The State of Tax Justice 2020: Tax Justice in the time of COVID-19 November 2020 TAX JUSTICE NETWORK Table of Contents Acknowledgements ...........................................................................................................................................................3 Introduction ........................................................................................................................................................................... 4 Taking back control of a system programmed to prioritise the wealthiest .................. 6 Reprogramming tax systems in the time of COVID ...................................................................... 8 Practical actions now to take us closer to long term solutions ........................................... 9 Conclusion................................................................................................................................................................11 At a glance .............................................................................................................................................................................12 Chapter 1: The scale of global corporate tax abuse ...................................................................................13 Results .......................................................................................................................................................................14 The UK spider’s web is responsible for 29% of global tax loss ............................................15 ‘Axis of tax avoidance’ is responsible for 47% of global tax loss ........................................16 Methodology .........................................................................................................................................................22 Chapter 2: Health and unpaid taxes ....................................................................................................................24 Unequal burdens under Covid-19............................................................................................................24 Good health and the 4 Rs of tax .............................................................................................................25 Tax losses, health losses .............................................................................................................................. 27 Chapter 3: The Corporate Tax Haven Index ....................................................................................................34 How it works .........................................................................................................................................................34 Rankings ..................................................................................................................................................................35 The UK spider’s web ........................................................................................................................................38 The ‘Axis of Tax Avoidance’ .........................................................................................................................38 Chapter 4: The scale of offshore tax evasion ...............................................................................................39 Results ......................................................................................................................................................................39 The UK spider’s web and axis of tax avoidance on offshore evasion .............................39 OECD countries are responsible for nearly half of tax lost to offshore tax evasion ....40 Methodology .........................................................................................................................................................40 Chapter 5: The Financial Secrecy Index ............................................................................................................49 How it works .........................................................................................................................................................49 Rankings ..................................................................................................................................................................50 Global financial secrecy is shrinking .....................................................................................................54 Cayman is the world’s greatest enabler of financial secrecy ...............................................54 OECD countries responsible for nearly half of financial secrecy in the world ..........54 Chapter 6: Vulnerability to illicit financial flows ..........................................................................................56 Annexes ..................................................................................................................................................................................67 Country Data ........................................................................................................................................................67 Worst offenders .................................................................................................................................................73 Regional summaries......................................................................................................................................... 74 Calendar outlook for the next year ........................................................................................................81 2 Acknowledgements The Global Alliance for Tax Justice is a growing movement of civil society organisations and activists, united in campaigning for greater transparency, democratic oversight and redistribution of wealth in national and global tax systems. We comprise the five regional tax justice networks of Africa, Latin America, Asia, North America and Europe, which collectively represent hundreds of organisations. Public Services International is a Global Union Federation of more than 700 trade unions representing 30 million workers in 154 countries. We bring their voices to the UN, ILO, WHO and other regional and global organisations. We defend trade union and workers’ rights and fight for universal access to quality public services. TAX JUSTICE The Tax Justice Network believes a fair world, where everyone has the opportunities to NETWORK lead a meaningful and fulfilling life, can only be built on a fair code of tax, where we each pitch in our fair share for the society we all want. Our tax systems, gripped by powerful corporations, have been programmed to prioritise the desires of the wealthiest corpora- tions and individuals over the needs of everybody else. The Tax Justice Network is fighting to repair this injustice. Every day, we equip people and governments everywhere with the information and tools they need to reprogramme their tax systems to work for everyone. This report and the associated data portal were envisaged and created by the Tax Justice Network team of Madelyn Brown, Mark Bou Monsour, John Christensen, Alex Cobham, Rachel Etter-Phoya, Javier Garcia-Bernardo, Naomi Fowler, Moran Harari, Layne Hofman, Luke Holland, Sioned Jones, Andres Knobel, Markus Meinzer, Lucas Millán, Liz Nelson, Miroslav Palanský, Helena Rose and Nick Shaxson. For their generous expert advice and guidance on methodologies, objectives and overall approach, we gratefully acknowledge the contributions of Dereje Alemayehu (GATJ), Daniel Bertossa (PSI), Kim Clausing (Reed College/UCLA), Stephen Hall (University of Leicester), Bernadette O’Hare (St Andrews University), James Henry (Columbia University), and Petr Janský (Charles University, Prague). For their important support including feedback on successive drafts of material, we gratefully acknowledge Hiroo Aoba (PSI), Susana Barria (PSI), Boubacar Bobaoua (PSI), Erika Beauchesne (Canadians For Tax Fairness), Gabriel Casnati (PSI), Jorge Coronado (PSI), Fatou Diouf (PSI), Jocelio Drummond (PSI), Adrian Falco (Red de Justicia Fiscal), Sarah Ganter (FES), Clark Gascoigne (FACT Coalition), Erica Hanichak (FACT Coalition), Leo Hyde (PSI), Najwa Hanna (PSI), Sigrid Jacobsen (Tax Justice Norway), Kate Lappin (PSI), Katharina Lepper (FES), Sandra Massiah (PSI), Arnold Merkies (TJN Netherlands), Paul Monaghan (Fair Tax Mark), Alvin Mosioma (TJN-Africa), Marcelo Netto (PSI), Daniel Oberko (PSI), Igor Ojeda (PSI), Paul Omondi (TJN-Africa), Steve Porter (PSI), Tove Maria Ryding (Eurodad), Luis Moreno (Latindadd), Robert Palmer (Tax Justice UK), Christoph Trautvetter (TJN Germany), Cynthia Umurungi (TJN-Africa), Toby Sanger (Canadians For Tax Fairness), Joanna Spratt (Oxfam New Zealand), Jason Ward (CICTAR) and Mark Zirnsak (Tax Justice Australia). For financial support to the State of Tax Justice project and the underpinning technical materials, we gratefully acknowledge: Public Services International (PSI); Friedrich- Ebert-Stiftung (FES); Norad and the European Union (in relation to the results of the Financial Secrecy Index and Corporate Tax Haven Index, which benefited from funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 727145, COFFERS). Table of Contents 3 Introduction This inaugural edition of the State of Tax Justice marks a number of major firsts. It is the first edition of a first-of-its-type annual