(Ecofin Agency) - International tax avoidance makes countries lose over $427 billion in tax revenues every year, a report by Tax Justice Network in collaboration with partners including Global Alliance for Tax Justice and Public Services International revealed.
The state of tax justice 2020 found that, of the amount lost in tax evasion, $245 billion represents profits transferred to tax havens by multinationals. With this strategy, the companies lower the amount of profit they report in countries where they operate and subsequently pay lower taxes than they normally should. The remaining $182 million is what rich individuals hide abroad also to avoid paying tax.
In this pandemic context, when major financial efforts are required, countries all over the world see on average the equivalent of 9.2% of their health budget lost to tax abuse. The damage is even heavier for low-income economies which lose up to 52% of their health budget in tax evasion against only 8.4% for high-income countries.
In Africa, tax abuse by companies and tax avoidance by rich individuals amounted to $23.2 billion each year, the TJN’s report said. The most affected country on the continent is Nigeria where the figure reached $10.5 billion. South Africa, Egypt, and Angola follow with losses above $2 billion.