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The Union welcomes new analysis published by the Tax Justice Network highlighting how British American Tobacco (BAT) is taking advantage of accounting loopholes to systematically shift profits out of low- and middle-income countries to avoid paying the full corporate income tax in the countries that most need these revenues.

According to the report, for every dollar British American Tobacco (BAT) paid in tax in the developing countries it operates in, it shifted more than half a dollar that would have been taxed locally to a subsidiary located in the UK where BAT paid almost no tax.

Tax Justice Network estimates Bangladesh, Indonesia, Kenya, Guyana, Brazil and Trinidad and Tobago together stand to lose a total of nearly $700 million in tax revenue by 2030 from the financial manoeuvring of just one tobacco company if business continues as usual.

Tobacco use imposes massive social and economic costs, especially in low- and middle- income countries where 80 percent of the world’s smokers live, yet British American Tobacco is exploiting the rules to pay far less than countries’ tax codes call for.

Ashes to Ashes: How British American Tobacco avoids taxes in low and middle income countries was published on the heels of BAT’s annual shareholder meeting in London. It reveals a range of mechanisms used by the tobacco company in 2016 to shift income equivalent to over 12 per cent ($941 million) of its pre-tax profits to BAT Holdings Ltd, a UK-based subsidiary where BAT paid almost no corporate income tax.

Dr Gan Quan, Director of Tobacco Control, says: “The Union welcomes this evidence reinforcing that BAT cannot be trusted, particularly by low- and middle-income countries and investigations should be launched immediately in these countries into the company’s corporate tax payments. These countries are being left with a huge burden of death and disease caused by tobacco products.”

Dr Gan Quan, Director of Tobacco Control, says: “The Union welcomes this evidence reinforcing that BAT cannot be trusted, particularly by low- and middle-income countries and investigations should be launched immediately in these countries into the company’s corporate tax payments. These countries are being left with a huge burden of death and disease caused by tobacco products.”

 

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