Context:
‘State of Tax Justice 2024’ Report Released by the Tax Justice Network.
Key Highlights:
- Annual Tax Loss: Countries are losing approximately $492 billion annually due to global tax abuse.
- Sources of Loss: 2/3rd of this loss is attributed to multinational corporations shifting profits offshore, while the remaining 1/3rd is due to wealthy individuals hiding their wealth offshore.
- Enablers of Tax Abuse: Nearly half of the global tax losses (43%) are enabled by 8 countries that oppose a UN tax convention: Australia, Canada, Israel, Japan, New Zealand, South Korea, the UK, and the US.
- Global North vs. Global South: Countries in the Global North lose the largest amount of tax revenues in absolute terms, while countries in the Global South endure the deepest losses as a share of their tax revenues.
- Consequences: These tax losses result in foregone public services, increased inequalities between countries, and limited support for domestic businesses.
- Policy Recommendations –
- UN Tax Convention: The report recommends adopting a UN tax convention to establish globally inclusive international tax rules and combat cross-border tax evasion.
- Excess Profits and Wealth Taxes: Implementing excess profits and wealth taxes can reduce economic inequality, and ensure that those who benefit most from society contribute proportionately to the social good.
Global Tax Reforms:
- OECD’s Global Minimum Tax (GMT) policy aims to impose a minimum effective rate of 15% on corporate profits.
- OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan and the Common Reporting Standard (CRS) for automatic exchange of financial account information
Source: Business World Online
Previous Year Question
‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and
[UPSC Civil Service Exam – 2017 Prelims]
(a) European Union
(b) Gulf Cooperation Council
(c) Organization for Economic Cooperation and Development
(d) Shanghai Cooperation Organization
Answer: (a)