KAMPALA - Rich countries should pay taxes on profits their companies earn from operations in poor countries, Malaysian Prime Minister Mahathir Mohamad said at an international investment conference here.
"I think it is only fair that these countries pay statutory taxes to the world, because they are considerably enriched by the world," Mahathir said late Monday at the Global 2001 SMART Partnership International Dialogue being held here aimed at jump-starting investments for African economies.
"This should be in addition to aid which is not only insignificant, but puts the recipient countries under obligation," Mahathir declared to applause from participants, most from the developing countries, adding that an international body could be set up to collect taxes from businesses.
Mahathir noted that businesses operating throughout the world currently pay taxes, mostly to their own countries, on the profits they make worldwide.
"The revenues gained by their governments go towards enriching the lives of people in the already rich countries," Mahathir said, adding: "It is only logical that businesses operating throughout the world should pay taxes to the world. All these businesses are based in rich countries."
Mahathir noted that in 1999, a total of 865 billion dollars was recorded as foreign direct investment, but only about a quarter of it went to developing countries, of which multinational firms took the lion's share.
He said that 63,000 parent multinational companies in the world, with about 690,000 foreign affiliates and a plethora of inter-firm arrangements, span virtually all regions, countries and industries.
Mahathir said his country, which had gained from activities of its businesses worldwide, was willing to pay such a tax, which could raise funds for the construction of needed infrastructure for poor countries, creating jobs and generating wealth.
He urged rich nations, which benefit most from globalization and a borderless world, "to accept this tax even if they are already providing aid to some poor countries.
"The already rich will get richer, but the poor would get a little of the wealth and infrastructural needs of their countries. I hope the poor countries will not reject this idea," Mahathir said.
"The rich may not even take note of this proposal, but if they want the poor to come on board their World Trade Organization (WTO) and globalization, they should make wealth-sharing quite certain by agreeing to this world tax," Mahathir added.
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