1. STOP tax dodging is a campaign bringing together your voice with the voices of hundreds of thousands of people in a joint effort to trigger political action in Europe on a problem affecting millions of the world’s poor.

2. Why are taxes important?
Taxes are a means of sharing out resources for the common good of all people in society.
Taxation provides a long-term and reliable source of revenue.
It enables governments to fund essential services.
It increases governments’ accountability to their citizens.
We may not like paying taxes but they are a good thing. They pay for health systems to look after us when we’re sick, for the roads we use every day, for sanitation, garbage collection, schools, and other basic services. But across the world, a lack of tax revenues is destroying the life chances of millions of people.
Tax is a far more reliable and sustainable source of income than aid or loans. A lack of tax revenues is one reason why many developing countries remain dependent on foreign aid and loans. But the aid and loans simply aren’t sufficient to provide basic services to whole populations or lift them out of poverty. Loans also increase a country’s debt and thus the interest that has to be paid on these debts.
As a government’s tax revenues increase, so too does its accountability to its citizens. The higher a government’s tax revenues, the more citizens tend to question how those revenues are spent.
Here in Europe, news that certain companies have not paid their fair share of tax has caused widespread public anger at a time when many governments are cutting public services and money is tight. But the scandal of tax dodging is even more shocking in the world’s poorest countries.

3. Tax dodging hurts the poor
2.6 billion people lack basic sanitation.
1.1 billion people have inadequate access to water. 
868 million people do not have enough food to eat.
270 million people have no access to healthcare.
72 million children of primary school age do not attend school.
Around the world, hundreds of millions of people are denied access to healthcare, education, clean water, sanitation, decent housing, public transport and other essential services. In most developing countries, the tax revenues that could help pay for these services are not being collected.
According to the Organisation for Economic Cooperation and Development (OECD), the amount of money developing countries are losing through tax dodging is far greater than the total amount they receive in aid. Research conducted by Christian Aid indicates that tax dodging by multinationals is costing developing countries US$160bn a year.

4. Children in Guatemala in a clinic to recover from acute malnourishment
Tax in Guatemala
Guatemala has the lowest tax revenues in the whole of Latin America. The poor and the vulnerable suffer when their government is unable to raise sufficient revenue through taxation to cater for their most basic needs.
This is Evelin (7), and Isabel (4). They are playing as they recover from acute malnourishment at a clinic run by partner Bethania. They will never recover from the underlying problem of chronic malnourishment which stunts mental and physical growth. Fifty per cent of all Guatemalan children are malnourished. The government doesn’t have the resources for a long-term comprehensive programme to bring levels of malnutrition down.
Put in stark terms, in Guatemala, the government doesn’t have the resources they need to keep the inhabitants safe and well. Children such as Evelin and Isabel do not have enough to eat.
The government should have more money coming in from tax than it does – this could help it address such problems.
Children in Guatemala in a clinic to recover from acute malnourishment

5. Mopani Copper Mines Plc in Mufulira, Zambia
Tax in Zambia
This mine is owned by a subsidiary of the multinational company, Glencore. It has been accused of dodging tax in Zambia, an allegation it denies.
Zambia is the seventh-largest producer of copper in the world. Huge demand for copper from China has seen the global copper price soar. And yet Zambia remains one of the poorest countries in the world, with life expectancy of only 49 years. Tax dodging is one of the reasons why.
The Zambian government estimates that it loses US$1bn in unpaid taxes from mining companies annually – a figure that is almost twice the entire national healthcare budget. With targeted investment from the tax they are owed, Zambia could raise the life expectancy and improve standards of living.
Mopani Copper Mines Plc in Mufulira, Zambia

6. How does tax dodging work?
Purchasing (Cayman Islands)
Supermarket’s
costs
Financial services (Luxembourg
Supermarket’s declared profit
Insurance (Isle of Man
Use of brand (Ireland)
Management (Switzerland)
Distribution (Bermuda)
€1 Profit made
€10.5 Costs
€1.5 Workers €8
Country of production
Here’s how it works: multinational companies shift their profits out of the countries where their real business takes place to a complex network of subsidiary companies in tax havens where taxes are low and secrecy is high. Once the profits disappear from a country, the chance to tax these profits disappears too – and likewise the possibility of using tax revenues to pay for basic services.
Take a banana as an example – you think it goes from the banana plantation on a ship to Europe and then gets transported to your supermarket where you buy it and it ends up in your fruit bowl. And that’s true.
But on paper it goes through a much more circuitous route. The banana gets sold by the subsidiary of a large multinational in a developing country to subsidiary company in the same multinational group in a tax haven. It’s sold at a very low price so on paper it looks like no tax has been paid. It’s then sold on to another subsidiary – let’s say in Europe – at a very high price.
The banana is sold on at this very high price so a lot of profit was made in the tax haven. But because there’s no tax charged in the tax haven, there is zero tax to pay.
€39 €8 €4 €4 €6
€17 €1
Country of sale
Tax havens
Here is a diagram of how bananas can travel through a tax haven on paper, but this can happen to any commodity or service.

7. Tax havens – the root of the problem
Tax havens offer:
Financial secrecy
Low or zero levels of tax.
Definition of the term ‘tax haven’ differ, but most of the world’s 60 or so tax havens share two distinct features:
high levels of financial secrecy
very low levels or zero levels of tax offered to companies registered there.
Tax havens are also known as:
Secrecy jurisdictions
OR more formally,
Offshore financial centres.

8. The tax haven connection
As much as US$32tn may be hidden in tax havens.
In 2010, financial wealth in small island tax havens alone amounted to US$18tn – about a third of the world’s financial wealth.
More than half of world trade – at least on paper – passes through tax havens.
More than half of all banking assets and a third of multinational company investments are routed via tax havens.
Tax Justice Network has estimated that as much as $32 trillion in financial wealth may be hidden in tax havens; this is equivalent to the national wealth of the US and Japan combined. (See James Henry, The Price of Offshore Revisited, Tax Justice Network, 2012).
In 2010, the IMF estimated that the financial wealth in small island tax havens alone amounted to US$18 tn – about a third of the world’s financial wealth. (See IMF Working Paper, WP/10/38, February 2010).
More than half of world trade – at least on paper – passes through tax havens. (This Figure is quoted in Nicholas Shaxson, Treasure Islands 2011, based on a statistic which was quoted by the Paris Group of Experts in 1999 and based on research undertaken by J Christfnsen and M Hampton). Evidence indicates the share has grown since 1999.
More than half of all banking assets and a third of multinational company investments are routed via tax havens. (See Ronen Palan, Richard Murphy and Christian Chavagneux, Tax Havens: How Globalisation Really Works, Cornell University, 2010).

9. Give tax dodgers nowhere to hide
We want to see the following challenged:
Secrecy in companies
Secrecy in tax havens
Secrecy around company ownership.
Tax dodging on the scale described could not happen if there were less secrecy and more transparency in both company accounts and in tax havens. That is why we are calling for concrete measures to end financial secrecy.
Challenge the secrecy in companies: At present, multinational company accounts only have to provide a global figure for their profits. This makes it difficult for national tax authorities to detect tax dodging by companies operating in their country. Country-by-country reporting would require companies to report on their profits made as well as taxes paid in every country where they operate. This would mean that revenue authorities and civil society organisations in both developing countries and in Europe could spot potential abuse and challenge crooked companies.
Support for this measure is growing and campaigners recently persuaded EU politicians to improve the financial transparency of European companies. All oil, gas, mining and logging companies now have to publish their payments to governments in the countries where they operate on projects worth €100,000 or more – including the taxes they pay. But this is only the first step. Now we must push for measures requiring companies to report on their profits and not just their payments to governments. The new EU laws should also be extended to all companies.
Challenge the secrecy in tax havens: As you know, a common tax dodging tactic is for large global companies to pass their profits through subsidiary companies in tax havens where they pay low or no taxes. We’ve called for the automatic exchange of information between tax authorities in all countries, including tax havens, to clamp down on this practice. As a result of concerted advocacy and campaigning, the G20 and the OECD have now recognised automatic information exchange as the global standard that should be aimed for.
Challenge the secrecy around company ownership: We also need to lift the secrecy surrounding the use of shell companies, many of them in tax havens. Multinational companies and wealthy individuals frequently keep their money in a complex network of trusts and shell companies – also known as ‘phantom’ firms – concealing the truth about the profits they make, and the taxes they potentially owe. We want to see the creation of public registers of beneficial ownership – registers which list the real owners of all these shell companies. Following the G8 summit in June 2013, support is growing for such registers. The key challenge is to ensure that these registers are public. If the registers are maintained privately within multinational companies, it will be much harder for civil society and for tax authorities in developing countries to access the information.

10. Challenging tax dodging
Campaigners from INESC join a march against corruption in Brazil as part of the week of action of the End Tax Haven Secrecy campaign

11. What would be the result?
‘African countries would have sufficient resources to finance their development, eradicate poverty and end the perpetual dependence on aid.’
Alvin Mosioma, director of Tax Justice Network – Africa
If we can build on this movement, we can start to see great results for developing countries and for the poorest people in the world…

12. CEDLA helped make tax work for the poorest in Bolivia
Tax in Bolivia
In Bolivia, CEDLA (the Centre for Labour and Agricultural Development) helped make tax work for Bolivia's poorest communities.
In 2006, as little as 18 per cent of the value of oil and gas exports stayed in Bolivia. Now that figure is 50 per cent, helping fund enormous improvements in social welfare.
CEDLA is one of the organisations that led the calls for change in Bolivia. It supported huge popular protests, urging the government to nationalise its oil and gas industries so that Bolivian people could benefit from its natural resources.
Now, the increased tax revenues mean 2.4 million of Bolivia’s most vulnerable people receive direct financial support – thousands of school children receive a grant to help them buy school books and uniforms, everyone over 60 gets a monthly state pension, and pregnant women and new mothers receive cash transfer payments when they attend pre- and post-natal classes.
Since this cash transfer programme began in 2009, chronic infant malnutrition has fallen from 27 per cent to 15.5 per cent and the number of babies born in Bolivia with the support of trained medical staff has risen from 55 per cent in 2009 to 76 per cent today.
CEDLA helped make tax work for the poorest in Bolivia

13. Get active on tax in Europe
Ask your Member of Parliament (MP) to:
take action to end the financial secrecy in tax havens and company accounts.
help establish public registers of the real owners of all companies in each country.
Arrange for your group to have a lobby meeting with your local MP and persuade him/her to ask the government to take action to end the financial secrecy in tax havens and company accounts.
Ask your MP to press the government to support strong EU laws which would make it compulsory for all European countries to set up public registers listing the real owners of all companies in each country, including phantom firms.

14. Prayer and action
Loving God, you have come close to us in Jesus that we might come close to our neighbours in you. Help us to see your world as one, and to recognise all your people as our sisters and brothers. In this age of globalisation, you call us to turn the present unjust world upside down so that your Kingdom may come.
We will answer your call. We choose to serve you, our God. We commit ourselves to see what the world does not want us to see, to put you before wealth, to bring light to the dark places of the world, and to act for justice in your name.
Amen

15. Campaigning together in Europe to STOP tax dodging
STOP tax dodging is a joint initiative seeking tax justice.
Across Europe, ordinary people are waking up to the fact that tax dodging not only damages our own economies, but also has a devastating impact on developing countries. Now we need to mobilise this public outrage in a way that will persuade EU leaders to take more radical action than at present. Join us
This presentation has partly been funded by the European Union. The contents of this presentation are the sole responsibility of Christian Aid and other member organisations of the STOP tax dodging campaign and can in no way be taken to reflect the views of the European Union.

16. Get involved