News From Africa
In 2013 alone, price manipulations due to transfer pricing generated in excess of $1,6 billion in profits for diamond companies in the UAE, and represents a major deprivation for African treasuries which lost much needed tax revenues that could have funded public service, says report.
By Staff Writer
A report shows Zimbabwe lost about $770 million in potential revenue between 2008 and 2012 through undervaluation and transfer pricing of its gems from the Marange diamond fields.
Report by Partnership Africa Canada on illicit financial flows in the diamonds industry said the gems were being exported to the United Arab Emirates (UAE), mostly Dubai.
The report was on the agenda of the just-ended Kimberly Process Certification Scheme (KPCS) Intersessional meeting in Shanghai, China and was presented by PAC’s research director, Alan Martin.
The three-day meeting ended Thursday June 12.
Report says that, the UAE allegedly imported Zimbabwean diamonds cheaply but exported them at much higher prices.
It analyzed the statistics of exports submitted to the KPCS by Zimbabwe and the statistics of imports and exports by the UAE.
Zimbabwe Environmental Law Society participates in the KPCS meetings as the coordinator of the KPCS Civil Society Coalition.
“Perhaps one of the country’s worst affected by transfer pricing and under-valuation of diamonds in is Zimbabwe, which lost an estimated $770 million in taxable revenues on exports to UAE between 2008 and 2012 due to an average 50% undervaluation of its diamonds, ” said Martin.
“Zimbabwe lost an average 50% undervaluation of its diamond revenues on exports to UAE. Last year a joint report by the African Development Bank and Global Financial Integrity, a US research and advocacy group, concluded that the illicit hemorrhage of resources from Africa is about four times Africa’s current external debt — or as much as $1,4 trillion between 1980 and 2009,” says report.
Democratic Republic of Congo (DRC) last year lost about $66.2 million under similar circumstances, report read
“In the diamond sector DRC has routinely been identified as a country through which conflict affected diamonds have fraudulently obtained KP certificates for onward travel to trading centres, including Dubai. This was the case with sanctioned Marange diamonds from Zimbabwe that first appeared in Kinshasa in 2008 to 2009,” Martin said.
In 2013 alone, price manipulations due to transfer pricing generated in excess of $1,6 billion in profits for diamond companies in the UAE, and represents a major deprivation for African treasuries which lost much needed tax revenues that could have funded public service.