Corporate tax revenue losses: Evidence from tobacco transnationals
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University of Illinois, Chicago, United States
Campaign for Tobacco Free Kids, Washington, United States
Publication date: 2021-12-10
Tob. Prev. Cessation 2021;7(Supplement):4
The production of tobacco is concentrated among a handful of very large transnational tobacco corporations (TTCs) that operate simultaneously in several countries. These companies do not pay their fair share of corporate income taxes to the societies in which they generate profits due to three main reasons:
1. Tax minimization strategies that take advantage of the complexities of international tax laws;
2. Tax competition between countries, which erodes nominal corporate income tax rates worldwide; and
3. Illicit trade of the tobacco products manufactured by these companies that fall in the black market.
This paper combines several data sources to empirically evaluate the amount of corporate income tax revenue lost worldwide due to these three sources during 2007–2016 [to be updated with more recent data], and finds that the tax revenue forgone from the four largest TTCs alone is of the order of US$ 30.8 billion [to be updated with more recent data], representing more than 40% of the companies' tax revenue remittances over the period.