Report: Global South School On Combating Corporate Profit Shifting and Wage Evasion

Illicit financial flows and base erosion profit shifting (IFFs and BEPS) have been called the ‘Achilles’ Heel’ of transnational corporations, because they present a vulnerability through which the architecture of corporate impunity can be tackled. Through both the interrogation of the tax and economic frameworks governing our economies, as well as the pursuit of grassroots-based action, we can begin to reclaim some of the wealth that is plundered by multi- and trans-national corporations operating in the Global South.

Profit shifting is a phenomenon that sits at the nexus of a number of popular struggles; including those of the anti-austerity, anti-extractivist, environmentalist, and labour movements. When the issue of IFFs and BEPS is brought to these struggles, concretized and made relevant to them, then it retains its political potential to help build an understanding of modern political economy and assist in enabling these movements to meet their vital demands.

In 2019, the Association of Mineworkers and Construction Union (AMCU) filed litigation at the Johannesburg High Court, alleging that profit shifting arrangements at one of the largest chrome companies in the world, Samancor, have deprived workers’ trusts of millions of dollars in dividends. The Alternative Information & Development Centre, having assisted with this and previous ground-up cases of profit shifting, believed that there was an opportunity to expand and develop this kind of work with similar organisations concerned with extractivism and economic justice in the Philippines and Brazil – both Global South countries with large, foreign TNC dominated extractives sectors much like South Africa. The Asian Peoples Movement on Debt and Development and Churches and Mining, as experienced organisations with grassroots links, joined the AIDC as project coordinators.

Throughout the course of the Global South Project on Combating IFFs and BEPS, the Churches and Mining network, Asian Peoples’ Movement on Debt and Development, and the Alternative Information & Development Centre have been continually engaging with community, labour, and faith-based organisations around the issues of corporate impunity, illicit financial flows and base erosion profit shifting (BEPS). At the same time, these organisations have also been pursuing case studies exposing profit shifting in the extractives sector, with the intent of enabling litigation, public pressure, or other actions.

The Global School aimed to be an extension of these national level processes, using them as a basis to create a space for international solidarity and mutual learning between members of popular movements concerned with economic, social and environmental justice. IFFs and BEPS are problems with many facets, and it was therefore vital that different groups be brought together in order to have a truly transformative conversation. The Global School was also intended as a space where new points of international collaboration and network building could be developed; especially given the fact that the Covid-19 pandemic had prevented the coordinating organisations from physically meeting since 2020. 

Despite some technical challenges, the Global School proved to be a success in fulfilling these objectives. By the end of the four days, participants left having formed strong bonds with each other and with a strong sense of comradeship and solidarity. Participants reported coming away from the School with a transformed understanding of the joint issues of IFFs/BEPS and extractivism, agreeing to take this knowledge back to their organisations and communities. Finally, the School has also sown the seeds of a number of promising initiatives and collaborations between delegates, arising from the conversations first raised there. Read the full report below. 

Posted in Combating Corporate Tax and Wage Evasion, profit shifting, Publications, Transfer Pricing Tagged with: , , , , , , , , ,

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