SABMiller tax report disappoints ActionAid

Credit: One Red Eye/Philip Meech.

Credit: One Red Eye/Philip Meech.

Published Oct 10, 2013

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ActionAid has welcomed SABMiller’s recently released report on tax and development, saying that it reflects an understanding that the public is concerned about corporate tax affairs and a realisation that in future corporate tax will be subject to much closer scrutiny by citizens and regulators.

In the report, titled “SABMiller: Tax and Development”, Jamie Wilson, the chief financial officer, notes that the success of the company is linked to the well-being of the wider communities that host the breweries and the healthy growth of local economies.

He refers to the current debate “about the best way of improving business tax reporting”, and says the issue is being addressed by the Group of 20 and the EU. “We are committed to keeping our own reporting under review and reflective of both best practice and regulatory developments.”

While welcoming the report, a spokesman for ActionAid, a UK-based NGO that wrote a highly critical report of SABMiller’s tax payments in Africa three years ago, told Business Report: “There’s little evidence that they [SABMiller] have addressed many of the problems and concerns that we raised in our report in 2010; in fact, the company continues to defend many of the practices we criticised.”

One of ActionAid’s key criticisms of the recent report is that SABMiller overemphasises total tax contribution, which includes excise duty, VAT and employment tax.

“It is misleading to use a top line figure for ‘total tax contribution’ where the vast majority of this is made up of excise duty, VAT and employment taxes. What matters is the tax paid on profits and, most importantly, the geographic distribution of that profit tax.”

SABMiller’s tax and development report states that its total tax contribution in financial 2013 was $7.2 billion (R72bn). However, of that, as much as $5.7bn was in the form of excise duties; the tax on profit was in fact just $1.3bn, equivalent to a tax rate of 25 percent on the $4.7bn profit made in 2013. As a result of tax refunds and timing differences, only $683 million of the $1.3bn was paid in cash during the year.

While the SABMiller report does go into useful detail about the positive impact the group has on economic development in the countries in which it operates, ActionAid urged it to disclose tax details on a country-by-country basis, “that would allow an outside observer to understand exactly where profits are made and taxes are paid”.

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