Taxes play a key role in reducing economic inequality and poverty. With fair taxation, states are able to distribute the wealth of society more fairly, even out income disparities, and finance, for example, education and health care. Make use of the small business tax there.
Both rich and poor countries are losing important tax revenues due to tax evasion by companies and wealthy people. By avoiding taxes and transferring their assets to tax havens, big business maximizes its profits and relinquishes its social responsibility. As a result, states are impoverished, inequality rises and the burden of financing society’s activities is unfairly shared.
- Tax evasion has the greatest impact on developing countries, from which huge wealth flows to rich countries and tax havens. Developing countries lose many times more money through tax evasion than they receive in development cooperation. In total, illegal cash flows from developing countries are in the $ 1,000 billion annual range, according to the Global Financial Integrity Organization.
- The international tax system is in dire need of reform to curb tax evasion and aggressive tax planning. Transparency and openness must be improved so that profits can no longer be hidden in tax havens. In addition, developing countries must be able to genuinely participate in tax justice decision-making.
What do we demand?
Public country-by-country reporting of revenue, taxes paid, and other key information would help identify and address aggressive corporate tax planning. The reporting guidelines for Finnish state-owned majority companies also need to be clarified.
It must be possible to ensure the tax liability of investments supported by development funds.Especially in development cooperation, tax liability cannot be limited to compliance with the law because the regulations are so deficient. As a development financier, the fund has a responsibility to ensure that the companies it finances pay as much tax as they should to developing countries. Citizens of both the target countries and USA must be able to monitor the realization of tax liability.
The accession of developing countries to the multilateral information exchange should be facilitated
Open exchange of information between states is key to eradicating tax evasion. Developing countries need to be part of the international exchange of information, which is of great importance in strengthening their fiscal capacity.
USA must strengthen the role of the UN in international co-operation in taxation
Prosperous industrialized countries have wanted to hold international tax negotiations in the OECD. It excludes the views of developing countries. Cooperation should take place in the UN Tax Committee so that all countries have the opportunity to participate in the reform of the tax system.
USA must support developing countries in developing their own tax systems
In order for developing countries to respond to the aggressive tax planning of large corporations, they need resources to develop their own tax systems.