Tax evasion by MNCs, individuals high in Bangladesh: TJN

FE REPORT | Published: November 22, 2020 11:06:34 | Updated: November 22, 2020 14:35:05

Tax evasion by MNCs, individuals high in Bangladesh: TJN

The tax abuse by multinational corporations (MNCs) and private individuals in Bangladesh is equivalent to at least three-fifths of the country's health budget, according to an estimate by Tax Justice Network (TJN).

The annual estimated loss in tax in the county due to evasion is US$ 703.40 million (or around Tk 60 billion), unveiled the TJN's latest report titled 'The State of Tax Justice 2020.'

It also showed that the amount is at least 3.50 per cent of the country's total tax revenue. The TJN estimated annual amount of tax revenue at $20.0 billion (or around Tk 1,695 billion).

This, however, appears a conservative estimation as the country's annual total tax revenue collection was recorded at Tk 2,223.56 billion in the last fiscal year (FY'20). Of this, Tk 2,184.06 billon came through National Board of Revenue (NBR) sources.

To put the negative impact of tax abuse and tax evasion in perspective, TJN compared the loss with the lower spending in the health sector and showed that the estimated tax loss is equivalent to annual salaries of 392,398 nurses in Bangladesh.

The report, however, did not mention how it estimated the country's annual health budget which is now Tk 292.46 billion as per the FY'21 national budget.

The TJN report mostly used data of 2019 when the annual health budget was Tk 186.95 billion (FY'19).

The TJN report also showed that the annual tax loss of Bangladesh is around 14.0 per cent of annual education budget.

Nevertheless, of the total tax loss, around 95 per cent or $ 674 million was due to 'global tax abuse committed by multinational corporations'.

The rest of the amount of $ 29 million was 'lost to global tax evasion committed by private individuals'.

The estimated tax loss in Bangladesh is greater than both the global and regional average in terms of ratio, according to the report.

The report also estimated that the tax revenue losses 'due to offshore financial wealth and of tax loss inflicted on other countries' in Bangladesh is $ 29.2 million.

The country's offshore wealth is also estimated at $1.90 million, which is only 0.70 per cent of the Gross Domestic Product (GDP).

India's loss of tax revenue is estimated at $ 10.31 billion, which is around 0.41 per cent of the country's GDP, 10.68 per cent of the education budget and 44.70 per cent of the heath budget.

Glolobal scenario: The report found that countries across the world are losing a total of over $ 427 billion in tax annually to international corporate tax abuse and private tax evasion.

It costs countries altogether 'equivalent of nearly 34 million nurses' annual salaries or one nurse's annual salary every second.'

"As pandemic-fatigued countries around the world struggle to cope with second and third waves of coronavirus, a ground-breaking study published today [Friday] reveals for the first time how much public funding each country loses to global tax abuse and identifies the countries most responsible for others' losses," the report reads.

It also said that $ 245 billion is directly lost to corporate tax abuse by multinational corporations and $ 182 billion to private tax evasion annually.

"Multinational corporations paid billions less in tax than they should have by shifting $ 1.38 trillion worth of profit out of the countries where they were generated and into tax havens, where corporate tax rates are extremely low or non-existent," it continued.

"Private tax evaders paid less tax than they should have by storing a total of over $10 trillion in financial assets offshore," it added.

TJN was officially launched in the British Houses of Parliament in March 2003. It is now a leading global platform and network to fight against tax injustice, tax abuse and tax havens.


Share if you like