Associated British Foods has hit back at allegations it dodged paying millions of pounds in tax to the Zambian government on profits made by its sugar operations in the country.

Action Aid issued a report on Sunday claiming that Zambia Sugar had found ways to siphon over $83.7m – or a third of its pre-tax profits – out of Zambia to tax havens, including Ireland and Mauritius, since 2007. It added that Zambia Sugar had paid “virtually no corporate tax” in Zambia despite generating profits of $123m over the past five years.

ABF, which owns Zambia Sugar via a majority stake in its immediate owner Illovo, strongly denied the allegations.

It said the company has invested £150m since 2008 to double production capacity in Zambia, for which it received capital allowances, resulting in no corporate tax being paid.

It added that payments made by Zambia Sugar for the services of third party contractors outside Zambia were made at cost. It denied using these transactions to deflate its tax bill in Zambia.

“We deny emphatically that Illovo is engaged in anything illegal, immoral or in any way designed to reduce the tax rightly payable to the Zambian government,” said an ABF spokesman.