Oxfam Criticises World Bank For Funding Tax Evaders

Oxfam Australia Says The Country Needs To Do More To Fight Climate Change

Oxfam the global aid agency has criticised the International Finance Corporation (IFC) which is the private lending arm of the World Bank for financing global companies who then funnel their profits through tax havens. According to the Oxfam report, 51 of 68 companies funded by the IFC last year to undertake projects in sub-Saharan Africa hid their profits in the tax haven of Mauritius and avoided paying tax. Oxfam says there is no link between the use of tax havens by multinationals and the work they do constructing infrastructure and offering services in some of the poorest countries in the world.

Global crackdown

The damning report by Oxfam comes amid a global debate and crackdown on tax evasion by rich individuals and corporations revealed by the Panama Papers. Dr Helen Szoke, chief executive of Oxfam Australia said the funnelling of finance provided by the World Bank to international tax havens highlights the fact that the global tax system is broken. She adds that just as the Australian Government is expanding its aid program through the private sector, it must focus on responsible investment and sustainable development.

“These companies could be cheating poor countries out of tax revenues that are needed to fight poverty and inequality. The World Bank Group should not risk funding companies that are dodging taxes in Sub-Saharan Africa and across the globe. It must put safeguards in place to ensure that its clients can prove they are paying their fair share of tax.”

Investments have doubled

According to the Oxfam report, over the last half decade, the IFC doubled its investments in corporations that funnel profits towards tax havens. Investment has risen from US$1.2 billion in 2010 to US$2.87 billion last year. According to Dr Szoke, Mauritius is the preferred destination for the practice of what is known as “round tripping”.  This is when a company sends its cash offshore first before returning it in the form of foreign direct investment. Dr Szoke says the World Bank should be making sure that any funds its provides should be used to finance health services and infrastructure for poor countries in Africa.

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