KAMPALA (AFP) - Prime Minister Mahathir Mohamad has appealed to developed countries to pay statutory taxes on profits their companies accrue from other nations of the world.

Addressing the Global 2001 SMART Partnership International Dialogue here last night, Mahathir said businesses operating throughout the world currently pay taxes, mostly to their own countries, on the profits they make worldwide.

"I think it is only fair that these countries pay statutory taxes to the world, because they are considerably enriched by the world. 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 of whom come from the developing world.

International tax collector mooted

The prime minister suggested that a international body could be set up to collect taxes from businesses.

"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 said Malaysia, which had gained from activities of its businesses worldwide, was willing to pay such a tax.

Commenting on the ongoing Kampala conference to jump-start investments for African economies, Mahathir said the proposed tax would be for the construction of needed infrastructures for poor countries, "which would create jobs and generate wealth for these nations."

Conscious of what reaction his suggestion will trigger, Mahathir quickly pleaded with rich nations, which benefit most from globalisation and a borderless world, "to accept this tax even if they are already providing aid to some poor countries."

Multinationals get lion's share

"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 Organisation (WTO) and globalisation, they should make wealth sharing quite certain by agreeing to this world tax," Mahathir added.

Mahathir noted that in 1999, a total of 865 billion dollars was recorded as Foreign Direct Investment (FDI), but only about a quarter of it went to developing countries, of which multinationtional 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.

The world's top 100 companies worth two trillion dollars in assets and two trillion dollars in sales turnover are in developed countries, where they employ more than six million people.