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Global Tax Evasion Report 2024

Global Tax Evasion

The European Union Tax Observatory recently published its ‘Global Tax Evasion Report for 2024.’ This report sheds light on some important problems concerning tax evasion, the Global Minimum Tax (GMT) targeting billionaires, and strategies to tackle tax evasion.

The report delves into the impact of global changes implemented in the last decade. These include things like sharing bank information across borders automatically and reaching a worldwide agreement on setting a minimum tax for multinational corporations.

What is Tax Evasion?

Tax evasion is the illegal act of not paying owed taxes to the government by fraudulent means, such as underreporting income, hiding money offshore, or inflating deductions, to reduce tax liability.

Key Highlights

$1 trillion profit shifted to tax havens in 2022, despite the BEPS frameworkMinimum corporate tax of 25%, closing tax competition loopholes
Global billionaires’ low effective tax rates (0% to 0.5%) due to the frequent use of shell companies to avoid income taxationNew 2% global minimum tax on billionaires’ wealth
Offshore tax evasion decreased but challenges remainCreate a Global Asset Registry for wealth and assets
Policy choices impact tax evasionTax long-term residents moving to low-tax countries
Multinational corporations shifted $1 trillion to tax havensImplement unilateral measures for tax collection
The report red-flagged the trend of “Greenwashing the Global Minimum Tax” wherein MNCs can use ‘green’ tax credits for low carbon transition to reduce their tax rates way below the minimum of 15%.Strengthen economic substance and anti-abuse rules

What are the International Reforms to Combat Tax Evasion?

Global Minimum Tax (GMT):

  • A Global Minimum Tax is like a universal tax rate that’s applied to a company’s income on a worldwide scale.
  • In 2021, the Organization for Economic Cooperation and Development (OECD) proposed a 15% minimum tax on the profits that big multinational companies make in foreign countries. This change is expected to generate around $150 billion in annual tax revenue for countries.
  • Around 136 countries, including India, agreed to set a minimum global tax rate of 15% for these big multinational companies, making it more difficult for them to find ways to avoid paying taxes.
  • The purpose of the GMT framework is to discourage countries from competing with each other by offering lower tax rates, which often leads to companies shifting their profits and eroding the tax base.

Automatic Exchange of Information:

  • The Automatic Exchange of Information was put in place in 2017 to combat the issue of wealthy individuals trying to hide their money in offshore accounts to avoid paying taxes.

What are the Key Highlights of the Report?

Challenges in Combating Offshore Tax Evasion:

Reduced Offshore Tax Evasion: Over the last decade, offshore tax evasion has gone down. In 2013, 10% of the world’s GDP was hidden in global tax havens, but now only 25% of this money remains untaxed.

Ongoing Challenges: Despite the progress, there are still issues to tackle. Offshore financial institutions sometimes don’t follow the rules, and there are limitations in sharing bank information automatically.

Extremely Low Tax Rates for Billionaires: Many global billionaires manage to pay taxes equivalent to only 0% to 0.5% of their wealth because they use shell companies to avoid income taxes. In the United States, billionaires have an effective tax rate of just 0.5%, and in France, some billionaires pay zero taxes.

Profit Shifting by Big Companies: Multinational corporations (MNCs) shifted around USD 1 trillion to tax havens in 2022, which is 35% of the profits they earned outside their home countries. There’s a concerning trend where MNCs can use ‘green’ tax credits to lower their tax rates well below the minimum 15%.

Importance of Policy Choices:

Tax Evasion Is a Result of Policy Decisions: Tax evasion, hiding wealth, and shifting profits to tax havens are not accidents; they result from policy choices or the lack of necessary decisions.

Need for Better Tax Policies: It’s crucial to assess the impact of tax policies and make improvements to create fair and sustainable tax systems.


Global Minimum Tax on Billionaires: The report suggests implementing a global minimum tax of 2% on billionaires’ wealth. Also, create mechanisms to tax wealthy long-term residents who move to low-tax countries.

Revenue and Wealth Equality: Such measures are vital for governments worldwide to boost their revenue, address wealth inequality, and fund important services like education, healthcare, and infrastructure.

Reform Corporate Taxation: Revise international agreements on minimum corporate taxation to establish a 25% rate and close any loopholes that encourage tax competition.

Unilateral Measures: In case global agreements fail, consider implementing independent measures to collect some of the unpaid taxes from multinational companies and billionaires.

Global Asset Registry: Develop a Global Asset Registry to improve the fight against tax evasion.

Strengthen Rules: Enhance the application of economic substance and anti-abuse rules to further discourage tax evasion.

Indian Measures to curb Tax Evasions

  • E-Invoicing
  • The Fugitive Economic Offenders Act, 2018
  • Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
  • Prevention of Money Laundering Act, 2002.

Read Also: Labour Law Reforms Bills in India

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