The landmark agreement, brokered by the Organization for Economic Cooperation and Development, set a minimum global corporate tax of 15%. The idea was to stop multinational corporations, among them Apple and Nike, from using accounting and legal maneuvers to shift earnings to low- or no-tax havens.
Much of the hoped-for revenue has been drained away by loopholes, some of them introduced as the OECD has been refining details of the agreement, which has yet to take effect. The watchdog group estimates that a 15% minimum tax could have raised roughly $270 billion in 2023. With the loopholes, it says, that figure drops to about $136 billion.
The Tax Observatory also expressed concern that the race by governments to grant tax breaks for green technologies to fight climate change “raises some of the same issues as standard tax competition. It depletes government revenues." The group said that multinational corporations shifted $1 trillion — 35% of the profits they earned outside their home countries — to tax havens. American companies account for about 40% of such global profit shifting.
The EU Tax Observatory is run by Gabriel Zucman, a leading economist and tax-and-inequality researcher of the Paris School of Economics and the University of California, Berkeley. Its report is based on the work of more than 100 researchers around the world who often work with government tax agencies. It draws upon new sources of data on multinational corporate finances and offshore wealth held by corporations.