The Big Four firm has defended itself after charity ActionAid criticised a document called Investing in Africa through Mauritius as a tax avoidance scheme.
The advice, published in 2013, is entirely legal and details how business can be structured through Mauritius to structure tax payments. One part of the document shows how this structure could reduce tax by 60% and capital gains tax by 100% for companies that operate in Mozambique.
ActionAid says Mozambique is one of the poorest countries on the planet, where over 50% of people live below the poverty line, and the average life expectancy is only 49.
ActionAid tax policy adviser Toby Quantrill said, “This document helps lift the lid on the tax avoidance techniques that are being used to deprive poor countries of hundreds of millions of dollars in tax.
“These techniques may be legal, but that does not mean they are moral. Tax revenues are desperately needed to meet peoples most basic needs and to move countries away from aid dependency.
“Big businesses have an important role to play in economic development in poor countries. But they also have to act in a socially responsible way. Deloitte is failing Africa for as long as it continues to advise on tax avoidance strategies in the way they have been doing.”
A Deloitte spokesperson said, "It is wrong to describe applying double tax treaties, such as the treaty between Mauritius and Mozambique, as tax avoidance. Such treaties are freely negotiated between the governments of the countries involved.
"Double tax treaties exist to enable the countries concerned to strike a balance between the need to encourage investment, including cross-border investment, to raise tax revenue, and to work together with other countries who have the same legitimate concerns to raise revenue and promote business.
"The absence of such treaties could result in a reduction of investment, and less profit subject to normal business taxes in the countries concerned. Any discussion of tax treaties by tax professionals would typically be around the technical and administrative aspects of the Treaties and not an expression of favour of any particular country at the expense of any other country.”
The document was part of a presentation given by Deloitte in China in June this year.
At the G8 summit this year, David Cameron condemned tax avoidance both in the UK and in developing countries. The Lough Erne Declaration was an agreement signed between G8 leaders to tackle tax evasion, aggressive tax avoidance and money laundering at the June conference.