Tax Dodgers Cost EUR 895 Bil

September 20, 2013 International Tax CooperationTaxation In AfricaTaxation in EU

Woman Trader In Accra's Makola Market, GhanaBRUSSELS – Tax policies in the EU are allowing multinational businesses to dodge their tax obligations while raising a profit in developing countries.

On September 18th the European NGO Confederation for Relief and Development (CONCORD) released a new report which called on EU policy makers to “… prevent, detect and correct some harmful policies” which result in the loss of billions in revenues and financial flows in developing countries.

According to CONCORD, every year more than EUR 100 billion in potential tax revenues is lost in developing countries, as lax tax policies in the EU allow multinational firms to evade their tax obligations around the world, despite raising a portion of their profits in the developing countries.

In 2010 developing nations missed out on further a cumulative EUR 895 billion in economic activity due to tax avoidance and illicit financial flows, with the total amount being nearly 13 times higher than the value of all the development aid expenditure for the entire EU in 2012.

The NGO called on all the EU countries to toughen their stance on international tax evasion in order to allow developing countries a fair chance to expand without being exploited by large multinational businesses.

Summarizing the plight of the developing countries, the chair of working group on policy coherence for development at CONCORD said that while the EU spends significant money on aid around the world, current tax policies result in the money simply being returned “…again to rich countries via tax dodging… The balance sheet shows that the poor in developing countries are losing out here.”

Photo by transaid images