Tax evasion in Latin America and the Caribbean is around 300,000 million dollars, this is equivalent to 6.1% of the Gross Domestic Product (GDP) of the region, experts pointed out at the Forum “The Challenges of Latin America and the Caribbean in Matters of Transparency Taxation and Against Illicit Financial Flows”.
The countries of the region also lose 93,000 million dollars a year in terms of illicit financial flows, this is equivalent to 1.5% of Latin American GDP. Of the 93,000 million dollars, it is estimated that the tax losses are 28,000 million dollars, 0.5% of the regional Gross Domestic Product.
This shows us the serious problem of opacity and lack of transparency materialized in tax evasion and avoidance. In addition to an absolutely regressive tax system that is based in Latin America on the taxation of consumption and indirect taxes, not on large capitals or large estates”, commented Jorge Coronado, member of the Global Alliance Tax Justice.
The speaker added that estimating losses in tax avoidance and evasion is complex, as well as verifying it, but they are linked to foreign trade actions and great wealth, since they are transferred to other countries.
According to information shown in the forum, it is estimated that 27% of Latin America’s wealth is located abroad, also called off-shore, particularly in tax havens. The figure would be around 945,000 million dollars.
Wealth flees the region
The wealth that is outside the territory of Latin America and the Caribbean represents 10% of world GDP. This means that one in every four dollars of wealth created escapes from the region, revealed Susana Ruiz, a member of Oxfam.
Meanwhile, Jorge Coronado said that in at least 40 years large capitals have been given a large number of tax privileges and generally do not pay taxes in the countries of Latin America and the Caribbean.
In addition to the fact that the tax administrations of Latin America have “little weight” in the issue of international taxation since they are only focused on the collection of their national income.
Evasion, double the fiscal stimuli for the pandemic
As already mentioned, tax evasion in the Income Tax and Value Added Tax is 6.1% of the regional GDP.
To put it in perspective, this figure means more than double the fiscal stimulus that the region allocated to combat the Covid-19 pandemic, according to Oxfam, one of the organizers of this forum.
“We could still have doubled the set of resources that were launched in the countries to respond to emergency measures and avoid an impact on the loss of human lives,” said Susana Ruiz, a member of Oxfam, in her participation.