The Corporate Tax Haven Index: solving the world’s broken tax system

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In this month’s Tax Justice Network podcast the TJN  looks at the new Corporate Tax Haven Index. What does it tell us about the global economy and the international tax system? And how can we fix it? We also look at how India is pushing the G20 into action on global tax rules — if they don’t act it will implement its own rules.

The Corporate Tax Haven Index provides one of those really rare glimpses of what actually happens underneath the bonnet of the global economy. It tells several disturbing stories…in what we can only describe as a full frontal assault on the national tax sovereignty of every country on the planet. That’s what they’re doing. They’re attacking the tax regimes of other countries. What it reveals is a really disturbing picture of international failure. We see the powerful European countries and especially Britain lying behind their clusters of tax havens and they have wrecked economies across the world and are now threatening social stability and democracy across the world.

But when countries like India say, no, that doesn’t work for us, we’re going our own way, then it gets very serious indeed. And the G20 simply cannot afford to ignore this any longer. So the road is open for the next steps. And of course the next steps are going to take us in the direction the Tax Justice Network has always been talking about. And that is in the direction of proper apportionment of profits to the countries where the profits are aligned with the economic substance. In other words, we’re moving towards unitary taxation and formula apportionment…And I think we should all welcome the opportunity now to create a framework for taxing multinational companies that suits the entire world, not just the most powerful countries in the world.

John Christensen, Tax Justice Network

I think it is important to point out that the term of tax haven has done us a big disservice for many decades now. That is used instead of claiming what we think is much more accurate nowadays, instead of claiming a spectrum of secrecy, a spectrum of tax haven-ness each country now embodies. We have to be more specific than just tax havens, there are so many dimensions to this and that is why we prefer to speak on the one hand about secrecy jurisdictions…and the other element that we need to complement this terminology is the corporate tax haven, which designates those places that play a more important role for multinationals in shifting their profits across borders. And this is why we have complemented the Financial Secrecy Index with the Corporate Tax Haven Index. [They] paint a different picture, much more nuanced where we can see that many countries nowadays have joined the bandwagon, and have joined the race to the bottom

Markus Meinzer, director of the Corporate Tax Haven Index and Financial Secrecy Index research teams