Firm 'cheating Zambia out of millions'

The charity alleges that Zambia Sugar, a subsidiary of Associated British Foods (ABF), has paid almost no tax in Zambia since 2007.

The company moved millions of pounds out of Zambia into tax havens including Mauritius, Ireland and the Netherlands, reducing its taxable profits, according to ActionAid.

ABF has denied the allegations. "The mill and related activities provide employment for more than 5,000 people," it said.

"As a direct consequence of this investment in a sustainable business, capital allowances and tax incentives were available to the company as they are to other investors.

"This report is clearly designed with political campaigning in mind. It is inaccurate and misleading."

Since 2007, Zambia Sugar has paid less than 0.5 per cent tax on its £78 million in profits, according to ActionAid - in a country where the main corporate tax rate is 35 per cent.

And between 2008 and 2010, it paid Zambia no taxes at all.

"We estimate that Zambia has lost tax revenues of some £11.2m since 2007, when ABF took over the Illovo sugar group," the charity said.

Researchers estimate that Zambia's economy loses some £1.2 billion each year because of tax avoidance by multinational corporations.

Zambia is struggling with desperate poverty, with 64 per cent of the population living below the poverty line.

It qualified for £3.8bn in debt relief under the Highly Indebted Poor Country Initiative in 2005.