Skip to main content

India suffers US$ 41.17 billion loss due to corporate tax avoidance, or 2.34% of GDP, one of the highest in the world

By Rajiv Shah
India loses US dollars 41.17 billion dollars, or 2.34% of its Gross Domestic Product (GDP), as a result of corporate tax avoidance. While in quantitative terms this loss is the fourth largest in the world, next to the United States (188.8 billion dollars), China (66.8 billion dollars) and Japan (46.8 billion dollars), the loss as percentage of GDP tells a totally different story.
The size of the economies of US, China and Japan is much bigger than that of India, one reason why their quantitative loss due to corporate tax avoidance is more than that in India. However, in percentage of GDP lost, India’s 2.34 per cent is much higher than the US’ (1.13 per cent), Japan’s (0.93 per cent), and China’s (0.75 per cent).
Revealing this, a new research paper by the United Nations (UN) think-tank headquartered in Helsinki, the United Nations University World Institute for Development Economics Research (UNU-WIDER), “Global distribution of revenue loss from tax avoidance”, calculates, the total revenue loss across the world comes to 500 billion dollars in a year.
Jointly prepared by a British scholar, Alex Cobham, and a Czech scholar, Petr Janský, the paper finds that, as percentage loss as a result of corporate tax avoidance, is very high in developing countries. If Guyana with 6.97 per cent tops the list, Chad follows suit with 6.97 per cent, Malta 4.59 per cent, Comoros 4.42 per cent, Zambia 4.42 per cent, and so on.
Interestingly, India's neighbour, Pakistan, falls in the category having one of the highest percentage of GDP loss as a result of corporate tax avoidance -- 4.42 per cent. Other neighbouring countries’ losses, however, are lower than that of India – it is 1.65 per cent for Sri Lanka, 1.48 per cent for Bangladesh, and 0.75 per cent for Nepal.
Commenting on the report, the World Economic Forum (WEF) wonders, “What would you do with $500 billion? The first challenge might be actually getting your head around quite how much money that is. If you like to travel in style you could buy 1,150 Airbus A380s… If you just wanted to show off, you could cover a football field to a depth of 1.5 metres with cash.”
Pointing out that it’s “the amount of revenue the world is losing as a result of tax avoidance”, WEF, which is a Switzerland-based organization of world political and business leaders seeking to create global partnership on business, political, intellectual and other issues, says, “Corporate tax is a vital source of government revenue across the globe. It is especially vital in developing countries.”
Noting that UNU-WIDER findings “highlight the extent of global tax avoidance – as well as the countries facing the biggest shortfalls”, WEF says, “In terms of overall losses, you probably won’t be surprised to see some of the world’s biggest economies at the top. Given the size and strength of their economies, they’ve racked up significant losses.”
The report emphasises the significance of the losses as a percentage of GDP: “The intensity of losses is substantially greater in low- and lower middle-income countries: and in sub-Saharan Africa, Latin America and the Caribbean and in South Asia compared to other regions.”

Comments

TRENDING

Mystery around Gujarat PSU 'transfer' of Rs 250 crore to Canadian firm Karnalyte

By AK Luke, IAS (Retd)*
While returning from a Board meeting of the Oil India Limited (OIL) in Ahmedabad some time in 2012, two officers of the Gujarat State Fertilizers and Chemicals Ltd (GSFC), Nanavaty and Patel,  saw me off at the airport. They said they were proceeding to Canada in connection with a project GSFC had entered into with a company there. As we were running late, I hastily wished them the best.

Savarkar in Ahmedabad 'declared' two-nation theory in 1937, Jinnah followed 3 years later

By Our Representative
One of the top freedom fighters whom BJP and Prime Minister Narendra Modi revere the most, Vinayak Damodar Savarkar, was also a great supporter of the two nation theory for India, one for Hindus another for Muslims, claims a new expose on the man who is also known to be the original proponent of the concept of Hindutva.

J&K continues to be haunted, as parts of India 'degenerate' into quasi-Kashmir situation

By Rajendran Narayanan*, Sandeep Pandey**
“Jab har saans mein bandook dikhe toh baccha kaise bekhauf rahe?” (How can a child be fearless when she sees a gun in every breath?) remarked Anwar, a gardener from Srinagar, when asked about the situation in Kashmir. On November 30, 2019, a walk through an iron gate in a quiet neighbourhood of Srinagar took us inside a public school. It was 11 am when typically every school is abuzz with activity. Not here though.

Indians have made 119 nations their ‘karma bhumi’: US-based Hindu NGO tells Rupani

Counterview Desk
In a stinging letter to Gujarat chief minister Vijay Rupani, the US-based Hindus for Human Rights (HfHR), referring to the report citing his justification for the Citizenship Amendment Act (CAA) – that “while Muslims can choose any one of the 150 Islamic countries in the world (for residence), India is the only country for Hindus" – has said, he should remember, Hindus have made several countries, including USA, their home.

Tata Mundra's possible closure? Power ministry's 'pressure tactic' on consumer states

By Bharat Patel*
Tata power has announced to the Union Ministry of Power that Tata Power may be forced to stop operating  its imported coal-based Mundra Ultra-Mega Power Project (UMPP) after February, 2020. It is not only unfortunate but also criminal that irreversible damage has been caused to the fragile ecosystem of Mundra coast for a project that will have a running life of only seven years.

Population control? 10% Indian couples want to delay next pregnancy, but fail

Counterview Desk
Shireen Jejeebhoy, director at Aksha Centre for Equity and Wellbeing, previously senior associate at the Population Council, India, argues that the debate on the country's population was fuelled by Prime Minister Narendra Modi’s Independence Day address to the nation, where he drew attention to “concern” about the challenges posed by this ‘exploding’ population growth, needs to centre around the promotion of rights and education, instead of the language of explosion and the threat of coercion that this term implies.

Upendra Baxi on foolish excellence, Indian judges and Consitutional cockroaches

By Rajiv Shah
In a controversial assertion, top legal expert Upendra Baxi has sought to question India's Constitution makers for neglecting human rights and social justice. Addressing an elite audience in Ahmedabad, Prof Baxi said, the constitutional idea of India enunciated by the Constituent Assembly tried to resolve four key conflicting concepts: governance, development, rights and justice.

What about religious persecution of Dalits, Adivasis, asks anti-CAA meet off Ahmedabad

By Rajiv Shah
A well-attended Dalit rights meet under the banner “14 Pe Charcha” (discussion on Article 14 of the Indian Constitution), alluding to Prime Minister Narendra Modi well-known campaign phrase of the 2014 Parliamentary elections, “chai pe charcha” (discussion over cup of tea), organized off Ahmedabad, has resolved on Wednesday to hold a 14 kilometres-long rally on April 14 to oppose the controversial Citizenship Amendment Act (CAA), enacted on December 10-11.

Kerala governor turned History Congress into political arena, 'insulted' Prof Irfan Habib

Counterview Desk
In a signed statement, office bearers of the Aligarh Society of History and Archaeology (ASHA), Prof Syed Ali Nadeem Rezavi (president), Prof Jabir Raza (vice-president), Prof Manvendra Kumar Pundhir (secretary) and Prof Farhat Hasan (joint secretary), have said that Kerala governor Arif Mohammad Khan had sought to insult veteran historian Prof Irfan Habib, 88, at the 80th session of the Indian History Congress, even as turning it into his “political arena”.