IMF Paper: Corporate Tax Avoidance Hurts Global Economy and Poor Countries

Jubilee USA

For Immediate Release

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Hannah Shultz, Communications Director: hannah@jubileeusa.org /  (o) (202) 783-3566 x101 (m) (319) 541-7357

IMF Paper: Corporate Tax Avoidance Hurts Global Economy and Poor Countries

WASHINGTON - The International Monetary Fund (IMF) released a staff paper noting that corporate tax avoidance negatively impacts all economies, but hurts developing countries the most. The IMF's release comes as the G20, the Organization for Economic Cooperation and Development and United Nations bodies seek vehicles to diminish corporate tax avoidance.

"The developing world loses more in corporate tax avoidance than it receives in aid from developed countries," stated Eric LeCompte, Executive Director of the religious anti-poverty group, Jubilee USA Network. "The paper shows that when multinational corporations shift their profits to another country to pay less taxes, we see higher levels of global inequality."

The IMF paper is entitled "Spillovers in International Corporate Taxation."  "Spillovers" are the impact of one country's policies on another country. By shifting profits to countries with low tax-rates (often so-called "tax havens"), corporations avoid paying their taxes in the countries where they make those profits. The paper notes that this is a particularly large problem in developing countries, which need corporate taxation to fund social services. The paper argues that "many developing countries...need to be better protected against the avoidance of tax on capital gains on natural resources."

"These 'spillovers' are more like a flood," noted LeCompte. "For every $1 poor countries are receiving in official aid, nearly $10 is leaving through corruption and tax avoidance."

Read the IMF paper.

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Jubilee USA Network is an alliance of more than 75 US organizations and 650 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and won more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org

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