{"id":33056,"date":"2023-02-26T00:03:00","date_gmt":"2023-02-26T00:03:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=33056"},"modified":"2023-03-02T19:51:05","modified_gmt":"2023-03-02T19:51:05","slug":"1-trillion-in-the-shade-the-annual-profits-multinational-corporations-shift-to-tax-havens-continues-to-climb-and-climb","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/1-trillion-in-the-shade-the-annual-profits-multinational-corporations-shift-to-tax-havens-continues-to-climb-and-climb\/","title":{"rendered":"$1 trillion in the shade \u2013 the annual profits multinational corporations shift to tax havens continues to climb and\u00a0climb"},"content":{"rendered":"\n

Ludvig Wier<\/a>, University of Copenhagen<\/a><\/em> and Gabriel Zucman<\/a>, University of California, Berkeley<\/a><\/em><\/p>\n\n\n\n

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CC BY-NC-ND<\/a><\/figcaption><\/figure>\n\n\n\n

About a decade ago, the world\u2019s biggest economies agreed to crack down<\/a> on multinational corporations\u2019 abusive use of tax havens. This resulted in a 15-point action plan<\/a> that aimed to curb practices that shielded a large chunk of corporate profits from tax authorities.<\/p>\n\n\n\n

But, according to our estimates, it hasn\u2019t worked. Instead of reining in the use of tax havens \u2013 countries such as the Bahamas and Cayman Islands with very low or no effective tax rates \u2013 the problem has only gotten worse.<\/p>\n\n\n\n

By our reckoning<\/a>, corporations shifted nearly US$1 trillion in profits earned outside of their home countries to tax havens in 2019, up from $616 billion in 2015, the year before the global tax haven plan was implemented<\/a> by the group of 20 leading economies, also known as the G-20.<\/p>\n\n\n\n

In a new study<\/a>, we measured the excessive profits reported in tax havens that cannot be explained by ordinary economic activity such as employees, factories and research in that country. Our findings \u2013 which you can explore in more detail along with the data and an interactive map in our public database<\/a> \u2013 show a striking pattern of artificial shifting of paper profits to tax havens by corporations, which has been relentless since the 1980s.<\/p>\n\n\n\n

Global crackdown<\/h2>\n\n\n\n

The current effort to curb the legal corporate practice of using tax havens to avoid paying taxes began in June 2012, when world leaders at the G-20 meeting in Los Cabos, Mexico<\/a>, agreed on the need to do something.<\/p>\n\n\n\n

The Organization for Economic Cooperation and Development, a group of 37 democracies with market-based economies, developed a plan that consisted<\/a> of 15 tangible actions it believed would significantly limit abusive corporate tax practices. These included creating a single set of international tax rules and cracking down on harmful tax practices.<\/p>\n\n\n\n

In 2015, the G-20 adopted the plan officially, and implementation began across the world the following year.<\/p>\n\n\n\n

In addition, following leaks like the Panama Papers<\/a> and Paradise Papers<\/a> \u2013 which shed light on dodgy corporate tax practices \u2013 public outrage led governments in the U.S.<\/a> and Europe to initiate their own efforts to lower the incentive to shift profits to tax havens.<\/p>\n\n\n\n

Profit-shifting soars<\/h2>\n\n\n\n

Our research shows<\/a> all these efforts appear to have had little impact.<\/p>\n\n\n\n

We found that the world\u2019s biggest multinational businesses shifted 37% of the profits \u2013 or $969 billion \u2013 they earned in other countries (outside the headquarter country) to tax havens in 2019, up from about 20% in 2012 when G-20 leaders met in Los Cabos and agreed to crack down. The figure was less than 2% back in the 1970s. The main reasons for the large increase were the growth of the tax avoidance industry in the 1980s and U.S. policies that made it easier to shift profits from high-tax countries to tax havens.<\/p>\n\n\n\n

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