Ashes To Ashes: How British American Tobacco Avoids Taxes in Low and Middle Income Countries

In their mission to maximize profits from the sale of deadly and addictive products, tobacco companies have been accused of activity including bribery and corruption. Now, a new report shows tobacco companies are avoiding paying corporate taxes.

A 2019 Tax Justice Network report examines corporate tax strategies for British American Tobacco (BAT) in Bangladesh, Brazil, Guyana, Indonesia, Kenya, Trinidad and Tobago, Uganda and Zambia. The report revealed a range of mechanisms used by the tobacco company to shift its pre-tax profits from those countries to BAT Holdings Ltd, a UK-based subsidiary where BAT paid almost no corporate income tax. By charging itself royalties, rerouting loans through tax havens and paying interests fees on loans made between regional offices, BAT shrunk its tax contributions in low and middle income countries where public funding is high in need and short in availability.

Tax Justice Network estimates just six of these countries stand to lose nearly $700 million in tax revenue by 2030 from the financial maneuvering of British American Tobacco if business continues as usual.

In the last few years, British American Tobacco has also disclosed to shareholders that government investigations are taking place for corporate tax avoidance in Brazil, Egypt, the Netherlands, South Africa, South Korea.