- Countries throughout the world lose $US427 billion in revenue annually from wealthy individuals and corporations abusing tax laws, a report by the global advocacy group Tax Justice Network finds.
- The November report states that $US245 billion of the $US427 billion tax losses stem from corporations shifting profits to tax havens such as the Cayman Islands, where corporate tax either doesn’t exist or is very low.
- The report is the first of its kind to publish a country-by-country breakdown of tax abuse, and uses data published by the Organisation for Economic Cooperation and Development.
- Researchers call on the G20 to tighten tax loopholes and require companies to report profits so that “corporate tax abusers and the jurisdictions that facilitate them can be identified and held to account.”
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A report by the global advocacy group Tax Justice Network found that countries lose $US427 billion in revenue per year from wealthy individuals and corporations evading taxes.
About $US245 billion of these losses stem from corporations shifting their profits to “tax-haven” countries where corporate taxes are very low or nonexistent, the report said. Wealthy individuals, on the other hand, have been storing about $US10 trillion of assets in offshore accounts, paying $US182 billion less in taxes than they would have if taxed in their respective countries.
The TJN report is the first of its kind to publish a country-by-country breakdown of how elite individuals and corporations have been abusing tax systems. It used data published by the Organisation for Economic Cooperation and Development, to which companies anonymously self-report their tax information.
Broken down by continent, Africa loses nearly $US25 billion a year, while the losses number $US184 billion for Europe, about $US73 billion for Asia, and almost $US95 million for North America.
The US is the biggest loser in absolute terms, the report finds, with the country losing $US90 billion in tax revenue each year.
The researchers called on the G20 to tighten tax loopholes, and require companies to publish their profits so that “corporate tax abusers and the jurisdictions that facilitate them can be identified and held to account.”
TJN Chief Executive Alex Cobham said, per remarks published in the Guardian, “A global tax system that loses over $US427 billion a year is not a broken system, it’s a system programmed to fail.”
“Under pressure from corporate giants and tax-haven powers like the Netherlands and the UK’s network, our governments have programmed the global tax system to prioritise the desires of the wealthiest corporations and individuals over the needs of everybody else.”
These missing funds have been sorely needed during the coronavirus pandemic. The report calculated that the money lost annually from tax abuse could pay the yearly salaries of nearly 34 million nurses.