Multinational Companies Avoid $200 Billion in Taxes Through Legal Loopholes, Costing Poorer Nations Billions
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Multinational corporations avoided $200 billion in taxes in 2020 through profit shifting to subsidiaries in tax havens. This causes fiscal injustice as smaller companies pay more.
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The biggest winners are corporations that save on taxes, and European tax havens that gain $32 billion in extra revenue. Developing countries lose out on billions in tax revenue.
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Profit shifting is technically legal but morally questionable. Pricing of intangible assets makes it hard for authorities to build cases against companies.
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The EU Tax Observatory suggests higher minimum corporate tax rate of 20% to generate extra $250 billion in annual global tax revenue.
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In 2021, 140 countries signed deal for 15% minimum rate but loopholes remain. More action needed to prevent tax avoidance.