• The European Union Tax Observatory released ‘Global Tax Evasion Report 2024’

FINDINGS

• Tax evasion is enabling billionaires to enjoy effective tax rates equivalent to 0% to 0.5% of their wealth.
• The report highlighted the success of one measure — the automatic exchange of bank information — in reducing offshore tax evasion by a factor of three over the past 10 years.
• $1 trillion profit shifted (in 2022) to tax havens, with negligible effects of policies like Base Erosion and profit Shifting (BEPS, 2015).
• The global minimum tax of 15% on MNCs, adopted in 2012 by 140 countries and territories — has been a disappointment.
• Challenges- The report identifies two primary reasons for offshore tax evasion-

There are an estimated 2,500 billionaires with a combined wealth of $13 trillion.

• Non-compliance by Offshore Financial Institutions for the automatic exchange of bank information, often due to concerns about losing their customer base.
• Shift to Uncovered Asset Classes like real estate

 

RECOMMENDATIONS

• It has called for a global minimum tax on billionaires equal to 2% of their wealth.
  • This would both address evasion and “generate nearly $250 billion from less than 3,000 individuals”.
  • The tax rate of 2% “would still be very modest” given that the wealth of billionaires has grown at 7% a year annually on average since 1995.

 

ABOUT EU TAX OBSERVATORY

• The EU Tax Observatory is an independent research laboratory
• It is hosted at the Paris School of Economics.
• It conducts innovative research on taxation, contributes to a democratic and inclusive debate on the future of taxation, and fosters a dialogue between the scientific community, civil society, and policymakers in the European Union and worldwide.