MAI SL consults CSOs and media on transfer prices
Sierra Leone-Freetown: Tax evasion by multinational corporations, such as mining companies, deprives countries throughout the world, particularly African countries, of much-needed cash, weakening the ability of revenue-strapped governments to better the lives of its citizens.
In light of this, Oxfam Sierra Leone has provided funding to the Movement Against Inequality in Sierra Leone- MAI SL to teach journalists and Civil Society Organizations on Transfer Pricing Regulations.
Transfer pricing is a method companies can use to move their tax responsibilities to low-cost tax jurisdictions. However, regulations on transfer pricing protect the fairness and correctness of transfer pricing among connected companies.
Regulations impose an arm’s length transaction norm, which stipulates that firms must determine prices based on similar transactions conducted by unrelated parties.
Globally, recent estimates show that $8 trillion in financial wealth was hidden in tax secrecy jurisdictions (tax havens) at the end of 2013, meaning $190 billion a year in tax revenues were lost to governments around the world.
Of this, $15 billion in tax revenues a year was ripped out of the African continent.
Country Director Oxfam Sierra Leone John Makina said that issue of transfer pricing been looked at, by MAI SL is actually at the heart of the organization.
“The issue of transfer pricing is one of the techniques that is used globally by multinationals, in trying to avoid paying tax; in particular, paying tax in Africa, and as a result, Africa still remains poor.”
Director Makina explained the need to train Civil Society Organizations and Media Practitioners to understand the fact and speak out on these issues and not just bickering.
He said that exploiting African resources starts from different levels. “Perhaps we’ll start from the time when these multinationals, get to a country to do contract agreements. Often, in Africa, we don’t have the capacity to negotiate with, multinationals.”
Makina explained that these are people that are experienced, they know what they’re talking about, they know how much they’re going to benefit out of it. Noting that at times these mining companies get samples from exploration that one start to wonder “are all these just samples or these are basically minerals that have been exported from our countries, and they’re paying nothing out of it and just enriching themselves?”
He also added that you will find some government officials with power, coming up and silencing people that can speak out. “There might be issues of ‘palm oiling,’ these are issues that are common, people that should have been able to speak out, are not speaking that’s where the role of the media and civil society organizations comes into play.”
MAI SL facilitator, Habib explained that Sierra Minerals, the only bauxite company, has a 20-year agreement to sell 90% of its bauxite to its owner Alum SA refinery registered in Romania and China. The bauxite is purchased by an aluminum company registered in the British Virgin Island (a country regarded as Tax heaven), affiliated with the parent company. He noted that such arrangement possess risk of under invoicing given that the local company is selling to a related party that is registered in a country with a very low corporate tax rate. OG/17/8/2021
By [email protected]