Corporate tax evasion in Costa Rica is “appalling,” amongst highest in Latin America: UN

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ICR-CRS Archive/FILE (Pictured: Workers at a multinational medical device manufacturing company's facility in Heredia, Costa Rica)

ICR-CRS Archive/FILE (Pictured: Workers at a multinational medical device manufacturing company’s facility in Heredia, Costa Rica)

The United Nations (UN) Economic Commission for Latin America and the Caribbean (ECLAC) and Oxfam describe as “appalling” the rate of corporate tax avoidance and evasion by corporations operating in Latin America – particularly in Costa Rica – in a report issued this month.

According to the report, losses to government revenues in Latin America and the Caribbean as a result of corporate income tax avoidance and evasion – especially by multinational corporations – ranges from an estimated 27 percent of potential corporate income tax revenues in Brazil to roughly 65 percent in Costa Rica – the highest percentage listed in the report.

Multinational corporations with operations in Latin America are amongst the biggest tax dodgers, despite the fact that governments in the region like Costa Rica are already “letting multinational companies off the hook” when it comes to taxes, “thanks to overly generous discounts on income tax rates” that by some calculations result in the effective tax burden for multinational companies being half that of domestic firms, according to the report.

Meanwhile, research suggests that these tax incentives have largely been ineffective in attracting investment, “which in many cases would have happened anyway,” according to ECLAC.

“Poorly designed tax systems, tax evasion and tax avoidance are costing Latin America billions of dollars in unpaid tax revenues – revenues which could and should be invested in tackling poverty and inequality,” according to the report.

 
 
 
 

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