The UK and its dependant territories, the Netherlands, Luxembourg and Switzerland, are together responsible for 50 per cent of global corporate tax losses according to a new report by the Tax Justice Network (TJN).

The State of Tax Justice 2023 also argues that global tax leadership, which is currently assumed by the Organisation for Economic Co-operation and Development (OECD), should be transferred to the UN.

The report urges countries to vote at the UN general assembly later this year in favour of beginning negotiations on a UN tax convention to avert what the TJN describes as “astronomic losses”.

Key figures

Countries are losing US$472 billion in tax a year to global tax abuse, of which US$301 billion is lost to cross-border corporate tax abuse by multinational corporations and US$171 billion is lost to offshore tax abuse by wealthy individuals according to the report.

It says the UK and its dependent territories are responsible for 24 per cent of the corporate tax losses, with the Netherlands, Luxembourg and Switzerland together responsible for around the same amount. In total, OECD member countries and their dependencies account for almost 7 of every ten dollars lost.

Trend analysis

If countries stay the course followed for the past 10 years on international tax rules, countries will lose US$4.7 trillion over the next 10 years, the report estimates.

It draws the comparison that countries around the world collectively spent US$4.66 trillion on public health in a single year.

Lower income countries

While higher income countries suffer by far the most annual tax losses, amounting to US$426 billion annually, these losses are equivalent to 9 per cent of higher income countries public health budgets.

But lower incomes countries’ tax losses, amounting to US$46 billion a year, are equivalent to more than half of their public health budgets.

From OECD to UN

Lower income countries have historically had little to no say on global tax rules and are not members of the OECD, the international organisation that consists of member countries with relatively high-income economies.

But the OECD has assumed the role of global tax leadership, despite the fact that its member countries and their dependencies account for around 70 per cent of corporate tax losses.

The report’s main recommendation therefore is that countries should support moving leadership on global tax from the OECD to the UN, where the TJN believes global membership, public transparency and the UN’s human rights legal frameworks and technical expertise can provide a more viable forum for securing effective tax solutions.

The State of Tax Justice report, available in in English, Spanish, Portuguese and French can be downloaded from here.

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