Nearly $500bn ‘lost to tax abuse’ by companies and elites in 2021
Countries have lost $483bn to tax abuse by multinationals and ultra-wealthy individuals, with the UK singled out as the world’s greatest enabler of global corporate tax abuse, according to a new report.
The State of Tax Justice 2021 report found that the UK was responsible for nearly 40 per cent of the total losses this year, which amounted to £359bn – enough to fully vaccinate the global population against Covid-19 three times over according to the report.
Almost a third of global corporate tax loss was also ascribed to the “UK spider’s web” – referring to the network of UK Overseas Territories and Crown Dependencies which are often used to facilitate profit shifting and illicit financial flows, with Canada at the “centre of the web” – making it the world’s greatest enabler of global corporate tax abuse, the report said.
Companies can shift their profits in Canada after rerouting them via satellite jurisdictions, to underpay taxes in other places.
“The line between tax avoidance and tax evasion is a very thin one,” said Jonathan Fisher QC, Barrister at Bright Line Law.
“A former Chancellor described the line as the thickness of the prison wall,” he added.
“Tax avoidance is lawful and occurs where individuals or companies arrange their affairs in such a way as to reduce tax, but without misleading HMRC about what they are doing,” said Fisher.
“Very often the avoidance arrangements may be artificial and contrived, which is why politicians have described them as immoral, but they remain legal.”
Tax evasion on the other, Fisher explained, constitutes a criminal offence.
“It is deliberate and dishonest conduct, designed to reduce tax by misleading HMRC about the true position of an individual’s or a company’s profits or losses.”
The report, from the Global Alliance for Tax Justice, Public Services International and the Tax Justice Network, is the second of its kind.