Corporate tax evasion schemes hurt developing world's economy: IMF
June 27, 2014, 12:00 am TWN
WASHINGTON--Developing economies are increasingly hurt by the way global corporations exploit taxation differences and move profits to low-tax locations, according to an International Monetary Fund report Wednesday.
But few countries can protect themselves in a competition for direct investment that increasingly appears like a “race to the bottom” in setting corporate tax rates, the IMF said.
Moreover, companies are increasingly able to shift and relocate more intangible assets — like intellectual property — to avoid taxes.
The IMF said that the more countries give in to investors' requirements on taxes, the more they are hurting the global community.
In addition, tax-cutting and legal tax avoidance by corporations are having an impact on countries' fiscal strength, undermining their ability to fund government just at a time when many are fighting deficits.