LONDON (AFP) – Tax evasion is costing the world about US$427 billion (S$574 billion) per year with cash funnelled via murky tax havens, according to data published on Friday (Nov 20) by the Tax Justice Network.
The TJN said in a statement that it has sifted through records worldwide in the first global study of its kind – and urged global action over shadowy tax havens that have diverted billions of dollars from nations currently fighting the Covid-19 pandemic.
The network, which is an umbrella grouping of non-governmental organisations, examined multinationals’ tax declarations and figures gathered by the paris-based Organisation for Economic Co-operation and Development (OECD) from 2016.
It also assessed individuals’ 2018 data from the Bank for International Settlements.
“Countries are losing a total of over US$427 billion in tax each year to international corporate tax abuse and private tax evasion,” the TJN concluded in its study.
This amounted to the equivalent of almost 34 million nurses’ annual salaries per year, it said.
The TJN also estimated that the total tax-evasion sum comprised US$245 billion committed by businesses – and US$182 billion committed by individuals.
Multinational corporations are shifting about US$1.38 trillion of profits via tax havens, while private individuals are investing more than US$10 trillion in assets there, according to the study.
The world’s richest regions including Europe and North America take the biggest financial hit from evasion.
The study named British overseas territory the Cayman Islands as the haven responsible for the greatest global tax loss.
Other leading tax havens include other British overseas territories, the Netherlands, Luxembourg, low-tax US states such as Delaware and Hong Kong.
“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,” said TJN chief executive Alex Cobham.
“The pandemic has exposed the grave cost of turning tax policy into a tool for indulging tax abusers instead of for protecting people’s well-being.
“Now more than ever we must reprogramme our global tax system to prioritise people’s health and livelihoods over the desires of those bent on not paying tax.”
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