Tax havens robbing 255 bn euros of poorest nations: OECD

NEW DELHI: Tax havens drain a staggering 255 billion euros from the revenue base of the world's poorest countries, funds which otherwise could be used for developing schools, hospitals and basic infrastructure, says OECD.

A top official of the Organisation for Economic Cooperation and Development (OECD), a grouping of industrialised nations, said revenue loss incurred by many poor countries due to tax havens are large and growing.

"Tax havens drain the revenues away from governments: revenues which could be spend on schools, hospitals, roads etc. It is difficult to quantify the amounts lost but it's a large and growing figure...

"Overall, the LDCs (least developed countries) are some of the biggest losers. Oxfam (an international charity group) estimates that tax havens drain more than 255 billion euors (about Rs 16,00,228 crore) from the LDCs," OECD Centre for Tax Policy and Administration director Jeffrey Owens told PTI from Paris.

A tax haven is generally defined as a region which lacks transparency in tax matters, among others.

The LDCs represent the poorest and the weakest nations such as Bangladesh, Afghanistan, Nepal and most of the African nations.

Owens said India is playing a key role in strengthening the international tax framework. "The Government of India has shown leadership in getting this issue onto the agenda of the G-20," Owens said.

The OECD official Owens further said, "India is part of the inner circle of the countries which leads the G-20 Global Forum which directs this work. India also represents the voice of the LDCs in the Forum, continually pushing to ensure that they benefit from the more open tax environment."

Echoing Finance Minister Pranab Mukherjee's assertion that tax havens harm national security, Owens noted that there are links between tax havens and terror funding.

"There are links between money laundering, terrorists, financing, bribery and tax evasion. These activities (what may be called the dark side of globalsiation) flourish in climate of non-transparency, non-cooperation between law enforcement agencies and weak regulation," Owens said.

Recently, Mukherjee said the opaque system of exchange of information in the these tax havens and their non-compliant behaviour are matter of concern not only for revenue base but "also linked to financing of activities which are detrimental to the national security interests".

The OECD has been spearheading activities in international tax matters, in the wake of global crackdown on tax havens.

New Delhi is an active member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, which is a grouping of nations that works towards establishing a more lucid regime of international tax norms.

The country is also a vice-chair of the Forum's Peer Review Group. Last week, the Finance Ministry had hosted the second meeting of the steering group of the Forum.