GMB Support Call For G20 Summit Meeting In Turkey On 15/16 November To Tackle Massive Scale Of Corporate Tax Avoidance Using Tax Havens
The main winners are tax havens and the lost revenues translate into real human cost for the poorest people through cuts to public services says GMB.
GMB is backing calls for the G20 summit in Turkey on November 15/16th to tackle the massive scale of corporate tax avoidance through profit shifting shown in a recent report from Public Services International (PSI), OXFAM, Tax Justice Network and Global Alliance for Tax Justice. See notes to editors for copy of Public Services International, OXFAM, Tax Justice Network and Global Alliance for Tax Justice dated 9th November 2015.
Bert Schouwenburg, GMB International Officer, said “The report, titled “Still Broken” finds that US corporations alone managed to shift $500-700 billion - a quarter of their annual profits - out of countries where the money was made and into a handful of low or no tax jurisdictions.
This missing tax has real consequences. The report finds that G20 countries lose the most revenue but that developing countries are hardest hit as they rely most on corporate tax to raise revenue.
The main winners are tax havens. This translates into real human cost for the poorest people through cuts to public services.
GMB is affiliated to PSI and fully back its view that it is time to build an international corporate tax system based on the public good and not national or corporate interest.
Leaders at the G20 summit are poised to announce the OECD Base Erosion Profit Shifting (BEPS) program; the first real attempt to curb corporate tax avoidance on a global scale. However the BEPS program is not expected to properly address some of the key methods of tax avoidance such as how corporations are able to get away with using proxy ‘holding companies’ in low tax countries. The report reminds world leaders that we will continue to fight until corporations stop placing the burden of their tax avoidance on the people and start paying a fair share.
GMB supports the work of PSI as a founding member of the Independent Commission of Reform of International Corporate Taxation to promotes credible alternative models to fix the international corporate tax system that is clearly fundamentally still broken.”
Contact: Bert Schouwenburg, 0207 391 6757 or 07974 251764 or Kathleen Walker Shaw on 07841 181549 or GMB press office 07921 289880
Notes to editors
Copy of press release from Public Services International, OXFAM, Tax Justice Network and Global Alliance for Tax Justice dated 9th November 2015.
G20 among biggest losers in large-scale tax abuse – but poor countries relatively hardest hit
G20 countries are among the biggest losers when US multinationals avoid paying taxes where they do business. This is the main finding of a new report on the global tax system, ‘Still Broken,’ released by the Tax Justice Network, Oxfam, Global Alliance for Tax Justice and Public Services International.
Overall it is estimated that, in order to reduce their tax bills, US multinationals shifted between $500 and 700 billion - a quarter of their annual profits - out of the United States, Germany, the United Kingdom and elsewhere, to a handful of countries including the Netherlands, Luxembourg, Ireland, Switzerland and Bermuda in 2012. In the same year, US multinational companies reported US$ 80 billion of profits in Bermuda - more than their profits reported in Japan, China, Germany and France combined.
Claire Godfrey, head of policy for Oxfam’s Even it Up Campaign said:
“Rich and poor countries alike are haemorrhaging money because multinational companies are not required to pay their fair share of taxes where they make their money. The heaviest costs are being felt in the poorest countries. Under-funded public services affect everyone the world over, but the vulnerable suffer most.”
Rosa Pavanelli, General Secretary for Public Services International:
“Public anger will grow if the G20 leaders allow the world’s largest corporations to continue dodging billions in tax while inequality rises, austerity bites and public services are cut.”
The G20 Heads of State are expected to consider a package of measures they claim will address corporate tax avoidance at their annual meeting in Turkey on 15 and 16 November.
Alex Cobham, Director of Research at Tax Justice Network, said:
“The corporate tax measures being adopted by the G20 this week are not enough. They will not stop the race to the bottom in corporate taxation, and they will not provide the transparency that’s needed to hold companies and tax authorities accountable. It’s in the G20’s own interest to support deeper reforms to the global tax system.”
Twelve countries – the United States, Germany, Canada, China, Brazil, France, Mexico, India, UK, Italy, Spain and Australia - account for roughly 90 per cent of all missing profits from US multinationals. For example, US multinationals make 65 per cent of their sales, employ 66 per cent of their staff and hold 71 per cent of their assets in America but declare only 50 per cent of their profits in the country.
While G20 countries lose the largest amount of money, low-income developing countries such as Honduras, the Philippines and Ecuador are hardest hit because corporate tax revenues comprise a higher proportion of their national income. It is estimated, for example, that Honduras could increase healthcare or education spending by 10-15 per cent if the practice of profit shifting by US multinationals was stopped.
Dereje Alemayehu, chair of the Global Alliance for Tax Justice said:
“If big G20 economies with well-developed tax legislation and well-resourced tax authorities cannot put a stop to corporate tax abuse, what hope have poor countries with weaker, less well-resourced tax administrations? Poor countries need a seat at the table in negotiations on future tax reforms to ensure that they can claim tax revenues which are desperately needed to tackle poverty and inequality.”
The Tax Justice Network, Oxfam, Global Alliance for Tax Justice and Public Services International are calling on the G20 to support further reforms to the global tax system that involve all countries on an equal footing. These reforms should effectively tackle harmful tax practices such as profit shifting and the use of corporate tax havens and should halt the race to the bottom in general corporate tax rates.