Global corporations ‘cheating public out of billions in tax’, say campaigners
Governments around the world could reap almost $90bn a year extra in tax if they made public their data on the extent to which multinational companies use tax havens, an advocacy group reports.
The Tax Justice Network said states were depriving themselves of $89bn (£75bn) a year by allowing some of the world’s biggest companies anonymity over the way they conduct their tax affairs.
In its State of Tax Justice 2022 report, the TJN called for an end to the concession made to multinational companies that they would not be named and shamed if they provided information about shifting profits into tax havens under a global initiative – country-by-country reporting – pioneered by the Organisation for Economic Cooperation and Development.
Some individual companies have voluntarily made their country-bycountry reports public, and the TJN said that on its calculations, governments could recoup 28% of the $316bn lost in cross-border “tax abuse” in 2021 if a loss of anonymity shone a light on the activities of all multinationals.
The UK legislated in 2016 to make country-by-country reporting publicly available but never used the power, and the idea was abandoned in 2020 by Rishi Sunak when he was chancellor.
Last year, according to TJN estimates, the UK lost £27bn to multinational corporations underpaying tax.
Rachel Etter-Phoya, a senior researcher at the Tax Justice Network, said: “The OECD concession to corporate tax abuse is a political choice to turn a blind eye. Our governments patronise us with talk about making ‘tough decisions’ to deal with the global cost of living crisis, then choose to stay quiet about multinational corporations that have privately confessed to cheating the public out of billions in tax.
“They’re choosing to protect the cherries on the cakes of the richest corporations while people worry about putting food on the table. Our message to governments is clear: stop the coverup, to lift living standards up.
“As for multinational corporations, we call on you to come clean about your taxes. If you’ve got nothing to hide, if you’re paying your fair share at a time when people are feeling the squeeze, publish your country-by-country reports.”
A government spokesperson said: “The UK has been at the forefront of international tax reforms, which includes adopting the OECD’s country-bycountry minimum standard, and leading discussions to achieve the historic global tax deal last year.
“It is unlikely that the publication of country-by-country reports would raise additional tax revenue suggested by the Tax Justice Network because HMRC already receives these reports annually from multinationals and uses them in their compliance work.”