UK multinational, Associated British Foods (ABF), whose brands include Silver Spoon and Twinings Tea, has strongly refuted claims that it avoiding paying millions of pounds of tax to the Zambian government.
The company faced the accusations following a report by the charity Action Aid, which claimed ABF's Zambian sugar-producing subsidiary contributed virtually no corporation tax to the state's exchequer between 2007 and 2012, and none at all for two of those years.
According to the report, Zambia Sugar paid less than 0.5% of its $123m (£77.9m) pre-tax profits in corporation tax during that period.
Describing Action Aid's allegations as 'inaccurate' and 'highly inflammatory', ABF said it 'denies emphatically' that is has engaged in any illegal or immoral tax avoidance scheme, the Telegraph reports.
John Bason, ABF finance director, said: 'The reason that no corporate tax is paid in Zambia for the last couple of years is because of our £150m investment building the biggest sugar mill in the country. There are capital allowances available on that, in the same way similar reliefs are available to investors in most countries, including the UK.'
Bason said the capital allowances would continue for up to another five years, when the company would return to paying Zambia's 10% rate of corporation tax.
Action Aid's research also suggests the company directs around a third of its pre-tax profits to sister companies in tax havens, including Ireland, Mauritius and the Netherlands.
Tax treaties between Zambia and some of those countries mean the state's revenue authorities are unable to charge their normal tax on money leaving their shores.
The charity estimates that these tax haven transactions have deprived Zambia of a sum 14 times larger than the UK's aid, provided to the country to combat hunger and food insecurity.
Saying it was 'absolutely not true' that Zambia Sugar was funnelling a third of its pre-tax profits to sister companies in tax havens, Bason said the payments to Ireland and Mauritius were made in return for the services of 'real people, doing real jobs.'
Bason said Ireland employed around 20 people, and that ABF company accounts had wrongly disclosed this as 'none'.
