The Tax Justice Network (TJN) has revealed that countries blacklisted by the European Union cause less than two percent of global tax losses while EU member states cause 36%.
Adopted in 2017, the EU blacklist is used by member states of the European Union to address what it deems as external risks of tax abuse and unfair tax competition. The screening process does not include EU member countries.
The EU blacklist, as of October 2020, comprises the following twelve jurisdictions, four of which are Caribbean countries: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, US Virgin Islands, Vanuatu.
In comparison, EU member states are responsible for 36% of global tax losses
The State of Tax Justice 2020 reveals that two jurisdictions blacklisted by the EU: Palau and Trinidad and Tobago, "while non-cooperative with international tax regulations, did not create any observable tax losses for other countries."
The study found that these blacklisted countries are "collectively responsible for just 1.72% of global tax losses, costing countries over $7bn in lost tax a year".
"In comparison, EU member states are responsible for 36% of global tax losses, costing countries over $154bn in lost tax every year".
The Tax Justice Network also called out the EU for removing Cayman from its blacklist earlier this year while its data shows that Cayman is responsible for the biggest share of global tax losses (16.5% of global tax losses, equal to over $70bn a year).
The Network said the fact that Cayman has been deemed a responsible jurisdiction shows that "current international tax rules are not fit for purpose".
The report titled "The State of Tax Justice" is the first study to measure thoroughly how much every country loses to both corporate tax abuse and private tax evasion.
It found countries are losing over $427bn in tax each year to international corporate tax abuse and private tax evasion.
Of the $427bn in tax lost each year globally to tax havens, the State of Tax Justice 2020 reports that $245bn is directly lost to corporate tax abuse by multinational corporations and $182bn to private tax evasion.
Multinational corporations paid billions less in tax than they should have by shifting $1.38trn worth of profit out of the countries where they were generated and into tax havens, where corporate tax rates are extremely low or non-existent. Private tax evaders paid less tax than they should have by storing a total of over $10trn in financial assets offshore.