PROFIT-SHIFTING OF MULTINATIONAL CORPORATIONS WORLDWIDE

The Institute of Development Studies published in March a Working Paper which says that multinational corporations avoid taxes by shifting their profits from countries where real activity takes place towards tax havens, depriving governments worldwide of billions of tax revenue. It says that new research, and research methods provides information on the activities of large multinational corporations, including for the first time many low- and lower-middle-income countries.  The paper estimates that they shifted US$1 trillion of profits to tax havens in 2016, which implies approximately US$200-300 billion in tax revenue losses worldwide.  Those headquartered in the US and Bermuda are the most aggressive at shifting profits towards tax havens, while those headquartered in India, China, Mexico and South Africa the least. The paper also establishes which countries gain and lose most from profit shifting: the Cayman Islands, Luxembourg, Bermuda, Hong Kong and the Netherlands are among the most important tax havens, whereas low- and lower-middle-income countries tend to lose more tax revenue relative to their total tax revenue.  It is said that the findings thus support the arguments of low- and lower-middle-income countries that they should be represented on an equal footing during international corporate tax reform debates.

https://opendocs.ids.ac.uk/opendocs/bitstream/handle/20.500.12413/16467/ICTD_WP119.pdf?sequence=1&isAllowed=y

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Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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