New tax rules can stop illicit transfers


New global rules forcing companies to report taxable activities country-by-country publicly may help Malawi to reduce the huge amounts of money that leave the country through illegal transfers to other countries.

A group of over 300 prominent economists, coordinated by Oxfam, have written a letter addressed to world leaders urging for more transparency on tax rules and includes signatories of best-selling author Thomas Piketty and 2015 Nobel Prize economics winner Angus Deaton.

Results from a four year research by African Union- Economic Commission for Africa chaired by former South African president Thabo Mbeki revealed that Malawi is losing about 16 percent of its Gross Domestic Product to multinational companies through illicit financial flows every year.


Another report released last year by ActionAid alleged that Malawi lost close to US$43 million in taxes which were meant to be remitted by Paladin Africa for uranium mining activities at Kayerekera mine in Karonga. ActionAid alleges that the money has been lost through a combination of harmful tax incentives from the Malawian government, and tax planning using treaty shopping by Paladin.

In one year, this lost revenue could have paid for 431,000 HIV and Aids treatments or 17,000 nurses salaries or 8,500 doctor’s salaries or 39,000 teacher’s salaries.

And the group of economists has reiterated that poor countries are the biggest losers from tax havens.


The BBC report that the letter comes ahead of the UK government’s anti-corruption summit on Thursday, which politicians from 40 countries as well as World Bank and International Monetary Fund representatives are expected to attend.

The economists include almost 50 professors from British universities including Oxford and the London School of Economics.

The letter comes in the aftermath of the Panama Papers leak, which revealed how some rich people hide assets, sparking widespread condemnation that the authorities had failed to act.

The Global Financial Integrity, a Washington based research and advocacy group, has since listed Malawi among countries that would face challenges in implementing the newly adopted sustainable development goals due to the scourge of illicit capital flight.

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