Multinational companies and wealthy individuals are using tax havens to underpay tax to the Nigerian government thereby leading to $492 billion losses annually, a new report by the Tax Justice Network has revealed.
The Tax Justice Network’s annual State of Tax Justice report measures how much tax every country loses to global tax abuse a year.
“Nigeria incurs an annual loss of $383.9 million, arising from profit and tax losses to global corporate tax abuse,” the 2024 State of Tax Justice report stated.
The report reveals that of the $492 billion in global annual tax losses, $347.6 billion arise from cross-border corporate tax abuse by multinational corporations.
It disclosed that of the $492 billion lost to global tax abuse a year, two-thirds ($347.6 billion) is lost to multinational corporations shifting profit offshore to underpay tax and the remaining third ($144.8 billion) is lost to wealthy individuals hiding their wealth offshore.
The total global loss comprises the combined costs of cross-border tax abuse by multinational companies and by individuals with undeclared assets offshore.
“Nearly half the losses (43 per cent) are enabled by eight countries that are opposed to the United Nations (UN) tax convention to check tax loopholes and they include Australia, Canada, Israel, Japan, New Zealand, South Korea, United Kingdom and the United States of America,” the report said.
The above eight countries which by their action are the biggest enablers of global tax abuse are also some of the biggest losers.
The eight, constituting a small group of higher-income countries, account for just about 8 percent of the global population and are known to have blocked the whole world from agreeing tax rules at the United Nations which were designed to curb global tax abuse.
British Virgin Islands stands on top of the list with a score of 3,061, followed by Cayman Islands (2,891), Bermuda (2,478), Switzerland (2,279), Singapore (2,059), Hong Hong (1,948), Netherlands (1,945), British Crown Dependency, Jersey (1,756), Ireland (1 622), and Luxembourg (1,480).
The Bahamas is ranked 11th with a score of 1,313, followed by the Isle of Man (1,144), Guernsey (1 122), Cyprus (1,046), while Mauritius (the only African country listed among the tax havens) is ranked 1,005.
China is ranked 974; United Arab Emirates (UAE), 964; United Kingdom (UK) is 894, France 883 and Malta 747.
The report said the UK and its second empire is responsible for over a quarter of all countries’ tax losses (26 per cent), costing countries $129 billion a year.
It said the largest component of global tax losses continues to be cross-border corporate tax abuse, while adding that multinational companies are responsible for around a third of global economic output, half of world exports and nearly a quarter of global employment.
The report added that their tax abuse is a first-order global economic issue, depriving governments of tax revenues, increasing inequalities between and within countries, and undermining smaller and domestic businesses that generate the majority of employment.
It also stated that the most recent data (October 2024) indicated that multinational corporations are shifting $1.42 trillion worth of profit into tax havens a year, causing governments around the world to lose $348 billion annually in direct tax revenue.
The report disclosed that the eight countries which recently voted against UN tax convention terms lost $177 billion; $189 billion lost by 44 abstainers, and $123 billion lost by 110 countries voting for.
It stated that multinational corporations are shifting more profit into tax havens and underpaying more on tax, evidencing failure of the Organisation for Economic Cooperation and Development (OECD’s) tax reform attempts.
“Offshore tax evasion by wealthy individuals dropped, but by far less than claimed, the majority of wealth offshore is still hidden from tax authorities,” the report said.
