Crumbling economies must tackle tax evasion to meet virus crisis, experts warn

With governments racked by colossal costs due to the coronavirus pandemic, experts say tax evasion is cast in a stark new light.

As emergency coronavirus medical and socialprograms lay bare economic and social deficiencies around the world, experts are calling for a more forceful tax response to the crisis.

They said the dramatic spike in jobless claims combined with the vast additional burden on health systems should be a tax call-to-arms for governments internationally.

The pandemic has highlighted global reliance on digital and pharmaceutical behemoths, and at the same time should shine a spotlight on their tax behavior, said Rasmus Corlin Christensen, a researcher with the International Centre for Tax and Development.

Developing countries are particularly vulnerable to such a system, with yearly tax losses estimated at around $200 billion, a figure roughly equivalent to the amount the United Nations predicts they will lose due to the coronavirus pandemic.

While often rich in natural resources, those nations routinely see their precious commodities extracted by multinationals that shift profits out to their offshore shell companies and deprive the source country of much-needed tax revenue.

Last year, ICIJ’s Mauritius Leaks investigation revealed how many corporations and wealthy individuals exploit so-called tax treaties to essentially divert tax revenue from poor nations back to their coffers. While legal, tax treaties often become a way to avoid paying tax in developing coun-tries, which may not be able to compete with the incentives offered by tax havens like Mauritius and others.“Sustainable, robust public responses to shocks require administrative capacity and tax resources,” Christensen said. “Tax avoidance and global tax competition, more broadly, strain the ability of countries to raise those resources.”

source -icij