H&M Evades Taxes in Bangladesh Organization Says

Company said it followed local laws and its operations in the South Asian nation generated hundreds of thousands of jobs

Swedish clothing chain H&M paid just 60 euros (US$73) of corporate taxes in 2008 in Bangladesh according to Action Aid, an NGO, which issues a report on June 22.

The cheap'n'chic fashion group said in response to the claims by Action Aid that it followed local laws in Bangladesh and added that its operations in the South Asian nation generated hundreds of thousands of jobs.

The claims surfaced as violent protests by tens of thousands of Bangladesh garment workers demanding higher pay forced the closure on June 22 of 700 factories that supply the top names in Western retail, including H&M.

Also a the end of February, a fire at the factory of one of H & M's suppliers killed 21 people.

The Action Aid report quoted Bangladeshi tax authorities as saying that the H&M's only subsidiary in the country had paid 5,000 takas (US$ 73) in corporate taxes in 2008. "It's the minimal amount of tax for a business in Bangladesh," the organization said in a 16-page report on H&M's activities in the country. It added a quote by Bangladeshi trade minister Muhammad Faruk Khan who said H&M's actions were "legal but immoral."

H&M responded that the 60 euros paid in Bangladesh were "only an administrative fee" but that it did pay 3.2 million euros in income tax through the salaries of its 25 employees at its local office in the country.

"Since we don't have any turnover in Bangladesh, we cannot pay corporation tax," company spokeswoman Jenni Tapper-Hoel said. "We definitely disagree with that being immoral," she said, adding that the company could only pay corporation tax in countries where it had an income.

H&M, the world's third largest clothing retailer after Gap of the US and Spain's Inditex (Zara), does not have any factories of its own but uses more than 700 suppliers, mostly in Asia and Europe.

"H&M's biggest contribution to the development of Bangladesh is that we place orders for manufacturing for large sums in the country, which generate several hundred thousand jobs," she added.

Another company spokesperson, Haakan Andersson, said the departure last month of H&M's corporate responsibility official Ingrid Schullstroem had "nothing whatsoever" to do with the accusations.

Copyright Agence France-Presse, 2010

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