crimes. The association brings together international jurists and lawyers and works in close collaboration with civil society organizations from all over the world. SHERPA’s activities also rely on the generous support of volunteers, interns and pro bono lawyers.