Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

Taxes

Tax Breaks

Corporations Dodge $200 Billion in Taxes Each Year

Peter Dazeley—Getty Images

A new report from the United Nations finds that global companies are able to avoid hundreds of billions of dollars in taxes annually by moving profits offshore.

The paper, produced by the UN's Conference on Trade and Development, suggests that strategies involving "foreign direct investment" result in lost tax revenue for developed countries like the United States—to the tune of $100 billion. Estimated losses for all developing nations are similar: Between $70 and $120 billion.

Companies are able to avoid taxes by shifting earnings away from countries with high tax rates—even if the profits were actually generated there—and moving them to nations with famously low rates.

For example, the report points out that the British Virgin Islands received more than $70 billion in foreign investment, nearly double that going to the United Kingdom—despite having an economy 3,000 times smaller.

International forums and organizations like the G20 and OECD are currently working toward an international agreement that would limit tax avoidance.