LONDON, UK – A string of foreign embassies owe the taxman more than £1.5million of unpaid business rates, official figures reveal.
Diplomatic representatives from foreign countries are exempt from national, regional or municipal taxes.
But embassies are encouraged to pay a portion of their bill, equating to just 6 per cent of what a normal firm would fork out.
The Foreign Office has now named and shamed 23 foreign embassies and diplomatic organisations that each owe more than £10,000 in business rates which should have been paid 12 months ago.
obert Hayton, head of UK business rates at property firm Altus Group, said: ‘Many of these embassies operate from prime central London real estate and are actively dodging their tiny tax contributions.’
He added that the revelation that foreign embassies are not paying up is likely to anger companies which have seen major hikes to their bills.
Business rates are based on the estimated rental value of a property.
Traditional retailers are often subject to sky-high bills due to the size of stores.
Struggling Debenhams paid out £80million in business rates last year, while John Lewis paid £174million.
The amount owed by foreign diplomatic missions and embassies has rocketed by 43 per cent compared with a year earlier.
The bills were due to be paid on December 31, 2017.More than £73,000 of the debt is owed by Syria, which the Government is unable to collect because the country is currently not represented in the UK.
The embassy run by Sudan was the biggest culprit for failing to pay its business rates bill, according to a written statement to Parliament by Lord Ahmad of Wimbledon.
The embassy, which is situated between Green Park and St James’s Park in London, owes £137,122 in business rates to the Government.
Iran is next on the list with £123,570 in business rates debts, followed by Zimbabwe, which owes £101,694.
Embassies from Qatar, Ukraine and Egypt all have so far refused to pay their business rates, as have the High Commissions of Malaysia and Pakistan, despite demands from officials at the Foreign Office.
Zimbabwe diplomats in various countries are living in dilapidated houses, Parliamentary portfolio committee on Foreign Affairs and International Trade has revealed.
In a report presented in the National assembly last week, the committee said some of the houses are becoming a health hazard.
“The committee has heard of the despicable and unacceptable state of disrepair that some of the country’s chanceries and residences abroad are in.
‘Indeed, in some cases, it has been said, diplomats have had to abandon some of the houses because they had become a health hazard,” the report reads.
“In this regard, the ministry had hoped that treasury was going to allocate $21,432 million towards repair of government-owned properties abroad but only a paltry $12 million was given. This is of great concern to the committee.”
The committee said diplomats continue to face arrears accumulated over the years.
“The committee observed a perennial challenge that the ministry continues to face — arrears. These have accumulated over the years because of inadequate budget allocation over the years, lack of liquidity provision by treasury and sporadic funding of the ministry’s commercial bank nostro account by the Reserve Bank of Zimbabwe.
“As a committee, we implore treasury to look into this and have a plan in place to clear these arrears.
“Right now, the ministry has over $5 million that waits for nostro funding and this money is badly needed at our foreign missions.”
The committee recommended that ambassadors and their staff should get their salaries on time and in foreign currency.
“Ambassadors and staff should be given performance linked contracts in order for the ministry to cultivate and buttress the spirit and culture of hard work at our foreign missions.
“The committee welcomes the proposal by Treasury to reduce the number of foreign missions from 46 to 38.
“However, the committee recommends that a comprehensive cost–benefit analysis should be carried out to assist in identifying those missions which can be closed or clustered.
“The committee also calls for speedy conclusion on this to avoid continued accumulation of debts in missions where business opportunities are very low.”
They added that embassies in selected countries should be equipped to enable them to process identity documents to Zimbabwean nationals working or living abroad while also urging the government to clear all outstanding debt “not only to avoid tarnishing the image of the country but also reduce the stress of our diplomats working under such conditions.”