Tax havens used by major international firms are depriving impoverished African states of tens of billions of dollars each year, former UN secretary general Kofi Annan said Wednesday.Annan told a Security Council meeting on natural resources and conflict that tax avoidance and “murky” deals result in a loss of state revenue that fuels the wars over natural resources that have bedeviled Africa for decades.“When foreign investors make extensive use of offshore companies, shell companies and tax havens, they weaken disclosure standards and undermine the efforts of reformers in Africa to promote transparency,” Annan said.The former UN leader said the Africa Progress Report panel, which he chairs, had found “anonymous shell companies” were used in five deals that cost the Democratic Republic of the Congo nearly $1.4 billion from 2010 to 2012.That sum is almost double the impoverished but resource-rich country’s annual budget for health and education.Annan added that Africa loses more money each year through a tax avoidance technique, known as trade mispricing, than it receives in international development assistance.More than $30 billion a year is sent to Africa each year in development aid by Western countries. Trade mispricing is where companies quote artificially low prices to deceive tax authorities.Annan praised a vow by Group of Eight leaders at a summit this week to crack down on tax avoidance and called for international rules to ensure the payment of taxes.
