Deloitte in Africa: Advising big businesses on how to avoid tax in some of the world’s poorest countries

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Publication Date: 
12 November 2013
Thematic thrusts: 

Deloitte is one of the biggest financial services companies in the world. Originally starting in the United Kingdom it is today headquartered in New York. It provides audit, tax, consulting, enterprise risk and financial advisory services and employs more than 200,000 employees internationally and operates in more than 150 countries2. In the last financial year it earned $32 billion in revenues.3 It is one of the ‘Big Four’ accountancy firms.

One of Deloitte’s fastest growing markets is Africa4. It has operations in 50 African countries including some of the poorest in the world – among them Mozambique, Zambia, Sierra Leone, Tanzania and Kenya. Deloitte offers African and international businesses advice on a key range of financial services.

ActionAid has uncovered documentation showing that Deloitte is providing information on tax avoidance strategies for use by wealthy corporations in extremely impoverished countries. This is advice that could potentially be used to avoid hundreds of millions of dollars in tax.

The document gives specific advice on how to structure businesses via Mauritius in order to avoid tax across parts of Africa.

To illustrate this it uses the example of how to avoid tax in Mozambique, where it advises companies on how it is possible to achieve a 60 percent reduction in withholding tax and a 100 percent reduction on any capital gains tax. Mozambique is one of the poorest countries in Africa where over 50% of the population live below the poverty line and the average life expectancy is just 49 years.

Mauritius has been described as the “gateway to Africa” for international businesses. It currently has 14 double taxation treaties in place with African countries and a further 10 others under negotiation, but the terms of these treaties can easily be abused by companies seeking to minimise their tax bills.

Deloitte presented this information as part of a major conference of international businesses just two weeks before the G8 conference in Loch Erne, Northern Ireland, when the world’s leaders promised action to combat the impact of tax avoidance internationally.

Tax avoidance in Africa, while legal, has been condemned by Kofi Annan.7 Aggressive tax avoidance has been described by UK Prime Minister David Cameron as morally wrong.8 ActionAid has been campaigning for a global clamp-down on tax avoidance which costs developing countries hundreds of billions of pounds a year in lost revenue. These enormous losses mean millions of children don’t receive a decent education, poor roads prevent farmers getting crops to market, and whole countries remain dependent on international aid.