“A persistently large amount of profits is shifted to tax havens: $1 trillion in 2022”, lamented the EU Tax Observatory in its report on global tax evasion 2024, published on Monday 23 October. The loss of corporate tax revenue caused by this transfer represents almost 10% of corporate tax revenues collected worldwide.
US multinationals are responsible for around 40% of profit shifting worldwide, and continental European countries appear to be the hardest hit.
In addition, the OECD agreement on minimum taxation of multinationals at 15% (see EUROPE 13270/23) has been weakened by a growing list of loopholes. New forms of aggressive tax competition are appearing and seriously affecting public revenues, particularly as a result of preferential tax regimes.
However, the Observatory found that, thanks to the automatic exchange of banking information, offshore tax evasion has been reduced by a factor of around three in less than 10 years.
It also calculated that a minimum wealth tax on billionaires equal to 2% of their wealth would combat tax evasion and generate nearly $250 billion in revenue from fewer than 3,000 individuals (see EUROPE 13254/26).
The Observatory made six recommendations: - introduce a 25% corporate tax rate and eliminate the loopholes in the agreement; - introduce a new global minimum tax for billionaires; - introduce mechanisms to tax wealthy individuals who have been long-term residents of a country and choose to settle in a tax haven; - implement unilateral measures to collect part of the tax deficits of multinationals and billionaires if global agreements fail; - create a global asset register; - strengthen the application of economic substance and anti-abuse rules.
To read the report, go to https://aeur.eu/f/97i (Original version in French by Anne Damiani)