Multinational corporations rob developing countries of 100 billion dollars every year by using tax avoidance schemes, global charity Oxfam said in a report released Monday.
“This amount is more than enough to provide an education for all of the 124 million children currently out of school, and to pay for health interventions that could save the lives of six million children,” Oxfam wrote in the report.
Called “Tax Battles: the dangerous race to the bottom on corporate tax,” the study named the Netherlands, Switzerland, Singapore, Ireland, Luxembourg, Hong Kong, Cyprus, Bermuda, the Cayman Islands, the Bahamas, Jersey, Mauritius, Curacao and the British Virgin Islands as the world’s worst tax havens.
The report also found that tax havens impact the coffers of developed countries too. Oxfam Australia estimated that in 2014, Australia-based multinational companies shifting profits to top tax havens cost the country close to 5 billion Australian dollars (3.7 billion US dollars).
“Switzerland, Singapore, and The Netherlands are revealed to be the top three offshore financial centres used by tax-dodging multinationals operating in Australia,” Oxfam Australia’s senior economist Muheed Jamaldeen said in a news release.
The report found, however, that tax havens “are only part of the problem,” with countries including Australia “slashing or planning to slash” corporate tax rates, according to the release.
“The average corporate tax rate across G20 countries was 40 per cent 25 years ago — today it is less than 30 per cent,” the release said. “The use of unproductive and wasteful tax incentives is also ballooning, particularly in the developing world.”
Corporate tax incentives, sometimes offered to attract investment or help a country shape its economy, are “far too often … ineffective, inefficient and costly,” the report said.
Jamaldeen said there was no winner in the race to the bottom for corporate tax avoiders.
“Creating a public list of the world’s worst tax havens is a step towards creating disincentives for multinationals to use them,” Jamaldeen said.
Corporate profits are rising, but corporate tax incomes are not, according to the report.
Oxfam’s paper follows Friday’s report by the Australian Tax Office saying that over a third of the largest companies in Australia paid no tax in the 2014-2015 financial year. The tax office said they weren’t necessarily avoiding tax, but that they offset profits with reported losses.
The Australian government is pushing parliament to pass its plan to slash corporate tax from 30 per cent to 25 per cent over ten years.