Report: Canada among biggest G20 losers in tax evasion
Ahead of a G20 meeting in Turkey this weekend that will tackle, among other issues, the GDP lost to global tax havens, the anti-poverty organization Oxfam is warning that it’s not just poor countries that suffer when corporations evade taxes.
Julie Delahanty, Oxfam Canada’s executive director, says the only people who benefit from tax loopholes that allow corporations to avoid paying taxes on profits in the jurisdictions where they earn them are the multinational corporations, their stakeholders and the small number of countries who profit from them.
“Canada has a new Prime Minister who we hope will play a leadership role in Turkey to reform international tax rules and champion the equal participation of poor countries in these processes,” said Delahanty.
According to the Oxfam report, Still Broken:Government must do more to fix the international corporate tax system, penned by Tax Justice Network, Oxfam, Global Alliance for Tax Justice and Public Services International, Canada was in the top five countries who loses out from missing profits.
In 2012, US multinational companies shifted $500 to 700 billion — or 25 per cent — of their annual profits to countries like Bermuda, Switzerland and the Netherlands. Corporations use these tax havens to shelter the profits they earned elsewhere from being taxed.
Canada is joined by Germany, France, US, China and Brazil in the 90 per cent of the countries who miss out on profits from these multinational corporations.
Although tax avoidance hurts wealthy nations, developing countries are more affected by these schemes, because they depend on their public revenues to come from taxing large corporations, the report concluded. Revenue loss in these countries are 30 per cent higher than in the Organisation for Economic Co-Operation and Development nations. Delahanty noted that in these countries, this loss of income results in diminished social services.
“This means children aren’t going to school, and they’re not getting health care. It’s a big concern for developing countries, and their input needs to be heard,” she said.
The G20 summit is taking place over two days, starting November 15, in Antalya, Turkey. The governments of the G20 countries are expected to consider a final package of measures that would address cross-border tax avoidance and tax evasion.
The G20 and the OECD, worked together to create The Base Erosion and Profiting Shifting project. The final package of BEPS policies was endorsed by the G20 finance ministers when they met in October in Lima, Peru. The G20 leaders will now be presented with their conclusions.
Despite the leadership role Canada has taken on this issue, Delahanty points out there is still much that needs to be done. This includes integrating developing countries into these tax policy negotiations, ending tax competition that creates a race to the bottom environment and finding a way to effectively fight against tax havens and detrimental tax regimes.