Tax profits in Congo?
Thanks to clever accounting methods, mining companies tend to run at a loss so avoiding paying it anyway.
In his article published on the African Arguments website, PhD researcher Ben Radley suggests that new legislation in the Democratic Republic of Congo aiming to increase government revenue from the mining industry, may, in fact, have little effect. The main problem, he argues, is corporate tax evasion and avoidance by multinational mining companies. Companies practice what is called 'transfer pricing', a practice by which companies set up multiple subsidiaries and trade between them thus shifting profits to low- or no-tax jurisdictions.
He highlights the 2014 example of Swiss-based Glencore. Its Congolese subsidiary Kamoto Copper Company (KCC) ran at a loss of hundreds of millions of dollars each year from 2009 to 2013. At the same time, its Canadian-registered subsidiary Katanga Mining Limited ran at a net profit of over $400 million. This resulted in a loss of revenue to the Congolese state of more than $150 million.
About the author
Ben Radley is a PhD researcher at the International Institute of Social Studies. He focuses on the political economy of mining, multinationals and development in the Democratic Republic of Congo