Just ten countries and territories are responsible for more than half of the world’s corporate tax avoidance, according to a new report.
NEW YORK – Just 10 countries and territories are responsible for more than half of the world’s corporate tax avoidance, according to a new report released Tuesday by the U.K. non-profit Tax Justice Network.
Across those jurisdictions at the top of the Corporate Tax Haven Index, the lowest available corporate tax rates averaged just over half of 1%, making them attractive destinations for multinational profits, instead of the countries where that wealth is actually generated.
“The estimates that we have suggest that every year there is $500 billion that is dodged in corporate tax.”
Rachel Etter-Phoya is a Malawi-based researcher for the Tax Justice Network.
“Given the number of American multinationals out there, there is a lot of money that American citizens are losing out on. This means that our governments don’t have enough revenue to pay for public services. They may have to raise taxes on our own income, on the working class, on the middle-class income, we may see more regressive taxes on the goods we buy in the shops.”
Leading the way in corporate tax avoidance are three British territories – the British Virgin Islands, Bermuda and the Cayman Islands – followed by the Netherlands, Switzerland and Luxembourg, a so-called “Axis of Avoidance” that siphons away tax revenues from developing countries struggling to pay state salaries, maintain infrastructure and address inequality.
Etter-Phoya suggests an alternate tax approach that involves calculating the total profits of multinational companies by the location of sales, employees or deployed capital, and thereby more fairly distributing corporate tax burdens.
“And if we change to this more unitary approach of taxation we would find that multinational profits would be taxed in the countries where we are employed, where our natural resources are being extracted, where we are using the different online systems that are being provided by multinationals. But at the moment, instead of raising taxes, we seem to be raising inequality.”