$ 427 billion per year lost to tax abuse by businesses and wealthy individuals, study finds | Business

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Tax abuse by multinational corporations and avoidance by wealthy individuals costs countries $ 427 billion a year in lost revenue, according to research by a global advocacy group.The Tax Justice Network said its report revealed for the first time the extent of the resource losses and called on the G20 group meeting of developed and emerging countries this weekend to tighten the rules.

TJN’s 2020 State of Tax Justice report says more than half of the losses – $ 245 billion – came from companies transferring $ 1.38 billion in profits out of the countries where they were generated to tax havens, where corporate tax rates were low or nonexistent.

Individuals paid $ 182 billion less in tax than they should have by storing a total of more than $ 10 billion in financial assets abroad, the report adds.

The TJN said it was able to quantify the extent of corporate tax evasion because the data was self-reported by multinationals and released by the Organization for Economic Co-operation and Development, but only after the Paris-based think tank made sure that no sole proprietorship could be identified.

With public finances strained as a result of the Covid-19 pandemic, the TJN said it was time for the G20 to demand the publication of profits made by individual multinationals on a country-by-country basis, so that “The jurisdictions which facilitate them can be identified and held to account”.

The report says the top five jurisdictions for countries’ tax losses were the Cayman Islands, a British overseas territory, responsible for 16.5% or more than $ 70 billion in global tax losses; United Kingdom (10%, $ 42 billion); the Netherlands (8.5%, $ 36 billion); Luxembourg (6.5%, $ 27 billion) and the United States (5.5%, $ 23 billion).

Alex Cobham, Managing Director of TJN, said: “A global tax system that loses more than $ 427 billion a year is not a broken system, it is a system programmed to fail. Under pressure from corporate giants and tax haven powers like the Netherlands and the UK Network, our governments have programmed the global tax system to prioritize the desires of the wealthiest businesses and individuals over the needs of everybody.

“The pandemic has exposed the high cost of turning tax policy into a tool for engaging in tax abusers instead of protecting the well-being of people.

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