A/HRC/31/61 of $100 billion annually, which represents about one third of corporate income taxes that would be due in the absence of profit-shifting. Total development resource leakages, including lost earnings from missed reinvestment opportunities in addition to tax revenue losses, are an estimated $250 billion to $300 billion per year. These estimates are likely to be lower bound figures, since they do not cover all forms of corporate tax avoidance. 18 A recent study by the International Monetary Fund (IMF) estimates long-run annual revenue losses to developing countries of $200 billion per year (1.7 per cent of gross domestic product (GDP)) and to countries of the Organization for Economic Cooperation and Development (OECD) of $500 billion per year (0.6 per cent of GDP).19 Looking specifically at the United States of America, one report estimates losses due to profitshifting by United States firms to be $100 billion per year, while another calculates a decline in the effective tax rate on United States firms from 30-20 per cent over the past 15 years, two thirds of which is attributable to profit-shifting.20 These losses are borne by both the Government of the United States and the Governments of other countries, while the benefits accrue to shareholders of the respective companies. Since equity ownership is very concentrated, so too, therefore, are these benefits. Similar trends can also be observed in other developed countries. 20. Corporate tax avoidance causes additional problems beyond lost revenue. The preceding suggests that corporate tax avoidance perpetuates inequality since the benefits accrue to a small minority while revenue losses will need to be made up by the rest of the population. Moreover, in developing countries, it decreases the competitiveness of domestic businesses since, unlike transnational corporations, they generally cannot take advantage of cross-border tax haven transactions in order to minimize their tax bill. 21 Tax avoidance also wastefully increases the cost tax administration. 22 Furthermore, the more sophisticated tax avoidance schemes become, the more ineffective capacity-building efforts to strengthen tax administrations become. This suggests that, while capacity-building efforts are important to help combat tax avoidance in the short term, what is needed more fundamentally is a change in the rules themselves. III. Tax abuse, human rights and sustainable development 21. The Independent Expert notes in his interim study that there are various connections between illicit financial flows and human rights. Many of these also apply specifically to tax abuse. First and foremost, tax abuse deprives Governments of resources required to progressively realize human rights, including economic, social and cultural rights, such as health, education, social protection, water, sanitation, as well as civil and political rights, including access to justice, free and fair elections, freedom of expression and personal security. Tax abuse can also undermine the rule of law, for example, when large-scale tax evasion is allowed to occur with impunity. In addition, whistle-blowers, media outlets and human rights defenders that expose tax abuse require effective protection based on international human rights law and the United Nations Convention against Corruption. Human rights and due process guarantees are also essential to protect persons from undue 18 19 20 21 22 See A. Cobham, “UNCTAD study on corporate tax in developing countries”, Unacounted.org (2015). E. Crivelli, R. De Mooij and M. Keen, “Base erosion, profit shifting and developing countries”, IMF working paper No. WP/15/118, pp. 19-20 (2015). See J. Gravelle, “Tax havens: international tax avoidance and evasion”, Congressional Research Service (2015); and Zucman, “Taxing across borders” (footnote 6). See ActionAid, “How tax havens plunder the poor”, p. 6 (2013). See Declaration of the Independent Commission for the Reform of International Corporate Taxation, p. 9, available from www.icrict.org/declaration/. 7