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Oxfam warns Vietnam about FDI from tax havens

11/10/2016

Oxfam International has raised warnings about foreign direct investments from international tax havens at a conference about tax and inequality held in Hanoi on October 7.

  

About 50% of the FDI in Vietnam was capital from the tax havens

Susana Ruiz from Oxfam said Vietnam and other developing countries were incurring USD170bn in damage each year because of international tax havens. About 50% of the FDI in Vietnam was capital from the tax havens so most of the profits are not being kept in Vietnam.

Even though Vietnam attracts a lot of investors, tax revenue is not high. Instead of paying 20-30% taxes in the countries they are operating in, corporations will bring the profits to countries with less than 1% or 0% tax.

Ruiz said the Panama Papers had revealed how offshore companies were created to avoid taxes. The tax money are making the rich richer and widening the gap between the rich and the poor.

According to Oxfam, 60% of global trade value is created between member companies. International corporations spend 5% of their profits to pay corporate income tax. But they don't pay taxes in countries they are doing business and generating profit from. This profit is brought to tax havens.

The lack of transparency has helped to create virtual economies. Many tax havens such as British Virgin Islands got more FDI in 2013 than India and Brazil. 50% of FDI to India in 2014 comes from a building in Mauritius, a small country in the Indian Ocean.

Oxfam warned Vietnam to not receive FDI from countries have many tax loopholes.

In addition, there are huge amounts of money are unusually being transferred abroad. Vu Quang Viet, economist and former statistics expert for the United Nations, said from 2008 to 2013, USD33bn were illegally transferred overseas.

Over USD9bn was transferred overseas in 2009, the rate decreased in the next year but had picked up and kept rising. Nearly USD9bn was illegally transferred in 2013. Viet said such numbers could be explained by smuggling and corruption.

dv, dtinews.vn | October 09, 2016 02:59 PM

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