There Is a Better Way to Avoid Tax Avoidance!

Tax simplification would level the playing field between tax authorities and multinationals by relying on easily verifiable standards, writes Tim Hirschel-Burns for African Arguments.

African governments can fight tax avoidance and level the playing field between their tax authorities and multinational corporations by adopting rules that reduce administrative burdens and rely on easily verifiable standards, according to a study by Yale Journal of International Law.

Tax dodging is used to describe all of the ways - tax avoidance, tax evasion, corruption, and offshore accounts - that companies and rich individuals employ to reduce their tax bills. They lobby governments for tax breaks and lower corporate tax rates, exploit obscure loopholes in tax laws or shift profits into tax havens.

Taxes enable the state to redistribute wealth to alleviate poverty. They also provide education, healthcare, social security, pensions, efficient public transport, clean water, and other public services taken for granted in developed economies.

But in both developed and developing countries, tax revenues are being undermined by the ability of some of the wealthiest taxpayers - including many transnational companies - to effectively opt-out of the corporate tax system. They do this through a combination of ingenious (and lawful) tax haven transactions, and huge tax concessions awarded by governments write Jia Liu and Olatunde Julius Otusanya for The Conversation.