A recent report by the EU Tax Observatory has produced six new findings on global tax evasion and made six recommendations. Global Tax Evasion Report 2024highlights the following key points:
automatic exchange of information has led to a significant reduction in offshore tax evasion;
$1 trillion of corporate profits was booked in tax havens in 2022, with little sign of progress in addressing profit shifting, even after several years of the BEPS project;
the Pillar Two minimum tax has been watered down since initial general agreement in 2021;
new forms of ‘aggressive tax competition’ are affecting government revenues – this encapsulates special tax regimes introduced by individual countries to attract particular groups to their jurisdiction which, the report suggests, reduce the tax base in the country from which the entity/individual departed;
billionaires tend to pay very low rates of tax, and ‘significantly lower than those of all other groups of the population’; and
a global minimum tax on billionaires ‘would raise large sums’ – a perhaps somewhat obvious conclusion, suggesting that a 2% wealth tax would generate nearly $250bn from fewer than 3,000 individuals. The report notes that this could be the first time that such a proposal has been quantified, although the findings are based on estimates of wealth and taxes paid (see Table 2 of the report).
The report makes the following recommendations:
increase the Pillar Two global minimum corporate tax rate to 25% and remove carve-outs for certain profits;
introduce a new 2% global minimum wealth tax for billionaires;
institute mechanisms to tax wealthy individuals who have been long-term residents in a country and choose to move to a low-tax country (this would appear to involve taxing non-residents for a number of years after their departure);
implement unilateral minimum taxes, where international efforts fail to reach a consensus;
move towards the creation of a global asset registry to better fight tax evasion (extending the automatic exchange of financial information); and
strengthen the application of economic substance and anti-abuse rules.
A recent report by the EU Tax Observatory has produced six new findings on global tax evasion and made six recommendations. Global Tax Evasion Report 2024highlights the following key points:
automatic exchange of information has led to a significant reduction in offshore tax evasion;
$1 trillion of corporate profits was booked in tax havens in 2022, with little sign of progress in addressing profit shifting, even after several years of the BEPS project;
the Pillar Two minimum tax has been watered down since initial general agreement in 2021;
new forms of ‘aggressive tax competition’ are affecting government revenues – this encapsulates special tax regimes introduced by individual countries to attract particular groups to their jurisdiction which, the report suggests, reduce the tax base in the country from which the entity/individual departed;
billionaires tend to pay very low rates of tax, and ‘significantly lower than those of all other groups of the population’; and
a global minimum tax on billionaires ‘would raise large sums’ – a perhaps somewhat obvious conclusion, suggesting that a 2% wealth tax would generate nearly $250bn from fewer than 3,000 individuals. The report notes that this could be the first time that such a proposal has been quantified, although the findings are based on estimates of wealth and taxes paid (see Table 2 of the report).
The report makes the following recommendations:
increase the Pillar Two global minimum corporate tax rate to 25% and remove carve-outs for certain profits;
introduce a new 2% global minimum wealth tax for billionaires;
institute mechanisms to tax wealthy individuals who have been long-term residents in a country and choose to move to a low-tax country (this would appear to involve taxing non-residents for a number of years after their departure);
implement unilateral minimum taxes, where international efforts fail to reach a consensus;
move towards the creation of a global asset registry to better fight tax evasion (extending the automatic exchange of financial information); and
strengthen the application of economic substance and anti-abuse rules.
