Global tax evasion costs $ 427 billion annually

The NGO Tax Justice Network estimates that the shortfall is 184 billion dollars for Europe, or 12.6% of the health budget of the Old Continent.

Tax evasion around the world, on the part of companies or individuals, costs states $ 427 billion each year, for the benefit of tax havens or countries with little scrutiny, reveals Friday, November 20.

The NGO has scrutinized tax evasion country by country in a report that it presents as the first of its kind and which attempts to shed light on financial flows known for their opacity. The figures, published as the world fights against the pandemic, were compiled from the declarations of multinationals to tax authorities, recently published by the OECD and which date from 2016. For individuals, the NGO relied on bank deposit data available from the Bank for International Settlements (BIS) from 2018.

The NGO considers tax evasion any financial flow abroad in order to avoid taxation, without entering into the debate whether it is illegal or not. Of this sum of $ 427 billion that escapes tax, the equivalent of the annual salary of 34 million nurses, 245 billion are the work of companies and 182 billion individuals.

The regions that lose the most are the richest

The report explains that multinationals move the equivalent of 1.380 billion dollars from, but also to several rich countries that do not always belong to blacklists like the one established by the EU. Individuals place a total of more than 10,000 billion in financial assets.

The regions which lose the most are those which are the richest. North America loses 95 billion dollars and Europe 184 billion, that is to say, by comparison in full pandemic, respectively 5.7% and 12.6% of their budget dedicated to health. Latin America and Africa lose less money, but the impact is much heavier, since it represents 20.4% and 52.5% of their health budget, respectively.

The report also examines which countries benefit the most from this tax evasion. The Cayman Islands, the overseas territories of the United Kingdom, are the big winner, capturing 16.5%, ahead of the United Kingdom (10%), the Netherlands (8.5%), Luxembourg (6, 5%) and the United States (5.53%). “Under pressure from large corporations and tax havens like the Netherlands or the United Kingdom and its network, our governments have put the desires of wealthy companies and individuals before the needs of all others”, said Alex Cobham, CEO of Tax Justice Network, quoted in a press release.

This report, published the day before, urges world leaders to allow the publication of country-by-country tax data for multinationals, while the OECD figures are only published aggregated. Finally, the NGO pleads for more taxing companies and wealthy individuals in order to reduce the inequalities caused by the pandemic.