Profit-shifting enterprises cost governments about $500 billion (N190 trillion) in losses annually, according to a United Nations panel of experts.

Profit shifting is a corporate tax planning strategy used by multinationals to move profits from higher-tax jurisdictions to lower-tax jurisdictions thus reducing their tax burdens in the higher-tax jurisdictions.

The estimate came in an interim report of the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving 2030 Agenda (FACTI) published on Thursday.

According to the report, $7 trillion (N2.6 quadrillion) in private wealth is hidden in haven countries, while 10 per cent of world Gross Domestic Product (GDP) is held offshore.

It also indicates that around $1.6 trillion (N608 trillion) or 2.7 per cent of global GDP is laundered annually.

The panel, made up of former heads of state, past central bank governors, business and civil society leaders, and prominent academics was established by UN General Assembly and Economic and Social Council in March.

Mandate

Its mandate included identifying and closing existing gaps in the global fight against corruption, money laundering and illicit financial flows (IFFs).

The report says global finance controls have not kept pace with a globalised and digitalised world.

It states that governments cannot agree on the problem or the solution as resources that could help the world’s poor are drained by tax abuse, corruption and financial crime.

The report also reveals that criminals have exploited the pandemic as governments relax controls to speed up healthcare and social protection.

It underscores the need for governments to do more to tackle tax abuse and corruption in global finance.

The FACTI Panel calls for a more coherent and equitable approach to international tax cooperation, including taxing the digital economy, and more balanced cooperation on settling disputes.

PT