Despite several agreements signed in recent years, the OECD has “failed” to reform the international tax system to make it fairer, said the British NGO Tax Justice Network (TJN) in a report published on Tuesday.
The Organization for Economic Co-operation and Development (OECD), the club of rich countries, has been setting international tax rules since the 1960s. Over the past decade, it has worked to implement significant reforms, concedes the TJN.
But the OECD failed, criticizes the NGO, which specializes in the fight against tax injustices at the global level.
It did not include non-members (of the OECD, editor’s note) in its decisions (…) and it did not produce effective measures to curb tax abuse, she adds.
Despite the global minimum corporate tax, the rate of which was set at 15% after years of negotiations under the aegis of the OECD, multinational companies transfer profits worth 1.100 billion dollars (993 billion euros editor’s note) each year to tax havens.
End corporate tax abuse
These transfers of funds cause governments around the world to lose 301 billion dollars (271.7 billion euros editor’s note) per year in direct tax revenue, calculates the NGO.
As for the indirect losses, the researchers of the International Monetary Fund (IMF) estimate (…) that they are at least three times greater than the direct losses but do not give a precise figure.
As for individuals, the world loses 171 billion US dollars (154 billion euros editor’s note) per year because of offshore tax evasion linked to financial wealth alone, assures the TJN.
At 472 billion dollars, the sums escaping tax each year are thus up by 45 billion dollars (40.6 billion euros) compared to a previous estimate by the NGO dated 2020, which then valued them at 427 billion, of which 245 are due to companies and 182 due to individuals.
The report is published ten days after the announcement by the OECD of a first historic draft agreement between 138 countries, which have agreed to better distribute the tax revenues derived from the profits of multinationals.
In October 2021, states around the world had already agreed to introduce the minimum global tax of 15%, supposed to limit international tax competition and generate 220 billion dollars (198.6 billion euros) in additional tax revenue each year according to the OECD.
Faced with the limits of the reforms promoted by the OECD, the Tax Justice Network calls on political decision-makers to create a tax body attached to the UN, which would be responsible for setting the place of the OECD for rules to put an end to tax abuses.
The NGO also pleads for the automatic exchange of financial information between States and the transparency of beneficial ownership, to put an end to the anonymous control of companies and other legal vehicles.
While the tax may be neglected, even unloved, it is nevertheless the only sustainable source of revenue for independent and sovereign States and an essential tool to fight against inequalities, insists the Ugandan lawyer Irene Ovonji-Odida, the president of the TJN.