Associated British Foods (AB Foods), whose brands include Silver Spoon and Twinings Tea, rejected claims that it had engaged in tax avoidance scheme in Zambia, The Telegraph reported on Monday.

The daily British newspaper reported that the company “emphatically” denied it had done this to prevent paying millions of pounds of tax to the Zambian government.

The Telegraph said the robust defence followed allegations by Action Aid, the anti-poverty charity, which on Sunday  said that the Zambian sugar-producing subsidiary of ABF is avoiding paying tax in the African state blighted by malnutrition.

Action Aid said Zambia Sugar generated profits of $123 million (£77.9m) last year, but admitted to paying “virtually no corporate tax”. The charity claimed the subsidiary found legal ways to siphon a third of its pre-tax profits out of Zambia into tax havens including Ireland, Mauritius and the Netherlands.

It is claimed Zambian public services have lost an estimated $27 million – enough to put 48,000 children in school. But ABF said the allegations are “inaccurate” and “highly inflammatory”.

John Bason, finance director at ABF, told The Telegraph: “The reason that no corporate tax is paid in Zambia for the last couple of years is because of our £150 million investment building the biggest sugar mill in the country. There are capital allowances available on that, in the same way similar reliefs are available to investors in most countries, including the UK.”

Bason said the capital allowances would continue for up to another five years, at which point the company would return to paying Zambia’s 10 percent rate of corporation tax. He added it was

“absolutely not true” that Zambia Sugar was funnelling a third of its pre-tax profits to sister companies in tax havens. Payments were made to Ireland and Mauritius in return for the services of “real people, doing real jobs”, he said.