According to a new report from the anti-poverty charity Oxfam, systemic abuse of the global tax system has allowed an “opaque and secretive network” of 1,608 subsidiaries owned by American corporations like Apple and General Electric to hide $1.4 trillion in offshore tax havens. This chart from Statista, based on the Oxfam report, shows how much money major United States tech companies have overseas, and how many subsidiaries they have set up in countries that Oxfam defines as tax havens, “which can be characterized by secrecy, low- or zero-tax rates and the nearly complete lack of disclosure of any relevant business information”. A previous tax haven blacklist put together by the European Commission in 2015 was withdrawn after it failed to include key countries like Luxembourg.
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“The same tricks and tools used by multinational companies to dodge tax in the United States are being used to cheat countries across the world out of their fair share of tax revenues, with devastating consequences”.
Silverman added that poorer countries are “particularly” hit hard by these tax-evasive practices – losing an estimated $100bn a year. “This is enough to provide safe water and sanitation to more than 2.2 billion people”, said Silverman.
Oxfam also singled out British overseas territories such as Bermuda for their popularity with USA firms seeking to slash their tax bill by “profit-shifting”.
Apple, Coca-Cola, Walmart, ExxonMobil and Google parent Alphabet are among the many companies with billions hidden offshore.
“For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts”, said Oxfam.
The Oxfam’s report titled “Broken at the Top”, comes on the heels of the Panama Papers scandal revealing a secret multi-billion dollar trail to tax havens where corporations and wealthy stash their fortunes.
Oxfam analysts calculated that these corporations paid an average effective tax rate of 26.5 percent.
The report reveals that the same companies are among the largest beneficiaries of USA taxpayer funded support, receiving a staggering $11 trillion in federal loans, loan guarantees and bailout assistance from 2008-2014 even as they avoided hundreds of billions of dollars in taxes over the same period.
The report was released on the opening day of the Spring Meetings of the World Bank and International Monetary Fund, where the Panama Papers and the issue of tax havens were in focus.
“U.S. corporations must pay 35 percent tax on all profits, wherever they are earned around the globe – but only after that money has been “repatriated” back to the US”, the report said.
The IFC defended the use of the offshore companies in global development saying that the offshore companies are not used for tax evasion.
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Over the past several decades, corporations have been paying a smaller and smaller share of taxes, according to a Pew Research Center analysis.
