A report has highlighted the enormous amount of tax evasion that occurs across the world. This worrying news comes as it was revealed that the UK Government has handed out billions in Covid bailouts funnelled to companies based in tax havens.
Tax Justice Network reported that $427bn is stolen annually by companies and individuals who avoid paying taxes and called for the G20 to tighten rules.
The study published today, revealed for the first time how much public funding each country loses to global tax abuse and identifies the countries most responsible for others’ losses.
It said that over half the losses ($245bn) came from companies shifting $1.38tn of profits out of the organisation’s member countries to tax havens.
Additionally private individuals paid $182bn less tax by moving over $10trn in financial assets offshore.
The five jurisdictions most responsible for countries’ tax losses are British Territory Cayman (responsible for 16.5% of global tax losses, equal to over $70bn), the UK (10%; over $42bn), the Netherlands (8.5%; over $36bn), Luxembourg (6.5%; over $27bn) and the US (5.53%; over $23bn).
Almost a third of companies receiving coronavirus bailouts from the Bank of England are based in a tax haven or owned by someone living there, shocking research has revealed.
Analysis by TaxWatch UK, a thinktank, found that £4.79 billion in bailout cash has been handed to companies with links to tax havens, or that have been embroiled in financial controversy – close to 30 per cent of the money loaned out under the government’s Covid Corporate Financing Facility.
One company – Baker Hughes, a subsidiary of American giant General Electric – was granted a £600 million loan, despite the fact that its parent company has been sued by HMRC over unpaid taxes dating back 16 years.
Luxury fashion brand Chanel – whose ultimate parent company is based in the Cayman Islands – also received £600 million, as did EasyJet – which is part-owned by a trust based in the Caribbean territory.
A further £25 million went to cruise operator Carnival, whose ships were registered in Panama.
George Turner, director of TaxWatch UK, said: “Unlike many other countries in the world the UK has decided not to put any conditions on the tax conduct of companies receiving government support.
“There are understandable concerns that the government should seek to do everyone to support employment, and that preventing companies from receiving support may end up with job losses.
“However, there are clearly ways in which governments can structure conditions in a smart way to ensure better tax compliance. One idea for example, would be to force companies receiving support to publish more information on their tax payments around the world.”
Alex Cobham, chief executive of the Tax Justice Network, said: “A global tax system that loses over $427bna year is not a broken system, it’s a system programmed to fail. Our governments have programmed the global tax system to prioritise the desires of the wealthiest corporations and individuals over the needs of everybody else. The pandemic has exposed the grave cost of turning tax policy into a tool for indulging tax abusers instead of for protecting people’s wellbeing.
“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.”