The illegal "mining industry" has hurt people of eastern Congo. Millions have been died. Hundreds of thousands of poor persons have been displaced.
The legal "mining industry" has hurt people throughout the Congo. Millions of dollars of taxes have not been collected. These taxes could address the widespread poverty in the country.
Mining companies routinely deprive African countries of huge amounts of tax revenue that could be used to combat poverty, a new report reveals today.
Breaking the Curse: How Transparent Taxation and Fair Taxes can Turn Africa’s Mineral Wealth into Development highlights the methods mining companies use to pay as little tax as possible. These include:
Forcing governments to grant tax subsidies and concessions by threatening to go elsewhere if they are not forthcoming Insisting mining contracts signed with governments remain secret. Some governments, also anxious the contracts are not held up to public scrutiny – are happy to oblige.
Using the secrecy surrounding contracts to pursue aggressive tax avoidance strategies.
In at least one country, the Democratic Republic of Congo, (DRC), there have been allegations of corrupt politicians awarding illegal tax exemptions to mining companies in return for private gain.
- False accounting used, the report alleges, to enable companies to artificially depress profits in countries where they operate to evade tax.
In DRC, a 2007 World Bank document said: ‘fraudulent practices by companies and government agencies have created a gap [between] what should be paid versus what is actually what is actually recorded as having been received in terms of royalties and surface rents alone. The gap is larger if total mining taxes are considered: about US$200m per year should be generated by the sector.’ That year the government claimed to receive only US$13m in taxes from mining.The report has been jointly published by ActionAid, Christian Aid, Third World Network Africa, Tax Justice Network Africa, and Southern Africa Resource Watch.
ActionAid is an international anti-poverty agency working in over 40 countries taking sides with poor people to end poverty and injustice together.
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