UK spider’s web costs world economy $70Bn in tax evasion

Seth Emanuel

The Tax Justice Network’s Corporate Tax Haven Index 2019, a ranking of countries’ complicity in global corporate tax havenry estimated the UK spider’s web to be responsible for over a third of the world’s corporate tax abuse risks as measured by the index in 2019.

The State of Tax Justice 2020 reveals that over $393 billion in profit is shifted into the UK spider’s web by multinational corporations every year, costing the world nearly $70 billion in tax lost to corporate tax abuse.

The UK spider’s web is responsible for 29 per cent of the $245 billion in tax the world loses to corporate tax abuse every year, which is in line with the Corporate Tax Haven Index 2019 estimate.

When including tax losses to private tax evasion, the UK spider’s web is responsible for 37.4 per cent of all tax losses suffered by countries around the world, costing countries over $160 billion in lost tax every year.

Corporate tax rates in practice in the UK, Switzerland and Luxembourg – well known tax havens range from 10 per cent to 0.8 per cent – markets where Kenyan elites stash their stolen public funds. Mauritius and Dubai are also target markets for the corrupt.

Tax evasion is illegal but companies – especially those with global presence chose to reduce their bills by moving profits through countries or territories with lower taxes, including those with close legal ties to Britain like Kenya.

“We need a global solution to this problem,” said Chenai Mukumba, a policy researcher with TJN, who has recommended the formation of a UN –led organization to be spearheaded by a G20 group of developed and emerging market countries to tighten the rules.

The Tax Justice Network’s Corporate Tax Haven Index 2019 also estimated the UK spider’s web, along with the Netherlands, Luxembourg and Switzerland together to be responsible for half of the world’s corporate tax abuse risks as measured by the index in 2019. This earned the group the name “axis of tax avoidance”.

The State of Tax Justice 2020 reveals that over $656 billion in profit is shifted into the axis of tax avoidance by corporations every year, costing the world nearly $117 billion in tax lost to corporate tax abuse.

The axis of tax avoidance is responsible for 47per cent of the $245 billion the world loses to corporate tax abuse every year, which is in line with the Corporate Tax Haven Index 2019’s estimation.

When including tax losses to private tax evasion, the axis of tax avoidance is responsible for 55 per cent of all tax losses suffered by countries around the world, costing countries nearly $237 billion in lost tax every year.