We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

follow the money

Irish tax deals costing poorer countries 'millions' in tax revenues

ActionAid has called on the Irish government to reconsider treaties that reduce multinationals’ tax obligations in developing countries.

IRELAND’S TAX ARRANGEMENTS are depriving developing countries of millions in tax revenues, according to a new report published today.

The ActionAid study highlights how three Irish treaties “dramatically restrict” the ability of lower-income countries to tax the profits of multinationals.

Tax treaties are legal agreements between two countries not to retax income moving from one jurisdiction to another.

In some cases, they allow foreign companies to pay little or no tax in poorer countries.

The ActionAid research examined over 500 binding tax treaties signed by countries in sub-Saharan Africa and eastern and southern Asia since 1970.

The report claims that some $10.4 million (€9.2 million) was lost by Zambia, one of Africa’s poorest nations, between 2007 and 2012 as a result of one company’s use of Irish tax structures.

British-owned corporation Zambia Sugar previously admitted paying “virtually no corporate tax” during this time due to “substantial capital allowances”.

ActionAid alleges that one of the tax avoidance mechanisms used by the company involved routing a loan through Ireland to avoid Zambian tax on interest charges.

While Ireland’s tax treaty with Zambia was renegotiated in 2015, closing tax loopholes, the anti-poverty charity has ranked an updated version of the agreement as “very restrictive”.

Zambia Sugar’s parent company, Associated British Food, has repeatedly denied avoiding tax in the country, saying it has never “engaged in anything illegal, immoral or in any way designed” to reduce its tax obligations there.

Paying the price

ActionAid today called on the Irish government to reconsider treaties that reduce the tax companies pay in lower-income countries.

It also urged Ireland to increase transparency and adopt the UN model as a minimum standard when drafting new tax agreements.

“This really matters because women and children in poverty pay the price when crumbling public services like schools and hospitals are starved of possible revenue,” said Siobhán McGee, the charity’s CEO.

The full ActionAid report can be read here.

Read: The Panama Papers: The Irish connection

Read: One-third of Irish children miss out on housing, heating and good meals

Readers like you are keeping these stories free for everyone...
A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

Your Voice
Readers Comments
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.