Bangladesh loses $335 million annually due to corporate tax abuse

Bangladesh is losing $355 million annually in tax revenue due to outward profit shifting by corporations, particularly multinational firms, and tax abuses by wealthy individuals, especially those using tax havens. Of this, $335.9 million is attributed to profit shifting by corporations, while $19.1 million is lost through tax abuses related to individuals with assets abroad, according to the *State of Tax Justice 2024* report released yesterday. This loss represents 21.4 percent of the country's health expenditures, the report from the Tax Justice Network (TJN) noted.

The report also highlights that Bangladesh is among the countries contributing to the $492 billion in global annual tax losses caused by multinational corporations and wealthy individuals using tax havens to underreport their tax liabilities. Nearly half of these losses stem from just eight countries: Australia, Canada, Israel, Japan, New Zealand, South Korea, the UK, and the US.

This comes at a time when Bangladesh is grappling with a tax shortfall that hinders its ability to finance its development and operating budgets. The country’s revenue-to-GDP ratio is estimated at only 8.5 percent for the fiscal year 2023-24, one of the lowest in the world, according to the World Bank.

The TJN’s previous *State of Tax Justice* report had estimated Bangladesh’s annual losses from corporate abuses at $396 million, with corporations shifting $1.48 billion in profits. The latest report notes that multinational corporations shifted $1.3 billion out of Bangladesh, equivalent to 0.1 percent of the country's $460 billion economy.

Despite reductions in corporate tax rates in Bangladesh, multinational companies have increasingly shifted profits into tax havens, reaching the highest level of profit shifting recorded in the TJN's reports. Bangladesh has lowered its corporate tax rate to 27.5 percent in FY 2023-24, down from 40 percent in FY 2008, in an effort to attract investment, create jobs, and stimulate economic growth.

However, the TJN argues that the notion that cutting corporate tax rates leads to increased tax revenue has been debunked. According to the report, two-thirds of the $492 billion lost globally to tax abuses each year is due to multinational corporations shifting profits offshore, with the remaining third lost to wealthy individuals hiding their wealth abroad.

In a statement, Liz Nelson, the director of advocacy and research at the Tax Justice Network, emphasized that tax is a powerful tool for shaping societies. She criticized governments for using tax policies to benefit the ultra-rich and multinational corporations, a strategy that, according to the data, has weakened economies, worsened household conditions, and destabilized the planet. Nelson also noted that public demand for fair taxation of multinational corporations is growing, but governments continue to appease corporate interests on tax policy.