Global Tax Evasion Report 2024

Global Tax Evasion Report 2024

News: Recently, The European Union Tax Observatory has released ‘Global Tax Evasion Report 2024’ highlighting several critical issues related to tax evasion, the Global Minimum Tax (GMT) on billionaires, and measures to combat tax evasion.

Key Findings:
• Offshore Tax Evasion: The report states that offshore tax evasion has decreased over the past decade. However, challenges remain, including non-compliance by offshore financial institutions and limitations in the automatic exchange of bank information.
• Tax Rates for Billionaires: Global billionaires have effective tax rates equivalent to 0% to 0.5% of their wealth, due to the frequent use of shell companies to avoid income taxation.
• Profit Shifting by MNCs: Multinational corporations (MNCs) have shifted around USD 1 trillion to tax havens in 2022, equivalent to 35% of the profits they earned outside their headquarters countries.
• Greenwashing the Global Minimum Tax: The report red-flagged the trend of MNCs using ‘green’ tax credits for low carbon transition to reduce their tax rates way below the minimum of 15%.

Recommendations:
• The report advocates for a global minimum tax on billionaires, proposing a rate of 2% of their wealth. Institute mechanisms to tax wealthy people who have been long-term residents in a country and choose to move to a low-tax country.
• Reform the international agreement on minimum corporate taxation to implement a rate of 25% and remove the loopholes in it that foster tax competition.
• Implement unilateral measures to collect some of the tax deficits of multinational companies and billionaires in case global agreements on these issues fail.
• Move towards the creation of a Global Asset Registry to better fight tax evasion.