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Malawi, UK Tax Treaty signed by colonialists 60 years ago favors the UK

 Two months ago it was pretty hard to get people excited about the technicalities around tax justice. And then came the Panama Papers, laying bare a global system which makes it all too easy for the wealthiest to hide assets and dodge tax.

But many months before the Panama Papers appeared, the Scotland Malawi Partnership and ActionAid began a campaign together on a separate issue of tax justice: a call to have the colonial-era UK-Malawi bilateral tax treaty updated. This week we’re proud to report that every Scottish MP has now contributed in some way to this cause.

John  Chilembwe
John Chilembwe

The treaty, which sets out how money moving between the two countries is taxed, was originally signed in 1955 while Malawi (then Nyasaland) was under UK colonial rule. It was agreed between the UK Government and the UK Government’s appointed Governor of Nyasaland. Amazingly, it has only been minimally revised in the past 60 years, despite Malawi having become a fully independent nation more than 50 years ago.

ActionAid’s research shows that the way the UK-Malawi tax treaty allocates taxing rights unfairly favour the UK and limits the ability of the Government of Malawi to tax UK firms operating there.

Scotland has been helping lead the campaign to have this treaty updated because of its long-standing friendship with Malawi, dating back more than 150 years to the travels of Dr David Livingstone. The University of Edinburgh estimates that today more than 94,000 Scots and 145,000 Malawians are involved in civic partnerships together each year. Separate research in 2014 suggests some 46% of Scots can name a friend or family member involved in a Malawi partnership.

In this spirit of dignified partnership, Scots have long been outspoken in supporting their friends in Malawi. In the late 1880s a massive, popular campaign in Scotland persuaded the British Government to rethink its initial unwillingness to become involved in the area. In the 1950s, when the racist Federation of Rhodesia and Nyasaland was imposed on Malawi, Scots stood shoulder-to-shoulder with Malawians in resisting it, until finally the Federation was dismantled and Malawi became an independent country in 1964. More recently, in the 1990s, Scots offered significant solidarity as Malawi threw off the shackles of its one-party system and became a multi-party democracy.

It is perhaps unsurprising then that Scots have again been so passionate in their call for the colonial-era UK-Malawi tax treaty to be completely updated: it is outdated, unfair and not representative of the sort of dignified partnership Scotland enjoys with Malawi.

There are few issues which genuinely unite politicians of all stripes but Scotland’s friendship with Malawi does just that. There is an active Malawi Cross Party Group in Holyrood and a prominent Malawi and Zambia All-Party Parliamentary Group in Westminster which was co-founded by Scottish MPs and Peers.

Every Scottish MP has actively contributed to the call for the UK-Malawi tax treaty to be updated. Patrick Grady MP, the SNP’s international development spokesperson in Westminster, has been outspoken from the very outset of the campaign. Like countless other Scots, he has himself lived in Malawi and continues to have a great many friends in the north of the country. The strong support from the SNP block has been matched with much energy from Scottish Labour and the Scottish Liberal Democrats, with Ian Murray MP and Alistair Carmichael MP both actively involved in calling for the treaty to be updated.

As Secretary for State for Scotland, David Mundell MP is not able to formally join the campaign but he remains a great friend to Scotland’s links with Malawi having visited the country twice. On his most recent visit earlier this year Mr Mundell met with the President of Malawi and raised the tax treaty, discussing its updating.

The UK Government has now formally committed to updating the Malawi tax treaty and is actively working with the Government of Malawi to this end. The Scotland Malawi Partnership and ActionAid applaud both governments for this; we hope that DFID has an active role in this process to ensure that the UK’s new tax relationship with Malawi is coherent with, and complimentary of, the UK’s outstanding development work.

Scotland can be rightly proud that all its elective representatives at Westminster are keen to support the continuing friendship with Malawi, not just through aid but also by ensuring the trade between our two nations is structured in such a way as to help our friends in Malawi work themselves out of poverty.

  • David Hope-Jones, Principal Officer, Scotland Malawi Partnership
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  1. This should have been initiated by MPs in parliament and technocrats who are supposed to take care of government issues on that front. But instead you will notice that the MPs are busy talking about earning extra money on top of what they unrealistically take home. The technocrats instead of researching in fields they have the qualifications for they all of them want to be called “Political Analysts” and pointing fingers to issues in government which are trivia. Just because a mzungu has now spoken out we will see more intelligent no nothing’s from almost every Jim and Jack, others who can’t even show any evidence of what they are blabbing about; what a shame.

    • That is true, but you know giving each other a raise and Loans they will default ON is the order of the Day. Its a shame

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