$427bn lost annually to tax evasion as UK hands out billions in Covid bailouts to firms based offshore
A report has highlighted the large amount of tax evasion occurring across the world. This worrying news may come as it was says the united kingdom Government has handed out billions in Covid bailouts funnelled to companies based in tax havens.
Tax Justice Network reported that $427bn is stolen annually by companies and people who not pay taxes and called for the G20 to tighten rules.
The study published today, revealed the very first time just how much public funding each country loses to global tax abuse and identifies the countries most responsible for others' losses.
It asserted over half the losses ($245bn) came from companies shifting $1.38tn of profits out of the organisation’s member countries to tax havens.
Additionally private individuals paid $182bn less tax by moving over $10trn in financial assets offshore.
The five jurisdictions most accountable for countries' tax losses are British Territory Cayman (accountable for 16.5% of global tax losses, comparable to over $70bn), the UK (10%; over $42bn), holland (8.5%; over $36bn), Luxembourg (6.5%; over $27bn) and the US (5.53%; over $23bn).
UK firms
Almost another of companies receiving coronavirus bailouts in the Bank of England are located in a tax haven or of someone living there, shocking research has revealed.
Analysis by TaxWatch UK, a thinktank, found that lb4.79 billion in bailout cash has been handed to companies with links to tax havens, or which have been embroiled in financial controversy – close to 30 per cent from the money loaned out under the government's Covid Corporate Financing Facility.
One company – Baker Hughes, a subsidiary of American giant General Electric – was granted a lb600 million loan, despite the fact that its parent company continues to be sued by HMRC over unpaid taxes dating back 16 years.
Luxury fashion brand Chanel – whose ultimate parent company is based in the Caymans – also received lb600 million, as did EasyJet – that is part-owned with a trust located in the Caribbean territory.
A further lb25 million went to cruise operator Carnival, whose ships were registered in Panama.
George Turner, director of TaxWatch UK, said: “Unlike a number of other countries in the world the UK has decided not to put any conditions around the tax conduct of companies receiving government support.
“There are understandable concerns that the government should aim to do everyone to aid employment, which preventing companies from receiving support may end up with job losses.
“However, you will find clearly ways in which governments can structure conditions inside a smart way to make sure better tax compliance. One idea for example, would be to force companies receiving support to write more information on their tax payments around the world.”
Broken system
Alex Cobham, leader from the Tax Justice Network, said: “A global tax system that loses over $427bna year isn't a broken system, it is a system developed to fail. Our governments have programmed the worldwide tax system to prioritise the desires from the wealthiest corporations and individuals over the needs of everyone else. The pandemic has exposed the grave cost of turning tax policy into a tool for indulging tax abusers instead of for safeguarding people's wellbeing.
“Now more than ever we must reprogramme our global tax system to prioritise people's health insurance and livelihoods within the desires of these bent on not paying tax.”
