A new report by the Tax Justice Network has revealed that the global community loses $492 billion annually due to tax abuse by multinational corporations and wealthy individuals exploiting tax havens to underpay taxes. Of this, Nigeria faces an annual loss of $384 million, highlighting the significant impact of global tax evasion on the nation’s economy.
The report, which includes a ranking of 20 countries most complicit in enabling corporate tax avoidance, places the British Virgin Islands at the top of the Corporate Tax Haven Index (CTHI), followed by the Cayman Islands, Bermuda, Switzerland, Singapore, and Hong Kong. Other major tax havens include the Netherlands, Ireland, Luxembourg, and the British Crown Dependency, Jersey.
In total, the United Kingdom and its overseas territories account for over a quarter (26%) of the world’s tax losses, costing countries around the globe $129 billion annually. Multinational corporations are responsible for the lion’s share of these losses, with $347.6 billion lost each year due to cross-border tax abuse. The remaining $144.8 billion is lost to wealthy individuals who conceal their assets offshore.
The report underscores the role of certain high-income countries in perpetuating global tax abuse. Eight nations—Australia, Canada, Israel, Japan, New Zealand, South Korea, the UK, and the USA—have actively blocked efforts at the United Nations (UN) to establish a global tax convention to close tax loopholes. These nations account for just 8% of the world’s population but are responsible for a substantial portion of global tax losses.
The report also notes that lower-income countries, while losing smaller amounts in absolute terms, suffer disproportionately due to the larger share these losses represent in their national budgets. For instance, low-income countries lose five times as much of their public health budgets to tax abuse compared to wealthier nations.
The Tax Justice Network’s annual State of Tax Justice report provides a stark illustration of the scale of global tax abuse, with multinational corporations shifting $1.42 trillion in profits to tax havens annually. These actions deprive governments of essential tax revenue, exacerbating inequalities and undermining local businesses that rely on fair taxation to compete.
As countries prepare to vote at the UN on a tax convention aimed at curbing these practices, the Tax Justice Network urges all nations to support the negotiations, calling it the best opportunity in history to reform the global tax system. If successful, such a treaty could prevent nearly $5 trillion in potential losses over the next decade.
In conclusion, the report stresses that tax abuse is a global issue that harms everyone, but particularly disproportionately impacts low-income countries. The Tax Justice Network calls for a concerted global effort to use tax systems to protect people, economies, and the planet.
