02/08/23

TAX EVASION: Corporate tax abuse, offshore evasion soar: report

As published on: newagebd.net, Wednesday 2 August, 2023.

The amount of annual corporate tax abuse and offshore tax evasion from Bangladesh has increased by 168 per cent or $243 million over a couple of years, according to a Tax Justice Network report.

According to the global report titled State of Tax Justice 2023, Bangladesh lost more than $387.3 million in revenue in a year in 2022 due mainly to corporate tax abuse and offshore tax evasion.

The amount of annual tax losses was $144 million in 2020, according to the previous edition of the report, State of Tax Justice 2021.

Of the amount lost in 2022, corporate tax abuse by multinational corporations caused annual tax losses worth $361.2 million and individual offshore tax evasion was responsible for the remaining $26.1 million loss in taxes, said the report.

Compared with the previous report, the annual corporate tax abuse increased by 205.32 per cent or $243 million and offshore tax evasion rose by 1.55 per cent or $0.4 million from 2020 to 2022.

The Tax Justice Network, a London-based global alliance for tax justice, published its latest edition of the report, State of Tax Justice 2023, on July 25.

According to the report, the amount of the corporate tax abuse would add 1.5 per cent extra direct revenue to the country’s annual revenue growth.

The estimated amount of the direct tax losses had an impact on the national social spending budget, as the amount could increase the country’s health budget by 30.30 per cent and the education budget by 6.19 per cent, the report said.

The total tax losses were calculated based on the data reported by multinational corporations and banking data collected by governments.

According to the report, Bangladesh held the third position in revenue losses for corporate tax abuse among 43 Asian countries and held the fifth position in tax revenue losses for individual offshore tax evasion.

Multinational corporations sifted profit outward around $1,445 million by abusing tax worth $361.2 million while the wealthy individuals’ offshore amount was $1.7 billion by abusing tax worth $26.1 million in 2022, the report said.

In terms of financial secrecy index 2022, Bangladesh ranked 52nd among the 75 countries having tax paying system and in 2020, the position was 54, said the report.

Countries are losing $472 billion in tax a year to global tax abuse, in which $301 billion is lost to cross-border corporate tax abuse by multinational corporations and $171 billion is lost to offshore tax abuse by wealthy individuals.

Lower income countries, which have historically had little to no say on global tax rules, continue to be hit harder by global tax abuse, the report observed.

While most annual tax losses are suffered by higher income countries ($426 billion), these losses are equivalent to 9 per cent of higher income countries’ public health budgets.

Lower income countries’ tax losses of $46 billion are equivalent to 56 per cent of their public health budgets.

If the countries stay the course followed for the past 10 years on international tax rules, they would lose $4.7 trillion over the next 10 years, the report said.

Tags

Tax Evasion Offshore Tax Tax Avoidance