Tax evasion by EU-based multinational corporations is costing developing countries billions in lost revenue, a practice that is devastating for poor nations’ economies, a report shows.
The report published on Monday by Eurodad, a network of non-governmental organizations, says multinational corporations’ tax dodging costs developing countries between 660 and 870 billion euros annually.
The report analyzed 13 EU member states and their respective roles in tax-related capital flight from poor countries.
“For developing countries, tax dodging is especially devastating, with more money leaving their economies than what they receive in aid,” said Tove Maria Ryding, tax co-coordinator at Eurodad.
The multinational companies’ tax evasion is an important issue, as developing countries face funding shortfalls of roughly 112 billion euros each year to reach development goals set by the United Nations, the report said.
Furthermore, Ryding said that while European citizens give money to charities to fight poverty in developing countries, EU-based multinationals are gaining large profits in those same countries without paying taxes.
“Until our governments put a stop to this, Europe is giving with one hand and taking with the other,” said Ryding.
Eurodad said none of the 13 surveyed states has implemented adequate levels of tax transparency or full country-by-country financial reporting requirements for international companies.
The report also showed that some of the biggest tax dodgers have their headquarters in some of the wealthiest member states.
The NGO said two out of three companies reviewed in Denmark pay no corporate tax at all. Danish media has reported that nearly 37 billion euros in Danish funds are stashed away in tax havens.
In addition, Sweden is becoming a haven for holding companies as it has introduced favorable tax rules. Stockholm admitted last year that capital flight from developing countries is a problem. However, the government has done little to address the problem, Eurodad said.
Ryding concluded by calling on EU leaders to demand that companies “reveal to the public who their owners are, where they operate and what taxes they pay” and “to ensure that all global companies pay their fair share of tax, both in the EU and in the rest of the world.”