World To Lose $4.7 Tln To Tax Havens Over Next Decade: Report

Unless substantial reforms are made to global tax rules, countries around the world are on course to lose $4.7 trillion in tax revenue over the next 10 years as multinational corporations and wealthy individuals use tax havens to underpay tax, an international tax fairness advocacy group estimates.

The Tax Justice Network made this warning in its annual State of Tax Justice report, published on Tuesday.

The future losses of public money would be equivalent to losing a year of worldwide spending on public health, according to the UK-based advocacy group.

The estimated shortfall in tax revenue is based on an analysis of data for 47 member states of the Organization for Economic Cooperation and Development (OECD).

Campaigners are urging countries to vote this winter in favour of beginning negotiations on a UN tax convention at the UN General Assembly to avert the huge losses.

“Countries have a choice to make at the UN this year end. Forfeit our future now by staying the course, or democratise global tax rules so we can hold on to the public money we need for the challenges ahead,” said Alex Cobham, chief executive at the Tax Justice Network.

The State of Tax Justice 2023 reports that countries are losing $472 billion in tax a year to global tax abuse. Of this annual loss, $301 billion is lost to multinational corporations shifting profit into tax havens and $171 billion is lost to wealthy individuals hiding wealth offshore.

Most annual tax losses are suffered by higher income countries – $426 billion, which is equivalent to 9 per cent of their public health budgets.

Lower income countries are the worst affected by global tax abuse, as tax losses are equivalent to more than half of their public health budgets, Tax Justice Network estimates.

The 10-year projection is based on the impact of the OECD’s efforts to reform international tax architecture and curb losses to global tax abuse, which began 10 years ago.

Its second reform process to set global tax rules has so far only produced drafts of policy proposals.

The Tax Justice Network is urging countries to support moving leadership on global tax from the OECD to the UN.

The UN Secretary General will present a report in September on possible options for a UN tax convention which the UN General Assembly will debate and vote on later this year, it says.

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