Imperial's deal with the Lao government saved Lao Tobacco from bankruptcy.
BBC reported that Imperial Tobacco is being accused of allowing a trade in cheap cigarettes in Laos through a tax deal with the government. However, the tax deal was merely one of the many economic aspects of the agreement for Imperial’s investment, which also saved Lao Tobacco from bankruptcy. Moreover, activists fail to mention that the company also pays the Lao government a regular dividend income.
Under the agreement signed in 2001 and due to run till 2026, Lao Tobacco, in which Imperial owns a 53% stake, pays 15-30% excise tax on its products. The 25-year agreement also applies to five other tobacco companies in Laos.
Under the terms of the deal, Imperial can negotiate “from time to time, taxes and duties from the importation of cigarettes and other finished tobacco products” with the Lao government, which it has several times. Under the original 2001 agreement, Imperial did not pay corporate income tax for the first five years and was granted other concessions.
Researchers at the University of Bath’s Tobacco Control Research Group accused the tax agreement between Imperial and state-owned Laos Tobacco of green-lighting cigarettes that might cost as little as £0.25 (US$0.33) per packet, while a similar packet of cigarettes would cost around £12.50 (US$16.33) in the UK. However, this is a highly privileged, western-centric view. Imperial pointed out that the low price of its cigarettes in Laos needs to be seen in a context where many live on the equivalent of £1 (US$1.31) a day.
Imperial unequivocally abides by all international tax obligations.