Cigarette manufacturer BAT on the spot for tax avoidance

Cigarette manufacturer BAT on the spot for tax avoidance

May 27, 2019 0 By mykenyancareers
BAT - Cigarette manufacturer BAT on the spot for tax avoidance
Joel Gitali Chair KETCA flanked by Thomas Lindi Co-ordinator KETCO  and (right) Samuel Ochieng, CEO Consumer Information Network (left)/Courtesy

NAIROBI, Kenya, May 27 – The Kenya Tobacco Control Alliance(KETCA) has called upon the National Treasury to investigate cigarette manufacturer British American Tobacco alliance over alleged tax avoidance.

This follows a report by Tax Justice Network that revealed how BAT avoids taxes in low and middle-income countries which is not in line with the World Health Organization recommendation for tobacco taxes to be raised up to 70 per cent.

Co-ordinator Kenya Tobacco control Alliance Thomas Lindi says the investigations will also help reduce the global disease burden where tobacco is seen to cause over 7 million deaths globally.

“Currently in the country we are about 45 per cent so when we look at that we are far from the recommendation by World Health Organization and this is an authority when it comes to issues health and we can see how tobacco has led to many deaths in the country,” he said.

Dubbed Ashes to Ashes, the report shows BAT is involved in tax avoidance practices at a time when the Africa countries lack resources to deal with tobacco issues that has a huge impact on health and economic matters.

Chief Executive Officer Consumer International Network Samuel Ochieng also mentioned BAT could be increasingly evading taxes since they bribe the policy makers as well as some KRA officials.

“No action has been taken against BAT since they bribe top officials and that is affecting the country’s revenue, if the trend continues more deaths will occur,” he said.

Should BAT persist with the same trend Kenya will lose over 718 million dollars in tax revenue by 2030.

KETCA has now asked the government to prioritize regulation and administration which will enable the maximization of corporate tax revenue from tobacco companies.

It has also recommended on the reviewing and negotiating tax treaties that are disadvantageous to lower income countries.

BAT Kenya has been manufacturing and distributing cigarettes for over a century.

The company has been fighting in courts against tougher anti-smoking regulation and BAT is under investigation by the UK serious Fraud Office for various allegations, including that it is paid bribes to the Kenya Revenue Authority for information on a competitor.

According to the report, in 2015 and 2016, the Kenya Revenue Authority may have received up to US$2.7 million less in revenue per year, due to BAT’s routing of dividend payments via The Netherlands.