This type of tax loss has a serious impact on public finances and the ability of states to provide public services such as health and education. For reference, the report states that these tax losses over 10 years are equivalent to one year of global public health spending, amounting to $4.8 trillion.
The largest component of global tax losses is corporate taxes
The main component of global tax losses, the report points out, is the abuse of corporate taxes. This includes various practices, such as criminal tax evasion, illegal tax avoidance and avoidance, which, although technically legal under international tax rules, still contribute to the socially contentious result of the difference between the place of real economic activity of companies and the place, where their earnings are declared.
Bulgaria with the largest gray economy in Europe
France is the country in Europe that seems to be most affected by this problem. In 2022, the theoretical losses for France are estimated at more than 27 billion dollars, which represents about 1% of the national GDP. Great Britain and Germany follow, with theoretical losses between 16 and 17 billion dollars.
Bulgaria with smaller losses
According to calculations by the Tax Justice Network, Bulgaria loses approximately 140 million dollars to tax evasion, which represents 0.2% of the country’s GDP. Compared to larger European economies, Bulgaria’s losses appear smaller.
The role of international reforms and requests to create global tax rules
The report notes that OECD reforms (such as a 15% minimum corporate tax) have so far failed to reduce “tax injustices” around the world because they do not bind non-OECD countries. The Tax Justice Network is therefore campaigning for a UN body to be responsible for setting global tax rules and for measures such as “automatic exchange of information on financial accounts, transparency of beneficial owners and publication of country-by-country reports by multinationals companies to reveal the extent and nature of profit shifting.’
These types of tax issues are of great interest to both countries and the international community as they affect the fiscal sustainability and fairness of the global economy. The decisions that will be made in the future will have a significant impact on the way countries collect and use taxes, as well as on efforts to reduce tax losses from abuse and tax evasion.
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