Tax Evasion and its Effect on Developing Economies

by Developed Africa 6. September 2013 09:00

A recent press release from Oxfam has argued that tax evasion is greatly harming poor countries economies.

The statement argues that by allowing tax evasion by multi-national corporations to continue, developing countries' economies will continue to be damaged.

Developing countries lose an estimated $100 billion to $160 billion annually to corporate tax dodging"

It reports that the G20 agreed plans to repress tax evasion, but that very little has actually happened in order to bring about any changes, especially any changes that allow developing countries to be a part of the discussions.

However, the argument against any clamp down on tax evasion by multi-nationals is that they would perhaps take their business elsewhere, somewhere where it is easier to avoid tax, and therefore would greatly affect the developing nations to an even greater extent.

Dmitri Medlez, Russian Oxfam country director argued that:

Economic growth alone won't be enough to prevent poverty escalating across G20 countries and beyond. The G20 must tackle the challenges of inequality to generate strong, sustainable, balanced and inclusive growth.

Whilst this may be true, it is also arguable that African countries might lose out to investors and see their economy decline if such a clampdown is not completely world-wide.

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