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Developing countries supported by Scottish Government lose millions through tax dodging

The five countries that receive money from the Scottish government’s international development fund lose millions every year through tax dodging, according to a new Christian Aid report. The Missing Millions, the cost of tax dodging to developing countries supported by the Scottish government details how, collectively, the countries lost just under £43 million in tax revenue between 2005 and 2007.

The scale and impact of tax dodging on Malawi, Rwanda, Tanzania, Zambia and Sudan will be the focus of a seminar on Wednesday 7 October, addressed by Jack McConnell, MSP who established the International Development fund when he was First Minister.

The joint Christian Aid and Scotland Malawi Partnership seminar (at Edinburgh City Chambers) will outline how multinational companies manage to dodge their tax liabilities, and explore whether tax could be a more sustainable revenue stream than overseas aid for Malawi and other poor countries.

Jack McConnell MSP and the Prime Minister's Special Representative for Peacebuilding says, ‘Aid is a short term answer to immediate problems, such as food insecurity, but is not a sustainable long term solution. Our global ambition should be to support fragile states and countries such as Malawi develop strong economies and civic institutions. We all have a responsibility to support development across the world, and that includes those companies which cynically use developing countries to avoid paying their full tax liabilities. They are taking money directly from the world's poorest people. It has to stop.’

Una Bartley, Acting Media and Communications Manager at Christian Aid, commends the Scottish government for honouring its aid commitments in the current financial crisis. However she claims that, ‘tax is a much more sustainable and dignified source of revenue than aid. Moreover, tax also supports greater accountability between the state and its citizens. States that rely on tax revenues are more likely to see the development of responsive governments, and thus improved development prospects as well as fewer conflicts’.

David Hope Jones, Co-ordinator of the Scotland Malawi Partnership says, ‘Malawi, one of the world's poorest countries faces many problems, from dealing with an HIV/Aids epidemic, to providing free primary education for millions of children. The government has made huge strides in recent years in meeting its development challenges, and Scotland is proud to stand shoulder to shoulder with our friends and colleagues in Malawi. That is why we are pleased to support Christian Aid's campaign to end the tax dodges that damage the future of so many countries across the world.’

According to Christian Aid, transfer mispricing and false invoicing – the most common forms of tax dodging  -  enable companies to shift profits from where they are actually made to where tax rates are low, concealing the scale of their profits in any one country and thus their tax liability. Overall, Christian Aid estimates that these two practices alone cost developing countries in excess of $160bn every year.

Christian Aid is calling for an end to these tax dodging activities and the establishment of greater transparency in global financial transactions.  Specifically, Christian Aid wants to see an international accounting standard, to ensure companies report their profits and tax paid country by country (rather than as aggregate figures), and a global agreement on a multilateral automatic information exchange to ensure tax havens establish the transparency poor countries need to start clawing back the billions they are owed in tax.

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For more press information please contact Una Bartley on 0131 240 1524 or ubartley@christian-aid.org

Notes to Editors:

Copies of the report The Missing Millions, the cost of tax dodging to developing countries supported by the Scottish government detailing the amount of money lost to each of the five countries can be downloaded from Christian Aid’s website: www.christianaidscotland.org/

The Missing Millions seminar is being held jointly by Christian Aid and the Scotland Malawi Partnership at Edinburgh City Chambers from 12.50pm to 4.45pm on Wednesday 7 October. Journalists are welcome to attend.

Christian Aid works in some of the world's poorest communities in more than 50 countries. We act where the need is greatest, regardless of religion, helping people build the life they deserve.

The Scotland Malawi Partnership is an independent Scottish charity which exists to inspire the people and organisations of Scotland to be involved with Malawi in an informed, coordinated and effective way so that both nations benefit.