“It is a contradiction to support increased development assistance, yet turn a blind eye to actions by multinationals and others that undermine the tax base of a developing country” Trevor Manuel, South African Finance Minister, 2008
According to experts’ estimates, cross border illicit financial flows from developing countries amount to US $1.3 trillion each year. More than half of these illicit flows are related to trade mispricing. As a result of multinational companies tax dodging poor countries lose massive financial resources which according to Eurodad member Christian Aid total approximately US $160 billion per year.
Curbing cross border illicit capital flight and tax havens is crucial for eradicating unethical financial behaviour, and a means to boost domestic resource mobilisation as a predictable source of development finance. Eurodad works to improve tax cooperation and financial transparency to prevent cross border tax avoidance and evasion by multinational companies (and individuals).
Over recent years, G20 leaders have expressed concerns about the lack of transparency and cooperation from secrecy jurisdictions and the need to regulate them. In June 2010, EU Heads of State and Government went beyond international agreements and committed to “pushing for a more development-friendly international framework”. However, too little is being done to implement these and other commitments.
In order to address tax evasion and harmful tax practices, and to increase cooperation and transparency, a global binding framework to tackle these issues is needed. Working together with members and other allies, Eurodad advocates for greater transparency and enhanced coordination of taxation systems worldwide. Eurodad also works to ensure that international institutions and treaties do not constrain developing countries’ policy space on this area.