Every year, Switzerland loses more than CHF 5 billion to tax evasion. The reverse is also true.
Let's start with the basics. What is tax evasion?
Tax evasion should not be confused with tax deduction. Evasion is any transfer of funds abroad in order to avoid paying taxes in the country of origin. It should be noted, however, that tax evasion is not necessarily illegal.
What does this mean for Switzerland?
According to the latest estimates by the OECD (Organisation for Economic Co-operation and Development), tax evasion costs Switzerland CHF 5.3 billion each year.
Of this $5.3 billion, about $840 million is associated with corporate tax evasion abroad. The remaining $4.46 billion is from wealthy individuals who transfer their funds to tax havens. The main beneficiary countries of these practices include the Netherlands, the United States and Luxembourg.
And yet...
However, Switzerland is the winner with tax evasion inflows of around CHF 11.93 billion, resulting in a net profit of CHF 6.63 billion. Every year...
What about the automatic exchange of bank data?
Switzerland, although technically no longer benefiting from banking secrecy since 2009, is therefore doing very well in terms of net income.
The reasons: a certain lack of legislative clarity and the fact that banking secrecy is still present between the cantons but no longer from Switzerland to other countries or vice versa.
The automatic exchange of bank data in Switzerland is not yet a reality. This is despite a massively rejected initiative led by the canton of Bern in December 2020 to set up a banking information system between the cantons.
Tax evasion around the world:
According to the NGO Tax Justice Network, tax evasion costs states 427 billion US dollars each year (we are talking here about the cost and not the total amount of tax evasion).
The Winners
The countries benefiting the most from this inflow of money are the Cayman Islands, which receive 16.5% of the total amount of annual tax evasion, the United Kingdom with 10% and the Netherlands with 8.5%.
The NGO's report also states that multinationals transfer more than 1,380 billion US dollars to tax havens each year, while the sum linked to individuals corresponds to 10,000 billion US dollars.
That's a lot of 0's. Yes, it's gigantic!
The Losers
The countries most affected are often the richest.
Europe is losing $184 billion, or 12.6% of its health budget.
The U.S. is losing $95 billion, or 5.7% of its health budget.
But the real loser is Africa with $23.2 billion. The total amount of escapes on the continent is lower than in rich countries, but this corresponds to 52.5% of its annual health budget.
What about ethics?
Commenting on these figures, the chief executive of the Tax Justice Network said: "Under pressure from large corporations and tax havens such as the Netherlands or the UK and its network, our governments have put the desires of wealthy companies and individuals ahead of the needs of everyone else."
The NGO is currently advocating for a tightening and better unification of international laws concerning the taxation of the wealthiest.
Sources: These figures were collected and published by the OECD through the declarations of multinationals to the tax authorities and date from 2016. The figures for individuals are based on bank deposits available from the BIS (Bank for International Settlements) since 2018.
