London - Associated British Foods denied any "illegal
or immoral" activities aimed at avoiding tax after an international
charity said the British firm had moved profits out of Zambia to reduce its tax
ActionAid said Zambia Sugar, a unit of FTSE 100 company AB
Foods, had made profits of $123m since 2007 but had paid "virtually no
corporate tax" in Zambia.
It also said in a report entitled 'Sweet Nothings' that the
owner of the Twinings tea and Silver Spoon sugar brands had found legal ways to
move $83.7m, or a third of the unit's pre-tax profits, out of Zambia to avoid
AB Foods said in a statement on its website on Sunday that
its Zambian unit "denies emphatically that it is engaged in anything
illegal, immoral or in any way designed to reduce the tax rightly payable to
the Zambian government
The UK company, which also owns clothing retailer Primark,
said it does not engage in aggressive tax planning in Zambia
"The group has an open and transparent relationship
with all the tax authorities in the jurisdictions in which it operates,"
the statement said.
For the year ending 31 March 2012, the unit's effective tax
rate was 30.3% according to AB Foods. The group has paid £120m in taxes over
the last five years and collected another £180m in employment and sales taxes,
ActionAid responded by saying it was standing by its report.
"None of (AB Foods') arguments seem to stack up or tell
the whole story," said Chris Jordan on Sunday, a co-author of the report
which concluded a year-long investigation.
Tax avoidance by corporations legally channeling profits
between international subsidiaries, a mechanism known as transfer pricing, has
become a hot political issue with firms like Starbucks, Google and Amazon
facing protests and political pressure.