Monday, April 11, 2016

Oxfam slams World Bank over multinational tax haven links

The global charity Oxfam has criticised the World Bank's private lending arm for financing multinationals who then channel funds through tax havens.

A report by Oxfam says 51 of 68 companies funded by the World Bank's International Finance Corporation in 2015 to finance projects in sub-Saharan Africa used the tax haven of Mauritius to hide wealth and to dodge tax.

Oxfam claims the use of tax havens by multinationals had "no apparent link" with their core businesses of building infrastructure and providing service in some of the world's poorest nations.

The allegations from Oxfam come in the midst of a global crackdown on multinational tax evasion and the shady practices revealed in the Panama Papers by the law firm Mossack Fonseca.

Oxfam Australia's chief executive Dr Helen Szoke says the channelling of World Bank finance to tax havens is more evidence that the international tax system is broken.

""At a time when the Australian Government is also increasing its engagement with the private sector through the Australian aid program, the government's focus must be on responsible investment and sustainable development," Dr Szoke told The World Today.

"These companies could be cheating poor countries out of tax revenues that are needed to fight poverty and inequality.

"The World Bank Group should not risk funding companies that are dodging taxes in Sub-Saharan Africa and across the globe. It must put safeguards in place to ensure that its clients can prove they are paying their fair
share of tax."

The Oxfam report claims that over the past five years,  the International Finance Corporation has doubled its investments in companies that use tax havens from US$1.2 billion in 2010 to US$2.87 billion in 2015.

Dr Szoke said Mauritius is also a destination for the practice of "round-tripping" where a company shifts money offshore before returning it disguised as direct foreign investment.

Instead, Dr Szoke says the World Bank should be ensuring that its financing is used to fund infrastructure and health services to poor nations in sub-Saharan Africa.

"The region lacks money to provide enough skilled birth attendants, clean water or mosquito nets, for example, resulting in high rates of child mortality; one child in 12 dies before their fifth birthday."

The International Finance Corporation has dismissed the Oxfam report as "flawed".

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