Multinational companies deprive African governments of $11 billion in taxes each year, and G-7 world leaders should set up a new global body to regulate corporate taxation, Oxfam International said on Monday.
By shifting profits overseas to lower tax regimes, companies legally avoid paying taxes to the African countries where they generate revenues, depriving governments of money they desperately need for development, the anti-poverty group said in a report on Africa.
When leaders of the G-7 major industrialised countries meet in Germany on June 7-8 to discuss how to support economic growth in Africa, a vital component of their talks should be comprehensive reform of the global tax system, Oxfam said.
“It’s absurd that there are international organisations for trade, health and football but not for tax,” Oxfam International executive director, Winnie Byanyima, said.
An international body similar to the World Trade Organisation could represent all countries’ interests and mediate disputes among taxation regimes, Oxfam said.
Oxfam based its calculation of the tax revenue Africa loses on a United Nations-backed study released in April that estimated $50 billion in illicit funds flow out of the continent each year, much of it through corporate trade mispricing to avoid taxes or in transfers of money obtained corruptly.
This is almost double the official development aid Africa receives each year, Reuters reports.
G7 leaders already are discussing how to make the global taxation system fairer, but developing countries complain they have no seat at the table in those talks, even though they are the victims of the present system.