Swiss company accused of tax dodging in Zimbabwe

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Zimbabwe’s tax authority said ABB, one of Switzerland’s most profitable companies, avoided paying millions of dollars to the economically strained country

In 2010, ABB Zimbabwe Private Ltd, the Swiss multinational’s local arm, won government tenders to provide power generators to one of the country’s largest power stations. Insigned on March 21, 2011, seen by ICIJ, the state-owned Zimbabwe Power Company promised to pay ABB Zimbabwe $4.1-million for four switchgears at the Hwange Power Station in the east of the country near the border with Zambia.

ABB Zimbabwe never intended to perform the contract, Manyathi wrote. The Deloitte analysis found that it had subcontracted work to a South African company under a verbal agreement. The South African company delegated work to third parties in Zimbabwe, according to Deloitte’s review. Leopoldo Parada, tax professor at the University of Leeds, said: “I haven’t seen this in all my years. It’s very weird to agree on that verbally.

Deloitte South Africa declined to comment, citing client confidentiality. The Zurich-based company was once a client of Mossack Fonseca, the law firm whose leaked files formed the basis of the Panama Papers investigation. ABB Zimbabwe abandoned the contracts and the state’s electric businesses received equipment directly from South Africa, the company argued. In court filings, the company said that consumption taxes were appropriately paid and that Zimbabwe waived customs duties.

 

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