According to a UN Nations panel of experts profit-shift enterprises cost governments about $500 billion (N190 trillion) in losses annually. Multinationals use the profit-shift which is a corporate tax planning strategy to move profits from higher-tax jurisdictions to lower-tax jurisdictions which reduces their tax burdens in the higher-tax jurisdictions. The estimate was from an interim report of the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI) published on Thursday.
The report stated that 10 percent of world Gross Domestic Product (GDP) is held offshore while $7 trillion which equivalent to N2.6 quadrillion in private wealth is hidden in haven Countries. It also points that $2.7 percent of global GDP or $1.6 trillion which is equivalent to N608 trillion is laundered annually. Past central bank governors, former head of states, business and civil society leaders made up the panel, and prominent academics was established in March by the UN General Assembly and Economic and Social Council. It responsibilities include identifying and bridging existing lapses in the global fight against money embezzling, corruption and illicit financial flows (IFFs). The report also stated that global finance controls have not kept pace with a globalised and digitalised world.
It further emphasized that the problem or the solution cannot be agreed upon by the governments as the resources that could help the world’s poor are siphoned by corruption, financial crime and tax abuse. The report also stated that criminals as taken advantage of the pandemic as governments relax controls to speed up social protection and healthcare.
It placed emphasis on the need for governments to do more to address corruption in global finance and tax abuse. The FACTI are demanding for a equitable and more coherent approach to international tax cooperation, including more balanced corporation on setting disputes and taxing the digital economy. This came some days after the FinCen Files investigation report which showed how criminals are allowed to move over $2 trillion(N760 trillion) by some big banks.
There are major gaps in the system to regulate dirty money according to the global investigation by 400 journalists. Dr Dalia Grybauskaitė, co-chair of the panel and former president of Lithuania, said corruption and tax avoidance were rampant In a statement on the launch of the FACTI report. He further said “Too many banks are in cahoots and too many governments are stuck in the past. We’re all being robbed, especially the world’s poor. Trust in the finance system is essential to tackle big issues like poverty, climate change and COVID-19. Instead we get dithering and delay bordering on complicity,” she said. Dr Ibrahim Mayaki, FACTI co-chair and former Prime Minister of Niger, said the COVID-19 pandemic had further exposed governments’ weakness in tackling corruption and financial crimes. Resources to stop the spread, keep people alive and put food on tables are instead lost to corruption and abuse,”.