Countries lose 426 billion through tax avoidance: Tax Justice report

Countries are missing out on 426 billion euros each year due to tax avoidance and tax evasion. This information comes from a new report conducted by non-profit organizations ActionAid and Tax Justice Network.

Together with Switzerland, the United Kingdom, and Luxembourg, the Netherlands is said to be accountable for more than 236 billion euros in missing revenue. The United Kingdom and British overseas territories, such as the Cayman Islands, are said to allow the most avoidance and evasion.

Late last month, leaders of the major G20 countries formally agreed to overhaul corporate taxation worldwide. The reform intends to put an end to tax avoidance by multinational companies.

Before the G20 Summit, 136 countries agreed to a major reform of the international tax system after lengthy negotiations led by the Organization for Economic Cooperation and Development (OECD). The countries agreed that multinationals will pay a minimum 15 percent tax starting in 2023, regardless of their country of residence.

"The international approach to tackling tax avoidance is going far too slowly because countries that enable tax avoidance still have too much influence on the agreements," said Arnold Merkies of Tax Justice Nederland. "As a result, we often see measures that seem nice at first, but do little to tackle tax avoidance in reality."

Tax Justice recommends that more taxes be levied on companies that have profited handsomely from the coronavirus pandemic. They added that the OECD should not be responsible for implementing global tax rules because its rich Western members are the ones enabling tax avoidance.