Saturday, April 3, 2021, marks five years since the astonishing leak of 11.5 million documents from the Panama-based tax advisory firm Mossack Fonseca. These documents revealed a hidden structure of crime, corruption and tax evasion hidden by secret offshore companies, which covered up the profits of dirty businesses and tax evasion.
While the leak showed that many of the world’s richest people and companies, including 143 politicians and their associates, used offshore tax havens to avoid paying their fair share in taxes, ordinary citizens of many countries around the world faced tough austerity measures.
Although many people were indicted and several high-ranking politicians resigned, five years of politicians have failed to change the structures that allow tax evasion, corruption, and dirty business exposed by the Panama Papers leak. And the Mossack Fonseca scandal represented only the tip of the iceberg in terms of lost revenue due to illicit financial flows and tax havens.
Tax Justice Network estimates that around $ 500 billion in corporate taxes are evaded each year globally, facilitated by a complex network of tax havens, banks, financial advisers, large companies and the elite. The OECD and the European Union have taken some steps to increase transparency, but in practice, billionaires and companies trying to avoid taxes and launder money can still find ways to do so, as our leaders have not fundamentally changed the laws and regulations that allow them. do it.
While the Panama Papers exposed how the global elite hides their money abroad, we don’t have to look very far to see how many EU countries facilitate tax abuse. Countries such as the Netherlands and Luxembourg are among the largest facilitators of tax evasion in the world, and others such as Ireland, Cyprus and Malta also have characteristics of tax havens. This is completely unacceptable.
Read the response from the European Commission by clicking on the link below:
Since the Panama Papers, we have also seen an explosion in the digital economy, which is notoriously difficult to tax as it can be tricky to establish exactly where the profits of tech companies are made, and many large tech companies use this lack. of clarity to avoid paying your fair share of taxes. For example, ActionAid’s research found that 20 developing countries could be losing up to $ 2.8 billion in tax revenue from Facebook, Alphabet Inc, and Microsoft due to unfair global tax rules.
The potential taxes collected from these three ‘big tech’ companies alone could address the World Health Organization (WHO) estimated shortage of more than 1.7 million nurses in these countries in just three years.
COVID-19 has highlighted our dependence on public services, particularly health and education, and the scarcity of funds for them.
Both the UK and the US Announce Plans to Increase Corporate Tax Rates is an acknowledgment that more tax revenue is needed during the pandemic and beyond. In addition to increasing corporate tax rates, the current Covid-19 crisis should provide an additional impetus for the EU and member states to take urgent action to close tax loopholes and change other laws and rules that facilitate tax evasion.
A recent directive proposed by the European Commission on country-by-country public reporting, which will require companies to disclose their income, profits, taxes paid and economic activity in each country where they are present, is an important step towards fiscal transparency. and it represents a great victory for many civil society organizations. But much more is needed for the EU to take effective action to address the issues highlighted five years ago by the Panama Papers.
There are four essential actions that the EU must take in matters of tax justice: Member states must eliminate all characteristics of tax havens in their own countries; the EU must update its blacklist of tax havens to actually include all tax havens, including its own member states. This should include blacklisting low or no tax jurisdictions; the tax treaties that allow companies to transfer profits to tax havens free of taxes should be reviewed; and the EU and its member states must take the initiative to properly tax the digital economy.
In the words of the Global Alliance for Tax Justice, nominated for the 2021 Nobel Peace Prize: “There is no lasting peace without social justice, nor social justice without tax justice.” EU governments must not stop or make excuses, action is needed now to address tax evasion and secrecy, especially given the ongoing Covid pandemic and the need for governments around the world, not just the EU, can raise revenue to fund vital public services.
ActionAid was founded as a charity in 1972.
Its strategy is to generate an international push for social, economic and environmental justice, driven by people living in poverty and exclusion.
George is Digismak’s reported cum editor with 13 years of experience in Journalism