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Tax, development and the role of business

23 August 2012

Today has seen the publication of the International Development Committee’s report on Tax in Developing Countries. SABMiller played an active role in contributing to the Committee’s inquiry.

The report makes a number of recommendations which we welcome and support. We particularly welcome the report’s recognition of the role that business can play in reducing developing countries’ dependency on aid.

SABMiller cares deeply about the issues that the inquiry considered. Our CEO, Graham MacKay, appeared before the Committee to offer our perspective on the issues explored   such as transfer pricing, controlled foreign company regulation and the exchange of information between tax authorities.

As part of our evidence, we recommended that corporation tax is not considered in isolation from the wider development benefit that business brings to a country, through the contribution of job creation, infrastructure investment and growth generated. Indeed, considering tax policy whilst ignoring the broader economic context could lead to policies which result in a lower net benefit for an economy.

There is no question that effective revenue collection can unlock vital resources which enable developing economies to tackle the root causes of poverty and promote their long-term development.  Tax collection is essential if countries are to break out of the aid trap. Equally, businesses look for a fair system of taxation that is efficient, stable and consistent over the long term. 

We believe it is critical that local revenue authorities are well equipped to understand the tax positions of the companies they are collecting revenue from. We support steps to improve management and administration of taxation in developing countries, including greater investment in both the capability and resourcing of local tax authorities, to ensure that businesses are taxed fairly and in order to optimise revenue collection.

The charity ActionAid also gave evidence to the inquiry, repeating some of the allegations that were made about SABMiller’s tax affairs in 2010 which were based on flawed and inaccurate assumptions. We strongly deny those allegations - SABMiller does not use aggressive planning, nor do we set up company structures for the purpose of minimising tax.

To get a real view of the role of business in development it's important to make sure that the whole of a company's impact is considered. ActionAid has estimated that £20m would be enough to pay for 250,000 children to go to school for a year in Africa. By that yardstick, the total taxes collected and paid by SABMiller in Africa & South Africa in the year ending March 201 (over $2.5bn) would be enough to put 26 million children into school. When you add to that the even bigger contribution we make through local job multipliers (17,600 jobs in Ghana, 44,000 jobs in Uganda, 355,000 jobs in South Africa) and buying from many thousands of local farmers, that's a very significant development impact.

SABMiller pays a significant level of tax and in many countries it is one of the top contributors to government income. In the year to March 31st 2012, total taxes borne and collected by the group amounted to US$9,400 million (2011: US$8,400m). Almost 80% of our total tax contribution is paid to developing countries and in 2012 our total tax contribution across Africa and South Africa was US$2.5bn.

The role of business in development is a crucial one and inquiries such as this are important vehicles for driving the debate. The future success of our business is inextricably linked to that of the markets in which we operate. We are committed to building value chains that drive economic growth and stimulate social development as the best way to generate long-term returns for our business and to create wealth for the countries and communities in which we operate.


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