UN report calls for more tax information exchange

(CNS): A report on the problem of money escaping from the world’s poorer countries, published by Global Financial Integrity (GFI) for the UM points the finger at tax havens as the places where the money is going and undermining their ability to develop. The report says there is a need to improve the exchange of tax information between governments on non-residents and corporations. “Frequently, national tax authorities are constrained by national borders and collecting tax revenue has been difficult,” the report states, adding that bank secrecy and confidentiality laws in many jurisdictions prevent disclosure. The authors call for international companies to be required to state all their earnings from all jurisdictions in their annual reports.

“More can be done to ensure that all nations, developing and developed, collect a fair amount of tax from both individuals and corporations. Governments could mandate financial institutions to provide relevant government authorities with data on income, gains, and property paid to non-resident individuals, corporations, and trust,” the author GFI Lead Economist Dev Kar, states.

In order to stem tax avoidance by multinational corporations, the international community could support the development of an international accounting standard requiring that all multi-national corporations report sales, profits, and taxes paid in all jurisdictions in their audited annual reports and tax returns. Tax avoidance is facilitated by the lack of transparency in the way many multinational corporations report and publish their accounts. Improving transparency in the accounts of multinational corporations could help tackle tax avoidance.

The report reveals that the world’s 48 poorest countries lost US$197 billion from 1990 until 2008 which is a serious impediment to development efforts for lesser developed countries. (LDCs). IT was commissioned by the United Nations Development Program (UNDP) and was presented for discussion at the United Nations IV Conference on Least Developed Countries hosted by the Republic of Turkey, on Wednesday.
Illicit Financial Flows from the Least Developed Countries: 1990-2008 examines how structural characteristics of Least Developed Countries could be facilitating the cross-border transfer of illicit funds, discusses the underlying estimates of illicit flows, presents an analysis of the magnitude of such flows, and makes policy recommendations for the curtailment

In her opening remarks for the UNDP Conference yesterday, UNDP Administrator Helen Clark said, “Illicit flows seriously impede LDCs’ efforts to raise resources for social and economic development. These flows are often absorbed into banks, tax havens, and offshore financial centres…”

Key findings of the report include illicit flows divert resources needed for poverty alleviation and economic development and that around US$197 billion flowed out of the 48 poorest developing countries and into mainly developed countries, on  a net basis over the period 1990-2008.

The full report is available for download on the UNDP website here