Friday, November 20, 2020

The Tax Avoidance Racket

 Tax abuse by multinational companies and avoidance by rich individuals is costing countries $427bn a year in lost revenues, according to a study by the Tax Justice Network, a global advocacy group.

Its 2020 report says more than half the losses – $245bn – came from companies shifting $1.38tn of profits out of the countries where they were generated into tax havens, where corporate tax rates were low or nonexistent.

Private individuals paid $182bn less tax than they should have by storing a total of more than $10tn in financial assets offshore.

The five jurisdictions most responsible for countries’ tax losses were the Cayman Islands, a British overseas territory, responsible for 16.5% or more than $70bn of global tax losses; the UK (10%, $42bn); the Netherlands (8.5%, $36bn); Luxembourg (6.5%, $27bn) and the US (5.5%, $23bn).

Alex Cobham, the chief executive of the TJN, said: “A global tax system that loses over $427bn 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..."

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